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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended May 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____ to ____
Commission file number: 1-9953
JONES INTERCABLE, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0613514
(State of Organization) (IRS Employer
Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
(Address of principal executive (Registrant's telephone no.
office and Zip Code) including area code)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
Class A Common Stock, $.01 par value
7.5% Convertible Subordinated Debentures due June 1, 2007
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
--- ---
Aggregate market value as of July 14, 1995 of the voting stock held by
non-affiliates:
Common Stock $33,957,792 Class A Common Stock $116,589,596
Shares outstanding of each of the registrant's classes of common stock as of
July 14, 1995:
Common Stock: 5,113,021 Class A Common Stock: 26,158,305
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x
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JONES INTERCABLE, INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED MAY 31, 1995
TABLE OF CONTENTS
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PART I 1
ITEM 1. BUSINESS 1
The Company 1
The Cable Television Industry 1
Industry Growth 2
System Operations 3
Programming 3
System Revenues 4
The Company's Cable Television Business 5
The Company's Other Businesses 8
The Company's Current Plans for Growth 8
Cable Television Systems Owned by the Company and by Company-
Managed Limited Partnerships 9
Proposed Acquisitions of Cable Television Systems by the Company 10
The Augusta System 10
The Dale City and Related Systems 11
The Manassas Systems 11
The Carmel System 11
The Orangeburg System 12
The Tampa System 12
Exchange of Assets with Time Warner Entertainment -
Advance/Newhouse Partnership 12
Sale of Cable Television System by the Company 13
Acquisition of Jones Spacelink, Ltd. 13
Acquisition by Bell Canada International Inc. of Shares of the
Company's Class A Common Stock 13
Investment in Mind Extension University, Inc. 15
Sale of 9 5/8% Senior Notes Due 2000 15
Increase in the Company's Authorized Class A Common Stock 15
International Investments by the Company and its Affiliates 16
Cable Television Franchises 17
Competition 17
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Competition in the Industry 17
Competition for Subscribers in the Company's Systems 20
Regulation and Legislation 22
Cable Communications Policy Act of 1984 23
Cable Television Consumer Protection and Competition Act of 1992 23
Ownership and Market Structure 28
Program Origination and Exclusivity Obligations 31
Copyright Matters 32
State Regulation 32
Local Regulation 32
Technical and Reporting Requirements 33
Regulatory Fees and Other Matters 33
Miscellaneous 33
ITEM 2. PROPERTIES 34
Cable Television Systems Owned by the Company 34
Programming Services 38
ITEM 3. LEGAL PROCEEDINGS 38
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 39
PART II 39
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 39
ITEM 6. SELECTED FINANCIAL DATA 41
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 42
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA 51
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE 83
PART III 83
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT 83
ITEM 11. EXECUTIVE COMPENSATION 88
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, DIRECTORS AND MANAGEMENT 91
ITEM 13. CERTAIN TRANSACTIONS 95
PART IV 101
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K 101
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PART I
ITEM 1. BUSINESS
THE COMPANY
Jones Intercable, Inc. (the "Company") is a Colorado corporation
organized in 1970. The Company is primarily engaged in the cable television
business. It currently acquires, develops and operates cable television systems
for itself and its managed limited partnerships. The Company also holds equity
interests in a number of programming and other cable-related subsidiaries, as
well as a data encryption company. See Item 1, The Company's Other Businesses.
Jones International, Ltd. ("International") directly owns approximately
47% of the Common Stock of the Company and approximately 9% of the Class A
Common Stock of the Company. Glenn R. Jones, the Chairman of the Board of
Directors and Chief Executive Officer of the Company, directly owns
approximately 9% of the Company's Common Stock and 1% of the Company's Class A
Common Stock. Because of his ownership of International, Mr. Jones is deemed to
be the beneficial owner of all shares of the Company owned by International, and
his direct and indirect stock ownership enables him to control the election of a
majority of the Company's Board of Directors and gives him voting power over
approximately 41% of votes to be cast by all shareholders of the Company on
matters not requiring a class vote.
On December 20, 1994, Bell Canada International Inc. ("BCI") purchased
7,414,300 shares of the Company's Class A Common Stock. This acquisition,
together with shares previously acquired by BCI, resulted in BCI owning an
approximate 30% economic interest in the Company. See Item 1, Acquisition by
Bell Canada International Inc. of Shares of the Company's Class A Common Stock.
In a related transaction, BCI acquired an option to purchase 2,878,151 shares of
Common Stock of the Company from International, Glenn R. Jones and certain of
their affiliates which, if and when exercised, would enable BCI to elect 75% of
the members of the Board of Directors of the Company. Also on December 20, 1994,
the Company acquired substantially all of the assets and assumed all of the
liabilities of Jones Spacelink, Ltd. ("Spacelink"), its then parent company, in
exchange for 3,900,000 shares of the Company's Class A Common Stock. See Item 1,
Acquisition of Jones Spacelink, Ltd.
At May 31, 1995, the Company had a total of approximately 3,480
employees. The executive offices of the Company are located at 9697 E. Mineral
Avenue, Englewood, Colorado 80112, and its telephone number is (303) 792-3111.
Unless the context otherwise requires, the term "Company" as used herein refers
to Jones Intercable, Inc. and its subsidiaries.
THE CABLE TELEVISION INDUSTRY
The cable television industry developed in the late 1940s and early
1950s in response to the needs of residents in predominantly rural and
mountainous areas of the country where the quality of television reception was
inadequate because of geographic location, surrounding terrain, man-made
structures or the curvature of the earth. During recent decades, cable
television systems have also
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been constructed in suburban areas and larger cities where signal interference
problems or limited availability of channels created a desire for better
reception and expanded service. Television reception is substantially improved
by cable television because of its insulation from outside interference.
The cable television industry, which started as a technical solution to
the problem of delivering television signals to remote areas of rural America,
has now become an entertainment staple in a majority of American homes. It is a
dynamic, evolving and ever more complex industry. Cable penetration, or the
percentage of U.S. television households that subscribe to cable television, now
stands at approximately 63%. It is anticipated that national penetration of
cable television will increase in the late 1990s as the value of cable
television is enhanced by additional entertainment programming choices, such as
exclusive coverage of sporting events and educational programs, and the ability
of cable systems to deliver other services.
A cable television system is a facility that receives satellite,
broadcast and FM radio signals by means of high antennas, a microwave relay
service or earth stations, amplifies the signals and distributes them by coaxial
and/or fiber-optic cable to the premises of its subscribers, who pay a fee for
the service. A cable television system may also originate its own programming
for distribution through the cable.
The physical plant of a cable television system consists of four
principal operating components. The first, known as the "headend" facility,
receives television and radio signals with microwave relay systems, special
antennae and satellite earth stations. The second component, the distribution
network, originating at the headend and extending throughout the system,
consists of coaxial and/or fiber-optic cables placed on poles or buried
underground, and associated electronic equipment. The third component of the
system is a "drop cable" that extends from the distribution network into the
subscriber's home and connects to the subscriber's television set. The fourth
component, a converter, is the home terminal device necessary to expand channel
capacity.
The cable television industry is undergoing significant change. With
recent announcements of alliances between cable television companies and
telephone, computer and software companies, the nature of the cable television
business seems to be changing from a traditional coaxial network delivering
video entertainment to a more sophisticated, digital platform environment where
cable systems could be capable of delivering traditional programming as well as
other services, including data, telephone and expanded educational and
entertainment services on an interactive basis. See Item 1, The Company's Cable
Television Business.
INDUSTRY GROWTH. Based upon information obtained by the Company from
industry sources, the Company believes that the following table demonstrates the
growth of the cable television industry in the United States for the periods
indicated:
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Approximate Percentage
Approximate Number of TV Households With
End of Year of Basic Subscribers(1) Basic Cable Service(2)
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1982 29,340,570 35%
1983 34,113,790 41%
1984 37,290,870 44%
1985 39,872,250 46%
1986 42,237,140 48%
1987 44,970,880 51%
1988 48,636,520 54%
1989 52,564,470 57%
1990 54,871,330 59%
1991 55,786,390 61%
1992 57,211,600 62%
1993 58,834,440 63%
1994 60,495,090 63%
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(1) The number of basic subscribers is computed by dividing the sum of total
individual-dwelling subscribers and total revenues from bulk-rate
subscribers by the standard basic service rate.
(2) The percentage is computed by dividing the number of basic subscribers
by the number of TV households in the United States (95,360,730 TV
households in 1994).
SYSTEM OPERATIONS. Cable television system operations are generally
conducted pursuant to the terms of a franchise or similar license granted by a
state agency or by the local governing body for the area to be served.
Franchises generally are granted on a non-exclusive basis for a period of 5 to
15 years. Joint use or pole rental agreements are normally entered into with
electric and/or telephone utilities serving a cable television system's area and
annual rentals generally range from $2 to $10 for each pole used. These rates
may increase in the future. See Item 1, Cable Television Franchises; Item 1,
Competition; and Item 1, Regulation and Legislation.
PROGRAMMING. Cable television systems generally offer various types of
programming, which include basic service, tier service, premium services,
pay-per-view programs and packages including several of these services at
combined rates.
Basic cable television service usually consists of signals of all four
national television networks, various independent and educational television
stations (both VHF and UHF) and certain signals received from satellites and
also usually includes programs originated locally by the system, which may
consist of music, news, weather reports, stock market and financial information
and live or videotaped programs of a public service or entertainment nature. FM
radio signals are also frequently distributed to subscribers as part of the
basic service. The Cable Television Consumer Protection and Competition Act of
1992 (the "1992 Cable Act") contains signal carriage requirements.
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Rules promulgated under the 1992 Cable Act allow each commercial television
broadcast station to elect every three years whether to require the cable
systems in its area to carry its signal or to require the cable systems to
negotiate with the station for "retransmission consent" to carry the station. If
a local commercial broadcast television station requires a cable system to
negotiate with the station for retransmission consent, and the cable system is
unable to obtain retransmission consent, the cable system is not permitted to
continue carriage of such station. See Item 1, Regulation and Legislation.
During the initial three-year election period which began on October 6, 1993 and
continues through December 31, 1996, no broadcast stations carried on
Company-owned cable television systems that elected retransmission consent have
withheld consent to the retransmission of their signals. Most of these
arrangements will have to be renewed during 1996 in order to permit continued
carriage of broadcast signals by Company-owned systems.
In most systems, tier services are also offered on an optional basis to
subscribers. These channels generally include most of the cable networks such as
Entertainment and Sports Programming Network (ESPN), Cable News Network (CNN),
Turner Network Television (TNT), Family Channel, Discovery and others. Systems
also offer a package that includes the basic service channels and the tier
services.
Cable television systems offer premium services to their subscribers,
which consist of feature films, sporting events and other special features that
are presented without commercial interruption. The cable television operator
buys premium programming from suppliers such as HBO, Showtime, Cinemax or others
at a cost based on the number of subscribers served by the cable operator.
Premium service programming usually is significantly more expensive for the
system operator than the basic service or tier service programming, and
consequently the system operator prices premium service separately when sold to
subscribers.
Cable television systems offer to subscribers pay-per-view programming.
Pay-per-view is a service that allows subscribers to receive single programs,
frequently consisting of motion pictures and major sporting events, and to pay
for such service on a program-by-program basis.
SYSTEM REVENUES. Monthly service fees for basic, tier and premium
services constitute the major source of revenue for cable television systems. A
subscriber to a cable television system generally pays an initial connection
charge and a fixed monthly fee for the cable programming services received. The
amount of the monthly service fee varies from one area to another, and
historically has been a function, in part, of the number of channels and
services included in the service package and the cost of such services to the
cable television system operator. In most instances, a separate monthly fee for
each premium service and certain other specific programming is charged to
subscribers, with discounts generally available to subscribers receiving
multiple premium services.
Cable television operators have been able to generate additional
revenue through the sale of commercial spots and channel space to advertisers.
As with other forms of advertising, the cable television operator receives a fee
from the advertisers that is based on the volume of advertising and the time of
the day at which it is broadcast. Advertising, as well as fees generated by home
shopping
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and pay-per-view, represent additional sources of revenue for cable television
systems. These services are not regulated under the 1992 Cable Act.
The 1992 Cable Act mandated a greater degree of regulation of the cable
television industry, including rate regulation. Under the 1992 Cable Act's
definition of "effective competition," nearly all cable systems in the United
States, including almost all of those owned and managed by the Company, are
subject to rate regulation with respect to basic cable services. In addition,
the FCC is permitted to regulate rates for non-basic service tiers other than
premium services in response to complaints filed by franchising authorities
and/or cable subscribers. Rate regulations adopted by the FCC, which became
effective September 1, 1993, provide for a benchmark and price cap system that
is used to regulate basic and non-basic service rates, and cost-of-service
showings are available to cable operators to allow them to justify rates above
benchmark levels.
Cost-of-service showings justifying rates above benchmark levels were
filed for the following Company-owned systems: Jefferson County, Colorado;
Charles County, Maryland; Pima County, Arizona; Alexandria, Virginia; and North
Augusta, South Carolina. The cost-of-service showings have not yet received
final approval from franchising authorities, however, and there can be no
assurance that the cost-of-service showings will prevent further rate reductions
unless such final approvals are received. The Company complied with the February
22, 1994 benchmark regulations and reduced rates in the following Company-owned
systems: Oxnard and Walnut Valley, California; Hilo, Hawaii; Panama City Beach,
Florida; and Kenosha, Wisconsin. The Company will continue its efforts to
mitigate the effect of such rate reductions in these systems. The Company's Anne
Arundel System is subject to effective competition as defined by the 1992 Cable
Act, and, as a result, is not subject to rate regulation.
THE COMPANY'S CABLE TELEVISION BUSINESS
The Company develops and operates cable television systems for itself
and for its managed limited partnerships. The Company has grown by acquiring and
developing cable television systems for both itself and its managed limited
partnerships, primarily in suburban areas with attractive demographic
characteristics. One of the primary factors utilized by the Company in deciding
to acquire a particular cable television system is the potential of the system
for operating cash flow growth and value appreciation. Key elements of the
Company's operating strategy include increasing basic penetration levels and
revenue per subscriber through targeted marketing, superior customer service and
maintenance of high technical standards. The Company has deployed fiber optic
cable wherever practical in its current rebuild and upgrade projects, which
improves system reliability and picture quality, increases channel capacity and
provides the potential for new business opportunities. The Company has focused
on pay-per-view and advertising as revenue growth opportunities, and expects to
continue to do so in the future.
Within the past several years, and at an increasing pace recently, the
cable television industry has seen much change. With recent announcements of
alliances between cable television companies and telephone, computer and
software companies, the Company believes that the nature of the cable television
business is changing from a traditional coaxial network delivering video
entertainment to a more sophisticated, digital platform environment where cable
systems could be capable of delivering
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traditional programming as well as other services, including data, telephone and
expanded educational and entertainment services on an interactive basis. As this
convergence of various technologies progresses, cable television companies will
have to reevaluate their system architecture, upgrade their cable plants in
order to take advantage of new opportunities and consider clustering their
systems in geographic areas where they can achieve economies of scale and
reasonable returns on the investments made. The Company is, on an ongoing basis,
evaluating its position in this changing marketplace and intends, where
possible, to pursue these opportunities as they evolve. The ability of the
Company to do so, however, will be dependent in large part on the availability
of debt and equity financing.
With respect to the systems owned by the Company and its subsidiaries,
the Company earns revenues through monthly service rates and related charges to
cable television subscribers. The Company's subscribers have the option to
choose a limited basic service consisting generally of broadcast stations and a
few cable networks ("basic" service) or a package of services consisting of
basic service and tier services ("basic plus" service). The basic plus service
generally consists of most of the cable networks, including ESPN, USA Network,
CNN, Discovery, Lifetime and others. See Item 1, The Cable Television Industry,
Programming.
Monthly service rates include fees for basic service, basic plus
service and premium services. At May 31, 1995, monthly basic service rates
ranged from $5.80 to $15.00 for residential subscribers, monthly basic plus
service rates ranged from $11.00 to $24.80 for residential subscribers, and
monthly premium services ranged from $1.99 to $11.95 per premium service. In
addition, the Company earns revenues from pay-per-view programs and advertising
fees. Pay-per-view programs, which usually are either unique sporting events or
recently released movies, are available on many of the Company's cable
television systems. Subscribers are permitted to choose individual movies for a
set fee ranging from $.99 to $6.95 per movie and individual special events for a
set fee ranging from $5.95 to $54.90 per event. Related charges may include a
nonrecurring installation fee that ranges from $4.95 to $50.00; however, from
time to time the Company has followed the common industry practice of reducing
the installation fee during promotional periods. Commercial subscribers such as
hotels, motels and hospitals are charged a nonrecurring connection fee that
usually covers the cost of installation. Except under the terms of certain
contracts with commercial subscribers and residential apartment and condominium
complexes, subscribers are free to discontinue the service at any time without
penalty, and most terminations occur because a subscriber moves to another home
or to another city. For the fiscal year ended May 31, 1995, of the total
subscriber fees received by Company-owned systems, basic and basic plus service
fees accounted for approximately 65% of total revenues, premium service fees
accounted for approximately 17% of total revenues, pay-per-view fees were
approximately 3% of total revenues, advertising fees were approximately 7% of
total revenues and the remaining 8% of total revenues came from equipment
rentals, installation fees and program guide charges. The Company is dependent
upon timely receipt of service fees to provide for maintenance and replacement
of plant and equipment, current operating expenses and other costs.
As the general partner of its managed limited partnerships, the Company
earns management fees which are generally 5% of the gross revenues of the
partnership, not including revenues from the
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sale of cable television systems or franchises. The Company also receives
reimbursement from the partnerships for certain allocated overhead and
administrative expenses incurred by the Company in its management activities.
From time to time, the Company has made advances to certain of its managed
limited partnerships and has deferred collection of management fees and expense
reimbursements owed by certain of its managed limited partnerships to allow for
expansion of a cable television system or other cash needs of such a
partnership. Upon dissolution of a Company-managed partnership or the sale or
refinancing of its cable television systems, the Company is generally entitled
to receive 25 percent of the net remaining assets of such partnership, after
payment of partnership debts and after investors have received an amount equal
to their capital contributions plus, in most cases, a stated preferential return
on their investment. Pursuant to the terms of the various limited partnership
agreements, the Company has full operational control of the management and
day-to-day business of the partnerships.
The Company historically has found that the cash flow of a particular
cable television system and the long-term value of that system can be increased
as a result of (i) the addition of new subscribers through increased market
penetration, (ii) the building of extensions to reach new potential subscribers
in the franchise area, (iii) the addition of new programming services or
products, and (iv) periodic rate adjustments. Increases in subscribers usually
result from specific marketing efforts undertaken by a cable system operator
within the community, which may include telephone solicitation, particular
program promotions, direct mailings, increased advertising or other means. A
cable operator also can build extensions to systems, which increase the number
of homes passed by the cable system and the number of potential subscribers, and
thereby increase the potential revenue from additional subscriber fees. The
building of extensions to cable television systems usually occurs due to the
development within the system's franchise area of a new housing area adjacent to
areas then served by the system or the availability of a franchise for an area
adjacent to the current franchise area. In addition, increased revenues may be
generated from the offering of additional services to subscribers. New cable
services have been developed and introduced since the inception of the cable
television industry, and new cable services are expected to continue to develop.
These services could include new services which offer movies or other
entertainment on demand or nearly on demand by a subscriber (known as "near
video on demand"), interactive services including both games and entertainment,
as well as information and consumer services. No assurance can be given that the
Company will be able to increase the cash flow of any particular cable
television system or the value of that system by any of the methods described
above, and unless amended (see Item 1, Regulation and Legislation), the rate
regulations promulgated by the FCC under the 1992 Cable Act may limit the amount
of any rate increases with respect to regulated services the Company will be
able to implement in the future. See Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Increases in cash flow, as well as increases in long-term value, of a
cable television system can also be realized through cost efficiencies. Because
the Company manages numerous cable television systems for itself and its managed
partnerships, its cable television systems generally benefit from a reduction in
certain costs associated with operations. The Company is able to purchase
programming services and cable system equipment at lower prices than would
otherwise be available to a single cable system owner due to the volume of
business that the Company and its affiliates conduct with
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such suppliers and vendors. In addition, the Company has developed over time
certain centralized operating and marketing systems that are made available to
the cable television systems owned by the Company and its managed partnerships.
While the Company will seek to implement additional cost efficiencies in its
cable television properties, no assurance can be given that it will be able to
do so, or that any increase in cash flow or value will result therefrom.
The Company's business consists of providing cable television services
to a large number of customers, the loss of any one or more of which would have
no material effect on the Company's business. Each of the cable television
systems owned or operated by the Company has had some subscribers who later
terminated the service. Terminations occur primarily because people move to
another home or to another city. In other cases, people terminate on a seasonal
basis or because they no longer can afford or are dissatisfied with the service.
The amount of past due accounts in systems owned or operated by the Company is
not significant. The Company's policy with regard to these accounts is basically
one of disconnecting service before a past due account becomes material.
The Company does not depend to any material extent on the availability
of raw materials, it carries no significant amounts of inventory and it has no
material backlog of customer orders. The Company has engaged in research and
development activities relating to the provision of new services. Compliance
with Federal, state and local provisions that have been enacted or adopted
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment has had no material effect upon the capital
expenditures, earnings or competitive position of the Company.
THE COMPANY'S OTHER BUSINESSES
Since the Company's acquisition in December 1994 of substantially all
of the assets of Spacelink (see Item 1, Acquisition of Jones Spacelink, Ltd.),
the Company now also operates a number of non-cable television subsidiaries: The
Jones Group, Ltd., a cable television brokerage company; Jones Futurex, Inc.
which manufactures and markets data encryption products and provides contract
manufacturing services; Jones Satellite Networks, Inc., a second-tier subsidiary
of the Company that delivers radio programming to radio stations throughout the
United States via satellite; and Superaudio, a joint venture between a
subsidiary of Jones Galatic Radio, Inc. and an unaffiliated party that offers FM
stereo audio service programming to cable television system subscribers. See
Item 7, Management's Discussion and Analysis of Financial Condition and Results
of Operation.
THE COMPANY'S CURRENT PLANS FOR GROWTH
The Company intends to grow by implementing a balanced strategy
directed at acquiring cable television systems from Company-managed limited
partnerships and from third parties. See Item 1, Proposed Acquisitions of Cable
Television Systems by the Company. As part of this process certain systems
owned by the Company and its managed partnerships may be sold to third parties
and Company-owned systems may be exchanged for systems owned by other cable
system operators. See Item 1, Exchange of Assets with Time Warner
Entertainment-Advance/Newhouse Partnership. The Company also intends to
maintain and enhance the value of its current cable television systems through
capital expenditures. Such expenditures will include, among others, cable
television plant extensions and the upgrade and rebuild of certain systems. It
is the Company's plan to cluster
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its cable television properties, to the extent feasible, in geographic areas
where it will have an adequate number of subscribers to justify the capital
expenditures required to upgrade its plant and the possible offering of
telephony and other telecommunications services. Acquisitions and capital
expenditures are subject to the availability of cash generated from operations
and debt and/or equity financing. The capital resources to accomplish these
strategies are expected to be provided by: the remaining proceeds from the
December 1994 acquisition by BCI of shares of the Company's Class A Common Stock
(see Item 1, Acquisition by Bell Canada International Inc. of Shares of the
Company's Class A Common Stock); subject to market conditions, the sale of
securities; the Company's reducing revolving credit agreement; and cash
generated from the Company's operating activities. (See Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations.)
The Company's recent alliance with BCI will also significantly affect
the Company's current plans for growth. In March 1994, BCI acquired from the
Company 2,500,000 shares of the Company's Class A Common Stock at $22.00 per
share for an investment of $55,000,000. On December 20, 1994, the Company sold
to BCI, pursuant to a Stock Purchase Agreement, 7,414,300 shares of the
Company's Class A Common Stock at $27.50 per share for an investment of
$203,893,000 which, together with the shares acquired by BCI in March 1994,
resulted in BCI owning an approximate 30% economic interest in the Company. At
the same time, BCI agreed to invest up to an additional $141,106,750 for shares
of the Company's Class A Common Stock to maintain its 30% economic interest in
the event the Company makes future equity offerings. See Item 1, Acquisition by
Bell Canada International Inc. of the Company's Class A Common Stock. A
material reason for the transaction with BCI was to provide a significant
infusion of equity capital into the Company to implement the Company's plans of
continued growth through the acquisition of cable television systems and to
increase the Company's ability to access the public equity and debt markets.
The Company believes that the alliance between BCI and the Company will
bring to the Company more than equity capital. BCI, through its parent company
and its affiliates, is engaged in many areas of the telecommunications business.
BCE Inc., the parent of BCI, is the largest telecommunications company in
Canada. BCE Inc. is also the parent company of Bell Canada, the largest provider
of telecommunications services in Canada. Bell Northern Research, an affiliate
of BCI, is Canada's largest research and development organization and is engaged
in developing and analyzing new technologies used in the telecommunications
area. Northern Telecom, a 52% subsidiary of BCE Inc., is a leading global
manufacturer of telecommunications equipment. As cable television systems in the
United States evolve and change into more sophisticated digital networks
providing traditional television entertainment, but also telephone and data
services, and as competition between cable television operators, telephone
companies and others develops, the relationship between BCI and the Company will
be of critical importance in providing the Company with access to expertise and
experience that it would not otherwise have available.
CABLE TELEVISION SYSTEMS OWNED BY THE COMPANY AND BY COMPANY-MANAGED LIMITED
PARTNERSHIPS
At May 31, 1995, the Company managed 55 cable television systems, 42 of
which, operating in 20 states, were owned by Company-managed partnerships and 13
of which, operating in 9 states,
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were owned by the Company. The Company's existing managed partnerships own cable
television systems located in California, Colorado, Florida, Georgia, Illinois,
Indiana, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey,
New Mexico, New York, Ohio, Oregon, South Carolina, Texas and Wisconsin. The
Company-owned cable television systems are located in Arizona, California,
Colorado, Florida, Hawaii, Maryland, South Carolina, Virginia and Wisconsin.
At May 31, 1995, Company-owned systems served approximately 314,200
basic subscribers who subscribed to a total of approximately 258,600 pay units.
And, at such date, systems held by Company-managed partnerships served
approximately 1,035,000 basic subscribers who subscribed to a total of
approximately 757,500 pay units. (Each premium service subscribed to equals one
pay unit.) According to industry sources, the Company ranks among the top 10
multiple system cable television operators in the United States.
PROPOSED ACQUISITIONS OF CABLE TELEVISION SYSTEMS BY THE COMPANY
The Augusta System
On February 22, 1995, the Company entered into a purchase and sale
agreement with Cable TV Fund 12-B, Ltd., a Colorado limited partnership ("Fund
12-B"), one of the Company's managed limited partnerships that owns the cable
television system serving areas in and around Augusta, Georgia (the "Augusta
System"), providing for the sale by Fund 12-B to the Company of the Augusta
System for a purchase price of $141,718,000 in cash, subject to normal closing
adjustments. The purchase price was determined by averaging three separate
independent appraisals of the fair market value of the Augusta System as of
December 31, 1994. In July 1995, the Company was informed by one of the three
appraisers of the Augusta System that, taking into account the regulatory,
legislative and competitive developments in the cable television industry since
December 31, 1994, their appraised value of the Augusta System would be
increased. On July 24, 1995, the Company and Fund 12-B accordingly amended the
purchase and sale agreement to increase the purchase price for the Augusta
System from $141,718,000 to $142,618,000 to reflect this increased appraised
value.
The closing of the acquisition of the Augusta System is subject to a
number of conditions including the approval of the holders of a majority of the
limited partnership interests in Fund 12-B. The Company believes that the
approval of the limited partners will be received. The Company expects that its
acquisition of the Augusta System will occur during 1995. The Company intends to
fund its acquisition of the Augusta System using a portion of the $196,500,000
net proceeds of the Company's March 1995 offering of $200,000,000 of 9 5/8%
Senior Notes. The Company, as general partner of Fund 12-B, expects to receive a
distribution from Fund 12-B of approximately $13,205,797 upon closing the
transaction.
The Augusta System passes approximately 102,000 homes and serves
approximately 66,950 basic subscribers. The Augusta System is contiguous with
the cable television system owned by the Company serving areas in and around
North Augusta, South Carolina (the "North Augusta System"). Together, the
Augusta System and the North Augusta System will, upon closing of the Company's
acquisition of the Augusta System, form an operating cluster that will serve
approximately 81,700 basic subscribers and pass approximately 125,700 homes.
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The Dale City and Related Systems
On June 30, 1995, the Company entered into an asset purchase agreement
with Columbia Associates, L.P., an unaffiliated party, to acquire the cable
television systems serving Dale City, Lake Ridge, Woodbridge, Fort Belvoir,
Triangle, Dumfries, Quatico, Accoquan and portions of Prince William County,
all in the State of Virginia. These systems serve approximately 50,000 basic
subscribers and pass approximately 64,100 homes. The purchase price is
$123,000,000, subject to normal closing adjustments. The acquisition of these
systems is subject to a number of conditions including the consent of
franchising authorities and other regulatory authorities having jurisdiction.
Funding is expected to be provided from cash on hand and from available
borrowings under the Company's credit facility. The Company expects to acquire
these systems in 1995. The Company will pay Jones Financial Group, Ltd.
("Financial Group"), an affiliate of the Company, a fee of approximately
$1,328,400 upon completion of the transaction as compensation for acting as the
Company's financial advisor in connection with this transaction.
The Manassas Systems
On May 31, 1995, the Company entered into separate asset purchase
agreements with Cablevision of Manassas Park, Inc. and Benchmark/Manassas Cable
Fund Limited Partnership pursuant to which the Company intends to acquire cable
television systems serving Manassas, Manassas Park, Haymarket and portions of
unincorporated Prince William County, all in the State of Virginia (the
"Manassas Systems"). Neither Cablevision of Manassas Park, Inc. nor
Benchmark/Manassas Cable Fund Limited Partnership are affiliated with the
Company. The total purchase price for the Manassas Systems is $71,100,000,
subject to normal closing adjustments. The Manassas Systems pass approximately
39,000 homes and serve approximately 25,450 basic subscribers and are located
approximately 20 miles from the Company-owned cable television system serving
Alexandria, Virginia. The acquisitions of the Manassas Systems are subject to a
number of closing conditions including the approval of applicable governmental
authorities to the transfer of the franchises for the Manassas Systems to the
Company, the approval of the Department of Justice and the Federal Trade
Commission pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976
and the consent of various other third parties. The Company expects to acquire
the Manassas Systems during 1995. The Company will pay Financial Group a fee of
approximately $896,000 upon completion of the transaction as compensation for
acting as the Company's financial advisor in connection with these
transactions.
The Carmel System
On August 11, 1995, the Company entered into a purchase and sale
agreement with IDS/Jones Growth Partners 87-A, Ltd., a Colorado limited
partnership, one of the Company's managed limited partnerships, to acquire
from such partnership the cable television system serving areas in and around
Carmel, Indiana (the "Carmel System"). The purchase price is
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$44,235,333, which is the average of three separate independent appraisals of
the fair market value of the Carmel System. The Carmel System passes
approximately 24,400 homes and serves approximately 18,600 basic subscribers.
The Company expects to acquire and then to trade the Carmel System, along with
certain other properties, to an unaffiliated cable television system operator
during 1995. See Item 1, Exchange of Assets with Time Warner
Entertainment-Advance/Newhouse Partnership.
The Orangeburg System
On August 11, 1995, the Company entered into a purchase and sale
agreement with Jones Cable Income Fund 1-B, Ltd., a Colorado limited
partnership, one of the Company's managed limited partnerships, to acquire from
such partnership the cable television system serving areas in and around
Orangeburg, South Carolina (the "Orangeburg System"). The purchase price is
$18,347,667, which is the average of three separate independent appraisals of
the fair market value of the Orangeburg System. The Orangeburg System passes
approximately 16,530 homes and serves approximately 12,300 basic subscribers.
The Company expects to acquire and then trade the Orangeburg System, along with
certain other properties, to an unaffiliated cable television system operator
during 1995. See Item 1, Exchange of Assets with Time Warner
Entertainment-Advance/Newhouse Partnership.
The Tampa System
On August 11, 1995, the Company entered into a purchase and sale
agreement with Cable TV Fund 12-BCD Venture, a joint venture of three of the
Company's managed limited partnerships (the "Venture"), to acquire from the
Venture the cable television system serving areas in and around Tampa, Florida
(the "Tampa System"). The purchase price is $110,395,667, which is the average
of three separate independent appraisals of the fair market value of the Tampa
System. The Tampa System passes approximately 125,000 homes and serves
approximately 63,500 basic subscribers. The Company expects to acquire and then
to trade the Tampa System, along with certain other properties, to an
unaffiliated cable television system operator during 1995. See Item 1, Exchange
of Assets with Time Warner Entertainment-Advance/Newhouse Partnership.
EXCHANGE OF ASSETS WITH TIME WARNER ENTERTAINMENT - ADVANCE/NEWHOUSE PARTNERSHIP
On August 11, 1995, the Company entered into an Asset Exchange
Agreement (the "Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television system operator. Pursuant to the Exchange Agreement, the Company will
convey to TWEAN substantially all of the assets of the Carmel System, the
Orangeburg System and the Tampa System and cash in the amount of $3,500,000,
subject to normal closing adjustments. See Item 1, Proposed Acquisition of Cable
Television Systems by the Company. In return, the Company will receive from
TWEAN substantially all of the assets of the cable television systems serving
Andrews Air Force Base, Capitol Heights, Cheltenham, District Heights,
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Fairmount Heights, Forest Heights, Morningside, Prince George's County, Seat
Pleasant and Upper Marlboro, Maryland and portions of Fairfax County, Virginia
(the "TWEAN Systems").
The closing of the transaction contemplated by the Exchange Agreement
is subject to customary closing conditions, including obtaining necessary
governmental and other third party consents. The parties intend to complete the
transaction by the end of 1995, but there can be no assurance that all
conditions will be satisfied or waived by that time. Either party may terminate
the Exchange Agreement if the transaction is not completed on or before June 30,
1996. The Company will pay Financial Group a $1,667,723 fee upon the completion
of the transaction as compensation for acting as the Company's financial advisor
in connection with this exchange transaction.
SALE OF CABLE TELEVISION SYSTEM BY THE COMPANY
On January 7, 1994, the Company entered into an agreement with Bresnan
Communications Company ("Bresnan"), an unaffiliated party, to sell its Gaston
County, North Carolina cable television system (the "Gaston System") to Bresnan
for $36,500,000, subject to normal closing adjustments. Closing on this
transaction occurred on July 25, 1994. The Company paid The Jones Group, Ltd.
("Jones Group"), an affiliate, $912,500 for brokerage services related to this
sale. See Item 13, Certain Transactions. Prior to December 20, 1994, the Jones
Group was owned 20% by the Company and 80% by Spacelink. Upon the completion of
the acquisition by the Company of the assets of Spacelink (see Item 1,
Acquisition of Jones Spacelink, Ltd.), the Jones Group became a wholly owned
subsidiary of the Company. Proceeds to the Company from the sale of the Gaston
System were used to pay amounts outstanding on the Company's credit facility.
ACQUISITION OF JONES SPACELINK, LTD.
On December 19, 1994, the shareholders of the Company approved an
Exchange Agreement and Plan of Reorganization and Liquidation dated May 31, 1994
providing for the acquisition by the Company of substantially all of the assets
of Spacelink and the assumption by the Company of all the liabilities of
Spacelink. On December 20, 1994, the Company acquired all of the assets of
Spacelink (except for the 2,859,240 shares of the Company's Common Stock owned
by Spacelink) and assumed all of the liabilities of Spacelink (other than
liabilities with respect to shareholders exercising dissenters' rights) in
exchange for 3,900,000 shares of the Company's Class A Common Stock. Spacelink
is effecting its complete liquidation and is distributing the aforesaid shares
of the Company's Class A Common Stock and Common Stock to its shareholders,
other than to any dissenting shareholders.
ACQUISITION BY BELL CANADA INTERNATIONAL INC. OF SHARES OF THE COMPANY'S CLASS A
COMMON STOCK
On December 19, 1994, the shareholders of the Company approved a Stock
Purchase Agreement (the "BCI Agreement") dated May 31, 1994, as amended,
between the Company and BCI pursuant to which BCI agreed to acquire an
approximate 30% economic interest in the Company. On December 20, 1994, BCI
purchased 7,414,300 shares of the Company's Class A Common Stock at
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$27.50 per share, or an aggregate of $203,893,250. This acquisition, together
with shares previously acquired by BCI in March 1994, resulted in BCI acquiring
a 30% economic interest in the Company. At the same time, BCI agreed to invest
up to an additional $141,106,750 for shares of the Company's Class A Common
Stock to maintain its 30% economic interest in the event the Company makes
future equity offerings. BCI also acquired an option from Glenn R. Jones and
International and certain subsidiaries of International to purchase 2,878,151
shares of the Company's Common Stock, representing all of the Company's Common
Stock owned by Mr. Jones, International and such subsidiaries of International
in exchange for $19.00 per share, or an aggregate of $54,684,869. The option
price or $19.00 per share is exclusive of the exercise price which shall be the
market value of the Company's Common Stock at the time of exercise. The Company
paid Financial Group a $2,000,000 fee in connection with the transaction for its
services in arranging and negotiating the terms of the BCI Agreement. See Item
13, Certain Transactions.
Also on December 20, 1994:
(a) The Company, International, Mr. Jones and BCI entered into a
Shareholders Agreement providing for, among other matters, certain consent
rights of BCI regarding certain major Company transactions and certain rights
of BCI to maintain its 30% equity interest in the Company. Pursuant to the
terms of the Shareholders Agreement, the Board of Directors of the Company
consists of 13 directors: nine members are elected by holders of the Company's
Common Stock ("Common Directors") and four members are elected by holders of
the Company's Class A Common Stock ("Class A Directors"). Of the four Class A
Directors, BCI is entitled to designate for nomination one director and Mr.
Jones and BCI are entitled to jointly designate for nomination three directors
that are independent directors (as defined). Of the nine Common Directors, Mr.
Jones is entitled to designate for nomination seven directors, and BCI is
entitled to designate for nomination two directors. BCI and Mr. Jones and
International have mutually agreed to vote in favor of their respective
nominees or joint nominees to serve on the Company's Board of Directors.
Directors of the Company were elected at its annual meeting of shareholders
held on July 10, 1995. See Item 10, Directors and Executive Officers of the
Company.
(b) The Company and BCI entered into (i) a Supply and Services
Agreement pursuant to which BCI agreed to provide to the Company advice and
personnel and (ii) a Secondment Agreement whereby BCI agreed to provide up to
ten people for the same period as the Supply and Services Agreement. See Item
13, Certain Transactions.
(c) Mr. Jones entered into an Employment Agreement with the Company for
a period of up to eight years providing for an annual base compensation of
$2,500,000, with an annual cost of living index based adjustment. See Item
11, Executive Compensation.
(d) The Company entered into a Financial Services Agreement with
Financial Group to engage Financial Group on an exclusive basis to render
financial advisory and related services in connection with the direct or
indirect acquisition and disposition of, and investment in, certain lines of
business for a fee equal to 90% of fees that would be charged to the Company by
unaffiliated third parties for the same or comparable services. Financial Group
and BCI have entered into a separate
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agreement pursuant to which BCI is entitled to receive one-half of the fees
earned by Financial Group under the Financial Services Agreement. See Item 13,
Certain Transactions.
(e) BCI acquired (i) a 15% equity interest in Jones Education Networks,
Inc., an entity then owned by Mr. Jones and International, for $18,000,000; (ii)
a 50% equity interest in Jones Lightwave, Ltd., an entity owned by Mr. Jones and
International, for $5,000,000 and loaned Jones Lightwave, Ltd. an additional
$5,000,000; and (iii) a 20% equity interest in Jones Entertainment Group, Ltd.,
an entity owned by Mr. Jones and International, for $7,000,000.
INVESTMENT IN MIND EXTENSION UNIVERSITY, INC.
During fiscal 1992 and fiscal 1993, the Company invested $10,000,000 in
Mind Extension University, Inc. ("ME/U"), an affiliate of International that
provides distance educational programming through affiliated and unaffiliated
cable television systems, for 25% of the stock of ME/U, which also received
certain advertising avails and administrative and marketing considerations from
the Company. The number of shares of Class A Common Stock of ME/U issued to the
Company was based on the average of two separate independent appraisals of
ME/U. In fiscal 1993 and fiscal 1994, the Company also made advances to ME/U
totaling $20,000,000. On April 11, 1995, the Company converted its advances to
ME/U into shares of the Class A Common Stock of Jones Education Networks, Inc.
("JEN"), the parent company of ME/U. JEN is an affiliate of International and,
in addition to its 51% ownership of ME/U, JEN owns an 81% interest in Jones
Computer Network, Ltd. The Company now owns a 17% interest in JEN as a result
of such conversion. Through the Company's acquisition of the assets of
Spacelink (see Item 1, Acquisition of Jones Spacelink, Ltd.), the Company
acquired an additional 13% interest in ME/U.
SALE OF 9 5/8% SENIOR NOTES DUE 2000
On March 23, 1995, the Company received $196,500,000 in net proceeds
from the Company's sale of $200,000,000 of 9 5/8% Senior Notes. The Senior Notes
will mature on March 15, 2002. Interest is payable semi-annually on March 15 and
September 15, commencing September 15, 1995. The Senior Notes are not redeemable
prior to maturity and are not subject to any mandatory redemption or sinking
fund. The Senior Notes are senior unsecured obligations of the Company ranking
equally with all other senior unsecured obligations of the Company.
INCREASE IN THE COMPANY'S AUTHORIZED CLASS A COMMON STOCK
On July 10, 1995, at the Annual Meeting of the Shareholders of the
Company, the shareholders approved an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of the Company's Class
A Common Stock from 30,000,000 shares to 60,000,000 shares.
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INTERNATIONAL INVESTMENTS BY THE COMPANY AND ITS AFFILIATES
The Company owns a 38% interest in Jones Global Group, Ltd. ("Jones
Global Group"), a Colorado corporation which is 62% owned by International. On
July 22, 1994, Jones Global Group and certain of Jones Global Group's wholly
owned subsidiaries transferred all of their interests in their cable/telephony
properties in the United Kingdom to Bell Cablemedia plc ("Bell Cablemedia"), a
public limited company incorporated under the laws of England and Wales, in
exchange for 3,663,584 American Depositary Shares ("ADSs") representing
18,317,920 Ordinary Shares of Bell Cablemedia. Also on July 22, 1994, the
Company and certain of its wholly owned subsidiaries transferred all of their
interests in their cable/telephony properties in the United Kingdom to Bell
Cablemedia in exchange for 6,035,648 ADSs representing 30,178,240 Ordinary
Shares of Bell Cablemedia. As a result of these transactions, the Company and
Jones Global Group no longer own any direct interest in cable/telephony
properties in the United Kingdom. Jones Spanish Holdings, Inc. ("Spanish
Holdings") is an affiliate indirectly owned 38% by the Company and 62% by
International. On October 13, 1994, Spanish Holdings and Jones International
Spanish Investments, Inc., a subsidiary of International, transferred all of
their interests in their cable/telephony properties in Spain to Bell Cablemedia
in exchange for a total of 190,148 ADSs representing 950,740 Ordinary Shares of
Bell Cablemedia. Such shares have been transferred to the Company in repayment
of advances made to finance such affiliates' Spanish operations. As a result of
this transaction, the Company and its affiliates no longer own any direct
interest in cable/telephony properties in Spain.
Prior to the closing of these transactions, Bell Cablemedia was
indirectly owned 80% by BCI and 20% by Cable and Wireless plc, an unaffiliated
entity. The agreement by the Company, Jones Global Group and Spanish Holdings to
contribute their holdings in the United Kingdom and Spain to Bell Cablemedia was
contingent upon the successful completion of Bell Cablemedia's initial public
offering, which closed on July 22, 1994. The initial offering price for the ADSs
was $17.00 per ADS. As part of the initial offering, Jones Global Group sold
1,100,000 ADSs providing net cash proceeds of $17,547,888 to Jones Global Group.
The ADSs received by the Company and its affiliates are "restricted
securities" within the meaning of Rule 144 promulgated under the Securities Act
of 1933 (the "Securities Act"), and the Company and its affiliates will not be
able to sell their ADSs unless an exemption from registration under the
Securities Act is available or unless its ADSs are sold under the terms of a
shelf registration statement that is required to be available to the Company,
its affiliates and others for the three years following July 20, 1994.
The Company directly or indirectly owns approximately 11.5% of the
issued and outstanding shares of Bell Cablemedia. The Company and its wholly
owned subsidiaries own 6,225,796 ADSs. The Company also indirectly owns 974,162
ADSs, representing 38% of the 2,563,584 ADSs owned by Jones Global Group and its
wholly owned subsidiaries. In the aggregate, the Company's direct and indirect
investment in 7,199,958 ADSs had a quoted market value of approximately
$134,999,200, based on the quoted market price of $18.75 per ADS on July 14,
1995.
In fiscal 1995, the Company paid an advisory fee of (pound)414,854
(approximately $632,600) to Financial Group for its services to the Company in
connection with the aforementioned transactions.
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Jones Global Group paid an advisory fee of (pound)251,812 (approximately
$384,000) to Financial Group for its services to Jones Global Group in
connection with the aforementioned transactions.
CABLE TELEVISION FRANCHISES
The cable television systems owned or managed by the Company are
constructed and operated under fixed-term franchises or other types of operating
authorities (referred to collectively herein as "franchises") that are generally
non-exclusive and are granted by state and/or local governmental authorities.
The Company's franchises require that franchise fees ranging from 3% to 5% of
gross revenues of the cable system be paid to the governmental authority that
granted the franchise, that certain channels be dedicated to municipal use, that
municipal facilities, hospitals and schools be provided cable service free of
charge and that any new cable plant be substantially constructed within specific
periods. During the next three to five years, the renewal process must commence
for a significant number of the franchises for cable television systems owned or
managed by the Company and its affiliates. The Company recently has experienced
lengthy negotiations with some franchising authorities for the granting of
franchise renewals. Some of the issues involved in recent renewal negotiations
include rate regulation, customer service standards, cable plant upgrade or
replacement and shorter terms of franchise agreements. See Item 2, Properties,
Cable Television Systems Owned by the Company.
Cable television franchises are not exclusive, so that more than one
cable television system may be built in the same area (known as an "overbuild"),
with potential loss of revenues to the operator of the original cable television
system. The Company has experienced overbuilds in connection with certain
systems that it has owned or managed for limited partnerships, and currently
there are several overbuilds in the Company's systems. Constructing and
developing a cable television system is a capital intensive process and, because
most cable television systems provide essentially the same programming, it is
often difficult for a new cable system operator to create a marketing edge over
the existing system. Generally, an overbuilder also would be required to obtain
franchises from the local governmental authorities, although in some instances,
the overbuilder could be the local government, such as a city or town, and in
some such cases, no franchise would be required. In any case, an overbuilder
would be required to obtain programming contracts from entertainment programmers
and, in most cases, would have to build a complete cable system, including
headends, trunk lines and drops to individual subscribers homes, throughout the
franchise areas. See Item 1, Competition for Subscribers in the Company's
Systems.
COMPETITION
COMPETITION IN THE INDUSTRY. Cable television systems currently
experience competition from several sources.
High-powered direct-to-home satellites have made possible the
wide-scale delivery of programming to individuals throughout the United States
using roof-top or wall-mounted antennas. Companies offering Direct Broadcast
Satellite ("DBS") services are using video compression technology to increase
channel capacity and to provide a package of movies, network programming
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and other program services competitive to those of cable television systems. As
a practical matter, however DBS cannot offer its subscribers local video
services or programming. In addition to a medium-powered satellite distributor
that currently offers 72 channels of service, two companies offering
high-power DBS services began operations in 1994 and together offer more than
100 channels of service. Other companies have proposed providing similar DBS
program packages. In some instances, DBS systems may also serve as a
complement to cable television operations by enabling cable television
operators to offer additional channels of programming without the construction
of additional cable plant. Cable television systems may also serve as
marketing agents for DBS operators. The FCC has initiated a new interactive
television service which will permit non-video transmission of information
between an individual's home and entertainment and information service
providers. This service will provide an alternative means for DBS systems and
other video programming distributors, including television stations, to
initiate new interactive television services. This service may also be used as
well by the cable television industry. Although the cable industry does not
currently provide two-way interactive service from its subscribers' homes to
cable television offices, such services can be provided in the future. The
ability of DBS service providers to compete with the cable television industry
will depend on, among other factors, the availability of equipment at
reasonable prices. Although it is not possible at this time to predict the
likelihood of success of any DBS services venture, DBS may offer substantial
competition to cable television operators.
Although the Company has not yet encountered competition from a
telephone company entering into the cable television business, it is anticipated
that the Company's cable television systems will face competition in the near
future from telephone companies providing competitive services. Although Federal
cross-ownership restrictions have historically limited entry into the cable
television business by potentially strong competitors such as telephone
companies, proposals recently adopted by the FCC and currently under
consideration by Congress, as well as recent litigation regarding the
constitutionality of the cable television/telephone company cross-ownership
restrictions, should result in elimination of such restrictions, making it
possible for companies with considerable resources, and consequently a
potentially greater willingness or ability to overbuild, to enter the business.
Numerous telephone companies have begun video dialtone projects, and a few have
begun seeking cable television franchises from local governmental authorities.
See Item 1, Regulation and Legislation, Ownership and Market Structure for a
description of the potential participation of the telephone industry in the
delivery of cable television services. The Company cannot predict at this time
when and the extent to which telephone companies will provide cable television
services within service areas in competition with Company owned or managed cable
television systems. The entry of telephone companies as direct competitors could
adversely affect the profitability and market value of the Company's owned and
managed systems.
Additional competition is present from private cable television systems
known as Master Antenna Television (MATV) and Satellite Master Antenna
Television (SMATV) serving multi-unit dwellings such as condominiums, apartment
complexes, and private residential communities. These private cable systems may
enter into exclusive agreements with apartment owners, condominium associations,
and homeowners associations, which may preclude operators of franchised systems
from serving residents of such private complexes. In 1991, the FCC made
available a microwave service to SMATV systems which will facilitate the ability
of private cable television systems to distribute video entertainment
programming among several SMATV systems within a local area. Private cable
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systems that do not cross public rights of way or interconnect separately owned
and managed buildings are free from the federal regulatory requirements imposed
on franchised cable television operators. The telecommunications bill which
recently passed the Senate would exempt any facilities that do not use public
rights of way (such as SMATVs serving multiple buildings not under common
ownership) from the definition of a cable system and thus from franchise and
other requirements applicable to cable operators. A number of states have
enacted laws to afford operators of franchised cable television systems access
to multi-unit dwellings, although some of these statutes have been
successfully challenged in the courts.
Recently, in some areas in which the Company's cable television systems
provide cable television service to multi-unit dwellings and similar complexes,
companies that install and operate private cable television systems have been
installing telephone systems as well as providing cable television services. In
some instances the Company has been unable to provide cable television service
in buildings in which these private operators have secured exclusive contracts
to provide video and telephony services. The Company expects that the market to
install and provide these services in multi-unit buildings will continue to be
highly competitive.
Multichannel Multipoint Distribution Service ("MMDS") systems, will
likely focus on providing service to residents of rural areas that are not
served by cable television systems, but providers of programming via MMDS
systems will generally have the potential to compete directly with cable
television systems in urban areas as well, and in some areas of the country,
MMDS systems are now in direct competition with cable television systems. While
the MMDS industry is less capital intensive than the cable television industry,
and it is therefore more practical to construct MMDS systems in areas of lower
subscriber penetration, the previous unavailability of frequency spectrum,
programming services and the regulatory delays encountered by MMDS systems in
obtaining licenses have delayed the growth of the MMDS industry. To date, the
Company has not lost a significant number of subscribers, nor a significant
amount of revenue, to MMDS operators competing with the Company's cable
television systems.
The FCC has established a new wireless telecommunications service known
as Personal Communications Service ("PCS"). It is envisioned that PCS would
provide portable non-vehicular mobile communications services similar to that
available from cellular telephone companies, but at a lower cost. PCS would be
delivered by placing numerous microcells in a particular area to be covered,
accessible to both residential and business customers. Because of the need to
link the many microcells necessary to deliver this service economically, many
parties are investigating integration of PCS with cable television operations.
Several cable television multiple system operators hold or have requested
experimental licenses from the FCC to test PCS technology.
In addition to competing with one another, cable television systems
compete with broadcast television, which consists of television signals that the
viewer is able to receive directly on his television using his antenna
("off-air"). The extent of such competition is dependent in part upon the
quality and quantity of signals available by such antenna reception as compared
to the services provided by the available cable systems. Accordingly, it has
generally been less difficult to obtain higher penetration rates in areas where
there is signal interference from surrounding mountains or where signals
available off-air are limited, than in metropolitan areas where higher quality
off-air signals are often available without the aid of cable television systems.
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Cable television systems also compete with translator and low power
television stations. Translators receive broadcast signals and rebroadcast them
on different frequencies at low power pursuant to an FCC license. Low power
television stations increase the number of television signals in many areas of
the country, and provide off-air television programs, either pay or
advertiser-supported, to limited local areas. Cable television systems are also
in competition, in various degrees, with other communications and entertainment
media including motion pictures and home video cassette recorders, and are
dependent upon the continued popularity of television itself. The construction
of more powerful transmission facilities near a cable television system or an
increase in the number of television signals in such an area also could have an
adverse effect on revenues.
COMPETITION FOR SUBSCRIBERS IN THE COMPANY'S SYSTEMS. The Company owns
the cable television systems serving Alexandria, Virginia (the "Alexandria
System"), Anne Arundel County, Maryland and Ft. George Meade, Maryland (the
"Anne Arundel County System"); Charles County, Maryland (the "Charles County
System"); Empire, Georgetown and Idaho Springs, Colorado (the "Clear Creek
System"); Hilo, Hawaii (the "Hilo System"); Jefferson County, Colorado and
Evergreen, Colorado (the "Jeffco/Evergreen System"); Kenosha, Wisconsin (the
"Kenosha System"); North Augusta, South Carolina (the "North Augusta System");
Oxnard, California (the "Oxnard System"); Panama City Beach, Florida (the
"Panama City Beach System"); Pima County, Arizona (the "Pima County System");
and Walnut Valley, California (the "Walnut Valley System"). The Alexandria
System, Anne Arundel County System, Charles County System, Clear Creek System,
Hilo System, Jeffco/Evergreen System, Kenosha System, North Augusta System,
Oxnard System, Panama City Beach System, Pima County System and Walnut Valley
System may hereinafter collectively be referred to as the "Systems."
Following is a summary of the competition and potential competition in
the Company's Systems:
Alexandria System: Chesapeake and Potomac Telephone Company of Virginia
and Bell Atlantic Video Service Company, both subsidiaries of Bell
Atlantic Corporation (collectively "Bell Atlantic"), announced its
intention, if permitted by the courts, to build a cable television
system in Alexandria, Virginia, and has won a lawsuit to obtain such
authority. The case is on appeal. See Item 1, Regulation and
Legislation, Ownership and Market Structure. Bell Atlantic is preparing
for the construction and operation of a cable telecommunications
business in northern Virginia, including the Alexandria metropolitan
area. Bell Atlantic represents potential significant competition.
There are two companies in the system's service area that offer cable
television/telephony services to multiple dwelling units pursuant to
a revenue sharing arrangement with the property owner. This type of
service arrangement represents potential significant competition. There
is one MMDS operator in the system's service area; however, due to
numerous technical difficulties this operator provides little or no
competition. There are four SMATV operators in the system's service
area: three operators provide service to three hotels or approximately
500 rooms and one that serves a 1,500 unit apartment complex.
Anne Arundel System: There are no MMDS operators in the Anne Arundel
System's service area. There are two SMATV operators that service
customers in an area not provided service
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by the Anne Arundel System. There are numerous TVRO operators in the
system's service area, including Primestar, DSS, Circuit City, Sears
and Action TV. However, to date, these operators provide minimal
competition. The Anne Arundel System currently shares its service area
with North Arundel Cable Television. A significant portion of the Anne
Arundel System has been overbuilt, and there is significant competition
for subscribers in the overbuilt area. Currently the competition
involves the securing of subscribers in new construction areas where
both companies offer service and aggressive competition for subscribers
in the overbuilt area through promotional offers by both companies. The
Anne Arundel System meets the FCC's definition of effective
competition, and, thus, its rates are not regulated under the 1992
Cable Act. Bell Atlantic and Southwestern Bell are designing major
telecommunications infrastructures with respect to multiple dwelling
units in the Baltimore/Washington region. These companies could
potentially present significant competition.
Charles County System: There are no MMDS or SMATV operators in the
Charles County System service area. There are three TVRO operations in
the service area that provide minimal competition and generally serve
rural areas not served by the Charles County System.
Clear Creek System: There are no MMDS or SMATV operators or TVRO
operations in the Clear Creek System's service area. There are a few
TVRO operators that provide minimal competition.
Hilo System: There is one MMDS operator in the Hilo System that
provides little competition. There are a few private satellite
operators selling home dishes in the Hilo System service area, but they
provide minimal competition. DBS service is not yet available in the
Hilo System's service area.
Jefferson County/Evergreen System: There is one MMDS operator in
unincorporated Jefferson County whose signal reaches the area,
providing minimal competition. The system has lost a 360-unit
condominium complex to a SMATV operator. DBS service is available in
the system's service area, but DBS provides minimal competition at this
time.
Kenosha System: There are no MMDS operators in the Kenosha System.
There is one SMATV operator in a 800-unit apartment complex and no TVRO
operations or marketing in the service area. DBS service is available
in the Kenosha System's service area, but DBS provides minimal
competition at this time.
North Augusta System: There are no MMDS or SMATV operators in the North
Augusta System service area. There are several TVRO operators in the
service area, but they provide minimal competition.
Oxnard System: The local telephone company has received approval from
the FCC to build a video dialtone system. The telephone company has
indicated that it will have a system activated by early 1996 and that
by early 1997 it will have the ability to serve in excess of 80,000
customers in Ventura County, which includes the entire Oxnard System's
service area. DBS service is available in the system's service area,
but DBS provides minimal competition
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at this time. There are no MMDS operators in the Oxnard System service
area; there are SMATV operators and TVRO operations in the area, but
they provide minimal competition.
Panama City Beach System: The Panama City Beach System has lost basic
subscribers and commercial units to an overbuilder. This overbuild
continues to provide significant competition and has had an adverse
effect on this system's operations. There are two MMDS operators in
the Panama City Beach System that do not provide significant
competition. There are four SMATV operators serving two condominium
complexes and two motels; these operators provide little competition.
There are six TVRO dealers, only one of which operates in the System's
service area, and that operator provides minimal competition.
Pima County System: There is one competing MMDS operator in the Pima
County System service area that provides significant competition,
servicing approximately 28,000 customers, and this operator provides a
competitive basic service. There is one active SMATV operator in the
Pima County System that is attempting to secure as many multiple
dwelling units as possible. The SMATV operator is at a disadvantage
because it does not provide local channels. A second active SMATV
operator is expected to penetrate the market in the upcoming years.
There is one inactive cable operator in an overbuilt area passing
approximately 1,200 homes in Pima County. DBS service is available in
the Pima System's service area. However, at this time DBS does not
provide significant competition due to its high cost and its inability
to provide local channels.
Walnut Valley System: There are no MMDS or SMATV operators in the
system's service area. There are no TVRO operations in the Walnut
Valley System service area; however, approximately 2% of homes passed
have dishes. DBS service is available in the Walnut Valley System's
service area, but DBS does not provide significant competition at this
time.
The Systems also face competition from numerous video cassette rental
outlets in the Systems' service areas and from the large number of first run
movie theaters in their service areas. The Company believes the preponderance of
VCR ownership in the Systems' service areas may be a positive rather than a
negative factor because households that have VCRs are attracted to
non-commercial programming delivered by the Systems, such as movies and sporting
events on cable television, that they can tape at their convenience.
The foregoing general discussion of the type of competition facing the
Company's systems also applies to the cable television systems owned by the
Company's managed limited partnerships. Competition from alternative programming
sources is also increasing for those systems and may be expected to continue.
REGULATION AND LEGISLATION
The cable television industry is regulated in varying degrees by the
Federal Communications Commission ("FCC"), some state governments and most local
governments. In addition, the Copyright Act of 1976 imposed copyright liability
on all cable television systems. Present FCC
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regulations include requirements with respect to registration of operation,
record keeping, technical standards, and periodic reporting. Several states have
assumed regulatory jurisdiction of the cable television industry, and it is
anticipated that other states will do so in the future. Cable television
operations are subject to local regulation insofar as systems operate under
franchises granted by local authorities. The following is a summary of Federal
laws and regulations materially affecting the growth of the cable television
industry, and a description of state and local laws with which the cable
industry must comply.
CABLE COMMUNICATIONS POLICY ACT OF 1984. On December 29, 1984, the
Cable Communications Policy Act of 1984 (the "1984 Cable Act"), which amended
the Communications Act of 1934, took effect (as so amended, the "Communications
Act"). This legislation imposed uniform national regulations on cable television
systems and franchising authorities. Among other things, the legislation
regulated the provision of cable television service pursuant to a franchise,
specified those circumstances under which a cable television operator may obtain
modification of its franchise, established criteria under which a franchise
shall be renewed and established maximum fees payable by cable television
operators to franchising authorities.
The law prescribes a standard of privacy protection for cable
subscribers, and imposes equal employment opportunity requirements on the cable
television industry. It restricts the amount of fees paid by the cable
television operator to the franchising authority to a maximum of 5% of gross
revenues during the term of the franchise. Franchising authorities are granted
authority to establish requirements in new franchises and renewal of existing
franchises for the designation and use of public educational and governmental
access channels. Franchising authorities are empowered to establish requirements
for cable-related facilities and equipment, which may include requirements that
relate to channel capacity, system configuration and other facility or equipment
requirements related to the establishment and operation of a cable television
system.
CABLE TELEVISION CONSUMER PROTECTION AND COMPETITION ACT OF 1992. In
October 1992, Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which amended the 1984 Cable
Act. The 1992 Cable Act became effective in December 1992, although certain
provisions, most notably those dealing with rate regulation and retransmission
consent, took effect at later dates. This legislation has effected significant
changes to the legislative and regulatory environment in which the cable
television industry operates. The 1992 Cable Act generally mandates a greater
degree of regulation of the cable television industry. Pursuant to the FCC's
definition of effective competition adopted following enactment of the 1984
Cable Act, and under the FCC's rules and regulations, substantially all of the
Company's franchises were rate deregulated in the mid 1980s. Under the 1992
Cable Act's definition of effective competition, nearly all cable systems in
the United States, including those owned and managed by the Company, are again
subject to rate regulation of basic cable services. In addition, the 1992 Cable
Act allows the FCC to regulate rates for non-basic service tiers other than
premium services in response to complaints filed by franchising authorities
and/or cable subscribers.
The 1992 Cable Act also (i) eliminated the 5% annual basic rate
increase formerly allowed by the 1984 Cable Act without local approval; (ii)
requires the FCC to adopt regulations to establish, on
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the basis of actual costs, the prices for installation of cable service, remote
controls, converter boxes and additional outlets; (iii) requires cable operators
to permit subscribers to purchase video programming offered by the operator on a
per-channel or a per-program basis without the necessity of subscribing to any
tier of service, other than the basic service, unless the system's lack of
addressable converter boxes or other technological limitations does not permit
it to do so; (iv) allows the FCC to impose restrictions on the retiering and
rearrangement of cable services under certain circumstances; and (v) permits the
FCC and the franchising authorities more latitude in controlling rates and
rejecting rate increase requests.
In April 1993, the FCC adopted regulations governing the regulation of
rates for basic and non-basic services. The regulations became effective on
September 1, 1993. The FCC adopted a benchmark regulatory scheme for the
regulation of basic and cable programming service rates. However, rather than
relying on the benchmark scheme, operators may submit cost-of-service showings
to justify rates above the applicable benchmarks. A cable operator that can
demonstrate through a cost-of-service showing that rates for basic and non-basic
services are justified will not be required to reduce rates or be regulated
under the benchmark and price cap system. Franchising authorities may not elect
cost-of-service as their primary form of rate regulation but must apply the FCC
benchmark system. Except for those operators that filed cost-of-service
showings, cable operators whose rates are subject to regulation and that were
above September 30, 1992 benchmark levels generally reduced those rates to the
benchmark level or by 10%, whichever is less, adjusted forward for inflation.
Operators who have not adjusted rates pursuant to the FCC's regulations, or
whose cost-of-service showings fail to justify current rates, could be subject
to refund liability and interest.
In February 1994, the FCC revised its benchmark regulations. Effective
May 1994, cable television systems not seeking to justify rates with a
cost-of-service showing were to reduce rates up to 17% of the rates in effect on
September 30, 1992, adjusted for inflation, channel modifications, equipment
costs and certain increases in programming costs. Under certain conditions
systems were permitted to defer these rate adjustments until July 14, 1994.
Further rate reductions for cable systems whose rates are below the revised
benchmark levels, as well as reductions that would require operators to reduce
rates below benchmark levels in order to achieve a 17% rate reduction, were held
in abeyance pending completion of cable system cost studies. The FCC also
announced its intention to investigate cable systems whose rates were
substantially above the permitted benchmark levels.
The FCC also revised its regulations governing the manner in which
cable operators may charge subscribers for new channels added to cable
programming services tiers. The FCC instituted a three-year flat fee mark-up
plan. Commencing on January 1, 1995, operators may charge subscribers up to $.20
per channel for any channels added after May 14, 1994, but may not make
adjustments to monthly rates totaling more than $1.20 plus an additional $.30 to
cover programming license fees for those channels over the first two years of
the three-year period. In year three an additional channel may be added with
another $.20 increase in rates. Rates may also increase in the third year to
cover any additional costs for the programming for any of the channels added
during the entire three year period. Cable operators electing to use the $.20
per channel adjustment may not also take a 7.5% mark-up on programming cost
increases, which is otherwise permitted under the FCC's regulations.
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The FCC has requested further comment on whether cable operators should continue
to receive the 7.5% mark-up on increases in license fees on existing programming
services.
Additionally, the FCC will permit cable operators to exercise their
discretion in setting rates for New Product Tiers ("NPTs") so long as, among
other conditions, the channels that are subject to rate regulation are priced in
conformity with applicable regulations and cable operators do not remove
programming services from existing rate-regulated service tiers and offer them
on the NPT.
Also in February 1994, the FCC adopted interim cost-of-service
regulations. Rate reductions will not be required where it is demonstrated that
rates for basic and other regulated programming services are justified and
reasonable under the FCC's cost-of-service standards. The FCC established an
interim industry-wide 11.25% rate of return, and requested comments on whether
this standard and other interim cost-of-service standards should be made
permanent. The FCC also established a presumption that acquisition costs above a
system's book value should be excluded from the rate base, but the FCC will
consider individual showings to rebut this presumption. The need for special
rate relief will also be considered by the FCC if an operator demonstrates that
the rates set by a cost-of-service proceeding would constitute confiscation of
investment, and that, absent a higher rate, the return necessary to operate and
to attract investment could not be maintained. The FCC will establish a uniform
system of accounts for operators that elect cost-of-service rate regulation, and
the FCC has adopted affiliate transaction regulations. After a rate has been set
pursuant to a cost-of-service showing, rate increases for regulated services
will be indexed for inflation, and operators will also be permitted to increase
rates in response to increases in costs beyond their control, such as taxes and
increased programming costs.
Among other issues addressed by the FCC in its February rate orders was
the treatment of packages of a la carte channels. The offering of packages of a
la carte services generated uncertainty as to their proper regulatory treatment.
In February 1994, the FCC adopted rules which revised the treatment of a la
carte programming offerings by applying various criteria to determine whether a
cable operator's a la carte packages should be subject to rate regulation. If an
operator was found to have bundled channels in an a la carte package to evade
rate regulations, the FCC could impose forfeitures or other sanctions. Local
franchising authorities were given the authority, subject to FCC review, to
determine whether an a la carte offering should be subject to rate regulation.
In a November 1994 action the FCC reversed its policy regarding rate regulation
of packages of a la carte services. Any new a la carte services that are offered
in a package will be subject to rate regulation by the FCC although not
necessarily regulated unless the FCC deems it necessary to do so. The FCC
indicated that it could not envision circumstances in which any price for a
collective offering of premium channels that had traditionally been offered on a
per-channel basis would be found to be unreasonable.
The Company believes that the regulation of its industry, including the
rates charged for regulated services under present FCC rules and the cable
industry's restructuring of rates and services in response to the 1992 Cable
Act, remains a matter of interest to Congress, the FCC and other regulatory
authorities. The Senate and the House of Representatives each recently passed
legislation that would amend the rate regulation provisions of the 1992 Cable
Act. Under the Senate bill, the FCC could only consider a rate for cable
programming services to be unreasonable if it substantially exceeded the
national average of services provided by cable systems other than small
systems, determined on a per-channel basis as of June 1, 1995, and adjusted, if
necessary, on a periodic basis. The House bill, would eliminate rate regulation
of cable programming services within a franchise area upon authorization by the
FCC to a common carrier to provide video dialtone service, or pursuant to a
franchise to provide video programming directly to subscribers, or
approximately 15 months after the date of enactment of the bill and after the
FCC has completed all actions necessary to prescribe regulations relating to
video platforms. Both bills would deregulate rates for the cable programming
service tier of a small cable operator, or its basic service tier where such a
tier was the only tier offered in a franchise area on December 31, 1994. There
can be no assurance as to the final outcome of this legislation, or what, if
any, future actions such legislative and regulatory authorities may take or the
effect thereof on the Company.
The United States Court of Appeals for the District of Columbia Circuit
recently released its decision which generally upheld the FCC's rate regulations
implemented pursuant to the 1992 Cable Act. The court ruled, however, that the
FCC impermissibly failed to permit cable operators to adjust rates for certain
cost increases incurred during the period between the date the 1992 Cable Act
was passed through the initial date of rate regulation. The manner in which the
FCC will implement the court's ruling which requires it to permit cable
operators to account for these cost increases cannot
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currently be determined. Additionally, one party has requested that the court
reconsider its decision based on the status of cable operators as First
Amendment speakers.
The 1992 Cable Act encourages competition with existing cable systems
by allowing municipalities, which are otherwise legally qualified, to own and
operate their own cable systems without having to obtain a franchise; prevents
franchising authorities from granting exclusive franchises or unreasonably
refusing to award additional franchises covering an existing cable system's
service area. The 1992 Cable Act also makes several procedural changes to the
process under which a cable operator seeks to enforce renewal rights, which
could make it easier in some cases for a franchising authority to deny renewal.
The 1992 Cable Act prohibits the common ownership of cable systems and
co-located MMDS or SMATV systems, and absent certain exceptions, the sale or
transfer of ownership of a cable system within 36 months after its acquisition
or initial construction. The 1992 Cable Act also precludes video programmers
affiliated with cable companies from favoring cable operators over competitors
and requires such programmers to sell their programs to other multichannel video
distributors. This provision may limit the ability of cable program suppliers to
offer exclusive programming arrangements with cable companies and could affect
the volume discounts that program suppliers currently offer to the Company as a
multiple system operator.
Under the 1984 Cable Act cable operators with thirty-six or more
activated channels are required to designate channel capacity for commercial use
by persons unaffiliated with the operator. The 1984 Cable Act provided operators
with substantial latitude in setting rates for commercially leased access
channels, but, the 1992 Cable Act requires leased access rates to be set
according to a formula determined by the FCC. It is possible that such leased
access services will result in competition to services offered over cable
systems.
The 1992 Cable Act contains new signal carriage requirements. These new
rules allow commercial television broadcast stations which are "local" to a
cable system, i.e., the system is located in the station's Area of Dominant
Influence ("ADI"), to elect every three years whether to require the cable
system to carry the station, subject to certain exceptions, or whether to
require the cable system to negotiate for "retransmission consent" to carry the
station. The first such election was made in June 1993. A recent amendment to
the Copyright Act of 1976 will in some cases increase the number of stations
that may elect must-carry status on cable systems located within such stations'
ADI. Cable systems must obtain retransmission consent for the carriage of all
"distant" commercial broadcast stations, except for certain "superstations"
(i.e., commercial satellite-delivered independent stations such as WTBS). All
commercial stations entitled to carriage were to have been carried by June 1993,
and any non-must-carry stations (other than superstations) for which
retransmission consent had not been obtained could no longer be carried after
October 5, 1993. Local non-commercial television stations are also given
mandatory carriage rights, subject to certain exceptions, within the larger of:
(i) a 50 mile radius from the station's city of license; or (ii) the station's
Grade B contour (a measure of signal strength). Unlike commercial stations,
non-commercial stations are not given the option to negotiate retransmission
consent for the carriage of their signal. The must-carry provisions for
non-commercial stations became effective in December 1992. The FCC adopted rules
implementing the must-carry provisions for non-commercial and commercial
stations and retransmission consent for commercial stations in March 1993.
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On April 8, 1993 a special three-judge federal district court for the
District of Columbia issued a decision upholding the constitutional validity of
the must-carry signal carriage requirements. This decision was vacated by the
United States Supreme Court on June 27, 1994 and remanded to the district court
for further development of a factual record. The Court's majority determined
that the must-carry rules were content neutral, but that it was not yet proven
that the rules were needed to preserve the economic health of the broadcasting
industry. In the interim, the must-carry rules will remain in place during the
pendency of the proceedings in district court.
In 1993, a federal district court for the District of Columbia upheld
provisions of the 1992 Cable Act concerning rate regulation, retransmission
consent, restrictions on vertically integrated cable television operators and
programmers, mandatory carriage of programming on commercial leased channels and
public, educational and governmental access channels and the exemption for
municipalities from civil damage liability arising out of local regulation of
cable services. The 1992 Cable Act's provisions providing for multiple ownership
limits for cable operators and advance notice of free previews for certain
programming services has been found unconstitutional, and these decisions have
been appealed. Regulations relating to the regulation of rates and the carriage
of indecent programming were recently upheld by the United States Court of
Appeals for the District of Columbia. It is presently not known whether these
decisions will be appealed to the United States Supreme Court.
The 1992 Cable Act also allows for a greater degree of regulation of
the cable industry with respect to, among other things: (i) programming access
and exclusivity arrangements; (ii) access to cable channels by unaffiliated
programming services; (iii) leased access terms and conditions; (iv) horizontal
and vertical ownership of cable systems; (v) franchise renewals; (vi) technical
standards; (vii) subscriber privacy; (viii) consumer protection issues; (ix)
cable equipment compatibility; and (x) obscene and indecent programming. The
1992 Cable Act required the FCC to establish national customer service standards
and the FCC adopted regulations governing office hours, telephone availability,
installations, outages, service calls, and billing and refund policies.
Additionally, state or municipal authorities may enact laws or regulations which
impose stricter or different customer service standards than those set by the
FCC.
The responsibility for franchising or other authorization of cable
television systems is left to state and local authorities. There are, however,
several provisions in the Cable Act of 1984 that govern the terms and conditions
under which cable television systems provide service. These include uniform
standards and policies that are applicable to cable television operators seeking
renewal of a cable television franchise. The procedures established provide for
a formal renewal process should the franchising authority and the cable
television operator decline to use an informal procedure. A franchising
authority unable to make a preliminary determination to renew a franchise is
required to hold a hearing in which the operator has the right to participate.
In the event a determination is made not to renew the franchise at the
conclusion of the hearing, the franchising authority must provide the operator
with a written decision stating the specific reasons for non-renewal. Generally,
the franchising authority can finally decide not to renew a franchise only if it
finds that the cable operator has not substantially complied with the material
terms of the present franchise, has not provided reasonable service in light of
the community's needs, does not have the financial, legal or technical ability
to provide the services being proposed for the future, or has not presented a
reasonable
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proposal for future service. A final decision of non-renewal by the franchising
authority is appealable in court.
OWNERSHIP AND MARKET STRUCTURE. The FCC rules and federal law generally
prohibit the direct or indirect common ownership, operation, control or interest
in a cable television system, on the one hand, and a local television broadcast
station whose television signal (predicted grade B contour as defined under FCC
regulations) reaches any portion of the community served by the cable television
system, on the other hand. For purposes of the cross-ownership rules, "control"
of licensee companies is attributed to all 5% or greater stockholders, except
for mutual funds, banks and insurance companies which may own less than 10%
without attribution of control. The FCC has requested comment as to whether to
raise the attribution criteria from 5% to 10% and for passive investors from 10%
to 20%, and whether it should exempt from attribution certain widely held
limited partnership interests where each individual interest represents an
insignificant percentage of total partnership equity. The FCC recently lifted
its ban on the cross-ownership of cable television systems by broadcast
networks. The FCC revised its regulations to permit broadcast networks to
acquire cable television systems serving up to 10% of the homes passed in the
nation, and up to 50% of the homes passed in a local market. The local limit
would not apply in cases where the network-owned cable system competes with
another cable operator.
As part of the same action, the FCC also voted to recommend to Congress
that the broadcast/cable cross-ownership restrictions contained in the 1984
Cable Act be repealed and legislation currently pending in Congress might
repeal this provision. In order to encourage competition in the provision of
video programming, the FCC adopted a rule prohibiting the common ownership,
affiliation, control or interest in cable television systems and MMDS
facilities having overlapping service areas, except in very limited
circumstances. The 1992 Cable Act codified this restriction and extended it to
co-located SMATV systems, except that a cable system may acquire a co-located
SMATV system if it provides cable service to the SMATV system in accordance
with the terms of its cable television franchise. Permitted arrangements in
effect as of October 5, 1992 were grandfathered. The 1992 Cable Act permits
states or local franchising authorities to adopt certain additional
restrictions on the ownership of cable television systems. The Company has no
direct or indirect ownership, operation, control or interest in a television
broadcast station, or a telephone company, and it is thus presently unaffected
by the cross-ownership rules.
The Communications Act and FCC regulations generally prohibit the
common operation of a cable television system and a telephone company within the
same service area. Until recently, control was attributed to stockholders who
directly or indirectly own 1% or more of outstanding voting stock and for mutual
funds, 3% of the outstanding voting stock. The FCC's recently revised
regulations
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will now permit telephone companies to own up to a 5% interest in cable
television systems in their own service areas.
The cross-ownership prohibitions would preclude investors from holding
shares in the Company if they simultaneously served as officers or directors of,
or held an attributable ownership interest in, these other businesses, and would
also preclude the Company from acquiring a cable television system where the
Company's officers or directors served as officers or directors of, or held an
attributable ownership in, these other businesses which were located within the
same area as the cable system which was to be acquired.
Pursuant to the 1992 Cable Act, the FCC has imposed limits on the
number of cable systems which a single cable operator may own. In general, no
cable operators may hold an attributable interest in cable systems which pass
more than 30% of all homes nationwide. Attributable interests for these purposes
include voting interests of 5% or more (unless there is another single holder of
more than 50% of the voting stock), officerships, directorships and general
partnership interests. The FCC has stayed the effectiveness of these rules
pending the outcome of the appeal of the United States District Court decision
holding the multiple ownership limit provision of the 1992 Cable Act
unconstitutional.
The FCC has also adopted rules which limit the number of channels on a
cable system that can be occupied by programming in which the entity that owns
the cable system has an attributable interest. The limit is 40% of all activated
channels.
Federal cross-ownership restrictions have previously limited entry into
the cable television business by potentially strong competitors such as
telephone companies. Proposals now under consideration in Congress and recent
litigation could lead to the elimination of these restrictions, making it
possible for companies with considerable resources, and consequently a
potentially greater willingness or ability to overbuild, to enter the business.
Even in the absence of changes in the cross-ownership restrictions, the
expansion of telephone companies' fiber optic systems may facilitate entry by
other video service providers in competition with cable systems. The 1984 Cable
Act codified existing FCC cross-ownership regulations, which, in part, prohibit
local exchange telephone companies ("LECs"), including the Regional Bell
Operating Companies ("RBOCs") from providing video programming directly to
subscribers within their local exchange telephone service areas, except in rural
areas or by specific waiver of FCC rules. This federal cross-ownership rule is
particularly important to the cable industry because these telephone companies
already own certain facilities needed for cable television operation, such as
poles, ducts and associated rights-of-way. Recently, federal district courts in
all of the LECS' operating areas have struck down the 1984 Cable Act
cable/telephone cross-ownership provision as invalid and inconsistent with the
First Amendment. The United States Courts of Appeals for the Fourth and the
Ninth Circuits have upheld the appeals of two of these district court
decisions. The United States Supreme Court has agreed to review the Fourth
Circuit decision.
Before these successful challenges to the cable/telephone
cross-ownership prohibition, in order to encourage and develop a competitive
video services marketplace, the FCC conducted a wide-ranging inquiry into the
participation of the telephone industry in the delivery of cable television
29
<PAGE> 34
services. The FCC concluded that telephone companies should be permitted to
provide a video dialtone service that would be similar to the ordinary telephone
dialtone and would be able to provide access for consumers to a wide variety of
services now provided by cable television systems, as well as new services
(including videophone and advanced telecommunications services) which may
develop. The Commission has been petitioned to adopt specific accounting rules
for telephone companies that provide video dialtone in order to prevent
telephone companies from subsidizing video dialtone services with revenues from
regulated telephone services.
Under the FCC's video dialtone regulations, telephone companies will be
required to provide access to providers of video services on a common carrier
basis, and will be permitted as well to provide directly to their telephone
customers their own non-video dialtone and non-video services, subject to
certain structural cross-subsidization safeguards. Telephone companies will
also be permitted to own up to a 5% interest in a program service provided that
the telephone company has some other affiliation with the programmer, such as
an agreement to provide equipment or support services. Telephone companies will
be able to provide certain non-common carrier activities such as video
processing, billing, and collection and joint marketing arrangements.
All the Bell Operating Companies (except Southwestern Bell) and most of
the major independent telephone companies have requested authority from the FCC
to provide video dialtone in portions of their service areas, although Bell
Atlantic Corporation and U S West have recently indicated their intention to
temporarily defer their plans to construct multiple video dialtone systems
pending their assessment of new technology, and Ameritech has withdrawn its
applications in favor of providing traditional cable service on a stand-alone
basis. Ameritech, which operates in Illinois, including in several of the
Company's managed systems' service areas, is in the process of securing
franchises to provide cable television service in portions of its service area.
The Commission has approved a number of video dialtone applications for trials
and infomercial service and recently approved a tariff proposing rates, terms
and conditions under which Bell Atlantic Corporation will provide a commercial
video dialtone service in Dover, New Jersey. Several of the proposed video
dialtone systems could compete or will compete directly with the Company and
its partnerships' systems. If video dialtone services become widespread in the
future, cable television systems could be placed at a competitive disadvantage
because cable television systems are required to obtain local franchises to
provide cable television service and must comply with a variety of obligations
under such franchises.
In the FCC's video dialtone order, which was part of a comprehensive
proceeding examining the circumstances, if any, under which telephone companies
should be allowed to provide cable television services, including video
programming, to their customers, the FCC concluded that neither the 1984 Cable
Act nor its rules apply to prohibit the interexchange carriers (i.e., long
distance telephone companies such as AT&T) from providing such services to
their customers. The FCC also concluded that the 1984 Cable Act does not
require a LEC or its programmer customers to obtain a franchise to provide
video dialtone service to the public. This aspect of the FCC's video dialtone
order was upheld on appeal by the D.C. Circuit. Because cable operators are
required to bear the costs of complying with local franchise requirements,
including the payment of franchise fees, the FCC's decision could place cable
operators at a competitive disadvantage vis-a-vis services offered on a common
carrier basis over local telephone company-provided facilities. In its
reconsideration order, the FCC, among other actions, refused to require
telephone companies to justify cost allocations prior to the construction of
video dialtone facilities and indicated that it would provide guidance on costs
that must be included in proposed video dialtone tariffs. The FCC also
30
<PAGE> 35
established dual federal/state jurisdiction over video dialtone services based
on the origination point of the video dialtone programming service. The FCC
recently issued an order reaffirming its initial video dialtone decision, and
this order has been appealed.
On January 12, 1995, the FCC adopted a further notice of proposed
rulemaking in its video dialtone docket. The FCC tentatively concluded that it
should not ban telephone companies from providing their own video programming
over their video dialtone platforms in those areas in which the cable/telephone
cross-ownership rules have been held unconstitutional. The FCC requested
comments on this issue and on further refinements of its video dialtone
regulatory framework concerning, among other issues, telephone programmer
affiliation standards, the establishment of structural safeguards to prevent
cross-subsidization of video dialtone and programming activities, and the
continuation of the FCC's ban prohibiting telephone companies from acquiring
cable systems within their telephone service areas for the provision of video
dialtone services. It is undecided as to whether a LEC offering video dialtone
service must secure a local franchise if that LEC also engages in the provision
of video programming carried on its video dialtone platform. The FCC has also
proposed to broadly interpret its authority to waive the cable/telephone
cross-ownership ban upon a showing by telephone companies that they comply with
the safeguards which the FCC establishes as a condition of providing video
programming, and has recently concluded that it has legal authority to grant
waivers to permit telephone companies to provide programming in their service
areas on video dialtone networks.
The telephone industry has continued to lobby Congress for legislation
that will permit LECs to provide video programming directly to consumers within
their service areas. Legislation addressing a variety of telecommunications
issues, including video dialtone has been adopted both by the Senate and the
House of Representatives. Differences between provisions, in the two bills,
however, will need to be reconciled in conference and the final outcome of that
legislation is still uncertain. If enacted, the legislation will likely provide
for video dialtone facilities and services. Neither bill would require a video
dialtone facilities provider or customer programmer to obtain a cable franchise
as a condition to offering video programming although a telephone company
offering services may be required to comply with many requirements imposed on
cable operators and to pay fees equivalent to franchise fees. Both bills would
condition telephone company provision of cable television services on the
establishment of safeguards to prevent cross-subsidization between telephone
and cable television operations.
These bills would, among other things, generally prohibit telephone
companies from purchasing existing cable systems within their telephone service
areas except in certain size markets. Telephone companies providing cable
services over cable systems would be required by both bills to obtain a local
franchise. Both bills also would allow direct competition between cable
television systems and telephone companies in providing telephony services.
Another court decision, which modifies The Modified Final Judgment in
United States v. American Telephone & Telegraph Co., permits the RBOCs to
provide information services over their facilities. This decision effectively
permits RBOCs to acquire or construct cable television systems outside of their
own service areas, and several RBOCs have recently invested or acquired cable
television companies.
PROGRAM ORIGINATION AND EXCLUSIVITY OBLIGATIONS. Cable television
systems may originate programs and may present advertising subject to compliance
with the FCC's regulations governing
31
<PAGE> 36
political broadcasts, political advertisements and sponsorship identification,
and prohibitions on lotteries and obscene programming.
FCC regulations currently require cable television systems located
within 35 miles of a television market to delete syndicated programs on distant
broadcast signals upon request of the copyright owner or the local station
holding the exclusive rights to broadcast the same program within its television
market. Similar blackout regulations also are applicable to network programming
in which local network affiliates hold exclusive rights.
COPYRIGHT MATTERS. The Copyright Act of 1976 grants cable television
systems a "compulsory license" to carry distant television signals authorized by
the FCC. In consideration for the compulsory license, cable television systems
are required to pay royalties to the owners of the copyrighted material which is
carried. These copyright royalty payments are based upon a percentage of a cable
television system's gross revenues from basic subscriber service. Every cable
television system must submit statements of account and royalty payments to the
Copyright Office. The Copyright Act contains specific formulas for calculating
the amount of the royalty fee. In general, under these formulas, the larger the
system and the greater the number of distant signals carried, the greater will
be the royalty fees. Failure to comply constitutes copyright infringement and
may result in the imposition of fines and other penalties. The distribution of
royalties is administered by the Library of Congress which will use arbitration
panels to resolve royalty distribution disputes.
The possible simplification, modification or elimination of the
compulsory license is the subject of continuing legislative review.
Consequently, the nature or amount of future royalty payments for broadcast
signal carriage cannot presently be predicted. The elimination or substantial
modification of the cable compulsory license could adversely affect the
Company's ability to obtain suitable programming and could substantially
increase the cost of programming that would remain available for distribution
to the Company's cable subscribers.
STATE REGULATION. Several states have subjected cable television
systems to the jurisdiction of state governmental agencies, some of which have
exercised jurisdiction over transfers of control of cable systems, customer
service standards and franchising requirements. Attempts in other states to so
regulate cable television systems are continuing and can be expected to
increase. It cannot be predicted whether state regulation will have an adverse
effect on the growth of the cable television industry and the business of the
Company.
LOCAL REGULATION. A cable television system is generally operated
pursuant to a non-exclusive franchise or permit granted by the local governing
body of the area to be served. Franchises are granted for a stated term,
generally 10 to 15 years, and in many cases are cancelable for failure to comply
with various conditions and limitations, including compliance with national,
state and local safety and electrical codes, required rates of construction and
conditions of service. Franchises usually call for the payment of fees to the
granting authority. Some state and local regulations
32
<PAGE> 37
governing cable television systems may be subject to requirements imposed by the
FCC and are also subject to the requirements imposed by Federal law. The FCC has
generally preempted local regulation of the technical standards with which cable
television systems must comply, and has recently implemented uniform standards
for the industry.
TECHNICAL AND REPORTING REQUIREMENTS. The FCC licenses radio, microwave
and satellite facilities used by cable television systems. The FCC rules include
technical standards for cable television systems with which all systems must
comply. The FCC requires cable television systems to file annual reports
pertaining to frequency usage, subscriber information and equal employment
opportunity practices. The FCC has recently adopted new technical standards, and
franchising authorities may not require cable television systems to adhere to
standards that are stricter than those of the FCC.
REGULATORY FEES AND OTHER MATTERS. Pursuant to the dictates of the
Communications Act, the FCC has adopted requirements for payment of annual
"regulatory fees" by the various industries it regulates, including the cable
television industry. Currently, cable television systems are required to pay
regulatory fees of $0.37 per subscriber per year, which may be passed on to
subscribers as "external cost" adjustments to rates for basic cable service.
Effective September 18, 1995, the per subscriber fee will increase to $0.49.
Fees for other FCC licenses are scheduled to increase as well, including
licenses for business radio, cable television relay systems (CARS) and earth
stations. Those fees however, may not be collected directly from subscribers.
In addition, the FCC has adopted regulations pursuant to the 1992 Cable
Act which require cable systems to permit customers to purchase video
programming on a per-channel or a per-event basis without the necessity of
subscribing to any tier of service, other than the basic service tier, unless
the cable system is technically incapable of doing so. Generally cable systems
must become technically capable of complying with the statutory obligation by
December 2002. Consistent with its statutory obligations the FCC also has
adopted a number of measures for improving compatibility between existing cable
systems and consumer electronics equipment, including a prohibition from
scrambling program signals carried on the basic tier, absent a waiver. The FCC
also is considering whether to extend this prohibition to cover all regulated
tiers of programming.
MISCELLANEOUS. The Communications Act specifically empowers the FCC to
impose fines upon cable television system operators for willful or repeated
violation of the FCC's rules and regulations. The FCC has adjudicatory authority
over pole attachment disputes where a state has not asserted jurisdiction.
Pending legislation in Congress would increase significantly future pole
attachment rates for cable systems which used pole attachments in connection
with the provision of telecommunications services.
33
<PAGE> 38
ITEM 2. PROPERTIES
The Company leases its principal executive offices from Jones
Properties, Inc., a subsidiary of International. The offices consist of a
101,500 square foot office building located in Englewood, Colorado. This
building was completed in July 1985. The lease has a 15-year term with three
5-year renewal options at market rates existing at the beginning of the option
period. The annual rent is currently $24.00 per square foot, plus operating
expenses and will not, by the terms of the lease, exceed such amount during the
remainder of the term. The Company subleases approximately 47% of the building
to International and certain other affiliates on the same terms and conditions
as the primary lease.
The Company also leases from Jones Panorama Properties, Inc., a
wholly-owned subsidiary, an approximate 60,000 square foot office building (the
"Panorama Falls Building") located at 9085 E. Mineral Avenue, Englewood,
Colorado for a lease price of $12.00 per square foot. The Company has subleased
a portion of the Panorama Falls Building to International on the same terms and
conditions as the primary lease.
CABLE TELEVISION SYSTEMS OWNED BY THE COMPANY
The following sets forth (i) the monthly basic plus service rates
charged to subscribers, (ii) the number of basic subscribers and pay units, and
(iii) the franchise expiration dates for the cable television systems owned and
operated by the Company. The monthly basic plus service rates set forth herein
represent, with respect to systems with multiple headends, the basic plus
service rate charged to the majority of the subscribers within the system. In
cable television systems, basic subscribers can subscribe to more than one pay
TV service. Thus, the total number of pay services subscribed to by basic
subscribers are called pay units. As of May 31, 1995, the Company-owned cable
television systems passed approximately 482,000 homes, representing an
approximate 65% penetration rate. Figures for numbers of subscribers and homes
passed are compiled from the Company's records and may be subject to
adjustments.
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
ALEXANDRIA, VIRGINIA 1995 1994 1993
-------------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 21.53 $ 21.53 $ 24.65
Basic subscribers 38,497 38,863 35,366
Pay units 32,590 32,524 29,797
Franchise expiration dates:
City of Alexandria 6/17/2009
Fort Myer 12/31/95*
</TABLE>
* Franchise renewal is in process.
34
<PAGE> 39
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
ANNE ARUNDEL COUNTY, MARYLAND 1995 1994 1993
----------------------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 22.85 $ 21.95 $ 21.20
Basic subscribers 47,786 46,285 43,555
Pay units 42,590 41,682 38,004
Franchise expiration dates:
Anne Arundel County 5/31/99
Anne Arundel County
(Heritage Harbor) 12/12/99
North Anne Arundel 5/31/2000
Ft. George Meade 9/27/2008
</TABLE>
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
CHARLES COUNTY, MARYLAND 1995 1994 1993
------------------------ ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 24.80 $ 24.80 $ 23.59
Basic subscribers 22,702 21,690 20,784
Pay units 34,186 32,578 31,460
Franchise expiration dates:
Indian Head Naval Center 12/31/2003
Town of Indian Head 2/1/97
Town of LaPlata 5/25/97
</TABLE>
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
CLEAR CREEK, COLORADO 1995 1994 1993
--------------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 21.97 $ 21.97 $ 22.60
Basic subscribers 1,587 1,585 1,537
Pay units 933 948 981
Franchise expiration dates:
Clear Creek County 2/6/2009
Town of Empire 6/6/2003
Town of Georgetown 10/13/2002
City of Idaho Springs 3/7/97
Town of Silver Plume 6/27/2013
</TABLE>
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
HILO, HAWAII 1995 1994 1993
------------ ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 21.57 $ 21.68 $ 21.45
Basic subscribers 17,140 16,696 15,924
Pay units 13,516 12,810 11,468
</TABLE>
35
<PAGE> 40
Franchise expiration dates
of all franchises in the
Hilo, Hawaii System 12/31/96
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
JEFFERSON COUNTY/ 1995 1994 1993
---- ---- ----
EVERGREEN, COLORADO
<S> <C> <C> <C>
Monthly basic plus service rate $ 23.06 $ 22.06 $ 21.25
Basic subscribers 24,538 23,027 21,613
Pay units 25,069 24,880 22,687
Franchise expiration dates:
Arapahoe County 2/21/99
Jeffco/Televents 9/30/95*
Jefferson County 9/30/95*
Ken Caryl Ranch/The Valley Indefinite
Town of Morrison 6/4/2012
</TABLE>
* Franchise renewal is in process. The Company does not believe there are
any material issues to be resolved in connection with these renewals.
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
KENOSHA, WISCONSIN 1995 1994 1993
------------------ ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 19.94 $ 21.18 $ 22.95
Basic subscribers 27,056 25,047 23,188
Pay units 18,937 18,175 17,934
Franchise expiration dates:
City of Kenosha 7/05/98
Village of Pleasant Prairie 2/6/2001
Town of Somers 9/25/2000
</TABLE>
<TABLE>
<CAPTION>
At Acquisition
At May 31, (December 15
----------------------------- -----------------
NORTH AUGUSTA, SOUTH CAROLINA 1995 1994 1993)
----------------------------- ---- ---- -----
<S> <C> <C> <C>
Monthly basic plus service rate $ 21.45 $ 21.45 $ 21.45
Basic subscribers 15,477 15,065 15,080
Pay units 10,157 9,680 7,221
Franchise expiration dates:
City of Thomson 3/31/2000
</TABLE>
36
<PAGE> 41
Town of Dearing 12/5/2003
County of McDuffie 11/4/2000
City of North Augusta 3/31/2000
County of Aiken, SC 6/6/2007
Town of Trenton, SC 11/9/2003
County of Edgefield, SC 6/2/2000
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
OXNARD, CALIFORNIA 1995 1994 1993
------------------ ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 19.15 $ 20.00 $ 23.95
Basic subscribers 39,032 37,338 35,953
Pay units 25,952 23,851 22,237
Franchise expiration dates:
City of Oxnard 11/12/97
City of Port Hueneme 2/27/2007
Port Hueneme Naval Base 2/16/2004
Ventura County 11/29/2003
</TABLE>
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
PANAMA CITY BEACH, FLORIDA 1995 1994 1993
-------------------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 21.10 $ 21.20 $ 21.20
Basic subscribers* 7,893 8,406 7,984
Pay units** 5,966 9,399 5,522
</TABLE>
* During fiscal 1995, the Panama City Beach has lost subscribers to an
overbuilder. (See Item 1, Competition for Subscribers in the Company's
Systems.)
** The number of pay units in the system has vacillated during fiscal years
1994 and 1995 due to pay unit marketing promotions. These marketing
promotions resulted in periodic increases in pay units, followed by
decreases in pay units upon the expiration of the promotional period.
Franchise expiration dates:
City of Panama City Beach 6/10/2000
Bay County 4/5/2003
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
PIMA COUNTY, ARIZONA 1995 1994 1993
-------------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 24.00 $ 22.50 $ 23.20
Basic subscribers 53,279 49,311 46,739
Pay units 35,084 32,442 30,529
Franchise expiration dates:
Town of Marana 9/19/2003
</TABLE>
37
<PAGE> 42
Town of Oro Valley 7/10/97
Pima County
Area A 7/27/97
Area B 7/27/97
Area C 7/6/96
Tucson Nat'l Golf Club 12/31/96
<TABLE>
<CAPTION>
At May 31,
----------------------------------------------
WALNUT VALLEY, CALIFORNIA 1995 1994 1993
------------------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 22.06 $ 22.74 $ 23.75
Basic subscribers 18,669 17,790 17,193
Pay units 13,290 13,097 13,375
Franchise expiration dates:
City of Diamond Bar 5/97
Los Angeles County 11/95*
</TABLE>
* Franchise renewal is in process.
PROGRAMMING SERVICES
Programming services provided by the Company's cable television systems
include local affiliates of the national broadcast networks, local independent
broadcast channels, the traditional cable network services (e.g., American Movie
Classics, Arts & Entertainment, Black Entertainment Network, C-SPAN, The
Discovery Channel, Lifetime, Entertainment Sports Network, Home Shopping
Network, Mind Extension University, Music Television, Nickelodeon, Turner
Network Television, The Nashville Network, Video Hits One, and superstations
WOR, WGN and TBS) and a selection, which varies by system, of premium channel
programming (e.g., Cinemax, Encore, Home Box Office, Showtime and The Movie
Channel.)
ITEM 3. LEGAL PROCEEDINGS
On February 22, 1994, the Company and Jones Group were named as
defendants in a lawsuit brought by three individuals who are Class A Unitholders
in Jones Intercable Investors, L.P. (the "Partnership"), a master limited
partnership in which the Company is general partner. The litigation, entitled
Luva Vaughan et al v. Jones Intercable, Inc. et al, Case No. CV 94-3652 was
filed in the Circuit Court for Jackson County, Missouri, and purports to be "for
the use and benefit of" the Partnership. As originally filed, the suit sought
rescission of the sale of the Alexandria, Virginia cable television system (the
"Alexandria System") by the Partnership to the Company, which sale was completed
on November 2, 1992. It also sought a constructive trust on the profits derived
from the operation of the Alexandria System since the date of the sale and an
accounting and other equitable relief. The plaintiffs also alleged that the
$1,800,000 commission paid to Jones Group by the Partnership in connection with
such sale was improper, and asked the Court to order that such commission be
repaid to the Partnership.
38
<PAGE> 43
Under the terms of the partnership agreement of the Partnership, the
Company has the right to acquire cable television systems from the Partnership
at a purchase price equal to the average of three independent appraisals of the
cable television system to be acquired. The plaintiffs claim that the appraisals
obtained in connection with the sale of the Alexandria System were improperly
obtained, were not made by qualified appraisers and were otherwise improper. The
purchase price paid by the Company upon such sale was approximately $73,200,000.
The amount of damages being sought by the plaintiffs has not yet been specified.
On October 21, 1994, plaintiffs filed a motion to dismiss Jones Group
in response to Jones Group's argument that Missouri lacked personal jurisdiction
over it. Plaintiffs' motion was granted, and plaintiffs then filed an action in
Colorado against Jones Group seeking a return of the brokerage commission.
The Company and Jones Group filed motions for summary judgment in the
Missouri and Colorado cases, respectively. The Missouri court granted the
Company's motion in part and dismissed all counts of the Complaint for
rescission. It also struck the plaintiffs' jury demand. The Colorado court also
granted Jones Group's motion in part finding that the payment of the brokerage
commission was not a breach of the partnership agreement, but leaving for trial
the issue of whether such payment constituted a breach of fiduciary duty.
Subsequently, the plaintiffs have filed an amended complaint in the
Missouri case, recasting their allegations in terms of breach of contract,
common law fraud, conversion and breach of fiduciary duty. The plaintiffs have
reasserted their right to a jury trial.
The Company has conducted written discovery in the form of
interrogatories and requests for production of documents, and has noticed the
depositions of plaintiffs and plaintiffs' expert. No trial date has been set in
the Missouri case or in the Colorado case. Because discovery has just commenced,
it is premature to present a realistic evaluation of the probability of a
favorable or unfavorable outcome. However, the Company believes both that the
appraisals were proper and that the brokerage commission was properly paid to
Jones Group in accordance with the express terms of the partnership agreement.
The Company further believes that its defenses are meritorious and it intends to
vigorously defend the litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock and Class A Common Stock are traded in the
over-the-counter market and authorized for quotation on the National Market
System operated by the National Association of Securities Dealers, Inc.
(NASDAQ), under the following symbols:
39
<PAGE> 44
Common Stock - JOIN
Class A Common Stock - JOINA
The following table shows the high and low prices as quoted on the
NASDAQ/National Market System for each quarterly period of fiscal 1995 and 1994
for each class of the Company's stock:
<TABLE>
<CAPTION>
Common Stock Class A Common Stock
------------ --------------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
1995 First Quarter 15 7/8 11 1/2 15 3/8 12
Second Quarter 15 1/2 13 1/2 15 3/8 13 5/16
Third Quarter 16 1/4 11 3/8 16 1/4 11 3/8
Fourth Quarter 17 1/2 13 3/4 17 1/2 13 1/4
</TABLE>
<TABLE>
<CAPTION>
Common Stock Class A Common Stock
------------ --------------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
1994 First Quarter 14 3/4 11 15 1/4 11 1/4
Second Quarter 20 13 1/4 19 12 1/2
Third Quarter 20 1/4 14 7/8 20 1/4 15
Fourth Quarter 15 3/4 10 3/8 15 5/8 11
</TABLE>
At May 31, 1995, the Common Stock and Class A Common Stock of the
Company were held of record by 818 and 1,589 shareholders, respectively.
The Company has never paid a cash dividend with respect to its shares
of Common Stock or Class A Common Stock, and it has no present intention to pay
cash dividends in the foreseeable future. The current policy of the Company's
Board of Directors is to retain earnings to provide funds for the operation and
expansion of its business. Future dividends, if any, will be determined by the
Board of Directors in light of the circumstances then existing, including the
Company's earnings and financial requirements and general business conditions.
If cash dividends are paid in the future, the holders of the Class A Common
Stock will be paid $.005 per share per quarter in addition to the amount payable
per share of Common Stock. Such additional dividends on the Class A Common Stock
are not cumulative but would be adjusted appropriately if cash dividends are
declared with respect to a period other than a quarterly period. The Company's
credit agreements restrict the right of the Company to declare and pay cash
dividends without the consent of the lenders.
40
<PAGE> 45
Item 6. Selected Financial Data
The following table sets forth selected financial data regarding
Jones Intercable, Inc.'s financial position and operating results. This data
should be read in conjunction with the Company's consolidated financial
statements and the notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing in Item 7.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ---------- ---------- ---------- ----------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C>
REVENUES:
Cable Television Revenue
Subscriber service fees $ 114,020 $ 100,902 $ 92,714 $ 78,748 $ 73,934
Management fees 19,508 17,360 17,104 16,220 14,772
Fund fees and distributions - - - 26,790 4,283
Non-cable Revenue 17,418 8,217 7,352 6,090 3,174
----------- ----------- ----------- ----------- ----------
TOTAL REVENUES 150,946 126,479 117,170 127,848 96,163
----------- ----------- ----------- ----------- ----------
COSTS AND EXPENSES:
Cable Television Expenses
Operating expenses 64,714 53,036 50,737 39,579 39,753
General and administrative 7,887 8,715 7,650 6,681 4,985
Non-cable operating, general and
administrative 18,996 8,637 7,551 6,358 4,308
Depreciation and amortization 45,897 43,831 42,720 39,586 39,670
----------- ----------- ----------- ----------- ----------
OPERATING INCOME $ 13,452 $ 12,260 $ 8,512 $ 35,644 $ 7,447
=========== =========== =========== =========== ==========
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY ITEMS $ (4,001) $ (25,277) $ (40,266) $ 23,383 $ (45,030)
INCOME TAX BENEFIT
(PROVISION) - - - (7,389) -
----------- ----------- ----------- ----------- ----------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS (4,001) (25,277) (40,266) 15,994 (45,030)
Extraordinary items-
Gain (loss) on early
extinguishment of debt - - (20,386) (2,504) 11,419
Tax benefit from loss carry-
forward utilization - - - 6,089 -
Cumulative effect of change
in accounting method-
Change in method of
accounting for income taxes - - 3,862 - -
----------- ----------- ----------- ----------- ----------
NET INCOME (LOSS) $ (4,001) $ (25,277) $ (56,790) $ 19,579 $ (33,611)
=========== =========== =========== =========== ==========
PRIMARY EARNINGS (LOSS)
PER SHARE:
Income (loss) before
extraordinary items $ (.16) $ (1.43) $ (2.82) $ 1.30 $ (3.71)
Extraordinary items - - (1.43) .29 .94
Accounting change - - .27 - -
----------- ----------- ----------- ----------- ----------
$ (.16) $ (1.43) $ (3.98) $ 1.59 $ (2.77)
=========== =========== =========== =========== ==========
FULLY DILUTED EARNINGS
PER SHARE:*
Income before extra-
ordinary items $ 1.27
Extraordinary items .26
-----------
$ 1.53
===========
WEIGHTED AVERAGE
SHARES OUTSTANDING:*
Primary 24,848 17,662 14,277 12,294 12,153
=========== =========== =========== =========== ==========
Fully diluted 13,828
===========
TOTAL ASSETS $ 799,771 $ 448,485 $ 399,572 $ 357,252 $ 400,338
=========== =========== =========== =========== ==========
TOTAL DEBT $ 481,358 $ 343,907 $ 327,214 $ 299,300 $ 345,678
=========== =========== =========== =========== ==========
SHAREHOLDERS'
INVESTMENT (DEFICIT) $ 265,437 $ 62,043 $ 31,649 $ 26,875 $ (2,653)
=========== =========== =========== =========== ==========
</TABLE>
*Fully diluted earnings per share effect is not presented for years in which the
calculation was either insignificant or anti-dilutive.
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<PAGE> 46
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Year Ended May 31, 1995 Compared to 1994
Total Revenues
Historically, the Company has derived its revenues from three primary
sources: subscriber service fees from Company-owned cable television systems,
management fees from revenues earned by managed partnerships, and fees and
distributions payable upon the sale of cable television properties owned by
managed partnerships. The Company now also derives revenue from certain
non-cable television subsidiaries. Total revenues for the fiscal year ended May
31, 1995 increased $24,467,000, or 19%, from $126,479,000 reported in fiscal
1994 to $150,946,000, reported in fiscal 1995. This increase is reflective of
the Company's acquisition of Spacelink's assets on December 20, 1994, and the
purchase of the cable television system serving North Augusta, South Carolina
(the "North Augusta System") in December 1993. The positive effect on revenue of
these acquisitions was somewhat offset by the sale of the Company's Gaston
County, North Carolina cable television system (the "Gaston System") on July 25,
1994. On a pro forma basis, disregarding the effect of these acquisitions and
sales, total revenues increased $8,317,000, or 7%, for the year ended May 31,
1995 as compared to fiscal 1994.
Subscriber Service Fees
The Company's subscriber service fees increased $13,118,000, or 13%,
from $100,902,000 in fiscal 1994 to $114,020,000 in fiscal 1995. The Spacelink
acquisition, the North Augusta System purchase and the sale of the Gaston System
accounted for approximately $8,765,000, or 67%, of this increase. Disregarding
the effect of such transactions, subscriber service fees increased $4,353,000,
or 5%. This increase is due to increases in basic subscribers and premium
subscriptions and increases in advertising sales revenue, which somewhat
mitigated the effect of the reduction in basic rates due to rate regulations
issued by the FCC in implementing the 1992 Cable Act.
Management Fees
The Company receives management fees generally equal to 5% of the gross
operating revenues of its managed partnerships. Management fees totaled
$19,508,000 for fiscal 1995 as compared to $17,360,000 in fiscal 1994, an
increase of approximately 12%. The growth of management fee revenue is the
result of the acquisition of Spacelink's assets, which included general partner
interests in a number of managed limited partnerships, as well as increases in
operating revenues of the Company's managed partnerships. Partnership revenues
increased as a result of increases in basic subscribers, increases in
advertising sales revenue and increases in revenues from the installation of
service. Disregarding the effect of the acquisition of Spacelink's assets,
management fees increased approximately 7 percent.
Fund Fees and Distributions
In its capacity as the general partner of its managed partnerships, the
Company also receives revenues in the form of fund fees and distributions upon
the sale of cable television properties owned by such partnerships. No such
revenues were received during the fiscal years ended May 31, 1995, 1994 or 1993.
Non-Cable Revenue
The Company also now operates a number of non-cable subsidiaries. Such
subsidiaries include Jones Satellite Programming ("JSP"), a distributor of
satellite programming to satellite dish owners; Jones
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<PAGE> 47
Futurex, Inc. ("Futurex"), a manufacturer of various electronic components; and
Jones Satellite Networks, Inc. ("JSN"), a distributor of radio programming to
radio stations. Futurex and JSN were acquired as part of the Spacelink
acquisition. Non-cable revenue totaled $17,418,000 for the year ended May 31,
1995 compared to $8,217,000 in fiscal 1994, an increase of 112%. The acquisition
of Futurex and JSN accounted for $6,404,000, or 70%, of the increase in revenue.
The remainder of the increase is due to an increase in revenues of JSP.
Costs and Expenses
Operating, general and administrative expenses consist primarily of
costs associated with the administration of Company-owned cable television
systems, the administration of managed partnerships and the administration of
the non-cable television entities. The Company is reimbursed by its managed
partnerships for costs associated with the administration of the partnerships.
The principal administrative cost components are salaries paid to corporate and
system personnel, programming expenses, professional fees, subscriber billing
costs, data processing costs, rent for leased facilities, cable system
maintenance expenses and consumer marketing expenses.
Cable operating expenses increased $11,678,000, or 22%, from
$53,036,000 in fiscal 1994 to $64,714,000 for the year ended May 31, 1995. The
acquisition of Spacelink's assets and the purchase of the North Augusta System,
net of the sale of the Gaston System accounted for $6,215,000, or 53%, of this
increase. Disregarding the effect of these transactions, cable operating
expenses increased $5,463,000, or 11%. This increase was due primarily to
increases in premium and satellite programming costs. In addition, the Company
incurred marketing, public relations and other costs associated with the FCC's
rate regulations.
Cable general and administrative expenses decreased $828,000, or 10%,
from $8,715,000 in fiscal 1994 to $7,887,000 for the year ended May 31, 1995.
The decrease was due primarily to a decrease in transponder fees paid to an
affiliate.
Non-cable operating, general and administrative expense increased
$10,359,000, from $8,637,000 in fiscal 1994 to $18,996,000 for the year ended
May 31, 1995. The acquisition of Futurex and JSN accounted for $7,025,000, or
68%, of this increase. The remainder of the increase was due to increases in the
expenses of JSP.
Depreciation and amortization expense increased $2,066,000, or 5%, for
the fiscal year ended May 31, 1995 totaling $45,897,000 in the current year
compared to $43,831,000 for fiscal 1994. This increase was due to the
acquisition of Spacelink's assets, the purchase of the North Augusta System and
to capital additions in fiscal 1994 and 1995.
Interest expense increased $3,750,000, or 10%, from $36,189,000 in
fiscal 1994 to $39,939,000 for the year ended May 31, 1995. This increase is due
primarily to the sale of $200 million of Senior Notes on March 23, 1995. The
increase was offset, in part, by a reduction in interest expense on the
Company's credit facility due to lower outstanding balances in fiscal 1995.
Equity in losses of affiliated entities decreased $1,643,000, or 36%,
from $4,624,000 in fiscal 1994 to $2,981,000 for the year ended May 31, 1995.
This decrease was due to the elimination of equity losses recognized on the
Company's foreign investments as well as increase in income recognized by the
Company related to its investment in Jones Intercable Investors, L.P., a
Company-managed limited partnership. In July 1994, the Company converted its
foreign investments into stock of Bell Cablemedia. The investment in Bell
Cablemedia is accounted for using the cost method.
Interest income increased $4,957,000, or 106%, for the year ended May
31, 1995 from $4,695,000 in fiscal 1994 to $9,652,000 in the current fiscal
year. This increase was due primarily to the
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<PAGE> 48
increase in the Company's cash on hand during fiscal 1995 resulting from the BCI
investment in December 1994 and the sale of $200 million of Senior Notes in
March 1995.
The Company recognized a gain of $15,496,000 in July 1994 on the sale
of its Gaston System. No such gains were recognized in fiscal 1994.
Net Loss
Net loss decreased $21,276,000, or 84%, from $25,277,000 in fiscal 1994
to $4,001,000 for the year ended May 31, 1995. This decrease was due primarily
to the gain on the sale of the Gaston System recognized and the increase in
interest income in fiscal 1995.
Year Ended May 31, 1994 Compared to 1993
Subscriber Service Fees
In Fiscal 1994, the Company's subscriber service fees increased
$8,188,000, or 9%, from $92,714,000 in fiscal 1993 to $100,902,000 in fiscal
1994. The net effect of the purchase of the Alexandria System and North Augusta
System and the sale of the San Diego System accounted for approximately
$5,856,000, or 72%, of the increase. In addition, increases in the number of
basic subscribers, as well as increases in revenue from premium service,
pay-per-view, advertising sales and installation of service somewhat mitigated
the effect of the reduction in the Company's basic rates due to rate regulations
issued by the FCC in implementing the 1992 Cable Act.
Management Fees
Management fees increased approximately 2%, from $17,104,000 in fiscal
1993 to $17,360,000 in fiscal 1994. Partnership revenues increased as a result
of increases in basic subscribers as well as increases in revenues from
pay-per-view, advertising sales and the installation of service. These increases
somewhat mitigated the effect of the reduction in basic rates in the Company's
managed partnerships due to the FCC's basic rate regulations.
Non-Cable Revenue
Non-cable revenue increased $865,000, or 12%, from $7,352,000 for the
year ended May 31, 1994 to $8,217,000 in fiscal 1993. This increase was due to
an increase in the revenues of JSP.
Costs and Expenses
For the year ended May 31, 1994, cable operating expenses increased
$2,299,000, or 5%, from $50,737,000 in fiscal 1993 to $53,036,000 in fiscal
1994. This increase was due to the purchase of the Alexandria System and the
North Augusta System, net of the sale of the San Diego System as well as
increases in personnel costs, satellite fees, premium service fees and
advertising costs. Such increases were significantly mitigated by a decrease in
non-cash compensation expense between years of $3,928,000 related to the
granting of Class A Common Stock options.
For the year ended May 31, 1994, cable general and administrative
expense increased $1,065,000, or 14%, from $7,650,000 in fiscal 1993 to
$8,715,000 in fiscal 1994. This increase was due primarily to an increase in
transponder fees paid to an affiliate.
For the year ended May 31, 1994, non-cable operating, general and
administrative expenses increased $1,086,000, or 14%, from $7,551,000 in fiscal
1993 to $8,637,000 in fiscal 1994. This increase was due to increases in the
expenses of JSP, which consist primarily of programming costs.
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<PAGE> 49
Depreciation and amortization expense increased $1,111,000, or 3%, for
the fiscal year ended May 31, 1994 totaling $42,720,000 in fiscal 1993 and
$43,831,000 in fiscal 1994. This increase was due to the purchase of the
Alexandria System in November 1992 and the purchase of the North Augusta System
in December 1993.
Interest expense decreased $7,384,000, or 17%, from $43,573,000 in
fiscal 1993 to $36,189,000 in fiscal 1994. This decrease is primarily due to the
redemption of the remaining $138,000,000 principal amount of the Company's 13%
Subordinated Debentures due 2000 in May 1993. The effect of this redemption was
somewhat mitigated by an increase in interest expense as a result of higher
balances outstanding on the Company's revolving credit facility.
Equity in losses of affiliated entities increased $1,724,000, or 59%,
from $2,900,000 reported for the year ended May 31, 1993 to $4,624,000 reported
in fiscal 1994. This increase was primarily the result of losses recognized by
the Company related to its 25% investment in Mind Extension University, Inc. as
well as increased losses recognized from the Company's United Kingdom
investments.
Interest income increased $635,000, or 16%, for the year ended May 31,
1994 from $4,060,000 reported in fiscal 1993 to $4,695,000 reported in fiscal
1994. This increase was due to higher average balances outstanding from certain
managed partnerships as well as interest income earned on advances made to Mind
Extension University, Inc.
For the year ended May 31, 1994, net loss decreased $31,513,000, from
$56,790,000 in fiscal 1993 to $25,277,000 in fiscal 1994. This decrease was due
primarily to a loss on early extinguishment of debt recognized in fiscal 1993.
The Company anticipates the continued recognition of operating income
prior to depreciation and amortization charges, but net losses resulting from
depreciation, amortization and interest expenses may continue in the future. To
the extent the Company recognizes liquidation distributions from its managed
partnerships in the future, losses may be eliminated; however, there is no
assurance as to the timing or recognition of these distributions.
Regulatory Matters
Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The 1992
Cable Act generally imposes a greater degree of regulation on the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States, including almost all
of those owned and managed by the Company, are subject to rate regulation of
basic cable services. In addition, the 1992 Cable Act allows the FCC to regulate
rates for non-basic service tiers other than premium services in response to
complaints filed by franchising authorities and/or cable subscribers. In April
1993, the FCC adopted regulations governing rates for basic and non-basic
services. The FCC's rules became effective on September 1, 1993. In compliance
with these rules, the Company reduced rates charged for certain regulated
services effective September 1, 1993.
On February 22, 1994, however, the FCC adopted several additional rate
orders including orders which revised its earlier-announced regulatory scheme
with respect to rates and established interim cost-of-service regulations. The
FCC's February 22, 1994 regulations generally require rate reductions, absent a
successful cost-of-service showing, equal to 17% of the rates in effect on
September 30, 1992, adjusted for inflation, channel modifications, equipment
costs, and increases in programming costs. The new regulations became effective
on May 15, 1994, but operators could elect to defer rate reductions to July 14,
1994, so long as they made no changes in their rates and did not restructure
service offerings between May 15 and July 14.
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<PAGE> 50
After analyzing the effects of the two methods of rate regulation, the
Company elected to file cost-of-service showings for the following Company-owned
cable television systems: Jefferson County, Colorado; Charles County, Maryland;
Pima County, Arizona; Alexandria, Virginia; and North Augusta, South Carolina.
For these systems, the Company anticipates no further reductions in revenues or
operating income before depreciation and amortization resulting from the FCC's
rate regulations. The cost-of-service showings have not yet received final
approval from franchising authorities, however, and there can be no assurance
that the cost-of-service showings will prevent further rate reductions until
such final approvals are received. The Company complied with the February 22,
1994 benchmark regulations and reduced rates in its Oxnard and Walnut Valley,
California; Hilo, Hawaii; Panama City Beach, Florida; and Kenosha, Wisconsin
cable television systems. The Company will continue its efforts to mitigate the
effect of such rate reductions in these systems. The Company's Anne Arundel,
Maryland cable television system is subject to effective competition as defined
by the 1992 Cable Act, and as a result, is not subject to rate regulation.
The FCC's rate regulations contain provisions for increasing rates for
added channels, external costs and inflation. The Company has been able to
increase rates recently in certain of its systems under such provisions. Such
increases, together with a reduction in the cost of implementing the 1992 Cable
Act, will cause the Company's revenue and cash flow to increase in fiscal 1996.
Currently, there is legislation before Congress which, if enacted,
would significantly change the regulatory environment in which the cable
industry operates. Such legislation may eliminate rate regulation and allow
telephone companies and others to enter the cable television business. See Item
1.
FINANCIAL CONDITION
The Company intends to grow by implementing a balanced strategy
directed at acquiring cable television systems from Company-managed limited
partnerships and from third parties. In addition, the Company may purchase cable
television systems from its managed partnerships, and then trade such properties
for cable television properties owned by unaffiliated parties. The Company will
attempt to cluster systems in certain markets as opportunities arise. The
Company also intends to maintain and enhance the value of its current cable
television systems through capital expenditures. Such expenditures will include,
among others, cable television plant extensions and the upgrade and rebuild of
certain systems. The Company also intends to implement new services as they are
developed and become economically viable. Such acquisitions and capital
expenditures are subject to the availability of cash generated from operations,
debt and/or equity financing. The capital resources to accomplish these
strategies are expected to be provided by the items discussed below.
In May 1994, the Company and Bell Canada International Inc. ("BCI")
entered into an agreement whereby BCI agreed to acquire an approximate 30
percent economic interest in the Company through the purchase of Class A Common
Stock of the Company. The shareholders of the Company approved the transaction
on December 19, 1994. Under the terms of the agreement, BCI will invest $400
million over time. To date, BCI has purchased 9,914,300 shares of the Company's
Class A Common Stock for approximately $258,900,000 resulting in BCI owning an
approximate 30 percent economic interest in the Company. The Company used a
portion of the proceeds from BCI's investments to repay outstanding debt
balances on the Company's and Spacelink's credit facilities, with the remainder
being held for future needs. BCI has committed to invest an additional
$141,100,000 to maintain its 30 percent interest in the event the Company offers
additional Class A Common Stock. BCI has the right to maintain or increase its
ownership by investing amounts beyond the $400,000,000 commitment.
On March 23, 1995, the Company sold $200 million of 9 5/8% Senior Notes
due 2002. The Senior Notes mature on March 15, 2002. Interest is payable
semi-annually. The Senior Notes are not redeemable prior to maturity and are not
subject to any sinking fund.
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<PAGE> 51
On December 8, 1992, the Company entered into a $300,000,000 reducing
revolving credit agreement with a number of commercial banks. The amount of
borrowings available under this agreement was $300,000,000 through May 31,1995,
after which availability is reduced quarterly until expiration on November 30,
2000. The maximum amount available will reduce 14 1/2% to $256,500,000 during
fiscal 1996. As of May 31, 1995, no amounts were outstanding under this credit
agreement. Interest on amounts outstanding under the credit agreement range from
LIBOR plus .75% to LIBOR plus 1.625% depending upon whether certain financial
ratios have been achieved. For the year ended May 31, 1995, the Company's
effective interest rate on amounts outstanding under the credit agreement was
7.51%.
The Company's cash balance at May 31, 1995, was $271,311,000. Such
balance reflects the remaining cash, after repaying certain debt amounts, from
the investments in the Company by BCI and the proceeds from the sale of the $200
million of Senior Notes. It is anticipated that this cash will be used for the
acquisitions discussed below.
From time to time, the Company has made loans to its managed limited
partnerships, although it is not required to do so. As of May 31, 1995, the
Company had advanced funds to various managed partnerships and other affiliates
of the Company totaling approximately $9,869,000, a decrease of approximately
$5,742,000 over the amount advanced at May 31, 1994. A significant portion of
these advances represent funds for capital expansion and improvements of
properties owned by partnerships where additional credit sources were not then
available to the partnerships. These advances reduce the Company's available
cash and its liquidity. The Company anticipates the repayment of these advances
over time. These advances bear interest at rates equal to the Company's weighted
average cost of borrowing.
The Company has sufficient liquidity from cash on hand, cash generated
from operations and availability under its credit facility to meet its current
operational needs.
In conjunction with the Company's acquisition strategy, the Company has
entered into the following agreements:
On February 22, 1995, the Company entered into a purchase and sale
agreement with Cable TV Fund 12-B, Ltd., a Colorado limited partnership ("Fund
12-B"), one of the Company's managed limited partnerships that owns the cable
television system serving areas in and around Augusta, Georgia (the "Augusta
System"), providing for the sale by Fund 12-B to the Company of the Augusta
System for a purchase price of $141,718,000 in cash, subject to normal closing
adjustments. The purchase price was determined by averaging the three separate
independent appraisals of the fair market value of the Augusta system as of
December 31, 1994. In July 1995, the Company was informed by one of the three
appraisers of the Augusta System that, taking into account the regulatory,
legislative and competitive developments in the cable television industry since
December 31, 1994, their appraised value of the Augusta System would be
increased. In July 1995, the Company and Fund 12-B accordingly amended the
purchase and sale agreement to increase the purchase price for the Augusta
System from $141,718,000 to $142,618,000 to reflect this increased appraised
value. The closing of the acquisition of the Augusta System is subject to a
number of conditions including the approval of the holders of a majority of the
limited partnership interests in Fund 12-B. The Company believes that the
approval of the limited partners will be received. The Company expects that its
acquisition of the Augusta System will occur during 1995. The Company, as
general partner of Fund 12-B, expects to receive a distribution from Fund 12-B
of approximately $12,985,000 upon the closing of the transaction. The Augusta
System passes approximately 102,000 homes and serves approximately 66,600 basic
subscribers. The Augusta System is contiguous with the cable television system
owned by the Company serving areas in and around North Augusta, South Carolina
("The North Augusta System"). Together, the Augusta System and the North Augusta
System will, upon closing of the Company's acquisition of the Augusta System,
form an operating cluster that will serve approximately 81,700 basic subscribers
and pass approximately 125,700 homes.
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<PAGE> 52
On May 31, 1995, the Company entered into Asset Purchase Agreements
with Cablevision of Manassas Park, Inc. and Benchmark/Manassas Cable Fund, Ltd.
to acquire cable television systems serving Manassas, Manassas Park, Haymarket
and portions of unincorporated Prince William County, all in Virginia (the
"Virginia Systems"). The purchase price for the Virginia Systems is $71,100,000,
subject to normal closing adjustments. The Virginia Systems serve approximately
26,000 basic subscribers, and are located approximately 20 miles from the
Company's wholly-owned cable television system serving Alexandria, Virginia. The
Company believes that the acquisition of the Virginia Systems, if completed,
will add to its existing presence in the Washington, DC/Baltimore metropolitan
area where the Company owns or manages, on behalf of certain of its limited
partnerships, an aggregate of approximately 123,000 basic subscribers. The
acquisition of the Virginia Systems is subject to a number of conditions,
including the approval of the applicable governmental authorities to the
transfer of the franchises for the Virginia Systems, the approval of the
Department of Justice and the Federal Trade Commission pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the consent of
various other third parties. These transactions are expected to close during
1995. The Company will pay Jones Financial Group a fee of $896,000 for acting
as its financial advisor in connection with these transactions.
On June 30, 1995, the Company entered into an agreement with Columbia
Associates, L.P., an unaffiliated party, to acquire the cable television systems
serving Dale City, Lake Ridge, Woodbridge, Fort Belvoir, Triangle, Dumfries,
Quatico, Accoquan and portions of Prince William County, all in the state of
Virginia. These systems serve approximately 50,000 subscribers. The purchase
price is $123,000,000. The acquisition of such systems is subject to a number of
conditions including the consent of governmental franchising authorities and
other regulatory authorities having jurisdiction, and other matters. Funding
is expected to be provided from cash on hand and from available borrowing
under the Company's credit facility. The Company will pay Jones Financial
Group a fee of $1,328,400 for acting as its financial advisor in connection
with this transaction.
On August 11, 1995, the Company entered into a purchase and sale
agreement with IDS/Jones Growth partners 87-A, Ltd., a Colorado limited
partnership, one of the Company's managed limited partnerships, to acquire from
such partnership the cable television system serving areas in and around Carmel,
Indiana (the "Carmel System"). The purchase price is $44,235,333, which is the
average of three separate independent appraisals of the fair market value of the
Carmel System. The Carmel System passes approximately 24,400 homes and serves
approximately 18,500 basic subscribers. The Company expects to acquire and to
trade the Carmel System, along with certain other properties, to an unaffiliated
cable television system operator during 1995, as discussed below.
On August 11, 1995, the Company entered into a purchase and sale
agreement with Jones Cable Income Fund 1-B, Ltd., a Colorado limited
partnership, one of the Company's managed limited partnerships, to acquire from
such partnership the cable television system serving areas in and around
Orangeburg, South Carolina (the "Orangeburg System"). The purchase price is
$18,347,667, which is the average of three separate independent appraisals of
the fair market value of the Orangeburg System. The Orangeburg System passes
approximately 16,530 homes and services approximately 12,000 basic subscribers.
The Company expects to acquire and then to trade the Orangeburg System, along
with certain other properties, to an unaffiliated cable television system
operator during 1995, as discussed below.
On August 11, 1995, the Company entered into a purchase and sale
agreement with the Cable TV Fund 12-BCD Venture, a joint venture of three of the
Company's managed limited partnerships, to acquire from the Venture the cable
television system serving areas in and around Tampa, Florida (the "Tampa
System"). The purchase price is $110,395,667, which is the average of three
separate independent appraisals of the fair market value of the Tampa System.
The Tampa System passes approximately
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<PAGE> 53
125,000 homes and serves approximately 62,500 basic subscribers. The Company
expects to acquire and then to trade the Tampa System, along with certain other
properties, to an unaffiliated cable television system operator during 1995, as
discussed below.
On August 11, 1995, the Company entered into an Asset Exchange
Agreement (the "Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television system operator. Pursuant to the Exchange Agreement, the Company
will convey to TWEAN substantially all of the assets of the Carmel System, the
Orangeburg System and the Tampa System and cash in the amount of $3,500,000
(subject to normal closing adjustments). In return, the Company will receive
from TWEAN substantially all of the assets of the cable television systems
serving Andrews Air Force Base, Capitol Heights, Cheltenham, District Heights,
Fairmount Heights, Forest Heights, Morningside, Prince George's County, Seat
Pleasant and Upper Marlboro, Maryland, portions of Fairfax County, Virginia.
The closing of the transaction contemplated by the Exchange Agreement
is subject to customary closing conditions, including obtaining necessary
governmental and other third party consents. The parties intend to complete the
transaction by the end of 1995, but there can be no assurances that all
conditions will be satisfied or waived by that time. Either party may terminate
the Exchange Agreement if the transaction is not completed on or before June 30,
1996. The Company will pay Financial Group, an affiliate of the Company, a
$1,667,723 fee upon the completion of the transaction as compensation to it for
acting as the Company's financial advisor in connection with this exchange.
The Company purchased property, plant and equipment totaling
approximately $44,958,000 during the year ended May 31, 1995. Such expenditures
were principally the result of the following: (a) the upgrade and rebuild of the
cable plant in the Alexandria, Virginia; North Augusta, South Carolina and Anne
Arundel, Maryland systems; and (b) new extension projects, drop materials,
converters and various maintenance projects in the Pima County, Arizona; Anne
Arundel, Maryland and Charles County, Maryland systems. Estimated capital
expenditures, excluding acquisitions, through May 31, 1996 are approximately
$40,000,000. Funding for such expenditures is expected to be provided by cash on
hand and cash generated from operations.
On December 19, 1994, the shareholders of the Company approved an
Exchange Agreement and Plan of Reorganization and Liquidation dated May 31,
1994, as amended, between the Company and Jones Spacelink, Ltd. ("Spacelink")
providing for the acquisition by the Company of substantially all of the assets
of Spacelink and the assumption by the Company of all of the liabilities of
Spacelink. On December 20, 1994, the Company acquired all of the assets of
Spacelink (except for the 2,859,240 shares of the Company's Common Stock owned
by Spacelink) and assumed all of the liabilities of Spacelink (other than
liabilities with respect to shareholders exercising dissenters' rights) in
exchange for 3,900,000 shares of the Company's Class A Common Stock. Spacelink
is effecting its complete liquidation and is distributing the aforesaid shares
of the Company's Class A Common Stock and Common Stock to its shareholders,
other than to any dissenting shareholders. The Company incurred costs related to
this transaction, totaling $5,438,000 at May 31, 1995, which have been
considered part of the purchase price of Spacelink. The Company has accounted
for this transaction using the purchase method.
The Company owns a 38% interest in Jones Global Group, Ltd. ("Jones
Global Group"), a Colorado corporation of which 62% is owned by International.
On July 22, 1994, Jones Global Group and certain of Jones Global Group's
wholly-owned subsidiaries transferred all of their interests in their
cable/telephony properties in the United Kingdom to Bell Cablemedia plc, a
public limited company incorporated under the laws of England and Wales, in
exchange for 3,663,584 American Depository Shares ("ADSs") representing
18,317,920 Ordinary Shares of Bell Cablemedia. Also on July 22, 1994,
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<PAGE> 54
the Company and certain of its wholly-owned subsidiaries transferred all of
their interests in their cable/telephony properties in the United Kingdom to
Bell Cablemedia in exchange for 6,035,648 ADSs representing 30,178,240 Ordinary
Shares of Bell Cablemedia. As a result of these transactions, the Company and
Jones Global Group no longer own any direct interest in cable/telephony
properties in the United Kingdom. Jones Spanish Holdings, Inc. ("Spanish
Holdings") is an affiliate indirectly owned 38% by the Company and 62% by
International. On October 13, 1994, Spanish Holdings and Jones International
Spanish Investments, Inc. transferred all of their interests in their
cable/telephony properties in Spain to Bell Cablemedia in exchange for a total
of 190,148 ADSs representing 950,740 Ordinary Shares of Bell Cablemedia. Such
shares subsequently were transferred to the Company in repayment of advances
made to finance such affiliates' Spanish operations. As a result of this
transaction, the Company and its affiliates no longer own any direct interest in
cable/telephony properties in Spain.
The Company directly or indirectly owns approximately 11.6% of the
issued and outstanding shares of Bell Cablemedia. The Company and its wholly
owned subsidiaries own 6,225,796 ADSs. The Company also indirectly owns 974,162
ADSs, representing 38% of the 2,563,584 ADSs owned by Jones Global Group and its
wholly owned subsidiaries. In the aggregate, the Company's direct and indirect
investment in 7,199,958 ADSs had a quoted market value of approximately
$134,999,200, based on the quoted market price of $18.75 per ADS on July 14,
1995. Due to the affiliated nature of the transactions and the Company's
indirect continuing interest in the United Kingdom and Spanish properties, the
investment in Bell Cablemedia is reflected at the Company's cost. At May 31,
1995, the Company's net investment in Bell Cablemedia totaled approximately
$61,193,000.
During fiscal 1992 and 1993, the Company invested $10,000,000 in Mind
Extension University, Inc., ("ME/U"), an affiliate of International that
provides distance educational programming through affiliated and unaffiliated
cable television systems, for 25% of the stock of ME/U, which also received
certain advertising avails and administrative and marketing considerations from
the Company. Through its acquisition of the assets of Spacelink, the Company
obtained an additional 13% interest in ME/U in December 1994. Spacelink had
acquired such interest in fiscal 1991 for $3,135,000.
In fiscal 1993, 1994 and 1995, the Company advanced $20,000,000 to
ME/U. On April 11, 1995, the Company converted its advances to ME/U into shares
of Class A Common Stock of Jones Education Networks, Inc. ("JEN"), the parent
company of ME/U. JEN is an affiliate of International and, in addition to its
51% ownership of ME/U, JEN owns an 81% interest in Jones Computer Network, Ltd.
The Company will own an approximate 17% interest in JEN.
-50-
<PAGE> 55
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Public Accountants 52
Consolidated Balance Sheets 53
Consolidated Statements of Operations 55
Consolidated Statements of Shareholders' Investment 56
Consolidated Statements of Cash Flows 57
Notes to Consolidated Financial Statements 58
-51-
<PAGE> 56
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO JONES INTERCABLE, INC.:
We have audited the accompanying consolidated balance sheets of JONES
INTERCABLE, INC. (a Colorado corporation) and subsidiaries as of May 31, 1995
and 1994, and the related consolidated statements of operations, shareholders'
investment and cash flows for each of the three years in the period ended May
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Jones Intercable,
Inc. and subsidiaries as of May 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
May 31, 1995, in conformity with generally accepted accounting principles.
As explained in Note 1 of Notes to Consolidated Financial Statements,
effective June 1, 1992, the Company changed its method of accounting for income
taxes.
Denver, Colorado,
August 11, 1995 ARTHUR ANDERSEN LLP
52
<PAGE> 57
<TABLE>
<CAPTION>
CONSOLIDATED
BALANCE SHEETS Jones Intercable, Inc.
As of May 31, 1995 and 1994 and Subsidiaries
--------------------------------------------------------------------------------------------------------------------------------
ASSETS 1995 1994
------------------------------------------------------------------------------------------(Stated in Thousands)-----------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 271,311 $ 4,239
RECEIVABLES:
Trade receivables, net of allowance for
doubtful accounts of $695,700 in 1995
and $393,900 in 1994 10,220 5,563
Affiliated entities 9,869 15,611
Other 3,668 715
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 360,275 292,381
Less - Accumulated depreciation (154,945) (121,235)
----------- -----------
205,330 171,146
Franchise costs, net of accumulated
amortization of $107,025,000 in 1995
and $76,113,800 in 1994 74,235 73,769
Cost in excess of interests in net assets
purchased, net of accumulated
amortization of $7,923,000 in 1995
and $5,918,600 in 1994 61,540 39,306
Noncompete agreement, net of accumulated
amortization of $1,273,000 in 1995
and $737,900 in 1994 407 412
Subscriber lists, net of accumulated
amortization of $39,354,000 in 1995
and $30,421,500 in 1994 14,434 18,524
Investments in domestic cable television
partnerships and affiliates 39,363 34,346
Investment in foreign cable television properties 61,193 57,752
----------- -----------
TOTAL INVESTMENT IN CABLE TELEVISION PROPERTIES 456,502 395,255
----------- -----------
DEFERRED TAX ASSET, net of valuation
allowance of $37,376,000 in 1995 and
$37,785,000 in 1994 3,862 3,862
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 44,339 23,240
----------- -----------
TOTAL ASSETS $ 799,771 $ 448,485
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
-53-
<PAGE> 58
<TABLE>
<CAPTION>
CONSOLIDATED
BALANCE SHEETS Jones Intercable, Inc.
As of May 31, 1995 and 1994 and Subsidiaries
--------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT 1995 1994
(Stated in Thousands)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES:
Accounts payable and accrued liabilities $ 47,338 $ 37,260
Subscriber prepayments and deposits 5,638 5,275
Subordinated debentures and other debt 481,358 280,907
Credit facility - 63,000
-------------- -------------
TOTAL LIABILITIES 534,334 386,442
-------------- -------------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 10)
SHAREHOLDERS' INVESTMENT:
Class A Common Stock, $.01 par value, 30,000,000 * shares authorized;
26,158,305 and 14,817,088 shares issued at May 31, 1995
and 1994, respectively 262 148
Common Stock, $.01 par value, 5,550,000 shares
authorized; 5,113,021 and 4,913,021 shares issued
at May 31, 1995 and 1994, respectively 51 49
Additional paid-in capital 394,420 175,316
Accumulated deficit (129,296) (113,470)
-------------- -------------
TOTAL SHAREHOLDERS' INVESTMENT 265,437 62,043
-------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $ 799,771 $ 448,485
============== =============
</TABLE>
* On July 10, 1995, the shareholders of the Company approved a resolution to
amend the Company's Articles of Incorporation to increase the number of
authorized Class A Common Stock Shares from 30,000,000 to 60,000,000.
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
-54-
<PAGE> 59
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS Jones Intercable, Inc.
For the years ended May 31, 1995, 1994 and 1993 and Subsidiaries
--------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
(In Thousands Except Per Share Data)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES FROM CABLE TELEVISION OPERATIONS:
Cable Television Revenue
Subscriber service fees $ 114,020 $ 100,902 $ 92,714
Management fees 19,508 17,360 17,104
Non-cable Revenue 17,418 8,217 7,352
--------- --------- ---------
TOTAL REVENUES 150,946 126,479 117,170
COSTS AND EXPENSES:
Cable Television Expenses
Operating expenses 64,714 53,036 50,737
General and administrative expenses (including
approximately $2,690,400, $4,246,000 and $2,222,600
of related party expenses during the fiscal years ended
May 31, 1995, 1994 and 1993, respectively) 7,887 8,715 7,650
Non-cable operating, general and administrative 18,996 8,637 7,551
Depreciation and amortization 45,897 43,831 42,720
--------- --------- ---------
OPERATING INCOME 13,452 12,260 8,512
OTHER INCOME (EXPENSE):
Interest expense (39,939) (36,189) (43,573)
Equity in losses of affiliated entities (2,981) (4,624) (2,900)
Interest income 9,652 4,695 4,060
Gain (loss) on sale of assets 15,496 -- (5,466)
Other, net 319 (1,419) (899)
--------- --------- ---------
LOSS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (4,001) (25,277) (40,266)
Income tax provision -- -- --
--------- --------- ---------
LOSS BEFORE EXTRAORDINARY ITEM (4,001) (25,277) (40,266)
EXTRAORDINARY ITEM:
Loss on early extinguishment of debt,
net of related income taxes -- -- (20,386)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING METHOD:
Change in method of accounting for income taxes -- -- 3,862
--------- --------- ---------
NET LOSS $ (4,001) $ (25,277) $ (56,790)
========= ========= =========
PRIMARY EARNINGS (LOSS) PER SHARE:
Loss before extraordinary item $ (.16) $ (1.43) $ (2.82)
Extraordinary item -- -- (1.43)
Accounting change -- -- .27
--------- --------- ---------
$ (.16) $ (1.43) $ (3.98)
========= ========= =========
WEIGHTED AVERAGE NUMBER OF CLASS A COMMON
AND COMMON SHARES OUTSTANDING: 24,848 17,662 14,277
========= ========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-55-
<PAGE> 60
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' INVESTMENT Jones Intercable, Inc.
For the years ended May 31, 1993, 1994 and 1995 and Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------
Additional
Class A Common Stock Common Stock Paid-In Accumulated
-------------------- ------------
Shares Amount Shares Amount Capital Deficit
------------------------------------------------------------------------------------------------------------------------------------
(Stated in Thousands)
<S> <C> <C> <C> <C> <C> <C>
BALANCES, May 31, 1992 7,972 $ 79 4,908 $ 49 $ 57,777 $ (31,030)
Proceeds from stock options
exercised 54 1 - - 306 -
Purchase of interest in the
Jones Group, Ltd. - - 5 - 37 (37)
Sale of Class A Common
Stock 4,270 43 - - 57,884 -
Class A Stock Option Grants - - - - 4,080 -
Purchase of Treasury Stock
from Jones Spacelink, Ltd. (60) (1) - - (413) (336)
Net loss - - - - - (56,790)
------ ----------- ----- ----------- ----------- -----------
BALANCES, May 31, 1993 12,236 122 4,913 49 119,671 (88,193)
Proceeds from stock options
exercised 75 1 - - 418 -
Class A Common Stock issued
upon conversion of
Subordinated Debentures 6 - - - 100 -
Class A Stock Option Grants - - - - 152 -
Sale of Class A Common Stock
to Bell Canada International Inc. 2,500 25 - - 54,975 -
Net loss - - - - - (25,277)
------ ----------- ----- ----------- ----------- -----------
BALANCES, May 31, 1994 14,817 148 4,913 49 175,316 (113,470)
Proceeds from stock options
exercised 27 1 200 2 1,383 -
Class A Common Stock Grants - - - - 261 -
Sale of Class A Common Stock to
Bell Canada International, net 7,414 74 - - 201,219 -
Spacelink Acquisition 3,900 39 - - 16,241 (11,825)
Net loss - - - - - (4,001)
------ ----------- ----- ----------- ----------- -----------
BALANCES, May 31, 1995 26,158 $ 262 5,113 $ 51 $ 394,420 $ (129,296)
====== =========== ===== =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-56-
<PAGE> 61
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF
CASH FLOWS Jones Intercable, Inc.
For the years ended May 31, 1995, 1994 and 1993 and Subsidiaries
--------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
(Stated in Thousands)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,001) $ (25,277) $ (56,790)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Extraordinary loss on early extinguishment
of debentures, net of related income taxes - - 20,386
Cumulative effect of change in method of accounting for income taxes - - (3,862)
Class A Common Stock option expense 261 152 4,080
Loss (gain) on sale of assets (15,496) - 5,466
Depreciation and amortization 45,897 43,831 42,720
Equity in losses of affiliated entities 2,981 4,624 2,900
Amortization of discount on debentures - - 348
Increase in deferred distribution revenue - - 4,778
Increase in trade receivables (838) (627) (805)
Increase in other receivables, deposits,
prepaid expenses and other assets (10,059) (362) (1,548)
Increase in accounts payable, accrued
liabilities and subscriber prepayments and deposits 6,340 1,321 9,059
----------- ----------- -----------
Net cash provided by operating activities 25,085 23,662 26,732
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of cable television systems - (27,880) (74,165)
Sale of cable television systems 35,587 - 18,170
Purchase of property and equipment (44,958) (23,818) (18,238)
Investment in cable television partnerships and affiliates (12,930) (44,328) (14,147)
Acquisition Costs (5,438) - -
Other, net 1,387 3,524 3,385
----------- ----------- -----------
Net cash used in investing activities (26,352) (92,502) (84,995)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 16,500 84,500 207,000
Repayment of debt (154,500) (67,500) (227,000)
BCI Investment 203,893 55,000 -
Equity acquisition fees (2,600) - -
Proceeds from Senior Note Offering 200,000 - -
Senior Note offering costs (3,500) - -
Proceeds from issuance of Class A Common
Stock and Class A Common Stock options 1,386 519 58,234
Decrease (increase) in accounts receivable from affiliated entities 5,742 (264) (4,302)
Purchase of Treasury stock - - (750)
Redemption of debentures - - (225,557)
Proceeds from debenture offerings, net - - 253,839
Other, net 1,418 (307) (4,484)
----------- ----------- -----------
Net cash provided by financing activities 268,339 71,948 56,980
----------- ----------- -----------
Increase (decrease) In Cash and Cash Equivalents 267,072 3,108 (1,283)
Cash and Cash Equivalents, beginning of year 4,239 1,131 2,414
----------- ----------- -----------
Cash and Cash Equivalents, end of year $ 271,311 $ 4,239 $ 1,131
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-57-
<PAGE> 62
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended May 31, 1995, 1994 and 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Jones Intercable, Inc. (the "Company") was formed in 1970, as a
wholly-owned subsidiary of Jones International, Ltd. ("International") to own,
operate and manage cable television systems. Subsequent sales of shares of the
Company's Common Stock by International and issuances of shares of such stock
and Class A Common Stock by the Company reduced International's ownership of the
Common Stock and Class A Common Stock of the Company. In 1987, International
agreed to exchange approximately 97% of its Common Stock holdings of the Company
for Class A Common Stock of Jones Spacelink, Ltd. ("Spacelink"), a subsidiary of
International with a publicly held minority interest. On December 19, 1994, the
shareholders of the Company approved an Exchange Agreement and Plan of
Reorganization and Liquidation dated May 31, 1994, as amended, between the
Company and Spacelink providing for the acquisition by the Company of
substantially all of the assets of Spacelink and the assumption by the Company
of all of the liabilities of Spacelink. On December 20, 1994, the Company
acquired all of the assets of Spacelink (except for the 2,859,240 shares of the
Company's Common Stock owned by Spacelink) and assumed all of the liabilities of
Spacelink (other than liabilities with respect to shareholders exercising
dissenters' rights) in exchange for 3,900,000 shares of the Company's Class A
Common Stock. Spacelink is effecting its complete liquidation and is
distributing the aforesaid shares of the Company's Class A Common Stock and
Common Stock to its shareholders, other than to any dissenting shareholders. The
Company incurred costs related to this transaction, totaling $5,438,000 at May
31, 1995, which have been considered part of the purchase price of Spacelink.
The pro forma effect of this transaction, which has been accounted for using the
purchase method, on the Company's results of operations is presented in the
following unaudited tabulation:
Year ended May 31, 1995:
(In thousands except per share data)
<TABLE>
<CAPTION>
As
Reported Adjustments Pro Forma
-------- ----------- ---------
<S> <C> <C> <C>
Revenues $ 150,946 $ 19,266 $ 170,212
========= ========= =========
Operating Income $ 13,452 $ (2,875) $ 10,577
========= ========= =========
Net Loss $ (4,001) $ (7,307) $ (11,308)
========= ========= =========
Net Loss per Class A Common
and Common Share $ (.16) $ (.42)
========= =========
</TABLE>
-58-
<PAGE> 63
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Year ended May 31, 1994:
(In thousands except per share data)
<TABLE>
<CAPTION>
As
Reported Adjustments Pro Forma
-------- ----------- ---------
<S> <C> <C> <C>
Revenues $ 126,479 $ 34,124 $ 160,603
========= ========= =========
Operating Income $ 12,260 $ (2,259) $ 10,001
========= ========= =========
Net Loss $ (25,277) $ (6,423) $ (31,700)
========= ========= =========
Net Loss per Class A Common
and Common Share $ (1.43) $ (1.47)
========= =========
</TABLE>
In May 1994, the Company and Bell Canada International Inc. ("BCI")
entered into an agreement whereby BCI agreed to acquire an approximate 30
percent economic interest in the Company through the purchase of Class A Common
Stock of the Company. BCI is a wholly owned subsidiary of BCE Inc., Canada's
largest telecommunications company. On December 19, 1994, the shareholders of
the Company approved the agreement. The investment by BCI was made in two
installments: the purchase of 2,500,000 newly issued shares of Class A Common
Stock of the Company at $22 per share for $55,000,000 in the fourth quarter of
fiscal 1994, and the purchase of 7,414,300 newly issued shares of Class A Common
Stock of the Company at $27.50 per share for $203,893,250 in the third quarter
of fiscal 1995, resulting in BCI owning an approximate 30 percent economic
interest in the Company for a total consideration of approximately $258,900,000.
The $55,000,000 was used to reduce amounts then outstanding under the Company's
revolving credit facility. A portion of the $203,893,250 was used to repay all
amounts then outstanding under the Company's and Spacelink's credit facilities
of $38,000,000 and $75,000,000, respectively, to pay fees of $2,000,000 to Jones
Financial Group, Ltd. ("Jones Financial Group"), an affiliate of International
and $600,000 to BCI with the remainder being held for future needs. BCI also has
committed to invest up to an additional $141,100,000 to maintain its 30 percent
interest in the event the Company offers additional Class A Common Stock. BCI
has the right to maintain or increase its ownership by investing amounts beyond
the $400,000,000 commitment.
On December 20, 1994, International, which is wholly owned by Glenn R.
Jones, Chairman and Chief Executive Officer of the Company, as well as certain
subsidiaries of International, and Mr. Jones individually, granted BCI options
to acquire 2,878,151 shares of the Common Stock of the Company. Except in
limited circumstances, the option will only be exercisable during the eighth
year after December 20, 1994. The exercise of such options would result in BCI
holding a sufficient number of shares of the Common Stock of the Company to
enable BCI to elect 75 percent of the Company's Board of Directors.
-59-
<PAGE> 64
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Summary of Significant Accounting Policies
Basis of Presentation
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. The Company's investments in domestic
cable television partnerships and other affiliates (Note 3) are carried at cost
plus equity in profits and losses. All significant intercompany transactions
have been eliminated in consolidation.
Statements of Cash Flows
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Income taxes and
interest paid during the periods presented are as follows:
<TABLE>
<CAPTION>
May 31,
-----------------------------------------
1995 1994 1993
------- ------- -------
(Stated in Thousands)
<S> <C> <C> <C>
Income taxes $ -- $ -- $ --
======= ======= =======
Interest $39,516 $35,689 $38,871
======= ======= =======
</TABLE>
Non-cash transactions: On July 22, 1994, the Company and certain of its
wholly owned subsidiaries transferred all of their interests in their
cable/telephony properties in the United Kingdom to Bell Cablemedia plc ("Bell
Cablemedia"), in exchange for 6,035,648 ADSs representing 30,178,240 Ordinary
Shares of Bell Cablemedia. On October 13, 1994, Jones Spanish Holdings, Inc.
("Spanish Holdings") and Jones International Spanish Investments, Inc.
transferred all of their interests in their Spanish cable/telephony properties
to Bell Cablemedia in exchange for a total of 190,148 ADSs, representing 950,740
Ordinary Shares of Bell Cablemedia. As described above, on December 20, 1994,
the Company acquired substantially all of the assets of Spacelink and assumed
all of the liabilities of Spacelink in exchange for 3,900,000 shares of the
Company's Class A Common Stock. As described in Note 3, on April 11, 1995, the
Company converted its $20,000,000 in advances to the Mind Extension University
("ME/U") into Class A Common Shares of Jones Education Networks, Inc. ("JEN").
During fiscal 1995, 1994 and 1993, the Company recorded $261,000, $152,000 and
$4,080,200, respectively of Additional Paid-in Capital related to Class A Common
Stock option grants as discussed in Note 7.
-60-
<PAGE> 65
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided using the
straight-line method over the following estimated service lives:
<TABLE>
<S> <C>
Distribution systems including capitalized
interest and operating expenses Primarily 15 years
Buildings 10-20 years
Equipment and tools 3- 5 years
Premium service equipment 5 years
Earth receive stations 5-15 years
Vehicles 3- 4 years
Other property, plant and equipment 3- 5 years
</TABLE>
Franchise Costs
Costs incurred in obtaining cable television franchises and other
operating authorities are initially deferred and amortized over the lives of the
franchises. Franchise rights acquired through purchase of cable television
systems are stated at estimated fair value at the date of acquisition and
amortized over the remaining terms of the franchises. Amortization is determined
using the straight-line method over lives of one to 18 years.
Cost in Excess of Interests in Net Assets Purchased
The cost of acquisitions in excess of the fair values of net assets
acquired is being amortized using the straight-line method over a 40-year life.
The Company assesses the realizability of these assets through periodic
independent appraisals. Any impairments are recognized as an expense on the
Company's Consolidated Statements of Operations.
Deferred Financing Costs
Costs incurred in connection with the issuance of debentures and the
execution of revolving credit agreements are deferred and amortized using the
effective interest method over the life of such issues and agreements.
Fund Fees and Distributions
Fees and distributions earned by the Company related to cable
television properties sold to unaffiliated parties are recorded as revenues when
received. Fees and distributions earned by the Company as general partner of
managed limited partnerships related to cable television properties sold to the
Company are treated as a reduction of the purchase prices of the cable
television systems purchased. Fees and distributions earned by the Company as
General Partner of managed limited partnerships related to cable television
properties sold to entities in which the Company has a continuing equity
interest are deferred and recognized as revenue in future periods.
-61-
<PAGE> 66
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Income Taxes
Effective June 1, 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes". Under the
liability method specified by SFAS No. 109, a deferred tax liability or asset is
determined based on the temporary differences between the financial reporting
and tax bases of assets and liabilities as measured by the enacted tax rates
which are expected to be in effect when these differences reverse.
Earnings Per Share of Class A Common Stock and Common Stock
Net loss per share of Class A Common Stock and Common Stock is based on
the weighted average number of shares outstanding during the periods. Common
stock equivalents were not significant to the computation of primary earnings
per share.
Treasury Stock
Due to an amendment to the Colorado Business Corporation Act, effective
July 1, 1994, the Company changed its accounting for treasury stock. Shares held
in treasury have been retired and classified as authorized but unissued shares.
Reclassifications
Certain prior year amounts have been reclassified to conform to the
1995 presentation.
2. TRANSACTIONS WITH RELATED PARTIES
The Company and the limited partnerships for which the Company is
general partner (Note 4) have had, and will continue to have, certain
transactions with International and its other subsidiaries. Principal recurring
transactions are as follows:
Jones Interactive, Inc. ("Jones Interactive"), a wholly-owned
subsidiary of International, provides information management and data processing
services for all companies affiliated with International. Charges to the various
operating companies are based on usage of computer time by each entity. Amounts
charged to the Company and its affiliated partnerships for the years ended May
31, 1995, 1994 and 1993 totaled $5,499,000, $4,687,000 and $4,082,400,
respectively.
The Company is party to a lease with Jones Properties, Inc., a
wholly-owned subsidiary of International, under which the Company has leased a
101,500 square foot office building in Englewood, Colorado. The lease agreement,
as amended, has a 15-year term with three 5-year renewal options. The annual
rent is not to exceed $24.00 per square foot, plus operating expenses. The
Company has subleased approximately 47% of the building to International and
certain affiliates of International on the same terms and conditions as the
above-mentioned lease. Rent payments to Jones Properties, Inc., net of
subleasing reimbursements for the three years ended May 31, 1995, 1994 and 1993
were $1,696,000, $1,753,000 and $1,753,000, respectively.
-62-
<PAGE> 67
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Upon the closing of the BCI investment, the Company entered into a
Secondment Agreement with BCI. Pursuant to the Secondment Agreement, BCI will
provide up to 10 people with specific experience in certain areas of operations
and other aspects of BCI's business. The Company will reimburse BCI for the full
employment costs of such individuals. The Company reimbursed BCI $220,800 during
the year ended May 31, 1995. No reimbursements were made during fiscal 1994 or
fiscal 1993.
The Company paid approximately 23%, 26% and 22% of the above-described
expenses during the years ended May 31, 1995, 1994 and 1993, respectively. The
remainder of the expenses were paid by the Company's managed limited
partnerships.
In fiscal 1993, the Company entered into a license agreement with Jones
Space Segment, Inc. ("Space Segment"), an affiliate of International, to use a
non-preemptible transponder on a domestic communications satellite that Space
Segment currently leases. The Company agreed to pay Space Segment $2,400,000
over a twelve-month period beginning on or about December 15, 1992, the delivery
date of the transponder. On November 9, 1993, the Company extended the term of
the license agreement through December 31, 1994 on the same terms and conditions
as the previous agreement. The Company subsequently terminated the 1993 license
agreement and entered into a new license agreement with Space Segment. Under the
new license agreement, which expired December 31, 1994, the Company, Jones
Infomercial Networks, Inc. ("PIN") and Jones Computer Network, Ltd. ("JCN"),
affiliates of International, had a license to use the transponder for their
respective purposes. Under the terms of the new agreement, the Company agreed to
pay Space Segment $200,000 per month from January 1994 through March 1994 and
the Company and PIN each agreed to pay $100,000 per month beginning April 1994
and until the launch of JCN. Through December 1994, the Company, PIN and JCN
each paid $66,667 per month. The Company recognized $572,000, $2,300,000 and
$700,000 of rental expense related to these lease agreements during the fiscal
years ended May 31, 1995, 1994 and 1993, respectively.
Jones Informercial Network Ventures, Inc., ("Jones Infomercial"), an
affiliate of International, provided advertising time for third parties on
certain Company and its managed partnership cable television systems, using
those systems' ad sales slots. In consideration, the revenues generated from the
third parties were shared two-thirds and one-third between Jones Infomercial and
the entities owning the cable television systems. Effective January 31, 1995,
Jones Infomercial and an unaffiliated third party formed the Product Information
Network ("PIN"). PIN provides advertising time for third parties in the same
manner as Jones Infomercial. PIN and the entity owning the cable system share
revenue generated 50% and 50%. Aggregate payments made to the Company by Jones
Infomercial and PIN relating to the Company's owned cable television systems
totaled approximately $223,900 and $17,700 for the years ended May 31, 1995 and
1994, respectively. No such payments were received during the year ended May 31,
1993.
Effective upon the closing of the BCI investment, the Company entered
into a Supply and Services Agreement with BCI. Pursuant to the Supply and
Services Agreement, BCI will provide the Company with access to the expert
advice of personnel from BCI and its affiliates for the equivalent of three
man-years on an annual basis. The Company will pay an annual fee of $2,000,000
to BCI during the term of the agreement. Payments under the Supply and Services
Agreement during the year ended May 31, 1995 totaled $1,000,000. No payments
were made during the fiscal years ended May 31, 1994 and 1993.
-63-
<PAGE> 68
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Jones Financial Group performs services for the Company as its agent in
connection with negotiations regarding various financial arrangements on behalf
of the Company. The Company has entered into a Financial Services Agreement with
Financial Group to render financial advisory and related services to the Company
for a fee equal to 90% of the fees that would be charged to the Company by
unaffiliated third parties for the same or comparable purposes. The Company will
pay Financial Group an annual $1,000,000 retainer as an advance against payments
due pursuant to this agreement and will reimburse Financial Group for its
reasonable out-of-pocket expenses. The term of the Financial Services Agreement
is for eight years. In December 1994, the Company paid fees of $2,000,000 to
Jones Financial Group for its services to the Company in connection with the BCI
agreement (see Note 1). In addition, the Company paid an advisory fee of
(pound)414,854 (approximately $632,600) to Jones Financial Group in fiscal 1995
for its services to the Company in connection with the Company's transfer of all
of its interests in its cable/telephony properties in the United Kingdom to Bell
Cablemedia plc (See Note 3).
The Company has incurred approximately $2,690,400, $4,246,000 and
$2,222,600 of related party expenses in connection with the above-mentioned
related party transactions which had been charged to operating, general and
administrative expenses during the fiscal years ended May 31, 1995, 1994 and
1993, respectively. The remaining related party expenses have been allocated to
the Company's managed partnerships and affiliates. The Company believes that the
methodology used in allocating related party expenses is reasonable.
During fiscal 1995, 1994 and 1993, the Company carried accounts
receivable from International and its affiliates totaling $2,000,000. This
receivable was repaid in January 1995. Interest on such receivables was charged
at the Company's average cost of borrowing plus 2%.
3. INVESTMENTS IN CABLE TELEVISION PARTNERSHIPS AND JOINT VENTURES
Jones Global Group
The Company owns a 38% interest in Jones Global Group, Ltd. ("Jones
Global Group"), a Colorado corporation of which 62% is owned by International.
On July 22, 1994, Jones Global Group and certain of Jones Global Group's
wholly-owned subsidiaries transferred all of their interests in their
cable/telephony properties in the United Kingdom to Bell Cablemedia plc, a
public limited company incorporated under the laws of England and Wales, in
exchange for 3,663,584 American Depository Shares ("ADSs") representing
18,317,920 Ordinary Shares of Bell Cablemedia. Also on July 22, 1994, the
Company and certain of its wholly-owned subsidiaries transferred all of their
interests in their cable/telephony properties in the United Kingdom to Bell
Cablemedia in exchange for 6,035,648 ADSs representing 30,178,240 Ordinary
Shares of Bell Cablemedia. As a result of these transactions, the Company and
Jones Global Group no longer own any direct interest in cable/telephony
properties in the United Kingdom. Spanish Holdings is an affiliate indirectly
owned 38% by the Company and 62% by International. On October 13, 1994, Spanish
Holdings and Jones International Spanish Investments, Inc., a subsidiary of
International, transferred all of their interests in their cable/telephony
properties in Spain to Bell Cablemedia in exchange for a total of 190,148 ADSs
representing 950,740 Ordinary Shares of Bell Cablemedia. Such shares
subsequently were transferred to the Company in repayment of advances made to
finance such affiliates' Spanish operations. As a result of this transaction,
the Company and its affiliates no longer own any direct interest in
cable/telephony properties in Spain.
-64-
<PAGE> 69
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Prior to the closing of these transactions, Bell Cablemedia was
indirectly owned 80% by BCI and 20% by Cable and Wireless plc ("C&W"). The
Company's, Jones Global Group's and Spanish Holdings' agreement to contribute
their United Kingdom and Spanish holdings to Bell Cablemedia was contingent upon
the successful completion of Bell Cablemedia's initial public offering, which
closed on July 22, 1994. The initial offering price for the ADSs was $17.00 per
ADS. As part of the initial offering, Jones Global Group sold 1,100,000 ADSs
providing net cash proceeds of $17,547,888 to Jones Global Group.
The ADSs received by the Company and its affiliates are "restricted
securities" within the meaning of Rule 144 promulgated under the Securities Act
of 1933 (the "Securities Act"), and the Company and its affiliates will not be
able to sell their ADSs unless an exemption from registration under the
Securities Act is available or unless its ADSs are sold under the terms of a
shelf registration statement that is required to be available to the Company,
its affiliates and others for three years following July 20, 1994.
The Company directly or indirectly owns approximately 11.6% of the
issued and outstanding shares of Bell Cablemedia. The Company and its wholly
owned subsidiaries own 6,225,796 ADSs. The Company also indirectly owns 974,162
ADSs, representing 38% of the 2,563,584 ADSs owned by Jones Global Group and its
wholly owned subsidiaries. In the aggregate, the Company's direct and indirect
investment in 7,199,958 ADSs had a quoted market value of approximately
$134,999,200, based on the quoted market price of $18.75 per ADS on July 14,
1995. Due to the affiliated nature of the transactions and the Company's
indirect continuing interest in the United Kingdom and Spanish properties, the
investment in Bell Cablemedia is reflected at the Company's cost. At May 31,
1995, the Company's net investment in Bell Cablemedia totaled approximately
$61,193,000.
The Company paid an advisory fee of (pound)414,854 (approximately
$632,600) to Jones Financial Group in fiscal 1995 for its services to the
Company in connection with the aforementioned United Kingdom transactions. Jones
Global Group paid an advisory fee of (pound)251,812 (approximately $384,000) to
Jones Financial Group for its services to Jones Global Group in connection with
the aforementioned United Kingdom transactions. Jones Financial Group is owned
by International and Glenn R. Jones.
Mind Extension University, Inc.
During fiscal 1992 and 1993, the Company invested $10,000,000 in ME/U,
an affiliated company and subsidiary of JEN, that provides educational
programming through affiliated and unaffiliated cable television systems, for
25% of the stock of ME/U, which also received certain advertising avails and
administrative and marketing considerations from the Company. The number of
shares of Class A Common Stock of ME/U issued to the Company was based on the
average of two separate independent appraisals of ME/U. Through its acquisition
of the assets of Spacelink, the Company obtained an additional 13% interest in
ME/U in December 1994. Spacelink had acquired such interest in fiscal 1991 for
$3,135,000. Payments made to ME/U relating to the Company's owned cable
television systems for programming services for the fiscal years ended May 31,
1995, 1994 and 1993 totaled approximately $141,200, $103,300 and $84,300,
respectively. At May 31, 1995, the Company's net investment in ME/U was
$3,648,391.
-65-
<PAGE> 70
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Jones Education Networks
In fiscal 1993, 1994 and 1995 the Company advanced a total of
$20,000,000 to ME/U. Interest on such advances was charged at the Company's
weighted average cost of borrowing plus two percent. On April 11, 1995, the
Company converted its advances to ME/U into shares of Class A Common Stock of
JEN, the parent company of ME/U. The Company owns an approximate 17% interest in
JEN. JEN is an affiliate of International and, in addition to its 51% ownership
of ME/U, JEN owns an 81% interest in Jones Computer Network, Ltd.
Jones Intercable Investors, L.P.
The Company is the general partner of this partnership, which was
formed on September 18, 1986, and owns a 1% general partner interest. In a
series of transactions, the Company purchased an approximate 19% ownership
interest. The Company's net investment in this partnership totaled approximately
$4,482,900 at May 31, 1995. Based upon the quoted market price of $11.38 per
unit at May 31, 1995, the quoted market value of this investment was
approximately $18,124,200. The Company has accounted for this investment using
the equity method of accounting.
Jones Cyber Solutions, Ltd.
In fiscal 1995, the Company and Jones Interactive formed Jones Cyber
Solutions, Ltd. ("Jones Cyber Solutions") for the purpose of developing a
subscriber billing and management system. The Company invested $4.5 million in
Jones Cyber Solutions during fiscal 1995.
4. MANAGED PARTNERSHIPS
Organization
The Company is general partner for a number of limited partnerships
formed to acquire, construct, develop and operate cable television systems. In
addition, through its acquisition of Spacelink, the Company obtained general
partner interests in a number of partnerships previously managed by Spacelink.
Partnership capital has been raised principally through a series of public
offerings of limited partnership interests. The Company made a capital
contribution of $1,000 to each partnership and is allocated 1% of all
partnership profits and losses. The Company may also purchase limited partner
interests in the partnerships and generally participates with respect to such
interests on the same basis as other limited partners.
Management Fees
As general partner, the Company manages the partnerships and receives a
fee for its services generally equal to 5% of the gross revenues of the
partnerships, excluding revenues from the sale of cable television systems or
franchises.
-66-
<PAGE> 71
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Distributions
Any partnership distributions made from cash flow (defined as cash
receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are generally allocated 99% to the limited partners
and 1% to the general partner. With respect to Cable TV Funds 11 and 12, any
distributions other than from cash flow, such as from sale or refinancing of the
system or upon dissolution of the partnership, are generally made as follows:
first, to the limited partners in an amount which, together with all prior
distributions, will equal the amount initially contributed to the partnership
capital by the limited partners and the balance, 75% to the limited partners and
25% to the general partner. With respect to Cable TV Fund 14, any distributions
other than from cash flow are generally made as follows: first, to the limited
partners in an amount which, together with all prior distributions from cash
flow, will equal 125% of the amount initially contributed to the partnership and
the balance, 75% to the limited partners and 25% to the general partner. With
respect to Cable TV Fund 15, any distributions other than from cash flow are
generally made as follows: first, to the limited partners and general partner in
an amount which, together with all prior distributions, will equal the amount
initially contributed to the partnership capital by the limited partners and
general partner; second, to the limited partners which, together with all prior
distributions, will equal a 6% per annum cumulative and noncompounded return on
the capital contributions of the limited partners; the balance, 75% to the
limited partners and 25% to the general partner.
With respect to the Jones Cable Income Fund partnerships, any
distributions other than from cash flow are generally made as follows: first, to
the limited partners in an amount which, together with all prior distributions
made from sources other than cash flow, will equal the amount initially
contributed to partnership capital; second, to the limited partners in an amount
which, together with all prior distributions from cash flow, will equal a
liquidation preference ranging from 10% to 12% per annum, cumulative and
noncompounded, on their initial capital contributions and the balance, 75% to
the limited partners and 25% to the general partner.
Any distributions other than from cash flow made by Jones Intercable
Investors, L.P. (Note 3) are generally distributed as follows: first, to the
holders of the Class A Units an amount which, together with all prior
distributions of cash flow from operations, will equal a preferred return equal
to 10% per annum, cumulative and noncompounded, on an amount equal to $16.00 per
Class A Unit, less any portion of such amount which may have been returned to
the Unitholders from prior sale or refinancing proceeds; second, to the holders
of Class A Units an amount which, together with all prior distributions other
than distributions of cash flow from operations, will equal $16.00 per Class A
Unit, and the remainder, 60% to the holders of the Class A Units and 40% to the
general partner.
For the partnerships formerly managed by Spacelink, any partnership
distributions made from cash flow, as defined, are generally allocated 99
percent to the limited partners and one percent to the general partner. The
general partner is also entitled to partnership distributions other than from
cash flow, such as from the sale or refinancing of systems or upon dissolution
of the partnerships, which are a portion of the net remaining assets of such
partnership ranging from 15 percent to 40 percent after payment of partnership
debts and after investors have received an amount equal to their capital
contribution plus, in most cases, a preferential return on their investment.
-67-
<PAGE> 72
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
The Company recognized fees and distributions totaling $4,778,000 for
the year ended May 31, 1993. No such fees and distributions were recognized
during fiscal 1994 or fiscal 1995. The $4,778,000 distribution received during
fiscal 1993 from Jones Intercable Investors L.P., in which the Company has a 19%
limited partnership interest, upon the sale to the Company of the cable
television system serving the area in and around Alexandria, Virginia was
recorded as a reduction in the Company's investment in Jones Intercable
Investors, L.P.
Allocations
The Company's managed limited partnerships reimburse the Company for
certain allocated overhead and administrative expenses. These expenses generally
consist of salaries and related benefits paid to corporate personnel, rent, data
processing services and other corporate facilities costs. The Company provides
engineering, marketing, administrative, accounting, information management,
legal, investor relations and other services to the partnerships. Allocations of
personnel costs have been based primarily on actual time spent by Company
employees with respect to each partnership managed. Remaining overhead costs
have been allocated based on revenues and/or the relative cost of partnership
assets managed. As of December 1993, remaining overhead costs have been
allocated based solely on revenues. Company-owned systems are also allocated a
proportionate share of these expenses under the allocation formulas described
above. Amounts charged partnerships and other affiliated companies have directly
offset operating, general and administrative expenses by approximately
$32,929,000, $28,499,600 and $26,434,500 for the years ended May 31, 1995, 1994
and 1993, respectively.
Advances
The Company has made advances to certain of the limited partnerships
primarily to accommodate expansion and other financing needs of the
partnerships. Such advances bear interest at rates equal to the Company's
weighted average cost of borrowing which, for the year ended May 31, 1995 was
10.5%. Interest charged to the limited partnerships for the years ended May 31,
1995, 1994 and 1993 was $1,448,500, $1,617,000 and $1,497,600, respectively.
Certain condensed financial information regarding managed partnerships,
on a combined basis, is as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------
1994 1993 1992
----------------------------------------------------
(Stated in Thousands)
<S> <C> <C> <C>
Total assets $ 923,117 $ 986,560 $ 1,069,142
Debt 688,393 668,015 665,538
Amounts due general partner 25,735 20,631 16,009
Partners' Capital (Net of
accumulated deficit) 174,001 262,230 348,905
Revenues 397,318 385,990 372,718
Depreciation and amortization 153,520 157,643 172,342
Operating loss (34,565) (32,987) (37,678)
Net loss (80,988) (73,655) (29,503)
</TABLE>
-68-
<PAGE> 73
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
The fair market values of the partnerships' assets, as determined by
independent appraisals, exceed the combined amounts due the Company and other
outstanding indebtedness for each individual partnership, with the exception of
Spacelink Fund 4, Ltd. ("Fund 4"). The Company has reserved the portion of its
advance to Fund 4 that exceeds the fair value of Fund 4's assets.
The amount reported as combined net loss for all managed limited
partnerships for the year ended December 31, 1992 includes gains on sales and
liquidations recognized by certain partnerships which totaled approximately
$59,939,100. No such gains were recognized during the years ended December 31,
1994 or 1993.
5. NOTES RECEIVABLE
On December 19, 1994, Spacelink received a promissory note from Jones
Earth Segment, Inc., then an affiliate ("Earth Segment"), in conjunction with
the transfer of Earth Segment to International. The principal sum is $6,554,500.
Interest on the principal is at the prime rate plus one percent and is paid
quarterly. The note matures on December 19, 1999. The note is secured by the
real and personal property of Earth Segment. The Company acquired this note as
part of the acquisition of Spacelink's assets.
Pursuant to a tax sharing agreement with International, Spacelink was
allocated tax benefits based on its pro rata share of taxable loss generated as
part of the consolidated group. The tax sharing agreement was terminated
effective June 1, 1993. The allocated benefits are to be paid no later than five
years from the date they were created. The benefits accrue interest at the prime
rate in effect at the time they were created. The Company, through its
acquisition of Spacelink's assets, acquired a receivable from International
totaling $2,152,000 at May 31, 1995 relating to this tax sharing agreement.
6. DEBT
Debt consists of the following:
<TABLE>
<CAPTION>
May 31,
--------------------------------
1995 1994
------------- --------------
(Stated in Thousands)
<S> <C> <C>
SUBORDINATED DEBENTURES:
Debentures due July 15, 2004, interest payable semi-annually at 11.5%,
redeemable at the Company's option on or after July 15, 1997 at 106.75% of par,
declining to par by July 15, 2000 $ 160,000 $ 160,000
Debentures due March 1, 2008, interest payable semi-annually at 10.50%,
redeemable at the Company's option on or after March 1, 2000 at 105.25% of
par, declining to par by March 1, 2005 100,000 100,000
Convertible debentures due June 1, 2007, interest payable semi-annually at
7.5%, redeemable at the Company's option on or after June 1, 1990 at 107.5%
of par, declining to par by 1997 19,368 19,368
</TABLE>
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<PAGE> 74
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
<TABLE>
<S> <C> <C>
SENIOR NOTES:
Senior Notes due March 15, 2002, interest payable
semi-annually at 9 5/8% 200,000 -
OTHER:
Capitalized equipment lease
obligations due in installments through 1998 1,702 1,136
Non-interest bearing notes due 1995 through 1998 288 403
LENDING INSTITUTIONS:
Credit facility - 63,000
------------- --------------
Total debt $ 481,358 $ 343,907
============= ==============
</TABLE>
In addition to the terms described above, the Company's Convertible
Subordinated Debentures may be converted into its Class A Common Stock at $15.10
per share, subject to adjustment under certain conditions. Also, the 11.5%
Senior Subordinated Debentures due 2004 and the Convertible Subordinated
Debentures described above provide for annual sinking fund payments which are
calculated to retire 62-1/2% to 75% of the issues prior to maturity after
consideration of the debt redemptions discussed below, as follows:
<TABLE>
<CAPTION>
Annual Sinking Commencement
Fund Payment Date
-------------- ------------
<S> <C> <C>
Debenture Issue:
Convertible Debentures $ 3,000,000 June 1, 1998
Debentures due July 2004 $50,000,000 July 15, 2002
</TABLE>
As a result of debenture redemptions during fiscal 1992 and 1993, the
Company has eliminated any cash requirements for sinking fund payments scheduled
above until fiscal 2003, because the redeemed bonds can be applied against the
sinking fund payments.
Other than the amounts listed above, and the $200 million of Senior
Notes due March 15, 2002, there are no other significant debt maturities.
On March 23, 1995, the Company sold $200 million of 9 5/8% Senior Notes
due 2002. The Senior Notes mature on March 15, 2002. The Senior Notes bear
interest from the date of issuance at the rate of 9 5/8% per annum, payable
semi-annually on March 15 and September 15 of each year, commencing September
15, 1995. The Senior Notes are not redeemable prior to maturity and are not
subject to any sinking fund. The Senior Notes are senior unsecured obligations
of the Company. The Company paid fees of $3,500,000 relating to this
transaction. Such fees will be amortized over the life of the notes.
On December 8, 1992, the Company entered into a $300,000,000 reducing
revolving credit agreement with a number of commercial banks. The amount of
borrowings available under this agreement was $300,000,000 through August 30,
1995, after which availability is reduced quarterly until expiration
-70-
<PAGE> 75
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
on November 30, 2000. The maximum available will reduce 14 1/2 %, to
$256,500,000, during fiscal 1996. Interest on amounts outstanding under the
credit facility range from LIBOR plus .75% to LIBOR plus 1.625% depending upon
whether certain financial ratios have been achieved. For the year ended May 31,
1995, the Company's effective interest rate on amounts outstanding under the
credit facility was 7.51%. A fee ranging from 3/16% to 3/8% per annum on the
unused portion of the commitment is also required. Substantially all of the
Company's cable television related assets are pledged as security under the
agreement. At May 31, 1995, no amounts were outstanding under this credit
facility.
The Company has never paid a cash dividend with respect to its shares
of Common Stock or Class A Common Stock, and it has no present intention to pay
cash dividends in the foreseeable future. The current policy of the Company's
Board of Directors is to retain earnings to provide funds for the operation and
expansion of its business. The Company's credit agreement restricts the right of
the Company to declare and pay cash dividends without the consent of the
lenders.
At May 31, 1995, the carrying amount of the Company's long-term debt
was $481,358,000 and the estimated fair value was $513,526,000. The fair value
of the Company's long-term debt is estimated based on the quoted market prices
for the same issues.
7. INCOME TAXES
The Financial Accounting Standards Board Statement No. 109, "Accounting
for Income Taxes" requires the use of the asset and liability method of
accounting for income taxes for the Company. Deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or settled. Deferred
tax expense or benefit is the result of changes in the liability or asset
recorded for deferred taxes.
During fiscal years 1995, 1994, and 1993, changes in the Company's
temporary differences and losses from operations, which result primarily from
depreciation and amortization, resulted in deferred tax benefits which were
offset by a valuation allowance of an equal amount. No current or deferred
federal income tax expense or benefit was recorded from continuing operations
during the reporting periods. However a tax benefit was recorded as an
extraordinary item in fiscal year 1993 as a result of the Company's adoption of
the new method of accounting and reporting deferred income taxes.
Income tax expense attributable to income or loss from continuing
operations differs from the amounts computed by applying the Federal income tax
rate of 35% in 1995, 1994, and 1993 as a result of the following:
-71-
<PAGE> 76
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Year Ended May 31,
-----------------------------------------------------
1995 1994 1993
-----------------------------------------------------
(Stated in Thousands)
<S> <C> <C> <C>
Computed "expected" tax (benefit) expense $ (1,400) $ (8,847) $ (13,690)
Dividends excluded for income tax purposes 176 39 -
Intangibles not deductible for tax purposes 1,064 228 317
State and local taxes, net of federal income
tax benefit (130) (822) (1,330)
Change in status and equity losses of foreign investments - (2,093) -
Adjustment to deferred tax assets and liabilities
for enacted change in Federal income tax rate - - (576)
Tax credits and other 26 (129) (908)
------------- ------------- --------------
Total income tax (benefit) provision from operations (264) (11,624) (16,187)
Tax effect of extraordinary operations - (7,604)
SFAS 109 valuation allowance 264 11,624 23,791
Cumulative effect of change in method of
accounting of income taxes - - (3,862)
------------- ------------- --------------
Total income tax benefit $ - $ - $ (3,862)
============= ============= ==============
</TABLE>
The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at May 31, 1995
and 1994 are presented below:
<TABLE>
<CAPTION>
May 31, 1995 May 31, 1994
--------------------- ---------------------
(Stated in Thousands)
<S> <C> <C>
Deferred Tax Assets:
Net operating loss carryforwards 55,244 54,291
Investment tax credit carryforwards 1,076 1,076
Alternative minimum tax credit carryforwards 1,116 1,116
Investment in affiliates, due principally to losses
of partnerships and affiliates recognized for
financial statement purposes in excess of
losses recognized for income tax purposes 2,901 4,040
Future deductible amounts for nondeductible tax
accruals 2,173 988
------- -------
Total gross deferred tax assets 62,510 61,511
Valuation allowance on deferred tax assets (37,376) (37,785)
Deferred tax liabilities
Property and equipment, due to differences
in depreciation methods for financial statement
and tax purposes (21,272) (19,864)
------- -------
Net deferred tax liability $ 3,862 $ 3,862
======= =======
</TABLE>
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<PAGE> 77
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
At May 31, 1995, the Company had net operating loss carryforwards for
income tax purposes aggregating approximately $69,864,000 for alternative
minimum tax ("AMT") and $144,428,000 for regular tax which expire $43,126,000 in
2004, $26,203,000 in 2007, $40,809,000 in 2008, $30,216,000 in 2009 and
$4,074,000 in 2010. The Company also had investment tax credit carryforwards
of $1,076,000 expiring in 1998 through 2005.
The Company's regular tax NOL's are recognized for financial statement
purposes as a reduction of the deferred tax liability or increase of the
deferred tax asset. Consistent with the requirements of SFAS 109, management
believes that sufficient taxable income will be incurred during the loss
carryforward period to utilize approximately $52,443,000 of the $144,428,000 of
regular tax loss carryforwards at May 31, 1994. Therefore, a valuation allowance
has been established for approximately $91,985,000 of net operating losses and
for all investment tax credits and alternative minimum tax credit carryforwards.
As of May 31, 1994, the Company had net operating losses ("NOL's") of
approximately $66,347,000 for alternative minimum tax ("AMT") and $141,937,000
for regular tax which expire $45,191,000 in 2005, $24,138,000 in 2007,
$40,809,000 in 2008 and $31,799,000 in 2009. The Company also had investment tax
credit carryforwards of $1,076,000 expiring 1998 through 2005.
8. STOCK OPTIONS
In 1984, the shareholders approved the adoption of a nonqualified stock
option plan to provide for the grant of stock options to key contributors to the
Company. Options to purchase 500,000 shares of the Company's Class A Common
Stock may be granted to an officer, employee, director, or independent
consultant to the Company, or of any affiliate, whose judgment, initiative and
efforts are expected to contribute to the successful conduct of the Company.
Options granted at a price equal to the fair market value of the stock at the
date of grant become exercisable in equal installments over a four year period
or in such installments as determined by the committee administrating the plan.
Effective December 5, 1990, all of the outstanding options under the 1983 Plan
were terminated and new options were granted to the holders of the terminated
options at the fair market value on that date. The number of shares subject to
the new options was identical to the number of shares under the former options
and the vesting of such new options was in most instances the same as under the
former option agreements. As of May 31, 1995, options to purchase 708,936 shares
had been granted, of which 357,381 shares were exercised and options to purchase
216,005 shares had been terminated or forfeited upon resignation of the holders.
Effective December 6, 1992, the Company granted to certain persons,
including officers, five-year, fully-vested options to purchase Class A Common
Stock at the same exercise price as then in effect
-73-
<PAGE> 78
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
for the grantees, all of whom had held options for the same number of shares
which expired on December 5, 1992. The Company recognized $1,869,700 of non-cash
compensation expense related to these grants in the third quarter of fiscal
1993.
On April 17, 1992, the Board of Directors of the Company adopted by
unanimous vote, subject to shareholder approval, the Company's 1992 Stock Option
Plan (the "1992 Plan"). The 1992 Plan was approved by the Company's shareholders
on August 20, 1992. Under the terms of the 1992 Plan, a maximum of 1,800,000
shares of Class A Common Stock and 200,000 shares of Common Stock are available
for grant. All employees of the Company, its parent or any participating
subsidiary, including directors of the Company who are also employees, are
eligible to participate in the 1992 Plan. Options generally become exercisable
in equal installments over a four-year period commencing on the first
anniversary of the date of grant. The options expire, to the extent not
exercised, on the fifth anniversary of the date of grant, or upon the
recipient's earlier termination of employment with the Company. Options can be
incentive stock options or non-statutory stock options. The exercise price may
not be less than 100% of the fair market value for incentive stock options, but
may be less than fair market value for non-statutory options. Stock appreciation
rights may be granted in tandem with the grant of stock options. The Board of
Directors may, in its discretion, establish provisions for the exercise of
options different from those described above, and has the power to grant options
under the 1992 Plan that may extend for a period of up to ten years. In fiscal
1994 and 1995, the Company recognized approximately $152,000 and $261,000,
respectively, of non-cash compensation expense related to stock options granted
under the 1992 Plan on November 9, 1993. As of May 31, 1995, options to purchase
1,058,148 shares had been granted, of which options to purchase 10,367 shares
had been exercised and 19,578 shares had been terminated or forfeited upon
resignation of the holders.
Information concerning Class A Common Stock options is as follows:
<TABLE>
<CAPTION>
May 31,
-----------------------------------------------------------------
1995 1994 1993
-----------------------------------------------------------------
<S> <C> <C> <C>
Available for grant 768,499 1,160,504 1,759,469
Outstanding 1,163,753 799,165 274,300
Price range, per share $ 5.625-13.81 $ 5.625-13.81 $ 5.625-11.5
Exercisable 318,923 195,950 269,300
Price range, per share $ 5.625-13.81 $ 5.625-11.50 $ 5.625-6.1875
Granted during period 399,620 610,928 174,900
Terminated during period 7,615 11,963 171,900
Exercised during period 26,917 74,600 54,293
Price range, per share $ 5.625-13.81 $ 5.625 $ 5.625
</TABLE>
On December 5, 1990, the Board of Directors granted options to purchase
200,000 shares of Common Stock to an officer of the Company at a price equal to
the fair market value on that date. Effective March 11, 1993, an option to
purchase 200,000 shares of Common Stock was granted under the
-74-
<PAGE> 79
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
1992 Plan at the same exercise price as the December 5, 1990 option which had
expired on December 5, 1992. Such option was exercised on December 6, 1994. The
Company recognized approximately $2,210,500 of non-cash compensation expense
related to this grant in the fourth quarter of fiscal 1993.
9. CLASS A COMMON STOCK
The Class A Common Stock has certain preferential rights with respect
to cash dividends and upon liquidation of the Company. In the case of cash
dividends, the holders of the Class A Common Stock will be paid one-half cent
per share per quarter in addition to any amount payable per share for each share
of Common Stock. In the event of liquidation, holders of the Class A Common
Stock are entitled to a preference of $1 per share. After such amount is paid,
holders of the Common Stock are entitled to receive $1 per share for each share
of Common Stock outstanding. Any remaining amount would be distributed to the
holders of the Class A Common Stock and the Common Stock on a pro rata basis.
In general, with respect to the election of directors, the holders of
Class A Common Stock, voting as a separate class, are entitled to elect that
number of directors which constitutes 25% of the total membership of the Board
of Directors. In all other matters not requiring a class vote, the holders of
the Common Stock and the holders of Class A Common Stock vote as a single class
provided that holders of Class A Common Stock have one-tenth of a vote for each
share held and the holders of the Common Stock have one vote for each share
held.
10. COMMITMENTS AND CONTINGENCIES
The Company rents office facilities and equipment under various
long-term lease arrangements. Minimum commitments under noncancellable operating
leases for the five years ending May 31, 2000 and thereafter are as follows:
<TABLE>
<CAPTION>
Building Facilities Equipment
Lease Leases Leases Total
----------- ----------- ----------- -----------
(Stated in Thousands)
<S> <C> <C> <C> <C>
1996 $ 1,280 $ 1,792 $ 362 $ 3,434
1997 1,280 1,465 312 3,057
1998 1,280 1,206 235 2,721
1999 1,280 1,066 85 2,431
2000 1,280 913 69 2,262
Thereafter 74 2,673 - 2,747
----------- ----------- ----------- -----------
Total commitments $ 6,474 $ 9,115 $ 1,063 $ 16,652
=========== =========== =========== ===========
</TABLE>
Rent paid during the years ended May 31, 1995, 1994 and 1993, totaled
$3,409,000, $2,963,000 and $2,918,000, respectively.
Certain amounts included in lease commitments will be allocated to
managed limited partnerships using the method discussed in Note 4.
-75-
<PAGE> 80
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The 1992
Cable Act generally imposes a greater degree of regulation on the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States, including almost all
of those owned and managed by the Company, are subject to rate regulation of
basic cable services. In addition, the 1992 Cable Act allows the FCC to regulate
rates for non-basic service tiers other than premium services in response to
complaints filed by franchising authorities and/or cable subscribers. In April
1993, the FCC adopted regulations governing rates for basic and non-basic
services. The FCC's rules became effective on September 1, 1993. In compliance
with these rules, the Company reduced rates charged for certain regulated
services effective September 1, 1993.
On February 22, 1994, however, the FCC adopted several additional rate
orders including orders which revised its earlier-announced regulatory scheme
with respect to rates and established interim cost-of-service regulations. The
FCC's February 22, 1994 regulations generally require rate reductions, absent a
successful cost-of-service showing, of 17% of September 30, 1992 rates, adjusted
for inflation, channel modifications, equipment costs, and increases in
programming costs. The new regulations became effective on May 15, 1994, but
operators could elect to defer rate reductions to July 14, 1994, so long as they
made no changes in their rates and did not restructure service offerings between
May 15 and July 14.
After analyzing the effects of the two methods of rate regulation, the
Company elected to file cost-of-service showings for the following Company-owned
cable television systems: Jefferson County, Colorado; Charles County, Maryland;
Pima County, Arizona; Alexandria, Virginia; and North Augusta, South Carolina.
For these systems, the Company anticipates no further reductions in revenues or
operating income before depreciation and amortization resulting from the FCC's
rate regulations. The cost-of-service showings have not yet received final
approval from franchising authorities, however, and there can be no assurance
that the cost-of-service showings will prevent further rate reductions until
such final approvals are received. The Company complied with the February 22,
1994 benchmark regulations and reduced rates in its Oxnard and Walnut Valley,
California; Hilo, Hawaii; Panama City Beach, Florida; and Kenosha, Wisconsin
cable television systems. The Company will continue its efforts to mitigate the
effect of such rate reductions in these systems. The Company's Anne Arundel,
Maryland cable television system is subject to effective competition as defined
by the 1992 Cable Act, and as a result, is not subject to the rate regulation.
On February 22, 1994, the Company and Jones Group were named as
defendants in a lawsuit brought by three individuals who are Class A Unitholders
in Jones Intercable Investors, L.P. (the "Partnership"), a master limited
partnership in which the Company is general partner. The litigation, entitled
Luva Vaughan et al , Case No. CV 94-3652 was filed in the Circuit Court for
Jackson County, Missouri, and purports to be "for the use and benefit of" the
Partnership. As originally filed, the suit sought rescission of the sale of the
Alexandria, Virginia cable television system (the "Alexandria System") by the
Partnership to the Company, which sale was completed on November 2, 1992. It
also sought a constructive trust on the profits derived from the operation of
the Alexandria System since the date of the sale and an accounting and other
equitable relief. The plaintiffs also alleged that the $1,800,000 commission
paid to Jones Group by the Partnership in connection with such sale was
improper, and asked the Court to order that such commission be repaid to the
Partnership.
-76-
<PAGE> 81
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
Under the terms of the partnership agreement of the Partnership, the
Company has the right to acquire cable television systems from the Partnership
at a purchase price equal to the average of three independent appraisals of the
cable television system to be acquired. The plaintiffs claim that the appraisals
obtained in connection with the sale of the Alexandria System were improperly
obtained, were not made by qualified appraisers and were otherwise improper. The
purchase price paid by the Company upon such sale was approximately $73,200,000.
The amount of damages being sought by the plaintiffs has not yet been specified.
On October 21, 1994, plaintiffs filed a motion to dismiss Jones Group
in response to Jones Group's argument that Missouri lacked personal jurisdiction
over it. Plaintiffs' motion was granted, and plaintiffs then filed an action in
Colorado against Jones Group seeking a return of the brokerage commission.
The Company and Jones Group filed motions for summary judgment in the
Missouri and Colorado cases, respectively. The Missouri court granted the
Company's motion in part and dismissed all counts of the complaint for
rescission. It also struck the plaintiffs' jury demand. The Colorado court also
granted Jones Group's motion in part finding that the payment of the brokerage
commission was not a breach of the partnership agreement, but leaving for trial
the issue of whether such payment constituted a breach of fiduciary duty.
Subsequently, the plaintiffs have filed an amended complaint in the
Missouri case, recasting their allegations in terms of breach of contract,
common law fraud, conversion and breach of fiduciary duty. The plaintiffs have
reasserted their right to a jury trial.
The Company has conducted written discovery in the form of
interrogatories and requests for production of documents, and has noticed the
depositions of plaintiffs and plaintiffs' expert. No trial date has been set in
the Missouri case or in the Colorado case. Because discovery has just commenced,
it is premature to present a realistic evaluation of the probability of a
favorable or unfavorable outcome. However, the Company believes both that the
appraisals were proper and that the brokerage commission was properly paid to
Jones Group in accordance with the express terms of the partnership agreement.
The Company further believes that its defenses are meritorious and it intends to
vigorously defend the litigation.
In addition to the above matters, the Company is involved in certain
other litigation in its normal course of business. Management believes that the
ultimate resolution of such matters will not have a material adverse effect on
the Company's financial position or results of operations.
11. ACQUISITIONS AND SALES
Sales by the Company
During fiscal 1993, the Company sold the cable television systems
serving a portion of San Diego, California and Riverside County, California (the
"California Systems") for $18,170,000. Brokerage fees totaling approximately
$454,000, or 2 1/2% of the sales prices, were paid to The Jones Group, Ltd. The
Company recognized a loss relating to these transactions of $5,466,000, or $.38
per share, during fiscal 1993.
-77-
<PAGE> 82
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
On January 7, 1994, the Company entered into an agreement with Bresnan
Communications Company ("Bresnan") to sell its Gaston County, North Carolina
cable television system (the "Gaston System") to Bresnan for $36,500,000,
subject to normal closing adjustments. Closing on this transaction occurred in
the first quarter of fiscal 1995. The Company paid The Jones Group, Ltd.
$912,500 for brokerage services related to this acquisition. Proceeds from the
sale of the Gaston System were used to repay amounts outstanding on the
Company's credit facility. The Company recognized a gain before income taxes of
$15,496,400, or $.88 per share, related to this transaction.
Acquisitions by the Company
On September 29, 1992, the Company entered into an agreement with Jones
Intercable Investors, L.P. (the "Partnership"), a publicly traded master limited
partnership for which the Company is general partner, to acquire from the
Partnership the cable television system serving the areas in and around
Alexandria, Virginia (the "Alexandria System") for $73,200,000. The Alexandria
System served approximately 34,800 basic subscribers at November 30, 1992. The
purchase price was determined based on the average of three separate,
independent appraisals. Closing occurred on November 2, 1992. In addition, The
Jones Group, Ltd. received a brokerage fee of approximately $1,831,000, or 2
1/2% of the purchase price. The Company, through its 19% ownership interest in
the Partnership, realized a $9,018,000 gain upon the sale of the Alexandria
System which was recorded as a reduction in the basis of the assets purchased as
a result of the Company's continuing equity interest in the Alexandria System.
The Alexandria System acquisition was accounted for using the purchase method of
accounting. Its results of operations are included in the Company's Consolidated
Statements of Operations from November 1992 forward.
In December 1993, the Company acquired the cable television systems
serving North Augusta, South Carolina and surrounding areas (the "North Augusta
System") for $27,200,000. The North Augusta System is contiguous to the Augusta,
Georgia cable system managed by the Company on behalf of one of its
partnerships. The Company paid The Jones Group, Ltd. $680,000 for brokerage
services related to this acquisition. The North Augusta System acquisition was
accounted for using the purchase method of accounting. Its results of operations
are included in the Company's Consolidated Statements of Operations from
December 15, 1993 forward.
On February 22, 1995, the Company entered into a purchase and sale
agreement with Cable TV Fund 12-B, Ltd., a Colorado limited partnership ("Fund
12-B"), one of the Company's managed limited partnerships that owns the cable
television system serving areas in and around Augusta, Georgia ("The Augusta
System"), providing for the sale by Fund 12-B to the Company of the Augusta
System for a purchase price of $141,718,000 in cash, subject to normal closing
adjustments. The purchase price was determined by averaging the three separate
independent appraisals of the fair market value of the Augusta system as of
December 31, 1994. In July 1995, the Company was informed by one of the three
appraisers of the Augusta System that, taking into account the regulatory,
legislative and competitive developments in the cable television industry since
December 31, 1994, their appraised value of the Augusta System would be
increased. In July 1995, the Company and Fund 12-B accordingly amended the
purchase and sale agreement to increase the purchase price for the Augusta
System from $141,718,000 to $142,618,000 to reflect this increased appraised
value. The closing of the acquisition of the Augusta System is subject to a
number of conditions including the approval of the holders of a majority of the
limited partnership interests
-78-
<PAGE> 83
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
in Fund 12-B. The Company believes that the approval of the limited partners
will be received. The Company expects that its acquisition of the Augusta System
will occur during 1995. The Company, as general partner of Fund 12-B, expects to
receive a distribution from Fund 12-B of approximately $12,985,000 upon the
closing of the transaction. The Augusta System passes approximately 102,000
homes and serves approximately 66,600 basic subscribers. The Augusta System is
contiguous with the cable television system owned by the Company serving areas
in and around North Augusta, South Carolina ("The North Augusta System").
Together, the Augusta System and the North Augusta System will, upon closing of
the Company's acquisition of the Augusta System, form an operating cluster that
will serve approximately 81,700 basic subscribers and pass approximately 125,700
homes.
On May 31, 1995, the Company entered into Asset Purchase Agreements
with Cablevision of Manassas Park, Inc. and Benchmark/Manassas Cable Fund, Ltd.
to acquire cable television systems serving Manassas, Manassas Park, Haymarket
and portions of unincorporated Prince William County, all in Virginia (the
"Virginia Systems"). The total purchase price for the Virginia Systems is
$71,100,000, subject to normal closing adjustments. The Virginia Systems serve
approximately 26,000 basic subscribers, and are located approximately 20 miles
from the Company's wholly owned cable television system serving Alexandria,
Virginia. The acquisition of the Virginia Systems is subject to a number of
conditions, including the approval of the applicable governmental authorities
to the transfer of the franchises for the Virginia Systems, the approval of the
Department of Justice and the Federal Trade Commission pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the consent of
various other third parties. These transactions are expected to close during
1995. The Company will pay Jones Financial Group a fee of $896,000 for acting
as its financial advisor in connection with these transactions. Funding for the
Virginia Systems acquisition is expected to be provided from the net proceeds
from the Senior Notes offering discussed in Note 6 and from cash on hand.
On June 30, 1995, the Company entered into an agreement with Columbia
Associates, L.P., an unaffiliated party, to acquire the cable television
systems serving Dale City, Lake Ridge, Woodbridge, Fort Belvoir, Triangle,
Dumfries, Quatico, Accoquan and portions of Prince William County, all in the
state of Virginia. These systems serve approximately 50,000 subscribers. The
purchase price is $123,000,000. The acquisition of such systems is subject to a
number of conditions including the consent of governmental franchising
authorities and other regulatory authorities having jurisdiction, and other
matters. Funding is expected to be provided from cash on hand and from
available borrowings under the Company's credit facility. The Company will pay
Jones Financial Group a fee of $1,328,400 for acting as its financial advisor
in connection with this transaction.
On August 11, 1995, the Company entered into a purchase and sale
agreement with IDS/Jones Growth partners 87-A, Ltd., a Colorado limited
partnership, one of the Company's managed limited partnerships, to acquire from
such partnership the cable television system serving areas in and around Carmel,
Indiana (the "Carmel System"). The purchase price is $44,235,333, which is the
average of three separate independent appraisals of the fair market value of the
Carmel System. The Carmel System passes approximately 24,400 homes and serves
approximately 18,500 basic subscribers. The Company expects to acquire and to
trade the Carmel System, along with certain other properties, to an unaffiliated
cable television system operator during 1995, as discussed below.
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<PAGE> 84
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the years ended May 31, 1995, 1994 and 1993
On August 11, 1995, the Company entered into a purchase and sale
agreement with Jones Cable Income Fund 1-B, Ltd., a Colorado limited
partnership, one of the Company's managed limited partnerships, to acquire from
such partnership the cable television system serving areas in and around
Orangeburg, South Carolina (the "Orangeburg System"). The purchase price is
$18,347,667, which is the average of three separate independent appraisals of
the fair market value of the Orangeburg System. The Orangeburg System passes
approximately 16,530 homes and services approximately 12,000 basic subscribers.
The Company expects to acquire and then to trade the Orangeburg System, along
with certain other properties, to an unaffiliated cable television system
operator during 1995, as discussed below.
On August 11, 1995, the Company entered into a purchase and sale
agreement with the Cable TV Fund 12-BCD Venture, a joint venture of three of the
Company's managed limited partnerships, to acquire from the Venture the cable
television system serving areas in and around Tampa, Florida (the "Tampa
System"). The purchase price is $110,395,667, which is the average of three
separate independent appraisals of the fair market value of the Tampa System.
The Tampa System passes approximately 125,000 homes and serves approximately
62,500 basic subscribers. The Company expects to acquire and then to trade the
Tampa System, along with certain other properties, to an unaffiliated cable
television system operator during 1995, as discussed below.
On August 11, 1995, the Company entered into an Asset Exchange
Agreement (the "Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television system operator. Pursuant to the Exchange Agreement, the Company
will convey to TWEAN substantially all of the assets of the Carmel System, the
Orangeburg System and the Tampa System and cash in the amount of $3,500,000
(subject to normal closing adjustments). In return, the Company will receive
from TWEAN substantially all of the assets of the cable television systems
serving Andrews Air Force Base, Capitol Heights, Cheltenham, District Heights,
Fairmount Heights, Forest Heights, Morningside, Prince George's County, Seat
Pleasant and Upper Marlboro, Maryland, portions of Fairfax County, Virginia.
The closing of the transaction contemplated by the Exchange Agreement
is subject to customary closing conditions, including obtaining necessary
governmental and other third party consents. The parties intend to complete the
transaction by the end of 1995, but there can be no assurances that all
conditions will be satisfied or waived by that time. Either party may terminate
the Exchange Agreement if the transaction is not completed on or before June 30,
1996. The Company will pay Financial Group, an affiliate of the Company, a
$1,667,723 fee upon the completion of the transaction as compensation to it for
acting as the Company's financial advisor in connection with this exchange.
-80-
<PAGE> 85
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended May 31, 1995, 1994 and 1993
12. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of May 31, 1995 and 1994, consisted of
the following:
<TABLE>
<CAPTION>
May 31,
--------------------------
1995 1994
--------- ---------
<S> <C> <C>
Cable distribution systems $ 261,816 $ 218,635
Buildings 11,396 7,050
Land 2,920 2,742
Equipment and tools 10,544 6,475
Premium service equipment 29,401 24,895
Earth receive stations 3,672 3,343
Vehicles 2,064 1,400
Leasehold improvements and office furniture 15,967 13,382
Construction work in progress 4,748 1,249
Other 17,747 13,210
--------- ---------
360,275 292,381
Accumulated depreciation (154,945) (121,235)
--------- ---------
$ 205,330 $ 171,146
========= =========
</TABLE>
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
1995
-------------------------------------------------------------
Three Months Ended
-------------------------------------------------------------
August 31 November 30 February 28 May 31
----------- ----------- ----------- -----------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
Revenues $ 32,428 $ 32,762 $ 42,360 $ 43,396
Depreciation and
amortization 11,012 10,627 12,022 12,236
Operating income 2,855 3,285 3,381 3,931
Net income (loss) 10,293 (5,215) (4,152) (4,927)
Net loss per share $ .51 $ (.26) $ (.15) $ (.16)
</TABLE>
-81-
<PAGE> 86
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended May 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1994
-------------------------------------------------------------
Three Months Ended
-------------------------------------------------------------
August 31 November 30 February 28 May 31
----------- ----------- ----------- -----------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
Revenues $ 30,943 $ 31,051 $ 31,750 $ 32,735
Depreciation and
amortization 10,514 10,468 11,063 11,786
Operating income 3,591 3,015 3,171 2,483
Net loss (5,852) (5,776) (6,521) (7,128)
Net loss per share $ (.34) $ (.34) $ (.38) $ (.37)
</TABLE>
14. SUBSEQUENT EVENT: AUTHORIZED SHARES
On July 10, 1995, the shareholders of the Company approved a resolution
to amend the Company's Articles of Incorporation to increase the number of
authorized Class A Common Stock shares from 30,000,000 to 60,000,000.
-82-
<PAGE> 87
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information concerning the executive officers and directors of
the Company is set forth below.
<TABLE>
<S> <C> <C>
Glenn R. Jones 65 Chairman of the Board and Chief Executive Officer
Derek H. Burney 55 Vice Chairman of the Board
James B. O'Brien 45 President, Chief Operating Officer and Director
Ruth E. Warren 45 Group Vice President/Operations
Kevin P. Coyle 43 Group Vice President/Finance
Christopher J. Bowick 39 Group Vice President/Technology
Timothy J. Burke 44 Group Vice President/Taxation/Administration
Raymond L. Vigil 48 Group Vice President/Human Resources and Director
Cynthia A. Winning 44 Group Vice President/Marketing
Elizabeth M. Steele 43 Vice President/General Counsel/Secretary
Larry W. Kaschinske 35 Controller
William E. Frenzel 66 Director
Donald L. Jacobs 57 Director
James J. Krejci 53 Director
Philip R. Ladouceur 54 Director
Christine Jones-Marocco 40 Director
Daniel E. Somers 47 Director
Robert S. Zinn 58 Director
Robert B. Zoellick 42 Director
David K. Zonker 41 Director
</TABLE>
Mr. Glenn R. Jones has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company since its formation in 1970, and he was
President from June 1984 until April 1988. Mr. Jones was elected a member of the
Executive Committee of the Board of Directors in April 1985. Mr. Jones is the
sole shareholder, President and Chairman of the Board of Directors of Jones
International, Ltd. He is also Chairman of the Board of Directors of the
subsidiaries of the Company and of certain other affiliates of the Company. Mr.
Jones was appointed Vice Chairman of the Board of Directors of Bell Canada
International Inc. in February 1995. Mr. Jones has been involved in the cable
television business in various capacities since 1961, is a past and present
83
<PAGE> 88
member of the Board of Directors and the Executive Committee of the National
Cable Television Association. He also is on the Executive Committee of Cable in
the classroom, an organization dedicated to education via cable. Additionally,
in March 1991, Mr. Jones was appointed to the Board of Governors for the
American Society for Training and Development, and in November 1992 to the Board
of Education Council of the National Alliance of Business. Mr. Jones is also a
founding member of the James Madison Council of the Library of Congress and is
on the Board of Governors of the American Society of Training and Development.
Mr. Jones is a past director and member of the Executive Committee of C-Span.
Mr. Jones has been the recipient of several awards including the Grand Tam Award
in 1989, the highest award from the Cable Television Administration and
Marketing Society; the Chairman's Award from the Investment Partnership
Association, which is an association of sponsors of public syndications; the
cable television industry's Public Affairs Association President's Award in
1990, the Donald G. McGannon award for the advancement of minorities and women
in cable; the STAR Award from American Women in Radio and Television, Inc. for
exhibition of a commitment to the issues and concerns of women in television and
radio; the Women in Cable Accolade in 1990 in recognition of support of this
organization; the Most Outstanding Corporate Individual Achievement award from
the International Distance Learning Conference; the Golden Plate Award from the
American Academy of Achievement for his advances in distance education; the Man
of the Year named by the Denver chapter of the Achievement Rewards for College
Scientists; and in 1994 Mr. Jones was inducted into Broadcasting and Cable's
Hall of Fame.
Mr. Derek H. Burney was appointed a Director of the Company on December
20, 1994 and Vice Chairman of the Board of Directors on January 31, 1995. He is
also a member of the Executive Committee of the Board of Directors. Mr. Burney
joined BCE Inc., Canada's largest telecommunications company, in January 1993 as
Executive Vice President, International. He has been the Chairman of Bell Canada
International Inc., a subsidiary of BCE, since January 1993 and, in addition,
has been Chief Executive Officer of BCI since July 1993. Prior to joining BCE,
Mr. Burney served as Canada's ambassador to the United States from 1989 to 1992.
Mr. Burney also served as chief of staff to the Prime Minister of Canada from
March 1987 to January 1989 where he was directly involved with the negotiation
of the U.S. Canada Free Trade Agreement. In July 1993, he was named an Officer
of the Order of Canada. Mr. Burney is chairman of Bell Cablemedia plc. He is a
director of Mercury Communications Limited, Videotron Holdings plc, Tele-Direct
(Publications) Inc., Teleglobe Inc., Bimcor Inc., Maritime Telegraph and
Telephone Company, Limited, Moore Corporation Limited and Northbridge
Programming Inc.
Mr. James B. O'Brien, the Company's President, joined the Company in
January 1982. Prior to being elected President and a Director of the Company in
December 1989, Mr. O'Brien served as a Division Manager, Director of Operations
Planning/Assistant to the CEO, Fund Vice President and Group Vice
President/Operations. Mr. O'Brien was appointed to the Company's Executive
Committee in August 1993. As President, he is responsible for the day-to-day
operations of the cable television systems managed and owned by the Company. Mr.
O'Brien is also President and a Director of Jones Cable Group, Ltd., Jones
Global Funds, Inc. and Jones Global Management, Inc., all affiliates of the
Company. Mr. O'Brien is a board member of Cable Labs, Inc., the research arm of
the U.S. cable television industry. He also serves as a director of the Cable
Television Administration and Marketing Association and as a director of the
Walter Kaitz Foundation, a
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<PAGE> 89
foundation that places people of ethnic minority groups in positions with cable
television systems, networks and vendor companies.
Ms. Ruth E. Warren joined the Company in August 1980 and has served in
various operational capacities, including system manager and Fund Vice
President, since then. Ms. Warren was elected Group Vice President/Operations of
the Company in September 1990.
Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice
President/Financial Services. In September 1985, he was appointed Senior Vice
President/Financial Services. He was elected Treasurer of the Company in August
1987, Vice President/Treasurer in April 1988 and Group Vice President/Finance
and Chief Financial Officer in October 1990.
Mr. Christopher J. Bowick joined the Company in September 1991 as Group
Vice President/Technology and Chief Technical Officer. Previous to joining the
Company, Mr. Bowick worked for Scientific Atlanta's Transmission Systems
Business Division in various technical management capacities since 1981, and as
Vice President of Engineering since 1989.
Mr. Timothy J. Burke joined the Company in August 1982 as corporate tax
manager, was elected Vice President/Taxation in November 1986 and Group Vice
President/Taxation/Administration in October 1990.
Mr. Raymond L. Vigil joined the Company in June 1993 as Group Vice
President/Human Resources. Previous to joining the Company, Mr. Vigil served as
Executive Director of Learning with USWest. Prior to USWest, Mr. Vigil worked in
various human resources posts over a 14-year term with the IBM Corporation.
Ms. Cynthia A. Winning joined the Company as Group Vice
President/Marketing in December 1994. Previous to joining the Company, Ms.
Winning served since 1994 as the President of PRS Inc., Denver, Colorado, a
sports and event marketing company. From 1979 to 1981 and from 1986 to 1994, Ms.
Winning served as the Vice President and Director of Marketing for Citicorp
Retail Services, Inc., a provider of private-label credit cards for ten national
retail department store chains. From 1981 to 1986, Ms. Winning was the Director
of Marketing Services for Daniels & Associates cable television operations, as
well as the Western Division Marketing Director for Capital Cities Cable. Ms.
Winning also serves as a board member of Cities in Schools, a dropout
intervention/prevention program.
Ms. Elizabeth M. Steele joined the Company in August 1987 as Vice
President/General Counsel and Secretary. From August 1980 until joining the
Company, Ms. Steele was an associate and then a partner at the Denver law firm
of Davis, Graham & Stubbs, which serves as counsel to the Company.
Mr. Larry Kaschinske joined the Company in 1984 as a staff accountant
in the Company's former Wisconsin Division; was promoted to Assistant Controller
in 1990 and named Controller in August 1994.
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<PAGE> 90
Mr. William E. Frenzel was appointed a Director of the Company on April
11, 1995. Mr. Frenzel has been a Guest Scholar since 1991 with the Brookings
Institution, a research organization located in Washington D. C. Until his
retirement in January 1991, Mr. Frenzel served for twenty years in the United
States House of Representatives, representing the State of Minnesota, where he
was a member of the House Ways and Means Committee and its Trade Subcommittee,
he was the Congressional Representative to the General Agreement on Tariffs and
Trade (GATT), was the Ranking Minority Member on the House Budget Committee and
a member of the National Economic Commission. Mr. Frenzel also served in the
Minnesota Legislature for eights years. He is a Distinguished Fellow of the Tax
Foundation, Vice Chairman of the Eurasia Foundation, a Board Member of the
U.S.-Japan Foundation, the Close-Up Foundation, Sit Mutual Funds and Chairman of
the Japan-America Society of Washington.
Mr. Donald L. Jacobs was appointed a Director of the Company on April
11, 1995. Mr. Jacobs is a retired executive officer of TRW. Prior to his
retirement, he was Vice President and Deputy Manager of the Space and Defense
Sector; prior to that appointment, he was the Vice President and General Manager
of the Defense Systems Group and prior to his appointment as Group General
Manager, he was President of ESL, Inc., a wholly owned subsidiary of TRW. During
his career, Mr. Jacobs served on several corporate, professional and civic
boards.
Mr. James J. Krejci was President of the International Division of
International Gaming Technology, International headquartered in Reno, Nevada,
until March 1995. Prior to joining IGT in May 1994, Mr. Krejci was Group Vice
President of Jones International, Ltd. and was Group Vice President of the
Company. He also served as an officer of Jones Futurex, Inc., a subsidiary of
the Company engaged in manufacturing and marketing data encryption devices,
Jones Interactive, Inc., a subsidiary of Jones International, Ltd. providing
computer data and billing processing facilities and Jones Lightwave, Ltd., a
company owned by Jones International, Ltd. and Mr. Jones, and several of its
subsidiaries engaged in the provision of telecommunications services until
leaving the Company in May 1994. Mr. Krejci has been a Director of the Company
since August 1987.
Mr. Philip R. Ladouceur was appointed a Director of the Company on
April 11, 1995. Mr. Ladouceur joined Bell Canada International Inc. as Executive
Vice President of Operations on March 1, 1995. From 1993 to March 1995, Mr.
Ladouceur was President, Chief Executive Officer and a Director of ISM
Information Systems Management (Alberta) Corporation, a major information
management company based in Alberta, Canada. From 1990 to 1992, Mr. Ladouceur
was Executive Vice President and a Director of Sharwood and Company, a Toronto
merchant bank and President and Senior Partner of HDL Capital Corporation in
Toronto. From 1986-1989, he was Senior Vice President of Finance, Chief
Financial Officer and a Director of Rogers Communications Inc. Mr. Ladouceur is
a past director of the Financial Executives Institute of Canada.
Ms. Christine Jones-Marocco was appointed a Director of the Company on
December 20, 1994. She is the daughter of Glenn R. Jones. Ms. Marocco is also a
director of Jones International, Ltd.
Mr. Daniel E. Somers was appointed a Director of the Company on
December 20, 1994 and also serves on the Company's Audit Committee. From January
1992 to January 1995, Mr. Somers
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<PAGE> 91
worked as Senior Vice President and Chief Financial Officer of Bell Canada
International Inc. and was appointed Executive Vice President and Chief
Financial Officer on February 1, 1995. He is also a Director of certain of its
affiliates. Prior to joining Bell Canada International Inc. and since January
1989, Mr. Somers was the President and Chief Executive Officer of Radio Atlantic
Holdings Limited. Mr. Somers is a member of the North American Society of
Corporate Planning, the Financial Executives Institution and the Financial
Analysts Federation.
Mr. Robert S. Zinn was appointed a director of the Company on December
20, 1994. Mr. Zinn joined the Company in January 1991 and is a member of its
Legal Department. He is also Vice President/Legal Affairs of Jones
International, Ltd. Prior to joining the Company, Mr. Zinn was in private law
practice in Denver, Colorado for over 25 years.
Mr. Robert B. Zoellick was appointed a Director of the Company on April
11, 1995. Mr. Zoellick is Executive Vice President, General Counsel and
Corporate Secretary of Fannie Mae, a federally chartered and stockholder-owned
corporation that is the largest housing finance investor in the United States.
From August 1992 to January 1993, Mr. Zoellick served as Deputy Chief of Staff
of the White House and Assistant to the President. From May 1991 to August 1992,
Mr. Zoellick served concurrently as the Under Secretary of State for Economic
and Agricultural Affairs and as Counselor of the Department of State, a post he
assumed in March 1989. From 1985 to 1988, Mr. Zoellick served at the Department
of Treasury in a number of capacities, including Counselor to the Secretary. Mr.
Zoellick received the Alexander Hamilton and Distinguished Service Awards,
highest honors of the Departments of Treasury and State, respectively. The
German Government awarded him the Knight Commanders Cross for his work on
Germany unification. Mr. Zoellick currently serves on the boards of the Council
on Foreign Relations, the Congressional Institute, the German Marshall Fund of
the U.S., the European Institute, the National Bureau of Asian Research, the
American Council on Germany and the Overseas Development Council.
Mr. David K. Zonker was appointed a director of the Company on December
20, 1994. Mr. Zonker has been the President of Jones International Securities,
Ltd., a subsidiary of Jones International, Ltd. since January 1984 and he has
been its Chief Executive Officer since January 1988. From October 1980 until
joining Jones International Securities, Ltd. in January 1984, Mr. Zonker was
employed by the Company. Mr. Zonker is a member of the Board of Directors of
various affiliates of the Company, including Jones International Securities,
Ltd. Mr. Zonker is licensed by the National Association of Securities Dealers,
Inc. and he is a past chairman of the Investment Program Association, a trade
organization based in Washington, D.C. that promotes direct investments. He is a
member of the Board of Trustees of Graceland College, Lamoni, Iowa; the
International Association of Financial Planners and the American and Colorado
Institutes of Certified Public Accountants.
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ITEM 11. EXECUTIVE COMPENSATION
Compensation Summary
The following table sets forth certain information relating to the
compensation paid by the Company during the past three fiscal years to those
persons who were, at May 31, 1995, the Chief Executive Officer and the other
four most highly compensated executive officers of the Company.
<TABLE>
<CAPTION>
LONG TERM
---------
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------- ------
NAME AND FISCAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION (4)
------------------ ---- ------ ----- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Glenn R. Jones 1995 $ 1,401,846(1) $ 900,000(1) 122,269 (2) $ 135,623
Chairman of the Board 1994 530,420 630,000 418,708 (2) 136,226
and Chief Executive Officer 1993 684,651 600,000 230,000 (2)(3) 13,540
James B. O'Brien 1995 $ 224,961 $ 250,000 14,387 (2) $ 28,498
President 1994 196,568 52,500 12,307 (2) 19,404
1993 196,568 85,000 6,300 (2) 5,740
Kevin P. Coyle 1995 $ 173,616 $ 74,895 7,762 (2) $ 15,811
Group Vice President of 1994 168,559 45,000 5,008 (2) 12,814
Finance 1993 157,530 40,000 0 6,618
Christopher J. Bowick 1995 $ 158,061 $ 54,529 7,378 (2) $ 12,756
Group Vice President/ 1994 153,458 45,000 5,317 (2) 11,907
Technology 1993 139,507 41,850 0 0
Elizabeth M. Steele 1995 $ 192,823 $ 117,000 6,000 (2) $ 20,655
Vice President, General 1994 187,207 30,000 0 16,080
Counsel and Secretary 1993 187,207 36,000 0 5,480
</TABLE>
-----------------
(1) On December 20, 1994, contemporaneous with the Company's acquisition of
Spacelink and the acquisition by BCI of shares of the Company's Class A
Common Stock, the Company entered into an Employment Agreement with Mr.
Jones providing, in part, for base compensation of $2,500,000 in fiscal
1995 (which approximates his fiscal 1994 combined compensation from the
Company and Spacelink), with an annual cost of living index based
adjustment. See Item 13, Certain Transactions.
(2) Represents the number of shares of the Company's Class A Common Stock
underlying the options granted.
(3) Represents 200,000 shares of the Company's Common Stock and 30,000
shares of the Company's Class A Common Stock underlying the options
granted.
(4) The Company's employees are entitled to participate in a 401(k) profit
sharing plan. Certain senior employees of the Company are also eligible
to participate in a deferred compensation plan. The amounts shown in
the column reflect the Company's contributions pursuant to these plans
for the benefit of the named person's account.
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<PAGE> 93
The following table sets forth information with respect to grants of
stock options during fiscal 1995 for the Executive Officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
POTENTIAL REALIZABLE VALUE
INDIVIDUAL GRANTS FOR OPTION TERM
--------------------------------------------------------------------------- -------------------------------------------
% OF TOTAL
OPTIONS
GRANTED TO
ALL EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED(1) YEAR ($/SHARE) DATE 0% ANNUAL 5% ANNUAL 10% ANNUAL
---- ---------- ---- --------- ---- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Glenn R. Jones 122,269 31% $12.56 1/3/2005 $ 0 $ 965,925 $ 2,447,825
James B. O'Brien 14,387 4% $12.56 1/3/2005 $ 0 $ 113,657 $ 288,027
Kevin P. Coyle 7,762 2% $12.56 1/3/2005 $ 0 $ 61,320 $ 155,395
Christopher J. 7,378 2% $12.56 1/3/2005 $ 0 $ 58,286 $ 147,708
Bowick
Elizabeth M. Steele 6,000 2% $12.56 1/3/2005 $ 0 $ 47,400 $ 120,120
</TABLE>
-------------------
(1) Represents the number of shares of the Company's Class A Common Stock
underlying the options granted.
(2) The dollar amounts shown under these columns are the result of
calculations at 0%, 5% and 10% compound growth rates set by the
Securities and Exchange Commission, and therefore are not intended to
forecast possible future appreciation of the Company's stock price. In
all cases, the appreciation is calculated from the award date to the
end of the option term.
The following table sets forth information with respect to stock option
exercises during fiscal year 1995 by the Executive Officers named in the Summary
Compensation Table, including the aggregate value of gains on the date of
exercise. One Executive Officer exercised an option to purchase shares of the
Company's Common Stock. No Executive Officers exercised options to purchase
shares of the Company's Class A Common Stock. Also shown are the (i) number of
shares of Common Stock covered by both exercisable and unexercisable stock
options as of May 31, 1995, and (ii) values for in-the-money options which
represent the spread between the exercise price of such stock options and the
price of the Company's Common Stock as of May 31, 1995.
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<PAGE> 94
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR END 5/31/95 YEAR END 5/31/95
---------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Glenn R. Jones 200,000 $1,451,000 -0- -0-
</TABLE>
Compensation of Directors
Directors of the Company who are not full-time employees of the Company
or any of its affiliates receive $5,000 per fiscal quarter for their services as
Directors, with an additional $1,250 to be paid to each outside Director for
each regularly scheduled quarterly meeting of the Board of Directors attended in
person by such outside Director. No additional compensation for director service
is paid to Directors who are full-time employees of the Company or any of its
affiliates. In December 1993, Messrs. George Feltovich and Howard Thrall,
independent directors of the Company, were appointed by the Board of Directors
to constitute a special committee regarding the proposed acquisition by the
Company of substantially all of the assets of Spacelink and the proposed
acquisition by Bell Canada International Inc. of shares of the Company's Class A
Common Stock. See Item 1. Each of Messrs. Feltovich and Thrall were compensated
$40,000 for their services on the special committee through February 28, 1994.
Commencing March 1, 1994, through the period of discharge of the special
committee in December 1994, Messrs. Thrall and Feltovich were each compensated
at the rate of $175.00 per hour of work performed on behalf of the special
committee. Mr. Thrall was paid an additional $46,375 for such work, and Mr.
Feltovich was paid an additional $52,500 for such work. Messrs. Feltovich and
Thrall resigned from the Board of Directors in December 1994.
Compensation Committee Interlocks and Insider Participation
A compensation committee was established in January 1995. Glenn R.
Jones, Donald L. Jacobs and Philip R. Ladouceur, directors of the Company, are
the current members of the compensation committee. During fiscal 1995, that
committee did not act on compensation matters relating to fiscal 1995. During
fiscal 1995, prior to the creation of the compensation committee, Glenn R.
Jones, with the assistance of Patrick J. Lombardi, an executive officer and
director of International, James B. O'Brien and Raymond L. Vigil, Executive
Officers and Directors of the Company, and the heads of various departments,
with respect to each of their departments, participated in recommendations and
deliberations concerning executive compensation. Glenn R. Jones, James B.
O'Brien, Timothy J. Burke and Elizabeth M. Steele, Executive Officers of the
Company, serve as directors of certain of the Company's affiliates. As
individuals, these Executive Officers had no transactions with the Company
during fiscal year 1995. The various transactions between the Company and its
affiliates are described in Item 13 below.
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<PAGE> 95
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information as of July 14, 1995,
regarding ownership of the Company's Common Stock or Class A Common Stock by
persons (including any group) known to the Company to be beneficial owners of
more than 5% of either class of stock, the individual directors of the Company,
each of the executive officers named in the Summary Compensation Table, and the
executive officers and directors of the Company as a group. Under the rules of
the Securities and Exchange Commission, a person (or group of persons) is deemed
to be a "beneficial owner" of a security if he or she, directly or indirectly,
has or shares the power to vote or to direct the voting of such security, or the
power to dispose of or to direct the disposition of such security. Accordingly,
more than one person may be deemed to be a beneficial owner of the same
security. A person is also deemed to be a beneficial owner of any security which
that person has the right to acquire within 60 days.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL
BENEFICIAL OWNER (1) TITLE OF CLASS OWNERSHIP (2) PERCENT OF CLASS
-------------------- -------------- ------------- ----------------
<S> <C> <C> <C>
Jones International, Ltd. Common Stock 2,403,751(3)(4) 47.01
9697 East Mineral Avenue
Englewood, CO 80112 Class A 2,372,568(3)(5) 9.07
Common Stock
Glenn R. Jones Common Stock 2,878,151(3)(6) 56.29
9697 East Mineral Avenue
Englewood, CO 80112 Class A 2,769,678(3)(7) 10.53
Common Stock
Derek H. Burney Class A 350 less than .01
1000 rue de la Common Stock
Gauchetiere West
Montreal, Quebec,
Canada H3B 4Y8
Christopher J. Bowick Common Stock 2,678 .05
9697 East Mineral Avenue
Englewood, CO 80112 Class A Common 8,601(8) .03
Stock
Kevin P. Coyle Common Stock 345(9) less than .01
9697 East Mineral Avenue
Englewood, CO 80112 Class A 1,321(10) .01
Common Stock
</TABLE>
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<PAGE> 96
<TABLE>
<S> <C> <C> <C>
James J. Krejci Class A 5,000 .02
1133 Race Street, 16N Common Stock
Denver, CO 80206
Christine Jones Marocco Common Stock 2,749,679(11) 53.78
25 East End Avenue, #14F
New York, NY 10288 Class A 107,376(12) .41
Common Stock
James B. O'Brien Common 3,588 .07
9697 East Mineral Avenue
Englewood, CO 80112 Class A 29,121(13) .11
Common Stock
Daniel E. Somers Class A 100 less than .01
1000 rue de la Common Stock
Gauchetiere Quest
Montreal, Quebec,
Canada H3B 4Y8
Raymond L. Vigil Common 180 less than .01
9697 East Mineral Avenue
Englewood, CO 80112 Class A 2,207(14) .01
Common Stock
Robert S. Zinn Common Stock 2,771,944(15) 54.21
9697 East Mineral Avenue
Englewood, CO 80112 Class A 157,290(16) .60
Common Stock
David K. Zonker Class A 19,174(17) .07
9697 East Mineral Avenue Common Stock
Englewood, CO 80112
All executive officers and directors Common Stock 2,990,659 58.49
as a group
(16 persons) Class A 3,122,422(18) 11.87
Common Stock
Mutuelles AXA group Class A 1,816,427(19)(24) 6.94
Vie Mutuelle Common Stock
101-100 Terrasse Boieldieu
92042 Paris La Defense France
AXA
23, Avenue Matignon
75008 Paris France
</TABLE>
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<PAGE> 97
<TABLE>
<S> <C> <C> <C>
The Equitable Companies
Incorporated
787 Seventh Avenue
New York, New York 10019
Bell Canada International Common Stock 2,878,151(20) 56.29
BVI III Limited
Arawak Chamber Class A 9,914,300(21)(24) 37.90
Road Town Common Stock
Tortola, BVI
The Capital Group Companies, Inc. and Class A 1,467,000(22)(24) 5.61
Capital Research Common Stock
333 South Hope Street
Los Angeles, CA 90071
Neuberger & Berman Class A 2,000,200(23)(24) 7.65
605 Third Avenue Common Stock
New York, NY 10158
</TABLE>
(1) Directors and executive officers named in the Summary Compensation
Table who are not listed in the table do not beneficially own any of
the Company's shares. Shares shown as subject to options means that
such options are exercisable immediately.
(2) Unless otherwise noted, all persons indicated in the table have full
voting and investment power with respect to the share ownership
described.
(3) Glenn R. Jones, Chairman of the Board of Directors and Chief Executive
Officer of the Company, owns all of the outstanding shares of Jones
International, Ltd. ("International") and is deemed to be the
beneficial owner of all shares of the Company owned by International.
By virtue of this ownership, Mr. Jones controls approximately 41% of
the total votes to be cast by all shareholders of the Company's shares
on matters not requiring a class vote, because, with regard to such
matters, a share of Common Stock has one vote and a share of Class A
Common Stock has 1/10th of a vote. The holders of Class A Common Stock,
as a class, are able to elect the greater of 25% or the next highest
whole number of the Company's Board of Directors. Thus, holders of the
Class A Common Stock, as a class, are presently entitled to elect four
Directors.
(4) Includes 2,239,416 shares held by the Jones International Grantor
Business Trust; 100,400 shares held by Jones Entertainment Group, Ltd.;
35,707 shares held by Jones Space Segment, Inc.; 27,585 shares held by
Jones Global Group, Inc.; and 643 shares held by Jones Interdigital,
Inc. International may be deemed to be the beneficial owner of all
shares of Common Stock owned by Jones Entertainment Group, Ltd., Jones
Space Segment, Inc., Jones Global Group, Inc. and Jones Interdigital,
Inc.
(5) Includes 2,148,414 shares held by International; 136,946 shares held by
Jones Entertainment Group, Ltd., 48,705 shares held by Jones Space
Segment, Inc., 37,626 shares held by Jones Global Group, Inc.; and 877
shares held by Jones Interdigital, Inc. International may be deemed to
be the beneficial owner of all shares of Class A Common Stock owned by
Jones Entertainment Group, Ltd., Jones Space Segment, Inc., Jones
Global Group, Inc. and Jones Interdigital, Inc.
(6) Includes 474,400 shares held by the Glenn Jones Grantor Business Trust;
2,239,416 shares held by the Jones International Grantor Business
Trust; 100,400 shares held by Jones Entertainment Group, Ltd.; 35,707
shares
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<PAGE> 98
held by Jones Space Segment, Inc.; 27,585 shares held by Jones Global
Group, Inc.; and 643 shares held by Jones Interdigital, Inc.
(7) Includes 262,433 shares owned by Mr. Jones; 134,677 shares held by Mr.
Jones pursuant to stock options; 2,148,414 shares held by
International; 136,946 shares held by Jones Entertainment Group, Ltd.;
48,705 shares held by Jones Space Segment, Inc.; 37,626 shares held by
Jones Global Group, Inc.; and 877 shares held by Jones Interdigital,
Inc.
(8) Includes 1,329 shares held by Mr. Bowick pursuant to a stock option.
(9) Includes 320 shares held by Mr. Coyle's wife.
(10) Includes 1,252 shares held by Mr. Coyle pursuant to a stock option.
(11) Includes 8,799 shares held by Mrs. Marocco; 357 shares held by the
Joseph Michael Marocco Irrevocable Trust; 26,707 held by the Christine
Jones Marocco Irrevocable Trust; 2,239,416 shares held by the Jones
International Grantor Business Trust in which Mrs. Marocco has shared
voting power; and 474,400 shares held by the Glenn Jones Grantor
Business Trust in which Mrs. Marocco has shared voting power.
(12) Includes 23,891 shares held by Mrs. Marocco; 970 shares held by the
Joseph Michael Marocco Irrevocable Trust; 72,515 shares held by the
Christine Jones Marocco Irrevocable Trust; and 10,000 shares held by
Mrs. Marocco's husband. Mrs. Marocco disclaims beneficial ownership of
the shares held by her husband. Mrs. Marocco's husband is a principal
in a firm that may from time to time invest in the Company's
securities. Mrs. Marocco disclaims beneficial ownership of any
securities of the Company that said firm purchases or in which Mr.
Marocco may therefor have an interest.
(13) Includes 9,377 shares held by Mr. O'Brien pursuant to a stock option.
(14) Includes 1,719 shares held by Mr. Vigil pursuant to a stock option.
(15) Mr. Zinn is a trustee of (i) separate trusts for the benefit of the
three children of Glenn R. Jones, which hold in the aggregate 57,893
shares, (ii) the Glenn Jones Grantor Business Trust which holds 474,400
shares and (iii) the Jones International Grantor Business Trust which
holds 2,239,416 shares. Mr. Zinn shares voting power of these trusts.
Also includes 235 shares held by Mr. Zinn's wife; Mr. Zinn disclaims
beneficial ownership of these shares.
(16) Mr. Zinn is a trustee of separate trusts for the benefit of the three
children of Glenn R. Jones, which hold 157,194 shares. Includes 96
shares held by Mr. Zinn's wife; Mr. Zinn disclaims beneficial ownership
of these shares.
(17) Includes 26,674 shares held by Mr. Zonker's wife and 2,500 shares held
by Mr. Zonker pursuant to a stock option; Mr. Zonker disclaims
beneficial ownership of the shares held by his wife.
(18) Includes 154,479 shares held by various executive officers and
directors pursuant to stock options.
(19) The Mutuelles AXA group includes AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle and Uni Europe Assurance Mutuelle. The
Mutuelles AXA group, AXA and The Equitable Companies Incorporated have
sole voting power over 1,589,427 shares, sole dispositive power over
1,815,927 shares and shared dispositive power over 500 shares.
(20) Bell Canada International Inc. ("BCI"), the sole shareholder of Bell
Canada International BVI III Limited, may be deemed to have beneficial
ownership of the 2,878,151 shares of Common Stock covered by Option
Agreements dated December 20, 1994 among Morgan Guaranty Trust Company
of New York, acting as agent for BCI, and the Glenn Jones Grantor
Business Trust, the Jones International Grantor Business Trust, Jones
Entertainment Group, Ltd., Jones Space Segment, Inc., Jones Global
Group, Inc. and Jones Interdigital, Inc.
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(21) Bell Canada International BVI III Limited is a wholly-owned subsidiary
of Bell Canada International Inc., 1000 de la Gauchetiere Street West,
Suite 1100, Montreal, Quebec, Canada H3B 4Y8.
(22) Capital Guardian Trust Company and Capital Research and Management
Company, operating subsidiaries of The Capital Group Companies, Inc.,
exercised as of December 31, 1994, investment discretion with respect
to 487,000 and 980,000 shares, respectively, which was owned by various
institutional investors.
(23) Neuberger & Berman has sole voting power over 616,700 shares, shared
voting power over 928,400 shares and shared dispositive power over
2,000,200 shares.
(24) This information is based upon filings made by the shareholders with
the Securities and Exchange Commission, copies of which were provided
to the Company.
ITEM 13. CERTAIN TRANSACTIONS
Set forth below is a description of the Company's transactions with
Jones International, Ltd., certain of its subsidiaries and certain affiliates of
the Company during the fiscal year ended May 31, 1995. While the Company
believes that these transactions generally are as favorable as could have been
obtained from unaffiliated third parties, in most instances no third party bids
or appraisals were obtained and certain of the transactions are by their nature
unique to the companies involved. Accordingly, no assurance is given to such
effect. In some instances the amounts of transactions have been rounded to the
nearest thousand. Certain of the transactions described below are expected to
continue during the current fiscal year.
JONES INTERNATIONAL, LTD.
Jones International, Ltd. ("International") and certain of its
subsidiaries provide various services to the Company and its managed limited
partnerships, including information and data processing services, office space
and programming services, as described below. The costs of these services are
charged to the Company, and the Company reimburses International accordingly. In
some cases, a portion of certain of these expenses are reallocated to the
limited partnerships managed by the Company pursuant to the terms of the limited
partnership agreements of such limited partnerships.
During fiscal 1995, the Company carried accounts receivable from
International and its affiliates totaling $2,000,000. This receivable was repaid
in January 1995. Interest on such receivable was charged at the Company's
average cost of borrowing plus 2%. Interest charged International for the year
ended May 31, 1995 was $162,100.
On December 9, 1994, Jones Panorama Properties, Inc., a wholly-owned
subsidiary of the Company, granted an option to International to acquire the
Panorama Falls Building. The option is for a period of one year for a purchase
price of $3,050,000 plus the purchase price paid for certain surrounding
property for a parking lot, the cost of capital improvements and certain leasing
costs incurred by the Company (collectively the "Property Cost") and interest on
the Property Cost at an annual interest rate equal to the average cost of funds
to the Company.
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JONES COMPUTER NETWORK, LTD.
The Company and Jones Computer Network, Ltd. ("JCN") have entered into
an Affiliation Agreement whereby JCN provides computer related video programming
to cable television systems owned by the Company and its managed partnerships.
JCN is a subsidiary of Jones Education Networks, Inc., which is controlled by
International. JCN charges a fee based upon the number of subscribers receiving
the programming. Payments to JCN with respect to programming provided to cable
television systems owned by the Company and its managed partnerships totaled
approximately $686,402 in fiscal 1995, of which $184,831 was paid by the
Company.
JONES EARTH SEGMENT, INC.
International owns an 81% interest in Jones Earth Segment, Inc. ("Earth
Segment"), with the remaining 19% owned by Glenn R. Jones. Earth Segment owns a
ground-to-satellite ("uplink") facility that permits the satellite transmission
of programming originated by ME/U and the Company's affiliated audio programming
companies. During fiscal 1995, Jones Satellite Networks, Inc., a subsidiary of
the Company, used the uplink facility and paid Earth Segment $20,565 in
connection with such use.
JONES FINANCIAL GROUP, LTD.
Jones Financial Group, Ltd. ("Financial Group") performs services for
the Company and certain of its affiliates as its agent in connection with
acquisitions and sales of cable television systems, joint venture and other
financing arrangements. Financial Group is owned 81% by International and 19% by
Glenn R. Jones. The Company has entered into a Financial Services Agreement with
Financial Group to render financial advisory and related services to the Company
for a fee equal to 90% of the fees that would be charged to the Company by
unaffiliated third parties for the same or comparable purposes. The Company will
pay Financial Group an annual $1,000,000 retainer as an advance against payments
due pursuant to this agreement and will reimburse Financial Group for its
reasonable out-of-pocket expenses. The term of the Financial Services Agreement
is for eight years. Financial Group and BCI have entered into a separate
agreement pursuant to which BCI is entitled to receive one-half of the net fees
earned (gross fees less reasonable and customary operating expenses) by
Financial Group under the Financial Services Agreement.
The Company paid Financial Group an advisory fee of (pound)414,854
(approximately $632,600) in fiscal 1995 for its services to the Company in
connection with the Company's transfer of all of its interests in its
cable/telephony properties in the United Kingdom to Bell Cablemedia. See Item 1,
International Investments by the Company and its Affiliates. In December 1994,
upon the acquisition by BCI of a 30% equity interest in the Company, the Company
paid Financial Group a fee of $2,000,000. These fees were first applied against
the annual retainer.
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JONES INFOMERCIAL NETWORKS, INC.
Jones Infomercial Networks, Inc. ("JIN") is owned 81% by International
and 19% by Glenn R. Jones. The Company and JIN have entered into an Affiliation
Agreement whereby JIN provides advertising time for third parties on certain
cable television systems owned by the Company or its managed partnerships,
using those systems' ad sales slots. Effective January 31, 1995, the
Affiliation Agreement was amended, in part, to increase the revenue share to
the Company from 33% to 50%. The Affiliate Agreement, as amended, has been
assigned by JIN to its wholly-owned subsidiary, Jones Infomercial Network
Ventures, Inc. which has entered into a joint venture with an unaffiliated
party to combine the infomercial networks that each has developed. The revenues
generated from the third parties were shared with the Company from June 1, 1994
through January 30, 1995, two-thirds and one-third, and from January 31, 1995
through May 31, 1995, fifty-fifty. During fiscal year ended May 31, 1995, the
Company and its managed partnerships received revenues from JIN of $223,900 and
$306,400, respectively.
JONES INTERACTIVE, INC.
Jones Interactive, Inc. ("Interactive") is a wholly-owned subsidiary of
International. The Company and Interactive have entered into a Services
Agreement whereby Interactive provides information management and data
processing services for the Company in exchange for reimbursement by the
Company to Interactive of Interactive's expenses plus a management fee equal to
10% of such expenses. Amounts paid by the Company and its affiliated
partnerships to Jones Interactive, Inc. for the fiscal year ended May 31, 1995
totaled approximately $5,499,000, of which $1,265,000 was paid by the Company.
In fiscal 1995, the Company and Interactive formed Jones Cyber
Solutions, Ltd. for the purpose of developing a subscriber billing and
management system. The Company invested $4,500,000, and Interactive invested
$500,000 in Jones Cyber Solutions, Ltd.
JONES PROPERTIES, INC.
Jones Properties, Inc. is a wholly-owned subsidiary of International.
The Company is a party to a lease with Jones Properties, Inc. under which the
Company has leased a 101,500 square foot office building in Englewood, Colorado
in which the Company's corporate offices are located. The lease, which
commenced in 1985, has a 15-year term with three 5-year renewal options. The
annual rent is currently $24.00 per square foot, plus operating expenses and
will not, by the terms of the lease, exceed such amount during the remainder of
the 15-year term. The Company has subleased approximately 23,500 square feet of
the building to International and certain other affiliates on the same terms
and conditions of the above-mentioned lease. Payment to Jones Properties, Inc.
by the Company and its managed partnerships, net of subleasing obligations, for
the year ended May 31, 1995 was approximately $1,696,000 of which $390,000 was
paid by the Company.
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JONES SPACE SEGMENT, INC.
Jones Space Segment, Inc. ("Space Segment") is owned 81% by
International and 19% by Glenn R. Jones. The Company entered into a license
agreement with Space Segment to use a non-preemptible transponder on a
domestic communications satellite that Space Segment currently leases. Under
the license agreement, which expired December 31, 1994, the Company, JIN and
JCN had a license to use the transponder for their respective purposes. Under
the terms of the agreement, the Company agreed to pay Space Segment $200,000
per month from January 1994 through March 1994 and the Company and JIN each
agreed to pay $100,000 per month beginning April 1994 and until the launch of
JCN, in September 1994. Thereafter, until termination of the agreement on
December 31, 1994, the Company, JIN and JCN each paid $66,667 per month. The
Company recognized $572,000 of rental expense related to this agreement during
the fiscal year ended May 31, 1995.
MIND EXTENSION UNIVERSITY, INC. AND
JONES EDUCATION NETWORKS, INC.
Cable television systems owned by the Company and its managed
partnerships distribute the video programming of Mind Extension University, Inc.
("ME/U"), which is controlled by International, for a fee based upon the number
of subscribers receiving the programming. Payments to ME/U with respect to
programming provided to cable television systems owned by the Company and its
managed partnerships totaled approximately $694,600 in fiscal 1995, of which
$141,200 was paid by the Company.
During fiscal 1992 and 1993, the Company invested $10,000,000 in ME/U
for 25% of the stock of ME/U, which also received certain advertising avails and
administrative and marketing considerations from the Company. The number of
shares of Class A Common Stock of ME/U issued to the Company was based on the
average of two separate independent appraisals of ME/U. In fiscal 1993 and
fiscal 1994, the Company also made advances to ME/U totaling $20,000,000. On
April 11, 1995, the Company agreed converted its advances to ME/U into shares of
the Class A Common Stock of Jones Education Networks, Inc. ("JEN"), the parent
company of ME/U. JEN is an affiliate of International and, in addition to its
51% ownership of ME/U, JEN owns an 81% interest in Jones Computer Network, Ltd.
The Company now owns a 17% interest in JEN.
---------------
In addition to transacting business with International and its
subsidiaries, the Company, and its managed limited partnerships have engaged in
transactions with other affiliates of the Company. Set forth below is a
description of such transactions during the fiscal year ended May 31, 1995.
Certain of the transactions described below are expected to continue during the
Company's current fiscal year.
THE JONES GROUP, LTD.
The Jones Group, Ltd. ("Jones Group"), a wholly-owned subsidiary of the
Company, performs brokerage services for the Company and its managed
partnerships and collects fees for these services in connection with
acquisitions from and sales to unaffiliated parties of cable television
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properties. Prior to the Company's acquisition of Spacelink in December 1994
(see Item 1, Acquisition of Jones Spacelink, Ltd.), Jones Group was owned 80% by
Spacelink and 20% by the Company. Brokerage fees paid to Jones Group by the
Company and its managed partnerships during the fiscal year ended May 31, 1995
totaled $912,500, all of which were paid by the Company.
JONES GLOBAL GROUP, INC.
Jones Global Group, Inc. ("Global Group") is a corporation owned 62% by
International and 38% by the Company. Global Group and the Company owned
interests in cable/telephony properties in the United Kingdom. In July 1994, the
Company and Global Group transferred all of their interests in their
cable/telephony properties in the United Kingdom to Bell Cablemedia plc, a
public limited company incorporated under the laws of England and Wales ("Bell
Cablemedia") in exchange for American Depositary Shares ("ADSs") representing
Ordinary Shares of Bell Cablemedia. The Company and Global Group, respectively,
paid advisory fees of (pound)414,854 (approximately $632,600) and (pound)251,812
(approximately $384,000) to Financial Group, for its services to the Company and
Global Group in connection with the aforementioned transactions. The allocation
of these advisory fees was based on the ratio of ADSs of Bell Cablemedia
received by the Company and Global Group. As a result of these transactions, the
Company and Global Group no longer own any direct interest in cable/telephony
properties in the United Kingdom. The Company and Global Group do, however, own
indirect interests in cable/telephony properties in the United Kingdom through
their respective investments in Bell Cablemedia. The Company directly and
indirectly owns approximately 11.6% of Bell Cablemedia through its direct
ownership of 6,225,796 ADSs and its indirect ownership of 974,162 ADSs,
representing 38% of the 2,563,584 ADSs owned by Global Group. Messrs. Glenn R.
Jones, a director and Chief Executive Officer of the Company and Global Group,
and Patrick J. Lombardi, a director and officer of Global Group, have become
members of the board of directors of Bell Cablemedia.
JONES SPANISH HOLDINGS, INC.
Jones Spanish Holdings, Inc. ("Spanish Holdings"), is owned 38% by the
Company and 62% by International, and has explored cable television system
acquisition, development and operation opportunities in Spain. In October 1994,
Spanish Holdings and Jones International Spanish Investments, Inc. transferred
all of their interests in their cable/telephony properties in Spain to Bell
Cablemedia in exchange for a total of 190,148 ADSs representing 950,740 Ordinary
Shares of Bell Cablemedia. Such shares subsequently were transferred to the
Company in repayment of advances made to finance the Spanish operations. As a
result of this transaction, the Company and its affiliates no longer own any
direct interest in cable/telephony properties in Spain.
-------------------
In addition to the foregoing described transactions, the Company has
engaged in certain transactions in connection with the acquisition by BCI of
shares of the Company's Class A Common Stock. Set forth below is a description
of these transactions.
On December 20, 1994, contemporaneous with the closing of the
acquisition by BCI of shares of the Company's Class A Common Stock,
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1. International and Glenn R. Jones and certain affiliates of
International (collectively, the "Grantors") entered into option agreements
providing for the grant of options to Morgan Guaranty Trust Company of New York,
acting as agent for BCI, to purchase all of the shares of the Company's Common
Stock held, directly or indirectly, by International, Mr. Jones and the
affiliates of International in consideration for the payment by BCI to the
Grantors of an option deposit of $19.00 for each share of the Company's Common
Stock owned by Grantors on the date of the execution of the option agreements.
This option deposit payment resulted in the Grantors receiving approximately
$54,684,869 from BCI.
2. The Company entered into an Employment Agreement with Glenn R. Jones
(the "Employment Agreement") pursuant to which the Company agreed to employ Mr.
Jones as Chief Executive Officer of the Company for a period of up to eight
years. Under the terms of the Employment Agreement, Mr. Jones is to receive a
base compensation of $2,500,000 in fiscal year 1995 (which approximates his
fiscal year 1994 combined compensation from the Company and Spacelink), with an
annual cost of living index based adjustment. In addition, Mr. Jones is
entitled to participate in the Company's bonus, stock option and other employee
plans at a level generally commensurate with his previous participation. No
other employee of the Company has an employment agreement with the Company.
3. BCI, International, Glenn R. Jones and the Company entered into
certain arrangements concerning the operation and governance of the Company and
other related matters pursuant to a Shareholders Agreement ("Shareholders
Agreement"). Certain provisions of the Shareholders Agreement grant to Mr.
Jones, International and their affiliates the right to use a number of channels
on cable television systems now or hereafter owned or controlled by the Company
for distribution of their programming networks for a period of 15 years after
closing; BCI was also granted a similar right for a fewer number of channels.
International was granted certain non-exclusive rights to provide the Company
with goods and services on competitive terms which will, at the Company's
discretion, be pursuant to competitive bidding or other processes. BCI was
granted identical rights pursuant to a Supply and Services Agreement among the
Company and BCI.
4. The Company entered into a Supply and Services Agreement with BCI.
Pursuant to the Supply and Services Agreement, BCI will provide the Company with
access to the expert advice of personnel from BCI and its affiliates for the
equivalent of three man-years on an annual basis. The company will pay an annual
fee of $2,000,000 to BCI during the term of the agreement. Payments under the
Supply and Services Agreement during the year ended May 31, 1995 totaled
$1,000,000.
5. The Company entered into a Secondment Agreement with BCI. Pursuant
to the Secondment Agreement, BCI will provide up to 10 people with specific
experience in certain areas of operations and other BCI's business. The Company
will reimburse BCI for the full employment costs of such individuals. The
Company reimbursed BCI $220,800 during the year ended May 31, 1995.
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PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS.
(A)(3) EXHIBITS.
The following exhibits, which are numbered in accordance with Item
601 of Regulation S-K, are filed herewith or, as noted,
incorporated by reference herein:
2.1 Exchange Agreement and Plan of Reorganization and Liquidation,
dated as of May 31, 1994 by and between the Company and Jones
Spacelink, Ltd. (1)
2.2 Stock Purchase Agreement dated as of May 31, 1994, between Bell
Canada International Inc. and the Company. (1)
2.3 Transaction Agreement dated as of May 31, 1994, among Glenn R.
Jones, Jones International, Ltd., Bell Canada International Inc.
and Jones Spacelink, Ltd. (1)
2.4 Purchase and Sale Agreement dated February 22, 1995 between Cable
TV Fund 12-B, Ltd. and the Company. (22)
2.5 Amendment No. 1 dated July 24, 1995 to Purchase and Sale Agreement
dated February 22, 1995 between Cable TV Fund 12-B, Ltd. and the
Company.
2.6 Asset Purchase Agreement dated May 31, 1995 between Benchmark
Manassas Cable Fund Limited Partnership and the Company. (23)
2.7 Asset Purchase Agreement dated May 31, 1995 between Cablevision of
Manassas Park, Inc. and the Company. (23)
2.8 Asset Purchase Agreement dated as of June 30, 1995 between Columbia
Associates, L.P. and the Company
2.9 Purchase and Sale Agreement dated as of August 11, 1995 between
IDS/Jones Growth Partners 87-A, Ltd. and the Company
2.10 Purchase and Sale Agreement dated as of August 11, 1995 between
Jones Cable Income Fund 1-B, Ltd. and the Company
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2.11 Purchase and Sale Agreement dated as of August 11, 1995 between
Cable TV Fund 12-BCD Venture and the Company
2.12 Asset Exchange Agreement dated as of August 11, 1995 between Time
Warner Entertainment-Advance/Newhouse Partnership and the Company
3.1 Articles of Incorporation and amendments thereto of the Company.
(2)
3.2 Amendment to Articles of Incorporation of Company filed July 24,
1995.
3.3 Bylaws of the Company.
4.1 Indenture, dated as of May 15, 1987, between the Company and United
Bank of Denver National Association. (4)
4.2 Indenture, dated as of July 15, 1992, between the Company and First
Trust National Association. (5)
4.3 First Supplemental Indenture, dated as of July 15, 1992, between
the Company and First Trust National Association. (5)
4.4 Second Supplemental Indenture, dated as of March 1, 1993, between
the Company and First Trust National Association. (6)
4.5 Form of Shareholders Agreement among Glenn R. Jones, Jones
International, Ltd., Bell Canada International Inc. and the
Company. (1)
10.1.1 Form of Financial Services Agreement between Jones Financial Group,
Ltd. and the Company. (1)
10.1.2 Form of Employment Agreement between Glenn R. Jones and the
Company. (1)
10.1.3 Form of Supply and Services Agreement between Bell Canada
International Inc. and the Company. (1)
10.1.4 Form of Secondment Agreement between Bell Canada International Inc.
and the Company. (1)
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10.1.5 Form of Option Agreement for Glenn R. Jones and Jones
International, Ltd. between Bell Canada International Inc. and
Newco. (1)
10.1.6 Affiliate Agreement dated August 1, 1994 between the Company and
Jones Computer Network, Ltd.
10.1.7 Affiliate Agreement dated August 1, 1994 between the Company and
Jones Infomercial Networks, Inc.
10.1.8 Services Agreement between the Company and Jones Interactive, Inc.
10.2.1 Non-Qualified Stock Option Plan of the Company. (7)
10.2.2 Form of Non-Qualified Stock Option Agreement. (7)
10.2.3 1992 Stock Option Plan. (8)
10.2.4 Form of Basic Incentive Stock Option Agreement. (8)
10.2.5 Form of Basic Non-Qualified Stock Option Agreement. (8)
10.3.1 Office Lease, dated June 8, 1984, between the Company and Jones
Properties, Inc., regarding office space at 9697 East Mineral
Avenue, Englewood, Colorado. (9)
10.3.2 Office Building Lease dated December 9, 1994 between Jones Panorama
Properties, Inc. and the Company regarding Lot 4, Panorama Office
Park.
10.4.1 Partnership Agreement for Cable TV Fund 11. (10)
10.4.2 Partnership Agreement for Cable TV Fund 12. (9)
10.4.3 Partnership Agreement for Cable TV Fund 14. (11)
10.4.4 Partnership Agreement for Jones Cable Income Fund 1. (12)
10.4.5 First Restated Agreement of Limited Partnership for Jones
Intercable Investors, L.P. (13)
10.4.6 Partnership Agreement for IDS/Jones Growth Partners. (14)
10.4.7 Partnership Agreement for Cable TV Fund 15. (15)
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10.4.8 Partnership Agreement for IDS/Jones Growth Partners II, L.P. (16)
10.4.9 Partnership Agreement of Jones United Kingdom Fund, Ltd. (18)
10.5.1 Credit Agreement dated December 8, 1992 among the Company, Barclays
Bank PLC, Corestates Bank, N.A. and The Bank of Nova Scotia, as
Co-Agents and the various lenders named therein. (3)
10.5.2 First Amendment and Waiver to Credit Agreement dated as of January
22, 1993, among the Company, Barclays Bank PLC, Corestates Bank,
N.A. and The Bank of Nova Scotia, as Co-Agents and NationsBank of
Texas, N.A., as Managing Agent for various lenders. (3)
10.5.3 Second Amendment to Credit Agreement dated November 30, 1994 among
the Company, Barclays Bank PLC, CoreStates Bank, N.A. and The Bank
of Nova Scotia, as Lenders and as co-agents, and NationsBank of
Texas, N.A., as a Lender and as Managing Agent.
10.5.4 Third Amendment dated as of December 19, 1994 among the Company,
Barclays Bank PLC, CoreStates Bank, N.A. and The Bank of Nova
Scotia, as Lenders and as co-agents, and NationsBank of Texas,
N.A., as a Lender and as Managing Agent.
10.6.1 Copy of a franchise and related documents thereto granting a cable
television system franchise for Town of Marana, Arizona. (3)
10.6.2 Copy of a franchise and related documents thereto granting a cable
television system franchise for Oro Valley, Arizona. (2)
10.6.3 Copy of a franchise and related documents thereto granting a cable
television system franchise for Pima County, Arizona. (2)
10.6.4 Copy of a franchise and related documents thereto granting a cable
television system franchise for The Tucson National Golf Club. (2)
10.6.5 Copy of a franchise and related documents thereto granting a cable
television system franchise for Los Angeles County, California.
(17)
10.6.6 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Oxnard, California. (2)
10.6.7 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Port Hueneme,
California. (3)
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10.6.8 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Naval Construction Battalion
Center, Port Hueneme, California. (2)
10.6.9 Modification of franchise agreement dated June 23, 1993 for the
Naval Construction Battalion Center, Port Hueneme, California. (3)
10.6.10 Copy of a franchise and related documents thereto granting a cable
television system franchise for the County of Ventura, California.
(3)
10.6.11 Copy of a franchise and related documents thereto granting a cable
television system franchise for Arapahoe County, Colorado. (2)
10.6.12 Copy of a franchise and related documents thereto granting a cable
television system franchise for certain portions of Jefferson
County, Colorado. (2)
10.6.13 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Morrison, Colorado. (3)
10.6.14 Copy of a franchise and related documents thereto granting a cable
television system franchise for Anne Arundel County, Maryland. (2)
10.6.15 Copy of a franchise and related documents thereto granting a cable
television system franchise for Elizabeth Landing, Maryland. (2)
10.6.16 Copy of a franchise and related documents thereto granting a cable
television system franchise for Ft. George G. Meade, Maryland. (17)
10.6.17 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Indian Head, Maryland.
(3)
10.6.18 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Indian Head Division, Naval
Surface Warfare Center, Indian Head, Maryland. (3)
10.6.19 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of La Plata, Maryland. (2)
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10.6.20 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Cherryville, North
Carolina. (2)
10.6.21 Copy of a franchise and related documents thereto granting a cable
television system franchise for Cleveland County, North Carolina.
(2)
10.6.22 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Cramerton, North
Carolina. (3)
10.6.23 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Gastonia, North
Carolina. (2)
10.6.24 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Williamsburg and Jamestown
subdivision of Gastonia, North Carolina. (2)
10.6.25 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Kings Mountain, North
Carolina. (2)
10.6.26 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Lowell, North Carolina.
(2)
10.6.27 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of McAdenville, North
Carolina. (3)
10.6.28 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Ranlo, North Carolina.
(3)
10.6.29 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Stanley, North
Carolina. (3)
10.6.30 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Clover, South Carolina.
(3)
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10.6.31 Copy of a franchise and related documents thereto granting a cable
television system franchise for York County, South Carolina. (3)
10.6.32 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Alexandria, Virginia.
(24)
10.6.33 Copy of a franchise and related documents thereto granting a cable
television system franchise for Fort Myer, Virginia. (18)
10.6.34 Amendment dated April 6, 1990, of franchise granting a cable
television system franchise for Fort Myer, Virginia. (20)
10.6.35 Copy of a franchise and related documents thereto granting a cable
television system franchise for Aiken County, South Carolina. (21)
10.6.36 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Dearing, Georgia. (21)
10.6.37 Copy of a franchise and related documents thereto granting a cable
television system franchise for Edgefield County, South Carolina.
(21)
10.6.38 Copy of a franchise and related documents thereto granting a cable
television system franchise for McDuffie County, Georgia. (21)
10.6.39 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of North Augusta, South
Carolina. (21)
10.6.40 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Thomson, Georgia. (21)
10.6.41 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Trenton, South
Carolina. (21)
10.7.1 Indemnification Agreement dated March 14, 1994, among the Company,
Howard O. Thrall and George J. Feltovich. (21)
21 List of Subsidiaries of the Company.
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23 Consent of Arthur Andersen & Co., independent public accountants,
to the incorporation by reference of its report into the Company's
Form S-8 and Form S-3 Registration Statements.
27 Financial Data Schedule.
------------
(1) Incorporated by reference from the Company's Current Report on Form
8-K, filed on June 6, 1994.
(2) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1988.
(3) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1993
(4) Incorporated by reference from Registration Statement No. 33-13545
on Form S-2, filed on April 17, 1987, and Amendment No. 1 thereto,
filed on May 8, 1987.
(5) Incorporated by reference from Registration Statement No. 33-47030
on Form S-3, filed on April 8, 1992, and Amendment Nos. 1 and 2
thereof, filed on April 24, 1992 and June 4, 1992, respectively,
and Post-Effective Amendment No. 1 thereof, filed on July 15, 1992.
(6) Incorporated by reference from the Company's Current Report on Form
8-K, filed on March 1, 1993.
(7) Incorporated by reference from Registration Statement No. 2-91911
on Form S-2, filed on June 27, 1984, and Amendment No. 1 thereto,
filed on July 17, 1984.
(8) Incorporated by reference from Registration No. 33-54596 on Form
S-8, filed on November 16, 1992.
(9) Incorporated by reference from Registration Statement No. 2-94127.
(10) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1983.
(11) Incorporated by reference from Registration Statement No. 33-6976,
filed on July 3, 1986, and Amendment No. 1 thereto, filed on
November 17, 1986.
(12) Incorporated by reference from Registration Statement No. 33-00968
on Form S-1, filed on October 18, 1985.
108
<PAGE> 113
(13) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1992.
(14) Incorporated by reference from Registration Statement No. 33-12473.
(15) Incorporated by reference from Registration Statement No. 33-24358.
(16) Incorporated by reference from the Company's Registration Statement
on Form 8-A No. 0-18133, dated November 16, 1989.
(17) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1989.
(18) Incorporated by reference from Form 8-A of Jones United Kingdom
Fund, Ltd. (Commission File No. 0-19889).
(19) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1990.
(20) Incorporated by reference from the Annual Report on Form 10-K of
Jones Intercable Investors, L.P. (Commission File No. 1-9287) for
the fiscal year ended May 31, 1986.
(21) Incorporated by reference from the Company's Form S-4 Registration
Statement filed on July 11, 1994.
(22) Incorporated by reference from the Company's Current Report on Form
8-K dated March 10, 1995.
(23) Incorporated by reference from the Company's Current Report on Form
8-K dated June 7, 1995.
(24) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1994.
109
<PAGE> 114
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JONES INTERCABLE, INC.
By: /s/ Glenn R. Jones
---------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: August 9, 1995 Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Glenn R. Jones
---------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: August 9, 1995 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
---------------------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: August 9, 1995 (Principal Financial Officer)
By: /s/ Larry W. Kaschinske
---------------------------------
Larry W. Kaschinske
Controller
Dated: August 9, 1995 (Principal Accounting Officer)
By: /s/ James B. O'Brien
---------------------------------
James B. O'Brien
Dated: August 9, 1995 President and Director
110
<PAGE> 115
By: /s/ Raymond L. Vigil
---------------------------------
Raymond L. Vigil
Dated: August 9, 1995 Group Vice President and Director
By: /s/ Derek H. Burney
---------------------------------
Derek H. Burney
Dated: August 9, 1995 Director
By: /s/ William E. Frenzel
---------------------------------
William E. Frenzel
Dated: August 9, 1995 Director
By: /s/ Donald L. Jacobs
---------------------------------
Donald L. Jacobs
Dated: August 9, 1995 Director
By: /s/ James J. Krejci
---------------------------------
James J. Krejci
Dated: August 9, 1995 Director
By: /s/ Philip R. Ladouceur
---------------------------------
Philip R. Ladouceur
Dated: August 9, 1995 Director
By: /s/ Christine Jones-Marocco
---------------------------------
Christine Jones-Marocco
Dated: August 9, 1995 Director
By: /s/ Daniel E. Somers
---------------------------------
Daniel E. Somers
Dated: August 9, 1995 Director
By: /s/ Robert S. Zinn
---------------------------------
Robert S. Zinn
Dated: August 9, 1995 Director
111
<PAGE> 116
By: /s/ Robert B. Zoellick
---------------------------------
Robert B. Zoellick
Dated: August 9, 1995 Director
By: /s/ David K. Zonker
---------------------------------
David K. Zonker
Dated: August 9, 1995 Director
112
<PAGE> 117
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit Description Page
------- ----------- ----
<S> <C> <C>
2.1 Exchange Agreement and Plan of Reorganization and Liquidation,
dated as of May 31, 1994 by and between the Company and Jones
Spacelink, Ltd. (1)
2.2 Stock Purchase Agreement dated as of May 31, 1994, between Bell
Canada International Inc. and the Company. (1)
2.3 Transaction Agreement dated as of May 31, 1994, among Glenn R.
Jones, Jones International, Ltd., Bell Canada International Inc.
and Jones Spacelink, Ltd. (1)
2.4 Purchase and Sale Agreement dated February 22, 1995 between Cable
TV Fund 12-B, Ltd. and the Company. (22)
2.5 Amendment No. 1 dated July 24, 1995 to Purchase and Sale Agreement
dated February 22, 1995 between Cable TV Fund 12-B, Ltd. and the
Company.
2.6 Asset Purchase Agreement dated May 31, 1995 between Benchmark
Manassas Cable Fund Limited Partnership and the Company. (23)
2.7 Asset Purchase Agreement dated May 31, 1995 between Cablevision of
Manassas Park, Inc. and the Company. (23)
2.8 Asset Purchase Agreement dated as of June 30, 1995 between Columbia
Associates, L.P. and the Company
2.9 Purchase and Sale Agreement dated as of August 11, 1995 between
IDS/Jones Growth Partners 87-A, Ltd. and the Company
2.10 Purchase and Sale Agreement dated as of August 11, 1995 between
Jones Cable Income Fund 1-B, Ltd. and the Company
</TABLE>
<PAGE> 118
2.11 Purchase and Sale Agreement dated as of August 11, 1995 between
Cable TV Fund 12-BCD Venture and the Company
2.12 Asset Exchange Agreement dated as of August 11, 1995 between Time
Warner Entertainment-Advance/Newhouse Partnership and the Company
3.1 Articles of Incorporation and amendments thereto of the Company.
(2)
3.2 Amendment to Articles of Incorporation of Company filed July 24,
1995.
3.3 Bylaws of the Company.
4.1 Indenture, dated as of May 15, 1987, between the Company and United
Bank of Denver National Association. (4)
4.2 Indenture, dated as of July 15, 1992, between the Company and First
Trust National Association. (5)
4.3 First Supplemental Indenture, dated as of July 15, 1992, between
the Company and First Trust National Association. (5)
4.4 Second Supplemental Indenture, dated as of March 1, 1993, between
the Company and First Trust National Association. (6)
4.5 Form of Shareholders Agreement among Glenn R. Jones, Jones
International, Ltd., Bell Canada International Inc. and the
Company. (1)
10.1.1 Form of Financial Services Agreement between Jones Financial Group,
Ltd. and the Company. (1)
10.1.2 Form of Employment Agreement between Glenn R. Jones and the
Company. (1)
10.1.3 Form of Supply and Services Agreement between Bell Canada
International Inc. and the Company. (1)
10.1.4 Form of Secondment Agreement between Bell Canada International Inc.
and the Company. (1)
<PAGE> 119
10.1.5 Form of Option Agreement for Glenn R. Jones and Jones
International, Ltd. between Bell Canada International Inc. and
Newco. (1)
10.1.6 Affiliate Agreement dated August 1, 1994 between the Company and
Jones Computer Network, Ltd.
10.1.7 Affiliate Agreement dated August 1, 1994 between the Company and
Jones Infomercial Networks, Inc.
10.1.8 Services Agreement between the Company and Jones Interactive, Inc.
10.2.1 Non-Qualified Stock Option Plan of the Company. (7)
10.2.2 Form of Non-Qualified Stock Option Agreement. (7)
10.2.3 1992 Stock Option Plan. (8)
10.2.4 Form of Basic Incentive Stock Option Agreement. (8)
10.2.5 Form of Basic Non-Qualified Stock Option Agreement. (8)
10.3.1 Office Lease, dated June 8, 1984, between the Company and Jones
Properties, Inc., regarding office space at 9697 East Mineral
Avenue, Englewood, Colorado. (9)
10.3.2 Office Building Lease dated December 9, 1994 between Jones Panorama
Properties, Inc. and the Company regarding Lot 4, Panorama Office
Park.
10.4.1 Partnership Agreement for Cable TV Fund 11. (10)
10.4.2 Partnership Agreement for Cable TV Fund 12. (9)
10.4.3 Partnership Agreement for Cable TV Fund 14. (11)
10.4.4 Partnership Agreement for Jones Cable Income Fund 1. (12)
10.4.5 First Restated Agreement of Limited Partnership for Jones
Intercable Investors, L.P. (13)
10.4.6 Partnership Agreement for IDS/Jones Growth Partners. (14)
10.4.7 Partnership Agreement for Cable TV Fund 15. (15)
<PAGE> 120
10.4.8 Partnership Agreement for IDS/Jones Growth Partners II, L.P. (16)
10.4.9 Partnership Agreement of Jones United Kingdom Fund, Ltd. (18)
10.5.1 Credit Agreement dated December 8, 1992 among the Company, Barclays
Bank PLC, Corestates Bank, N.A. and The Bank of Nova Scotia, as
Co-Agents and the various lenders named therein. (3)
10.5.2 First Amendment and Waiver to Credit Agreement dated as of January
22, 1993, among the Company, Barclays Bank PLC, Corestates Bank,
N.A. and The Bank of Nova Scotia, as Co-Agents and NationsBank of
Texas, N.A., as Managing Agent for various lenders. (3)
10.5.3 Second Amendment to Credit Agreement dated November 30, 1994 among
the Company, Barclays Bank PLC, CoreStates Bank, N.A. and The Bank
of Nova Scotia, as Lenders and as co-agents, and NationsBank of
Texas, N.A., as a Lender and as Managing Agent.
10.5.4 Third Amendment dated as of December 19, 1994 among the Company,
Barclays Bank PLC, CoreStates Bank, N.A. and The Bank of Nova
Scotia, as Lenders and as co-agents, and NationsBank of Texas,
N.A., as a Lender and as Managing Agent.
10.6.1 Copy of a franchise and related documents thereto granting a cable
television system franchise for Town of Marana, Arizona. (3)
10.6.2 Copy of a franchise and related documents thereto granting a cable
television system franchise for Oro Valley, Arizona. (2)
10.6.3 Copy of a franchise and related documents thereto granting a cable
television system franchise for Pima County, Arizona. (2)
10.6.4 Copy of a franchise and related documents thereto granting a cable
television system franchise for The Tucson National Golf Club. (2)
10.6.5 Copy of a franchise and related documents thereto granting a cable
television system franchise for Los Angeles County, California.
(17)
10.6.6 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Oxnard, California. (2)
10.6.7 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Port Hueneme,
California. (3)
<PAGE> 121
10.6.8 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Naval Construction Battalion
Center, Port Hueneme, California. (2)
10.6.9 Modification of franchise agreement dated June 23, 1993 for the
Naval Construction Battalion Center, Port Hueneme, California. (3)
10.6.10 Copy of a franchise and related documents thereto granting a cable
television system franchise for the County of Ventura, California.
(3)
10.6.11 Copy of a franchise and related documents thereto granting a cable
television system franchise for Arapahoe County, Colorado. (2)
10.6.12 Copy of a franchise and related documents thereto granting a cable
television system franchise for certain portions of Jefferson
County, Colorado. (2)
10.6.13 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Morrison, Colorado. (3)
10.6.14 Copy of a franchise and related documents thereto granting a cable
television system franchise for Anne Arundel County, Maryland. (2)
10.6.15 Copy of a franchise and related documents thereto granting a cable
television system franchise for Elizabeth Landing, Maryland. (2)
10.6.16 Copy of a franchise and related documents thereto granting a cable
television system franchise for Ft. George G. Meade, Maryland. (17)
10.6.17 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Indian Head, Maryland.
(3)
10.6.18 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Indian Head Division, Naval
Surface Warfare Center, Indian Head, Maryland. (3)
10.6.19 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of La Plata, Maryland. (2)
<PAGE> 122
10.6.20 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Cherryville, North
Carolina. (2)
10.6.21 Copy of a franchise and related documents thereto granting a cable
television system franchise for Cleveland County, North Carolina.
(2)
10.6.22 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Cramerton, North
Carolina. (3)
10.6.23 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Gastonia, North
Carolina. (2)
10.6.24 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Williamsburg and Jamestown
subdivision of Gastonia, North Carolina. (2)
10.6.25 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Kings Mountain, North
Carolina. (2)
10.6.26 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Lowell, North Carolina.
(2)
10.6.27 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of McAdenville, North
Carolina. (3)
10.6.28 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Ranlo, North Carolina.
(3)
10.6.29 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Stanley, North
Carolina. (3)
10.6.30 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Clover, South Carolina.
(3)
<PAGE> 123
10.6.31 Copy of a franchise and related documents thereto granting a cable
television system franchise for York County, South Carolina. (3)
10.6.32 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Alexandria, Virginia.
(24)
10.6.33 Copy of a franchise and related documents thereto granting a cable
television system franchise for Fort Myer, Virginia. (18)
10.6.34 Amendment dated April 6, 1990, of franchise granting a cable
television system franchise for Fort Myer, Virginia. (20)
10.6.35 Copy of a franchise and related documents thereto granting a cable
television system franchise for Aiken County, South Carolina. (21)
10.6.36 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Dearing, Georgia. (21)
10.6.37 Copy of a franchise and related documents thereto granting a cable
television system franchise for Edgefield County, South Carolina.
(21)
10.6.38 Copy of a franchise and related documents thereto granting a cable
television system franchise for McDuffie County, Georgia. (21)
10.6.39 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of North Augusta, South
Carolina. (21)
10.6.40 Copy of a franchise and related documents thereto granting a cable
television system franchise for the City of Thomson, Georgia. (21)
10.6.41 Copy of a franchise and related documents thereto granting a cable
television system franchise for the Town of Trenton, South
Carolina. (21)
10.7.1 Indemnification Agreement dated March 14, 1994, among the Company,
Howard O. Thrall and George J. Feltovich. (21)
21 List of Subsidiaries of the Company.
<PAGE> 124
23 Consent of Arthur Andersen & Co., independent public accountants,
to the incorporation by reference of its report into the Company's
Form S-8 and Form S-3 Registration Statements.
27 Financial Data Schedule.
------------
(1) Incorporated by reference from the Company's Current Report on Form
8-K, filed on June 6, 1994.
(2) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1988.
(3) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1993
(4) Incorporated by reference from Registration Statement No. 33-13545
on Form S-2, filed on April 17, 1987, and Amendment No. 1 thereto,
filed on May 8, 1987.
(5) Incorporated by reference from Registration Statement No. 33-47030
on Form S-3, filed on April 8, 1992, and Amendment Nos. 1 and 2
thereof, filed on April 24, 1992 and June 4, 1992, respectively,
and Post-Effective Amendment No. 1 thereof, filed on July 15, 1992.
(6) Incorporated by reference from the Company's Current Report on Form
8-K, filed on March 1, 1993.
(7) Incorporated by reference from Registration Statement No. 2-91911
on Form S-2, filed on June 27, 1984, and Amendment No. 1 thereto,
filed on July 17, 1984.
(8) Incorporated by reference from Registration No. 33-54596 on Form
S-8, filed on November 16, 1992.
(9) Incorporated by reference from Registration Statement No. 2-94127.
(10) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1983.
(11) Incorporated by reference from Registration Statement No. 33-6976,
filed on July 3, 1986, and Amendment No. 1 thereto, filed on
November 17, 1986.
(12) Incorporated by reference from Registration Statement No. 33-00968
on Form S-1, filed on October 18, 1985.
<PAGE> 125
(13) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1992.
(14) Incorporated by reference from Registration Statement No. 33-12473.
(15) Incorporated by reference from Registration Statement No. 33-24358.
(16) Incorporated by reference from the Company's Registration Statement
on Form 8-A No. 0-18133, dated November 16, 1989.
(17) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1989.
(18) Incorporated by reference from Form 8-A of Jones United Kingdom
Fund, Ltd. (Commission File No. 0-19889).
(19) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1990.
(20) Incorporated by reference from the Annual Report on Form 10-K of
Jones Intercable Investors, L.P. (Commission File No. 1-9287) for
the fiscal year ended May 31, 1986.
(21) Incorporated by reference from the Company's Form S-4 Registration
Statement filed on July 11, 1994.
(22) Incorporated by reference from the Company's Current Report on Form
8-K dated March 10, 1995.
(23) Incorporated by reference from the Company's Current Report on Form
8-K dated June 7, 1995.
(24) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1994.
<PAGE> 1
EXHIBIT 2.5
AMENDMENT NO. 1
TO PURCHASE AND SALE AGREEMENT
This Amendment No. 1 to Purchase and Sale Agreement is made as of the 24th
day of July, 1995, by and between Cable TV Fund 12-B, Ltd., a Colorado limited
partnership ("Seller"), and Jones Intercable, Inc., a Colorado corporation
("Buyer").
RECITALS
A. Seller and Buyer entered into a purchase and sale agreement dated as of
February 22, 1995 (the "Purchase and Sale Agreement") pursuant to which Seller
agreed to sell to Buyer and Buyer agreed to purchase from Seller a cable
television system located in and around the cities of Augusta, Blythe and
Hephzibah, Georgia and the counties of Burke, Columbia and Richmond, Georgia
(the "Augusta System").
B. Seller and Buyer mutually desire to amend the Purchase and Sale
Agreement as set forth in this Agreement.
AGREEMENT
In consideration of the mutual promises contained in the Purchase and Sale
Agreement and in this Agreement and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Subject to the adjustments to be made in accordance with Paragraph 4 of
the Purchase and Sale Agreement, the total purchase price for the Assets (as
such term is defined in the Purchase and Sale Agreement) shall be One Hundred
Forty-Two Million Six Hundred Eighteen Thousand and no/100's Dollars
($142,618,000.00) (the "Purchase Price"), which Purchase Price represents the
average of three separate independent appraisals of the Augusta System. The
Purchase Price shall be payable to Seller at Closing (as such term is defined in
the Purchase and Sale Agreement) in cash, by cashier's check or by wire transfer
of federal funds to a bank or banks designated by Seller.
2. Except as provided in the foregoing Paragraph 1 of this Agreement, all
terms and conditions of the Purchase and Sale Agreement remain unchanged and
unaffected by this Agreement.
<PAGE> 2
IN WITNESS WHEREOF the parties have executed this Agreement as of the day
and year first above written.
SELLER:
CABLE TV FUND 12-B, LTD.,
a Colorado limited partnership
By: Jones Intercable, Inc.,
a Colorado corporation,
as its general partner
By:
James B. O'Brien
President
BUYER:
JONES INTERCABLE, INC.,
a Colorado corporation
By:
Elizabeth M. Steele
Vice President
<PAGE> 1
EXHIBIT 2.8
ASSET PURCHASE AGREEMENT
BETWEEN
COLUMBIA ASSOCIATES, L. P.
AND
JONES INTERCABLE, INC.
DATED AS OF
JUNE 30, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
1. Certain Definitions.................................................................. 1
2. Purchase and Sale of the Assets...................................................... 10
2.1 Agreement to Purchase and Sell............................................... 10
2.2 Excluded Assets.............................................................. 12
2.3 Deposit...................................................................... 13
2.4 Purchase Price............................................................... 13
2.5 Subscriber Adjustment........................................................ 14
2.6 Current Items Amount......................................................... 14
2.7 Pre-Closing Subscriber Adjustment and Current Items Amount Calculations...... 16
2.8 Approved Additional Capital Expenditures..................................... 17
2.9 Final Subscriber Adjustment Amount and Final Current Items Amount
Calculations...................................................................... 17
2.10 Assumption of Liabilities.................................................... 19
3. Seller's Representations............................................................. 19
3.1 Organization and Qualification............................................... 19
3.2 Authorization................................................................ 19
3.3 Systems Information.......................................................... 20
3.4 No Other Operators........................................................... 20
3.5 Title and Condition of Personal Property..................................... 21
3.6 Franchises, Licenses, and Contracts.......................................... 21
3.7 No Conflicts; Consents....................................................... 22
3.8 Litigation................................................................... 22
3.9 Employment Matters........................................................... 23
3.10 Taxes........................................................................ 24
3.11 Financial Statements......................................................... 24
3.12 No Material Adverse Change................................................... 25
3.13 Compliance with Legal Requirements........................................... 25
3.14 Environmental Laws and Regulations........................................... 28
3.15 Real Property................................................................ 29
3.16 Commitments.................................................................. 30
3.17 Non-Infringement............................................................. 30
3.18 Books and Records............................................................ 31
3.19 Accounts Receivable.......................................................... 31
3.20 Bonds........................................................................ 31
3.21 Accuracy of Schedules........................................................ 31
3.22 Disclosure................................................................... 31
3.23 Taxpayer Identification Number............................................... 31
4. Buyer's Representations.............................................................. 31
4.1 Organization................................................................. 32
</TABLE>
<PAGE> 3
<TABLE>
<C> <C> <S> <C>
4.2 Authorization................................................................ 32
4.3 No Conflicts; Consents....................................................... 32
4.4 Litigation................................................................... 33
4.5 Funds........................................................................ 33
4.6 Disclosure................................................................... 33
4.7 Taxpayer Identification Number............................................... 33
5. Covenants............................................................................ 33
5.1 Seller's Pre-Closing Obligations.............................................
5.2 Employees of Seller..........................................................
5.3 Title Matters................................................................
5.4 Forms 394....................................................................
5.5 HSR Act Compliance........................................................... 38
5.6 Billing Obligations.......................................................... 39
5.6 Programming.................................................................. 39
5.8 Financial Reporting.......................................................... 39
5.9 Post-Closing Rate Regulatory Matters......................................... 40
6. Conditions Precedent................................................................. 40
6.1 Conditions Precedent to Buyer's Obligations.................................. 40
6.2 Conditions Precedent To Seller's Obligations................................. 42
7. Closing.............................................................................. 43
7.1 Time and Place............................................................... 43
7.2 Seller's Deliveries.......................................................... 44
7.3 Buyer's Obligations.......................................................... 45
8. Termination.......................................................................... 45
8.1 Termination Events........................................................... 45
8.2 Effect of Termination........................................................ 46
9. Survival of Representations and Indemnity............................................ 47
9.1 Survival of Representations, Warranties and Covenants........................ 47
9.2 Seller's Indemnity........................................................... 48
9.3 Buyer's Indemnity............................................................ 49
9.4 Procedure for Indemnified Third Party Claim.................................. 50
9.5 Determination of Indemnification Amounts..................................... 50
9.6 Indemnity Escrow............................................................. 50
10. Confidentiality and Press Releases................................................... 51
10.1 Confidentiality.............................................................. 51
10.2 Press Releases............................................................... 52
11. Brokerage Fees....................................................................... 52
12. Casualty Losses...................................................................... 52
13. Managing General Partner Waiver...................................................... 53
14. Miscellaneous........................................................................ 54
14.1 Further Assurances........................................................... 54
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<C> <C> <S> <C>
14.2 Notices...................................................................... 54
14.3 Assignment; Binding Effect................................................... 56
14.4 Expenses..................................................................... 57
14.5 Taxes........................................................................ 57
14.6 Collection of Accounts....................................................... 57
14.7 Entire Agreement; Amendments; and Waivers.................................... 57
14.8 Counterparts................................................................. 58
14.9 Severability................................................................. 58
14.10 Schedules and Exhibits; Headings............................................. 58
14.11 Governing Law................................................................ 58
14.12 Third Parties; Joint Ventures................................................ 58
14.13 Construction................................................................. 58
14.14 Maintenance by Buyer of Books and Records.................................... 59
</TABLE>
EXHIBITS TO THE AGREEMENT
<TABLE>
<S> <C>
Exhibit A Form of Noncompetition Agreement
Exhibit B-1 Form of Deposit Escrow Agreement
Exhibit B-2 Form of Indemnity Escrow Agreement
Exhibit C Form of Franchise Transfer Consent
Exhibit D Form of Third Party Consent
Exhibit E Form of Bill of Sale
Exhibit F-1 Form of Opinion of Seller's Counsel
Exhibit F-2 Form of Opinion of Seller's FCC Counsel
Exhibit G Form of Assignment and Assumption Agreement
Exhibit H Opinion of Buyer's Counsel
</TABLE>
SCHEDULES TO THE AGREEMENT
<TABLE>
<S> <C>
Schedule 2.10 Subscribers Receiving Free Service
Schedule 3.1 Trade Names
Schedule 3.3 Systems Information
Schedule 3.4 Other Operators
Schedule 3.5 Personal Property
Schedule 3.6 Franchises, Licenses and Contracts
Schedule 3.8 Litigation and Other Proceedings
Schedule 3.13.2 Requests for Network Nonduplication and Syndex
Schedule 3.13.4 Rate Regulation and Compliance
Schedule 3.15 Real Property
Schedule 3.16 Local Offices
Schedule 3.20 Bonds
Schedule 5.1.2(a) Current Rebuild
Schedule 5.1.2(b) Marketing, Advertising and Promotional Activities and Expenditures
</TABLE>
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<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of the 30th day of
June, 1995, by and between JONES INTERCABLE, INC., a Colorado corporation
("Buyer"), and COLUMBIA ASSOCIATES, L.P., a Delaware limited partnership
("Seller").
RECITALS
A. Seller owns and operates certain cable television systems that are
franchised or hold other operating authority and operate in and around the
communities of Dale City, Lake Ridge, Woodbridge, Fort Belvoir, Triangle,
Dumfries, Quantico, Occoquan and Prince William County, all in the Commonwealth
of Virginia (collectively, the "Systems").
B. Seller desires to sell, and Buyer desires to purchase, substantially all
of the assets comprising the Systems, on the terms and conditions set forth in
this Agreement.
AGREEMENTS
In consideration of the mutual promises and covenants hereinafter set
forth, and for other consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer and Seller hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms,
whether in singular or plural form, shall have the following meanings:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered by Seller through the Adjustment Time in connection with the
operation of the Systems, as reflected on the billing records of Seller.
1.2 "Advertising Receivables" means the rights of Seller to payment for
advertising spots sold and video production services rendered or provided to
third parties by Seller through the Adjustment Time in connection with the
operation of the Systems, as reflected on the records of Seller.
1.3 "Affiliate" shall mean as to any Person or entity any other Person or
entity controlling, controlled by or under common control with, such Person or
entity.
<PAGE> 6
1.4 "Approved Additional Capital Expenditures" shall mean any and all
expenditures made or committed to be made by the Seller in respect of the
Systems during the period commencing on the date hereof through the Closing Date
in respect of capital assets or which, under generally accepted accounting
principles, would be classified as capital expenditures, other than Ordinary
Course Capital Expenditures; provided, however, that (i) an expenditure in
respect of the Systems shall not be treated as an Approved Additional Capital
Expenditure for purposes of this Agreement, unless the Buyer shall have approved
in writing, at any time prior to the Closing Date, the acquisition of the
capital assets or the general capital program in respect of which such capital
expenditures were incurred, (ii) expenditures incurred in connection with the
current rebuild of the Systems as described in Schedule 5.1.2(a) hereto (the
"Current Rebuild") shall not be treated as Approved Additional Capital
Expenditures, and (iii) expenditures relating to ordinary course line extensions
of the Systems shall not be treated as Approved Additional Capital Expenditures.
1.5 "Assumed Contracts it means (i) all Contracts listed in Schedule 3.6
hereto under a category which indicates that such Contracts will be assumed by
Buyer; (ii) any Contracts entered into by Seller in the ordinary course of
business and as permitted by this Agreement between the date hereof and the
Closing Date which would have been listed on Schedule 3.6 had they been in
existence on the date hereof, other than those Contracts for which Buyer would
have a liability following the Closing Date in excess of $10,000 as to any
single Contract or $75,000 in the aggregate to which Buyer has not given its
prior written approval in accordance with Section 5.1.3; (iii) any agreements in
respect of Approved Additional Capital Expenditures and (iv) subscription
agreements with individual residential subscribers for the cable services
provided by the Systems.
1.6 "Basic Subscriber" means as of any date of determination thereof each
residential customer or resident of a multiple dwelling unit who pays directly
to Seller the standard monthly fees and charges imposed by Seller for Basic
Service (as described in Schedule 3.3) (either alone or in combination with any
other service) from the Systems, and (i) who has paid at least two months'
payment in full without discount (other than Permitted Discounts), together with
any applicable installation fee (or, for purposes of Section 2.5 only, who has
paid at least one month's payment in full without discount, provided that after
the Closing Date any such subscriber pays for an additional month's service in
full without discount (other than Permitted Discounts) within 60 days after the
billing date); (ii) whose payment for service is not more than 60 days past due
from the billing date (provided that a subscriber's account shall not be
considered past due as a result of unpaid amounts not exceeding 20% of the
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amount due in respect of such month: provided, however, that no more than 750
accounts to which this provision applies may be included in this calculation);
and (iii) who has not given or been given notice of termination and who,
consistent with Seller's standing policy, should not have been given notice of
termination.
1.7 "Bulk Subscriber" means any commercial establishment (e.g., any hotel
or motel) or multiple dwelling unit establishment (e.g., any apartment,
condominium or cooperative building) served by any System that pays a bulk rate
for the System's basic service (either alone or in combination with any other
service), provided that such establishment (i) has been a bulk subscriber which
has paid at least two months' payment in full without discount, together with
any applicable installation fee; (ii) is not delinquent in any payment for any
such service; and (iii) has not given or been given notice of termination, and,
consistent with Seller's disconnect policy for bulk accounts, should not have
been given notice of termination. A Bulk Subscriber shall be deemed to be
delinquent if any part of such establishment's account with Seller (a) is more
than 60 days past due from the first day of the period to which any outstanding
bill relates (provided, that a bulk subscriber's account shall not be considered
past due as a result of unpaid amounts not exceeding 20% of the amount due in
respect of such billing period), or (b) in the case of Quantico Marine Base or
Fort Belvoir, is more than 120 days past due.
1.8 "Business Day" shall mean any day on which commercial banks are
authorized or required to close in New York City, New York or Denver, Colorado.
1.9 "Cable Act of 1992" means the Cable Television Consumer Protection and
Competition Act of 1992.
1.10 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 7.
1.11 "Closing Date" means the date of the Closing.
1.12 "Consents" means all of the consents, permits or approvals required
under the Franchises, Licenses, Material Assumed Contracts or under any Legal
Requirement for (i) Seller to transfer the Assets to Buyer or otherwise to
consummate lawfully the transaction contemplated hereby; (ii) Buyer to conduct
the business of the Systems and to own, lease, use and operate the Assets at the
places and substantially in the manner in which the business of the Systems is
conducted as of the date of this Agreement and on the Closing Date
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<PAGE> 8
and (iii) Buyer to assume and perform the Franchises, Licenses and Material
Assumed Contracts.
1.13 "Contracts" means all leases, private easements, private
rights-of-way, access agreements, multiple dwelling unit agreements, programming
agreements, pole attachment and conduit agreements, subscriber agreements and
other agreements, written or oral (including any amendments and other
modifications thereto) to which Seller is a party and which affect the Assets or
the business or operations of the Systems, and (i) which are in effect on the
date hereof, or (ii) which are entered into by Seller in the ordinary course of
business and as permitted by this Agreement between the date of this Agreement
and the Closing Date.
1.14 "Environmental Laws" means any federal, state or local law or
regulation relating to the pollution or protection of air, land or water, or any
combination thereof.
1.15 "Equivalent Billing Units" means that total number of subscribers of
the Systems, calculated by dividing by $23.37 for the Fort Belvoir Systems, and
by $24.07 for each of the other Systems, the sum of the aggregate monthly
billings of such Systems, before nonrecurring charges or credits, for the
billing period in which such calculation is being made, attributable to (i) the
Basic Subscribers for basic service (as described in Schedule 3.3) and (ii) the
Bulk Subscribers for basic service (excluding billings in each instance for
service in any billing period other than the billing period for which the
Equivalent Billing Units are being calculated and charges relating to services
other than basic service such as, without limitation, charges for remotes, cable
guides, premium services, taxes, copyright fees and late charges). For purposes
of making the calculation in this formula, the relevant billing periods with
respect to the Systems shall be either (i) for those subscribers billed on the
first of the month, the period from the first day of a month through and
including the last day of such month or (ii) for those subscribers billed on the
sixteenth of the month, the period from the sixteenth day of a month through and
including the fifteenth day of the next succeeding month.
1.16 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.17 "FCC" means the Federal Communications Commission.
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<PAGE> 9
1.18 "Final Order" means an order of a Governmental Authority (i) as to
which the time for filing a request for administration or judicial relief, or
for instituting administrative review sua sponte, shall have expired without any
such filing having been made or notice of such review having been issued; or
(ii) in the event of such filing, or review sua sponte as to which such filing
or review shall have been denied, dismissed, withdrawn or abandoned and the time
for seeking further relief or for instituting further administrative review sua
sponte with respect thereto shall have expired without any request for such
further relief having been filed or notice of such review having been issued.
1.19 "Franchises" means all municipal, county, and state franchises,
franchise applications incorporated in the franchises of Seller relating to the
Systems (if any), authorizations and permits relating to the Systems, other than
the Licenses.
1.20 "Governmental Authority" means (i) the United States of America, any
state, commonwealth, territory, or possession thereof and any political
subdivision or quasi-governmental authority of any of the same, including but
not limited to courts, tribunals, departments, commissions, boards, bureaus,
agencies, counties, municipalities, provinces, parishes, and other
instrumentalities, and (ii) any foreign (as to the United States of America)
sovereign entity, including but not limited to nations, states, republics,
kingdoms and principalities, any state, province, commonwealth, territory or
possession thereof, and any political subdivision, quasi-governmental authority,
or instrumentality of any of the same.
1.21 "Hazardous Substances" means (i) any "hazardous waste" as defined by
the Resources Conservation and Recovery Act of 1976 ("RCRA") (42 U.S.C. sec.6901
et seq.), as amended, and rules and regulations promulgated thereunder; (ii) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. sec.9601 et seq.) ("CERCLA"),
as amended, and rules and regulations promulgated thereunder; (iii) any
substance regulated by the Toxic Substances Act ("TSCA") (42 U.S.C. sec.2601 et
seq.), as amended, and rules and regulations promulgated thereunder; (iv)
asbestos; (v) polychlorinated biphenyls; (vi) any substances regulated under the
provisions of Subtitle I of RCRA relating to underground storage tanks; (vii)
any substance the presence, use, treatment, storage or disposal of which on the
Real Property is prohibited by any Legal Requirements; and (viii) any other
substance which by any Legal Requirements require special handling, reporting or
notification of any Governmental Authority in its collection, storage, use,
treatment, or disposal.
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<PAGE> 10
1.22 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
1.23 "Judgment" means any judgment, writ, order, injunction, award or
decree of any court, judge, justice or magistrate, including any bankruptcy
court or judge, and any order of or by any Governmental Authority.
1.24 "Knowledge" of any Person of or with respect to any matter means that
such Person (if a natural person) or any of the executive officers, directors,
and senior managers of such Person (if not a natural Person) has actual
awareness or knowledge of such matter.
1.25 "Legal Requirements" means applicable common law and any applicable
statute, ordinance, code or other law, rule, regulation, order, technical or
other standard, requirement or procedure enacted, adopted, promulgated, applied
or followed by any Governmental Authority, including Judgments.
1.26 "Licenses" means all domestic satellite, business radio, CARS,
microwave and other licenses, and all authorizations and permits relating to the
Systems granted to Seller by any Governmental Authority, except the Franchises
or any public easements or rights-of-way related thereto.
1.27 "Lien" means any security agreement, financing statement filed with
any Governmental Authority, conditional sale or other title retention agreement,
any lease, consignment or bailment given for purposes of security, any lien,
mortgage, indenture, pledge, option, encumbrance, adverse interest, constructive
trust or other trust, claim, attachment, exception to or defect in title or
other ownership interest (including but not limited to reservations, rights of
entry, possibilities of reverter, encroachments, easement, rights-of-way,
restrictive covenants, leases and licenses) of any kind, which otherwise
constitutes an interest in or claim against property, whether arising pursuant
to any Legal Requirement, Contract or otherwise.
1.28 "Limited Partners" means the holders of limited partnership interests
in Seller.
1.29 "Litigation" means any claim, action, suit, proceeding, arbitration,
investigation, hearing or other activity or procedure that could result in a
Judgment, and any notice of any of the foregoing.
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1.30 "Losses" means any claims, losses, liabilities, damages, Liens,
penalties, costs, and expenses, including but not limited to interest which may
be imposed in connection therewith, expenses of investigation, reasonable fees
and disbursements of counsel and other experts, and the costs reasonably
incurred by any Person in connection with making a claim or seeking
indemnification under this Agreement by reason of the occurrence of any event
with respect to which indemnification is sought.
1.31 "Managing General Partner" means Columbia International, Inc., a
Delaware corporation and the managing general partner of Seller.
1.32 "Material Assumed Contracts" means all Assumed Contracts listed in
Schedule 3.6 which are designated on such Schedule with an asterisk to indicate
that such Assumed Contracts are material to the financial condition or
operations of the business of the Systems.
1.33 "Noncompetition Agreements" means the Noncompetition Agreements of
Seller, the Managing General Partner, Robert M. Rosencrans, Scott Ledbetter and
Richard Rosencrans, substantially in the form attached hereto as Exhibit A.
1.34 "Ordinary Course Capital Expenditures" shall mean any and all
expenditures made in connection with the acquisition of a capital asset or
expenditures which, under generally accepted accounting principles, would be
classified as capital expenditures and which are necessary for the operation of
the Systems in the ordinary course of business as previously conducted by the
Seller at the Systems.
1.35 "Partnership Agreement" shall mean the Amended and Restated Agreement
of Limited Partnership of Columbia Associates, L.P., dated as of June 2, 1992,
by and among the Managing General Partner, Liberty of Greenwich, Inc., a
Colorado corporation as General Partner, and the parties listed on Schedule A
attached thereto as the Limited Partners.
1.36 "Permitted Discounts" means any System's standard senior citizen
discount and any customer rebate described on Schedule 3.3(III)(C) hereto.
1.37 "Permitted Liens" means (a) liens for Taxes not yet subject to
penalties for nonpayment and liens for taxes the payment of which is being
contested or the time for doing so has not yet expired, and for which adequate
reserves have been provided; (b) zoning laws and ordinances and similar Legal
Requirements; (c) rights reserved to any Governmental Authority to regulate the
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affected property; (d) security interests in the Assets held by the Seller's
lenders, which will be released or terminated on the Closing Date; and (e) as to
Real Property interests, any easements, rights-of-way, servitude, permits,
restrictions and minor imperfections or irregularities in title which are
reflected in the public records and which do not individually or in the
aggregate materially interfere with the right or ability to own, use or operate
the Real Property or to convey good, marketable and indefeasible title to such
Real Property; provided that classification of any item as a Permitted Lien of
the type described in item (a) above will not affect any liability Seller may
have for such item, including pursuant to any indemnity obligation under this
Agreement.
1.38 "Person" means any natural person, Governmental Authority,
corporation, general or limited partnership, joint venture, trust, association
or unincorporated entity of any kind.
1.39 "Personal Property" means all of the equipment, plant, inventory,
spare parts, supplies and other tangible personal property which are owned or
leased by Seller and used or useful as of the date hereof in the conduct of the
business or operations of the Systems, including, without limitation, all of
Seller's towers, tower equipment, antennas, aboveground and underground cable,
distribution systems, headend amplifiers, line amplifiers, earth satellite
receive stations and related equipment, microwave equipment, testing equipment,
motor vehicles, office equipment, furniture and fixtures, supplies, inventory
and other physical assets, plus such additions thereto and deletions therefrom
arising in the ordinary course of business and as permitted by this Agreement
between the date of this Agreement and the Closing Date.
1.40 "Rate Regulatory Matters" shall mean any matter or any effect on the
Seller or any Systems, or the past, current or prospective business or
operations thereof, arising out of or related to the Cable Act of 1992, any
regulations heretofore or hereafter adopted thereunder, or any other federal,
state or local law or regulation dealing with, limiting or affecting the rates
which can be charged by cable television systems to their subscribers (whether
for programming, equipment, installation, service or otherwise).
1.41 "Rate Regulatory Reduction Order" shall mean a Final Order issued by a
federal, state or local governmental or regulatory authority relating to Rate
Regulatory Matters which effectuates prior to or as of the Closing Date a
reduction in the aggregate rates charged to Basic Subscribers for basic cable
television service from the aggregate rates charged by Seller for such services
during the period of time in which the Seller owned the Systems.
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1.42 "Real Property" means all of the fee estates and buildings and other
improvements thereon, leasehold interests in real estate, private easements,
private rights to access, private rights-of-way, and other real property
interests which are used by Seller, or owned by Seller and useful, as of the
date of this Agreement, in the conduct of the business or operations of the
Systems, plus such additions thereto and deletions therefrom arising in the
ordinary course of business and permitted by this Agreement between the date of
this Agreement and the Closing Date.
1.43 "Systems" means any cable television systems described on Schedule 3.3
attached hereto, and any subsequent extensions thereof and additions thereto.
1.44 "Taxes" means all levies and assessments of any kind or nature imposed
by any Governmental Authority, including but not limited to all income, sales,
use, ad valorem, value added, franchise, severance, net or gross proceeds,
withholding, payroll, employment, excise or property taxes, together with any
interest thereon and any penalties, additions to tax or additional amounts
applicable thereto.
1.45 "Transaction Documents" means all instruments and documents executed
and delivered by Buyer or Seller or any officer, director or Affiliate of either
of them in connection with this Agreement or the transactions contemplated
hereby.
1.46 List of Additional Definitions. The following is a list of additional
terms used in this Agreement and a reference to the Section hereof in which such
term is defined:
<TABLE>
<CAPTION>
TERM SECTION
---------------------------- --------
<S> <C>
Adjustment Indemnity Portion 2.4
Adjustment Notice 2.9
Adjustment Time 2.6
Assets 2.1
Assigned Claims 9.2.2
Assumed Liabilities 2.10
Balance Sheet 3.11.1
Buyer Preamble
CCO 2.2
CCW 2.2
CLI 3.13.6
Communications Act 3.13.3
</TABLE>
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<PAGE> 14
<TABLE>
<S> <C>
Contingent Basic Subscriber Adjustment Amount 2.5
Contingent Basic Subscribers 2.5
Current Items Amount 2.6
Current Rebuild 5.1.2
Deposit 2.3
Escrow Agent 2.3
FAA 3.13.7
Final Adjustments List 14.14
Final Current Items Amount 2.9
Final Subscriber Adjustment Amount 2.9
Forms 394 5.4
General Indemnity Portion 2.4
Group 11
GTE Pole Audit Liability 9.2
Indemnitee 9.4
Indemnitor 9.4
Indemnity Escrow Agreement 2.4
Indemnity Escrow Fund 2.4
Initial Adjustment Certificate 2.7
KPMG 2.9
Non-hired Employee 5.2
Outside Closing Date 7.1
Preliminary Current Items Amount 2.7
Preliminary Subscriber
Adjustment Amount 2.7
Purchase Price 2.4
Response Notice 2.9
Retained Advertising Receivables 2.6.1
Seller Preamble
Subscriber Adjustment Amount 2.5
Threshold Amount 9.5
Title Commitment 5.3
Title Company 5.3
Title Defect 5.3
Waller 11
Williamette 2.2
</TABLE>
2. PURCHASE AND SALE OF THE ASSETS.
2.1 Agreement to Purchase and Sell. Subject to the terms and conditions set
forth in this Agreement, at the Closing Seller shall sell, convey,
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assign, transfer and deliver to Buyer, and Buyer shall purchase from Seller, for
the Purchase Price, free and clear of all Liens (other than Permitted Liens),
and with full substitution and subrogation to all rights and actions of warranty
against all preceding owners, the following described tangible and intangible
assets used or useful in connection with the conduct of the business or
operations of the Systems (the "Assets"):
(i) the Personal Property;
(ii) the Real Property;
(iii) the Franchises;
(iv) the Assumed Contracts;
(v) the Accounts Receivable;
(vi) the Licenses;
(vii) all of Seller's proprietary information, technical information
and data, machinery and equipment warranties, maps, computer
disks and tapes, plans, diagrams, blueprints and schematics
relating to the Systems, other than as any of the foregoing
relate to the Excluded Assets;
(viii) all of Seller's files of correspondence and lists and records
concerning past, present and prospective customers of the
Systems, all books and records relating to the business or
operations of the Systems, including executed copies of the
Assumed Contracts and correspondence relating to retransmission
agreements and must-carry elections, filings with the FCC or
local Governmental Authorities and all backup information upon
which any such filings are based, subject to the right of Seller
or the Managing General Partner to have such books and records
made available to Seller or the Managing General Partner for a
period of three years from the Closing Date; provided that if
Seller or the Managing General Partner desires to obtain such
files, lists or records upon the expiration of such three year
period, Seller or the Managing General Partner or its counsel
shall so notify Buyer no earlier than 90 days or later than 60
days prior to the expiration of such period. If Buyer receives
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such a notice, it shall, upon the expiration of such period (at
Seller's or the Managing General Partner's expense), deliver such
files, lists and records to a location designated by Seller or
the Managing General Partner or its counsel in its notification;
(ix) the goodwill and going concern value generated by Seller with
respect to the Systems, if any; and
(x) all intangible assets of Seller relating to the Systems not
specifically described above.
2.2 Excluded Assets. The following assets shall not be transferred to Buyer
by Seller and are specifically excluded from the Assets:
(i) Seller's cash, cash equivalents and marketable securities on
hand as of the Closing Date and all other cash in any of Seller's
bank or savings accounts, any and all insurance policies,
construction and performance bonds, letters of credit or other
similar items and any cash surrender value in regard thereto, any
stocks, bonds, certificates of deposit and similar investments
and any claims receivable under any insurance policies, except as
otherwise provided in Section 12 hereof;
(ii) any Contracts other than the Assumed Contracts, and all
programming agreements relating to the Systems other than any
retransmission consent agreements and programming agreements
entered into in connection with retransmission consent agreements
which are listed on Schedule 3.6 as Assumed Contracts;
(iii) all books, records and documents relating to Seller's
partnership operations or operations not specifically referred to
in Sections 2.1(iii), 2.1(vii), 2.1(viii), or 2.1(x), including,
without limitation, financial records, records as to partnership
interests and similar items;
(iv) all claims, rights and interests of Seller for any period prior
to the close of business on the Closing Date, including claims
receivable for refunds under pole attachment
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<PAGE> 17
agreements and from the FCC, and all claims in respect of tax
refunds;
(v) Seller's partnership interest in Columbia Cable of Washington
("CCW") and all of the assets of the cable television systems
owned by CCW;
(vi) Seller's partnership interest in Columbia Cable of Oregon
("CCO") and the assets of CCO, including the outstanding capital
stock of Willamette Cable TV, Inc., ("Willamette"), and all of
the assets of the cable television systems owned by Willamette
and/or CCO;
(vii) all assets of any cable television systems owned by Seller
other than the Systems; and
(viii) the trademarks, trade names, service marks and all other
information and similar intangible assets relating to Seller or
the Systems; provided, however, that for a period of 90 days
after the Closing Date, Buyer shall have the right to operate the
Systems using the names "Columbia Cable of Virginia",
"Cablevision of Prince William" and "Lake Ridge Cable" and all
derivations of such names and related tradenames, trade names and
service marks in use in the Systems on the Closing Date.
2.3. Deposit. Upon execution and delivery of this Agreement by Seller and
Buyer, Buyer shall deliver $6,000,000 (the "Deposit") to Colorado National Bank
("Escrow Agent"), to be held and applied pursuant to the terms of that certain
Deposit Escrow Agreement, dated the date hereof, by and among Seller, Buyer and
Escrow Agent, such Deposit Escrow Agreement to be in the form of Exhibit B-1.
2.4. Purchase Price. Subject to the terms and conditions of this Agreement,
at the Closing, Buyer shall, in accordance with instructions provided to it by
Seller at least 5 days prior to the Closing, deliver to Seller by a federal
funds check or by wire transfer of immediately available funds, to such account
or accounts as are designated in such instructions, the sum of $123,000,000 (the
"Purchase Price"), which sum shall be (i) reduced by the amount of the Deposit,
which is to be retained by the Escrow Agent (the "General Indemnity Portion",
which, together with the amounts delivered to the Escrow Agent pursuant to
Sections 2.5 and 2.7 below (the "Adjustment Indemnity Portion") shall be
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referred to as the "Indemnity Escrow Fund") to secure payment by Seller of any
indemnification obligations to Buyer in accordance with the terms of an
indemnity escrow agreement in substantially the form attached hereto as Exhibit
B-2 (the "Indemnity Escrow Agreement") to be executed and delivered by Buyer,
Seller and Escrow Agent at Closing, and (ii) subject to upward or downward
adjustment, as the case may be, pursuant to Sections 2.5, 2.6, 2.8 and 2.9
below; provided, however, that the Purchase Price shall not be subject to upward
adjustment pursuant to the provisions of Section 2.5 or 2.9 to the extent that
the number of Equivalent Billing Units exceeds 49,750. If Seller has requested
that Buyer deliver the Purchase Price by delivery of a federal funds check, the
Purchase Price shall be reduced by an amount equal to the interest which Buyer
would have received for overnight investment of an amount equal to the amount of
such federal funds check the night prior to the Closing Date, if such amount had
been deposited under, and subject to, the NationsBank Capital Markets Overnight
Repurchase Agreement. At Closing, the interest accrued on the Deposit will be
delivered by Escrow Agent to Buyer.
2.5 Subscriber Adjustment. If at Closing, the Systems have fewer than
49,750 Equivalent Billing Units as determined as of the Closing Date, the
Purchase Price shall be reduced by an amount equal to $2,472.36 for each
Equivalent Billing Unit less than 49,750 as of the Closing (the aggregate amount
of the reduction to be the "Subscriber Adjustment Amount"). In addition, if at
Closing the Systems have fewer than 49,750 Equivalent Billing Units determined
as of the Closing Date, Buyer will deposit with the Escrow Agent, in accordance
with the terms of the Indemnity Escrow Agreement, $2,472.36 for each residential
customer or resident of a multiple dwelling unit who has not paid as of the
Closing Date at least two months' payment in full without discount (other than
any Permitted Discounts) but has paid at least one month's payment in full
without discount (other than any Permitted Discounts) ("Contingent Basic
Subscribers"). In no event shall the aggregate amount, if any, deposited by
Buyer with the Escrow Agent for the aggregate Contingent Basic Subscribers (the
"Contingent Basic Subscriber Adjustment Amount") be greater than the Subscriber
Adjustment Amount as of the Closing Date. The release of the Contingent Basic
Subscriber Adjustment Amount shall be governed by the provisions of Section 2.9
and the Indemnity Escrow Agreement.
2.6. Current Items Amount. Buyer or Seller, as appropriate, shall pay to
the other (by increasing or decreasing the Purchase Price paid to Buyer at the
Closing) the net amount of the adjustments and prorations effected pursuant to
Sections 2.6.1, 2.6.2, 2.6.3 and 2.8 below (the "Current Items Amount"). The
adjustments provided for herein shall be made as of the close of business (5:00
p.m., Eastern time) on the Closing Date (the "Adjustment Time").
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2.6.1. Accounts Receivable and Advertising Receivables. Seller shall
be entitled to an amount equal to the sum of (i) 100% of the face amount of
all Accounts Receivable (other than Advertising Receivables) that are
current or 30 days or less past due as of the Adjustment Time, plus (ii)
95% of the face amount of all Accounts Receivable that are between 31 days
and 60 days past due as of the Adjustment Time. In addition, Seller shall
be entitled to 95% of the face amount of all Advertising Receivables that
are current or 60 days or less past due as of the Adjustment Time. With
respect to any Advertising Receivables that are more than 60 days past due
as of the Adjustment Time, Buyer and Seller shall endeavor in good faith to
jointly determine at Closing the reasonable likelihood that such
Advertising Receivables are capable of collection in the ordinary course of
business, and shall endeavor in good faith to jointly determine within
ninety (90) days after the Closing Date, based on such reasonable
likelihood of collectability, the amount to which Seller shall be entitled
from Buyer for such Advertising Receivables. Upon the conclusion of such
determination or if Buyer and Seller are unable to jointly make such
determination within ninety (90) days after the Closing Date, Seller shall
have the option to retain any Advertising Receivables which were more than
60 days past due as of the Adjustment Time for which Buyer and Seller have
been unable to reach agreement as to the amount to which Seller shall be
entitled from Buyer for such Advertising Receivables (the "Retained
Advertising Receivables"). In such event, Buyer shall forward to Seller any
such Retained Advertising Receivables received by Buyer during any calendar
month within ten (10) days after the end of such month. Buyer may not
settle, discount payment of, extend the term of, or otherwise compromise
any of Seller's Retained Advertising Receivables, except as previously
consented to in writing by Seller. For purposes of making "past due"
calculations with respect to Accounts Receivable, the "age" or days past
due of the Accounts Receivable shall be determined from the first day of
the month for which the applicable billing for services rendered for that
month is made (for example, a bill or statement for services for the period
from July 1 through July 31 shall be due as of July 1 for the purposes of
aging the Accounts Receivable applicable to such bill or statement and
shall be 31 days past due on August 1, and a bill or statement for services
for the period from July 16 through August 15 shall be due as of July 16
for the purposes of aging the Accounts Receivable applicable to such bill
or statement and shall be 31 days past due on August 16). For purposes of
making "past due" calculations with respect to Advertising Receivables, the
"age" or days past due of any Advertising Receivable shall be determined
from the date of the applicable billing of the third party owing such
amount to Seller for the services rendered or advertising spots sold to
such party.
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2.6.2 Advance Payments, Deposits and Accrued Sick Pay. Buyer shall be
entitled to an amount equal to the aggregate of (i) all deposits of subscribers
of the Systems for converters, decoders, and similar items, (ii) all payments
received by Seller for services to be rendered to subscribers of the Systems
after the Adjustment Time and (iii) an amount equal to one fourth of the accrued
sick pay as of the Adjustment Time of those employees of Seller whom Buyer hires
at Closing, which amount shall constitute Seller's sole liability pursuant to
the terms hereof with respect to accrued sick pay for such employees. Seller
shall be entitled to an amount equal to the aggregate of all deposits made under
utility, pole rental and other Assumed Contracts or bonds posted thereunder
which are transferred to Buyer at or after the Closing.
2.6.3 Expenses. As of the Adjustment Time, the following expenses shall be
prorated, in accordance with generally accepted accounting principles, so that
all expenses for periods prior to the Adjustment Time (other than expenses
related to Approved Additional Capital Expenditures, which shall be the sole
responsibility of Buyer) shall be for the responsibility of Seller, and all
expenses for periods after the Adjustment Time shall be for the responsibility
of Buyer: (i) all payments and charges under the Franchises, the Licenses, and
the Assumed Contracts; (ii) Taxes levied or assessed against any of the Assets;
(iii) Taxes, if any, payable with respect to cable television service and
related sales to subscribers of the Systems; (iv) charges for utilities and
other goods or services furnished to the Systems; (v) copyright fees based on
signal carriage by the Systems; (vi) all refund liabilities due to subscribers
in connection with the rates of the Systems; and (vii) all other items of
expense relating to the Systems; provided, however, that Seller and Buyer shall
not prorate any items of expense payable under any Excluded Assets, all of which
shall remain and be solely for the account of Seller. In addition, to the extent
that Buyer or Seller has paid more than one-half of any expenses incurred
hereunder which are specifically stated herein to be shared equally by Buyer and
Seller, the Purchase Price shall be adjusted so that Buyer and Seller are
ultimately each responsible for one-half of such expenses.
2.7 Pre-Closing Subscriber Adjustment and Current Items Amount
Calculations. The Subscriber Adjustment Amount, if any, the Current Items Amount
and the Contingent Basic Subscriber Adjustment Amount, if any, shall be
estimated in good faith by Seller, and set forth, together with a detailed
statement of the calculation thereof, in a certificate (the "Initial Adjustment
Certificate") executed by a duly authorized representative of Seller and
delivered to Buyer not later than ten (10) days prior to the Closing. Seller
shall use reasonable efforts to keep Buyer informed during its preparation of
the Initial Adjustment Certificate. Buyer shall no later than three (3) days
prior to the
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Closing, advise Seller of whether Buyer believes the estimate of Seller to be
accurate or whether it has sufficient information to evaluate the estimate and,
if it does not believe it to be accurate or does not have sufficient information
from Seller to evaluate the estimate, shall provide Seller with the information
and calculations upon which its belief is based, including an estimate by Buyer
of (i) the Equivalent Billing Units the Systems will have on the Closing Date,
(ii) the Current Items Amount as of the Closing Date and (iii) the Contingent
Basic Subscribers the Systems will have on the Closing Date. At the Closing,
Seller shall deliver to Buyer a certificate of the Managing General Partner,
dated the Closing Date, setting forth Seller's calculation of the Equivalent
Billing Units and the Contingent Basic Subscribers. If Buyer in good faith
believes Seller's calculation of the Subscriber Adjustment Amount or the Current
Items Amount is incorrect or that it has insufficient information to evaluate
the calculation, then, at the Closing, Buyer shall pay to Seller the Purchase
Price, with adjustment pursuant to this Section 2.7 resulting from Seller's
calculation of the Subscriber Adjustment Amount and Current Items Amount only to
the extent such calculation is not disputed by Buyer (such amounts to be
respectively the "Preliminary Subscriber Adjustment Amount" and the "Preliminary
Current Items Amount"), and any further amounts to which Seller believes it is
entitled pursuant to this Section 2.7 but which are disputed by Buyer shall
instead be deposited with the Indemnity Escrow Agent as the Adjustment Indemnity
Portion of the Indemnity Escrow Fund and shall be treated as unresolved claims
pursuant to the Indemnity Escrow Agreement.
2.8 Approved Additional Capital Expenditures. The Purchase Price shall be
increased by any amounts actually expended by Seller with respect to the
Approved Additional Capital Expenditures, if any, between the date hereof and
the Closing Date.
2.9 Final Subscriber Adjustment Amount and Final Current Items Amount
Calculations. Seller and Buyer shall endeavor in good faith to agree upon (i)
the final Subscriber Adjustment Amount (which shall be reduced by amounts to be
paid from the Contingent Basic Subscriber Adjustment Amount to Seller for those
Contingent Basic Subscribers who, following the Closing Date, have paid one
month's payment in full without discount (other than any Permitted Discounts)
within 60 days after the billing date for the service to which such payment
relates) (the "Final Subscriber Adjustment Amount") and (ii) the final Current
Items Amount (the "Final Current Items Amount"), within 90 days after the
Closing. Seller or Buyer, as appropriate, shall pay to the other party within 5
Business Days after the final determination thereof the amount by which the
parties agree that the Final Subscriber Adjustment Amount and Final Current
Items Amount differ from the Preliminary Subscriber Adjustment
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Amount and Preliminary Current Items Amount (including instructing Escrow Agent
to release all of the Adjustment Indemnity Portion to Buyer and Seller in such
proportions as have been agreed upon by Buyer and Seller; provided, that such
instructions shall require that Escrow Agent release to Buyer any amounts
remaining in the Adjustment Indemnity Portion, if any, after all amounts
required to be released to Seller as a result of the determination of the Final
Subscriber Adjustment Amount and Final Current Items Amount have been so
released to Seller), it being understood and agreed that all such payments to be
made by or for the account of Seller to Buyer in accordance with this Section
2.9 shall be paid or payable solely out of the Indemnity Escrow Fund.
Notwithstanding any provision to the contrary contained herein, if the
calculation of the Final Subscriber Adjustment Amount pursuant to this Section
2.9 results in the Systems having an aggregate of at least 49,750 Equivalent
Billing Units (whether as a result of (A) the inclusion of Contingent Basic
Subscribers who, following the Closing Date, have paid one month's payment in
full without discount (other than any Permitted Discounts) within 60 days after
the billing date for the service to which such payment relates and/or (B) the
resolution of a dispute in favor of Seller relating to the computation of the
Final Subscriber Adjustment Amount), Buyer shall not be entitled to any payments
from the Indemnity Escrow Fund to the extent that any claims for such payments
are based on the failure of the Systems to have 49,750 Equivalent Billing Units.
Any amounts in dispute at the end of such 90 day period will be determined
within 120 days after the Closing Date by the accounting firm of KPMG Peat
Marwick ("KPMG") in New York City. If KPMG is unable or unwilling to resolve
such dispute and the parties are unable to agree upon another firm of certified
public accountants, then either party may demand that the dispute be settled by
notice to the other (the "Adjustment Notice") setting forth the name of the firm
of certified public accountants designated by the party giving the Adjustment
Notice. The other party shall designate a second firm of public accountants by
notice ("Response Notice") given within ten (10) days after its receipt of the
Adjustment Notice. The two firms designated by the parties shall select a third
firm of certified public accountants to resolve the dispute; provided, however,
that if the firms are unable to agree upon a third firm, within ten (10) days
after the giving of the Response Notice, then the third firm of certified public
accountants shall be a firm of certified public accountants designated by the
American Arbitration Association at the request of either party. The decision of
KPMG (or such other firm(s) of certified public accountants designated to
resolve the dispute in accordance herewith) shall be final and binding upon
Seller and Buyer and judgment thereon may be entered in any court of competent
jurisdiction. Upon resolution of such dispute, appropriate payment shall be
promptly made in accordance with such resolution solely out of the Indemnity
Escrow Fund pursuant to the Indemnity Escrow
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Agreement; provided, however, that in no event shall any payment to Seller from
the Adjustment Indemnity Portion of the Indemnity Escrow Fund reduce the General
Indemnity Portion to less than six million dollars ($6,000,000). The parties
shall be responsible for their respective expenses in connection with such
resolution, except the fees of KPMG (or any other firm of certified public
accountants mutually acceptable to the parties) or the third accounting firm
shall be divided equally between Seller and Buyer. The payment required after
determination of all disputed amounts will be made by the responsible party
within five Business Days after the final determination.
2.10. Assumption of Liabilities. As of the Closing Date, Buyer shall
assume, pay, discharge, and perform and hold Seller harmless from the following
obligations and liabilities (the "Assumed Liabilities"): (i) all liabilities and
obligations with respect to periods subsequent to the Closing Date under any
Franchise, License, Assumed Contract or instrument relating to real property
assigned to Buyer; (ii) the obligation of Seller subsequent to the Closing Date
to operate the Systems and to provide cable television services, including the
obligation to provide free or reduced price service to (a) Seller's employees,
(b) those persons as may be required under the Franchise and (c) those persons
identified on Schedule 2.10; (iii) other obligations and liabilities of Seller
only to the extent that there shall be an adjustment in favor of Buyer with
respect thereto pursuant to Section 2.6; (iv) obligations relating to deposits
described in Section 2.6.2(i) for which an appropriate adjustment has been made
to the Purchase Price; and (v) all obligations and liabilities arising out of
Buyer's ownership of the Assets or operation of the Systems after the Closing
Date. All debts, liabilities, and obligations arising out of or relating to the
Assets or the operation of the Systems other than the Assumed Liabilities shall
remain and be the obligations and liabilities solely of Seller.
3. SELLER'S REPRESENTATIONS. Seller represents, warrants and covenants to
Buyer as follows:
3.1 Organization and Qualification. Seller is a limited partnership duly
organized and validly existing under the laws of the State of Delaware, and has
all requisite power and authority to own and lease the properties and assets it
currently owns and leases in connection with the Systems and to conduct its
activities and to carry on its business as such activities and business are
currently conducted in connection with the Systems. Seller is duly qualified to
do business as a foreign limited partnership in the Commonwealth of Virginia.
SCHEDULE 3.1 sets forth a list of all fictitious and/or trade names which Seller
is currently using or in the past has used in connection with the conduct of the
business of the Systems.
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3.2 Authorization. Seller has full partnership power and authority to
execute, deliver, and perform this Agreement and to consummate the transactions
contemplated in this Agreement. The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated in this
Agreement on the part of Seller have been duly and validly authorized and
approved by all necessary action on the part of Seller, except for the fact that
Seller has yet to obtain the required consents with respect thereto from the
Limited Partners of Seller. This Agreement has been duly and validly executed
and delivered by Seller, and is the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except insofar as the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
3.3 Systems Information. Schedule 3.3 sets forth a materially true and
accurate description of the following information:
(i) the approximate number of miles of activated aerial and
underground cable included in the Assets;
(ii) the minimum number of passings of the Systems;
(iii) a description of "Basic Service," available from the Systems,
the rates charged by Seller for such service, together with the
number of subscribers receiving the services, and any other
charges by Seller for services to subscribers;
(iv) as of May 31, 1995, the number of Equivalent Billing Units of
the Systems, calculated in accordance with the formula described
in Section 1.15 above;
(v) the channel and bandwidth capacity of the Systems, the stations
and signals carried by the Systems, the channel position of each
such signal and station, and all frequencies utilized by the
Systems; and
(vi) each agreement pursuant to which any broadcast station listed
in Schedule 3.3 is carried by the Systems.
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3.4 No other Operators. Except as described on Schedule 3.4, (i) the
Systems are the only multiple channel operator presently serving the communities
which they serve, (ii) to the best of Seller's knowledge, no other multiple
channel operator is presently contemplated by any Person in the communities now
served by the Systems, and (iii) no franchises or other authorizations other
than the Franchises have been issued with respect to the communities served by
the Systems.
3.5 Title and Condition of Personal Property. Schedule 3.5 contains a
complete description of all material items of Personal Property, other than the
Excluded Assets. The Personal Property constitutes all personal property
necessary to conduct lawfully and properly the business or operations of the
Systems as now conducted. No fewer than 49,000 of the 50,510 converters of the
Systems are 550MHz capable. Except as described on Schedule 3.5, Seller has good
and marketable title to all of the Personal Property, free and clear of all
Liens, except for Permitted Liens. All of the Personal Property is in good
working order and repair, ordinary wear and tear excepted.
3.6 Franchises, Licenses, and Contracts. Schedule 3.6 contains a list of
all of the Franchises, Licenses and material Contracts relating to the Systems,
other than: (i) subscription agreements with individual residential subscribers
for the cable services provided by the Systems in the ordinary course of
business which may be canceled by the Systems without penalty on not more than
30 days notice, and (ii) programming agreements. Seller has delivered to Buyer
true and complete copies of each of the Franchises, Licenses, and written
Assumed Contracts, including any amendments thereto, other than Contracts
described in clauses (i) and (ii) above and motor vehicle leases. Except for any
agreements listed on Schedule 3.6 as having expired and being in the process of
renewal, each of the Franchises, Licenses, and Material Assumed Contracts is
valid, in full force and effect, and enforceable in all material respects in
accordance with its terms against the parties thereto other than Seller, and
Seller has fulfilled when due, or has taken all action reasonably necessary to
enable it to fulfill when due, all of its material obligations thereunder. There
is no uncured material default (without regard to lapse of time, the giving of
notice, the election of any Person other than Seller, or any combination
thereof) by Seller nor, to the knowledge of Seller, is there any material
uncured default (without regard to lapse of time, the giving of notice, the
election of Seller, or any combination thereof) by any Person other than Seller
under any of the Franchises, Licenses, or Assumed Contracts. Neither Seller nor,
to the knowledge of Seller, any other Person is in arrears in the performance or
satisfaction of its material obligations under any of the Franchises, Licenses,
or Assumed Contracts, and no material waiver or indulgence has been granted by
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any of the parties thereto. The Franchises, Licenses, and Assumed Contracts are
sufficient to permit Seller to operate the Systems lawfully in the manner in
which it is currently operated in all material respects.
3.7 No Conflicts; Consents. Subject to obtaining required Consents under
the Franchises, Licenses or Assumed Contracts, the consent of the Limited
Partners pursuant to the Partnership Agreement, and the expiration or
termination of all applicable periods under the HSR Act, the execution,
delivery, and performance by Seller of this Agreement does not and will not: (i)
violate any provision of any Legal Requirement; (ii) conflict with or violate
any provision of the Partnership Agreement; (iii) conflict with, violate, result
in a material breach of, constitute a material default under (without regard to
requirements of notice, lapse of time, or elections of other Persons, or any
combination thereof), accelerate, or permit the acceleration of the performance
required by, any indenture or other material agreement or material instrument by
which Seller or any of the Assets may be bound or affected; (iv) result in the
creation or imposition of any Lien against or upon any of the Assets; or (v)
require any consent, approval, or authorization of, or filing of any
certificate, notice, application, report, or other document with, any
Governmental Authority or other Person.
3.8 Litigation. There is no outstanding Judgment against Seller requiring
Seller to take any action of any kind with respect to the Assets or the
operation of the Systems, or to which the Systems or the Assets are subject or
by which they are bound or affected, and there is no Litigation pending or, to
Seller's knowledge, threatened, against Seller which individually or in the
aggregate might result in any materially adverse change in the financial
condition or operation of the Systems or materially adversely affect the Assets
or the ability of Seller to perform its obligations under this Agreement. Except
as described on Schedule 3.8, there are no proceedings pending to which Seller
is a party or, to Seller's knowledge, threatened, nor have any demands been made
by any Governmental Authority, utility, pole lessor, or other party, which seeks
or could result in the termination, modification, suspension or limitation of
Seller's rights or obligations with respect to the Franchises, Licenses, or
Assumed Contracts. There are no claims, actions, suits, proceedings or
investigations pending or, to Seller's knowledge, threatened, by or before any
Governmental Authority, or any arbitrator, by or against or affecting or
relating to Seller or its General Partner which, if adversely determined, would
restrain or enjoin the consummation of the transactions contemplated by this
Agreement or declare unlawful the transactions or events contemplated by this
Agreement or cause any of such transactions to be rescinded. Nothing contained
in this Section 3.8, however, shall constitute any representation, warranty or
covenant with respect
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to any pending or threatened Rate Regulatory Matter or with respect to any Rate
Regulatory Reduction Order, all such representations, warranties and covenants
being made instead solely in Section 3.13.4(b) below.
3.9 Employment Matters.
3.9.1 ERISA. Neither Seller nor any Employee Benefit Plan or
Multiemployer Plan (as those terms are defined in ERISA) maintained by Seller or
to which Seller has contributed or has had the obligation to contribute is in
violation of the provisions of ERISA in any material respect; no reportable
event, within the meaning of Title IV of ERISA, has occurred and is continuing
with respect to any such Employee Benefit Plan or Multiemployer Plan; and no
prohibited transaction, within the meaning of Title I of ERISA, has occurred
with respect to any such Employee Benefit Plan or Multiemployer Plan.
3.9.2 Collective Bargaining. There are no collective bargaining
agreements applicable to any persons employed by Seller that render services in
connection with the Systems, and Seller has no duty to bargain with any labor
organization with respect to any such persons. There is not pending any demand
for recognition or any other request or demand from a labor organization for
representative status with respect to any persons employed by Seller that render
services in connection with the Systems.
3.9.3 Legal Compliance. With respect to any persons employed by Seller
that render services in connection with the Systems, Seller is in compliance in
all material respects with all applicable Legal Requirements respecting
employment conditions and practices, has withheld all amounts required by any
applicable Legal Requirements or Contracts to be withheld from wages or
salaries, and is not liable for any material arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.
3.9.4 No Unfair Practices. With respect to any persons employed by
Seller that render services in connection with the Systems, (i) Seller has not
engaged in any material unfair labor practice within the meaning of the National
Labor Relations Act and has not violated in any material respect any Legal
Requirements prohibiting discrimination on the basis of race, color, national
origin, sex, religion, age, marital status, or handicap in its employment
conditions or practices; and (ii) there are no pending or, to Seller's
knowledge, threatened unfair labor practice charges or discrimination complaints
relating to race, color, national origin, sex, religion, age, marital status, or
handicap against Seller before any Governmental Authority nor, to Seller's
knowledge, does any basis therefor exist.
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3.9.5 No Labor Controversies. There are no existing or, to Seller's
knowledge, threatened, labor strikes, disputes, or grievances affecting the
Systems or other labor controversies which could reasonably be expected to have
a material and adverse effect on the financial condition or operations of the
Systems. There are no pending or, to the knowledge of Seller, threatened
arbitration proceedings under any Contracts respecting Seller's employees, nor
to the knowledge of Seller, does any basis therefor exist.
3.10 Taxes. Seller has (i) duly and timely paid all Taxes with respect to
the Systems the nonpayment of which could reasonably be expected to have a
material adverse effect on the Assets or the operations or financial condition
of the Systems, which have become due and payable by it except such Taxes, if
any, as are being contested in good faith and by proper proceedings and as to
which adequate reserves have been provided and (ii) received no notice of, nor
does Seller have any knowledge of, any notice of deficiency or assessment of
proposed deficiency or assessment from any taxing Governmental Authority with
respect to the Systems. There are no audits pending with respect to the Systems
and there are no outstanding agreements or waivers by Seller that extend the
statutory period of limitations applicable to any federal, state, local, or
foreign tax returns or Taxes with respect to the Systems.
3.11 Financial Statements. Seller has delivered to Buyer copies of the
following financial statements, which are based on the books, records, and
accounts of Seller and which were prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods indicated:
3.11.1 Balance Sheets. Audited balance sheets as of the fiscal year
ended December 31, 1992, 1993 and 1994 and an unaudited balance sheet of Seller
for the fiscal quarter ending March 31, 1995 (the "Balance Sheet"), each of
which (subject in the case of the unaudited statement to year-end audit
adjustments) fairly and accurately present, as of the respective dates thereof,
the financial condition, assets, and liabilities of Seller; and
3.11.2 Statements of Operations. Audited statement of operations for the
twelve-month periods ended December 31, 1992, 1993 and 1994 and the unaudited
statement of operations of Seller for the fiscal quarter ending March 31, 1995,
all of which (subject in the case of the unaudited statement to year-end audit
adjustments) fairly and accurately present the results of the operations of
Seller for the respective periods indicated.
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As of the date thereof, Seller was the owner (except for certain leased
equipment not material in amount) of all the properties and assets set forth in
the Balance Sheet, and there are no material liabilities, accrued, absolute,
contingent or otherwise, that would be, under generally accepted accounting
principles, reflected in the Balance Sheet, which are not so reflected.
3.12 No Material Adverse Change. There has been no material adverse change
in the financial condition, Assets, liabilities, operations or prospects of the
Systems since March 31, 1995, other than any changes caused by any adjustments
to rates or rate rollbacks ordered or under review by the FCC in connection with
the Systems under the rate regulations of the FCC, or any other governmental
mandated rate restructuring, or by legislation, rulemaking or regulation
affecting the cable television industry generally, and the Assets and the
financial condition and operations of the Systems have not been materially and
adversely affected since March 31, 1995 as a result of any fire, explosion,
accident, casualty, labor trouble, flood, drought, riot, storm, condemnation or
act of God or public force or otherwise.
3.13 Compliance with Legal Requirements.
3.13.1 No Violation of Legal Requirements. Except as described on
Schedule 3.13.1, the operation of the Systems as currently conducted does not
violate or infringe in any material respect any Legal Requirement. Seller has
received no notice of any material violation by Seller or the Systems of any
Legal Requirement applicable to the operation of the Systems as currently
conducted, and knows of no basis for the allegation of any such violation. No
representation or warranty is given pursuant to this Section 3.13.1 with respect
to Rate Regulatory Matters.
3.13.2 Licensing. Seller is permitted under all applicable Franchises
and FCC rules, regulations and orders to distribute the transmissions (whether
television, satellite, radio or otherwise) of video programming or other
information that the Seller makes available to subscribers of the Systems and to
utilize all carrier frequencies generated by the operations of the Systems, and
is licensed to operate all the facilities required by law to be licensed,
including without limitation any business radio and any cable television relay
service systems being operated as part of the Systems. Other than requests for
network nonduplication and syntax protection and as described on Schedule
3.13.2, no written requests have been received by Seller during the one year
preceding the date of this Agreement from the FCC, the United States Copyright
Office or any other Person challenging or questioning the right of Seller to
operate the Systems and any FCC-licensed or registered facility used in
conjunction with Seller's
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operation of the Systems. Seller has not violated any laws or any duty or
obligation with regard to protecting the privacy rights of any past or present
subscribers of the Systems, which violation could reasonably be expected to have
a material adverse effect on the financial condition or operations of the
Systems.
3.13.3 Communications Act of 1934. Without limiting the generality of
the foregoing: (a) the operation of the Systems has been, and is, in compliance
in all material respects with the Communications Act of 1934, as amended (as so
amended, the "Communications Act"), and the rules and regulations of the FCC;
(b) Seller has made all material filings required to be made with the FCC
(including cable television registration statements, annual reports and
aeronautical frequency usage notices); (c) Seller has provided all notices to
subscribers required under the Communications Act; and (d) from 1988 through
1993, Seller has been certified as in compliance with the FCC's equal employment
opportunity rules, and said certification is pending at the FCC with respect to
the years 1994 and 1995. Seller has delivered to Buyer complete and correct
copies of all reports and filings for the past three years made or filed
pursuant to the Communications Act or FCC rules and regulations with respect to
the Systems. A request for renewal has been timely filed under Section 626 of
the Cable Communications Policy Act of 1984 with the proper Governmental
Authority with respect to all cable television franchises of the Systems
expiring within 36 months after the date of this Agreement.
3.13.4 Cable Act of 1992.
(a) Signal Carriage. Except with respect to Rate Regulatory Matters,
the representations and warranties as to which are made solely in Section
3.13.4(b), Seller is in compliance in all material respects with the provisions
of the Cable Act of 1992 and the FCC rules and regulations promulgated
thereunder as such laws relate to the operation of the Systems. Seller is in
compliance in all material respects with the must carry and retransmission
consent provisions of the Cable Act and the FCC rules and regulations
promulgated thereunder, including without limitation, (i) duly and timely
notifying "local commercial television stations" of inadequate signal strength
or increased copyright liability, if applicable, (ii) duly and timely notifying
non-commercial educational stations of the location of the Systems' principal
headed, (iii) duly and timely notifying subscribers of changes in the channel
alignment on the Systems, (iv) duly and timely notifying "local commercial and
noncommercial television stations" of the broadcast signals carried on the
Systems and their channel position, (v) maintaining the requisite public file
identifying broadcast signal carriage, (vi) carrying the broadcast signals after
June 1, 1993 on the Systems for all "local commercial television
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stations" which elected must carry status and, if required, up to two "qualified
low power stations" and (vii) obtaining retransmission consent for all broadcast
signals carried on the Systems after October 5, 1993, except for those signals
carried pursuant to a must carry election or the "superstition exemption." Sell
has not received any written notice that any broadcaster of television signals
complained regarding its channel position.
(b) Rate Regulation and Compliance. Seller makes no representation,
warranty or covenant that the rates charged to Subscribers are would be
allowable under any rules and regulations of the FCC, or any authoritative
interpretation thereof, promulgated from and after the date hereof Seller has
not been required to deliver FCC Forms 393, 1200, 1205, 1210 and 1215 to
franchisors and/or the FCC with respect to the Systems and copies of
correspondence with any Governmental Authority relating to rate regulation
generally or specific rates charged to subscribers with respect to the Systems,
including, without limitation, copies of any complaints and responses filed with
the FCC with respect to any rates charged to subscribers of the Systems. Excel
as otherwise described in Schedule 3.13.4, as of the date of this Agreement, (i)
there are no outstanding Rate Regulatory Reduction Orders affecting the System
and the rates charged thereby, other than any Rate Regulatory Reduction Order
affecting the cable industry generally, (ii) there are no Rate Regulatory
Matters pending to which Seller is a party, and (iii) no local Governmental
Authority has been certified by the FCC as a rate relating authority.
(c) Customer Service Standards. Seller is in compliance in all
material respects with all customer service standards applicable to the Systems.
3.13.5 Holding Period. Seller has not violated and is not subject to any
requirement to obtain a waiver under the antitrafficking provisions of the Cable
Act and the FCC rules promulgated thereunder as a result of the transfer of the
Systems to Buyer contemplated by this Agreement.
3.13.6 CLI. Seller has conducted all Systems and microwave performance
tests and all Cumulative Leakage Index ("CLI") related tests applicable to the
Systems. Seller has (i) maintained appropriate log books and other recordkeeping
which accurately and completely reflect in all material respects all results
required to be shown thereon; (ii) to the extent required by the rules and
regulations of the FCC, corrected any radiation leakage of the Systems required
to be corrected in connection with Seller's monitoring obligations under the
rules and reactions of the FCC; and (iii) otherwise
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complied in all material respects with all applicable CLI rules and regulations
in connection with the operation of the Systems.
3.13.7 FAA Rules and Regulations. The Systems are being operated in all
material respects in compliance with the Rules and Regulations of the Federal
Aviation Administration ("FAA"). Schedule 3.5 lists all of the existing towers
of the Systems. Without limiting the generality of the foregoing, the existing
towers of the Systems are obstruction marked and lighted in all material
respects in accordance with the Rules and Regulations of the FAA and FCC if so
required. All required authorizations, including but not limited to, Hazard to
Air Navigation determinations, for such towers have been issued by and pursuant
to the Rules and Regulations of the FAA. Except as set forth in Schedule 3.6,
Seller does not lease space on such towers to any third party.
3.13.8 Copyright. Seller has deposited with the United States Copyright
Office all statements of account and other documents and instruments, and paid
all royalties, supplemental royalties, fees and other sums to the United States
Copyright Office required under the Copyright Act with respect to the business
and operations of the Systems as are required to obtain, hold and maintain the
compulsory copyright license for cable television system prescribed in Section
111 of the Copyright Act. Seller is in compliance in all material respects with
the Copyright Act and the rules and regulations of the Copyright Office with
respect to the operation of the Systems. Seller is entitled to hold and does
hold the compulsory copyright license described in Section 111 of the Copyright
Act, which compulsory copyright license is in full force and effect and has not
been revoked, cancelled, encumbered or materially adversely affected in any
manner.
3.14 Environmental Laws and Regulations.
3.14.1 Superfund. Seller has not been advised that it is the subject of
any "Superfund" evaluation or investigation or proceeding in connection with the
Real Property, and has not been advised that it is the subject of any
investigation or proceeding of any Governmental Authority evaluating whether any
remedial action is necessary to respond to any release of Hazardous Substances
on or in connection with the Real Property.
3.14.2 Permits. Seller has obtained all permits, licenses, permissions,
and other authorizations relating to Seller's use of the Real Property which are
required under applicable Environmental Laws, including Legal Requirements
relating to actual or threatened emissions, discharges, or releases of Hazardous
Substances into ambient air, surface water, ground water,
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land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of Hazardous Substances.
Seller is in compliance in all material respects with all terms and conditions
of such permits, licenses, permissions, and authorizations, and is in material
compliance in all respects with all other limitations, restrictions,
obligations, schedules, and time-tables imposed by the Environmental Laws.
Seller has not received notice of, and has no knowledge of circumstances
relating to, any past, present, or future events, conditions, circumstances,
activities, practices, incidents, actions, or plans, including but not limited
to the presence, use, generation, manufacture, disposal, release, or threatened
release of any Hazardous Substances from the Real Property, which reasonably
could be expected to interfere with or prevent Seller's continued compliance in
all material respects, or which are reasonably likely to give rise to any
liability, based upon or related to the processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release, or threatened release into the environment, of any Hazardous
Substance from or attributable to the Real Property.
3.14.3 Environmental Reports. Seller has delivered to Buyer copies of
all environmental reports and studies that Seller has commissioned with respect
to the Real Property, and such copies are complete and accurate copies of such
reports and studies.
3.15 Real Property. Schedule 3.15 contains descriptions of all the Real
Property, which comprises all real property interests necessary to conduct the
business or operations of the Systems as now conducted in all material respects.
Seller is not aware of any easement or other real property interest, other than
those described on Schedule 3.15 or those that are incidental to the operation
of the Systems, that is required, or that has been asserted by a Governmental
Authority or a third-party to be required, to conduct the business or operations
of the Systems as now conducted in all material respects. Seller has delivered
to Buyer true and complete copies of all leases, easements, rights-of-way or
other instruments pertaining to the Real Property (including any and all
amendments and other modifications of such instruments), except in the case of
easements, for such instances in which Seller does not have a complete copy of
such easements (including any property descriptions with respect thereto) in its
possession and such easements are not material to the operation of the Systems.
All Real Property (including the improvements thereon) (a) is in good condition
and repair consistent with its present use, (b) is available to Seller for
immediate use in the conduct of the business or operations of the Systems, and
(c) complies in all material respects with all applicable building or zoning
codes and the
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regulations of any Governmental Authority having jurisdiction over Seller or
such Real Property.
3.16 Commitments. There are no unfulfilled binding material commitments for
capital improvements which Seller is obligated to make in connection with the
Systems. There are no obligations or liabilities to subscribers or to other
users of Seller's services with respect to the Systems which are material to the
business of the Systems, except: (i) with respect to deposits made by such
subscribers or such other users; and (ii) the obligation to supply services to
subscribers of the Systems in the ordinary course of business pursuant to the
Franchises. To the best of Seller's knowledge, there are no complaints by
subscribers or other users of Seller's services with respect to the Systems
that, individually or in the aggregate, could materially and adversely affect
the financial condition, Assets, liabilities, operations or prospects of the
Systems. Except with respect to the categories of persons referred to in Section
2.10(ii), there is no free service liability to subscribers existing with
respect to the Systems. Except (a) for Rate Regulatory Matters, (b) as otherwise
set forth on Schedule 3.3(III)(C) or (c) with respect to deposits for
converters, encoders, decoders and related equipment, and any other item for
which an adjustment is to be made pursuant to Section 2.6, hereof, Seller has no
obligation or liability for the refund of monies or for the provision of rebates
to the Systems' subscribers. Schedule 3.16 attached hereto sets forth each local
office of the Systems, and no other offices are required by the Franchises or
otherwise, to be maintained by Seller with respect to the Systems. Seller has
not made any commitment to any of the municipalities served by the Systems to
pay franchise fees to any such municipality in excess of the amounts set forth
in the Franchises.
3.17 Non-Infringement. The operation of the Systems as currently conducted
does not infringe upon, or otherwise violate, the rights of any person or entity
in any copyright, trade name, trademark right, service mark, service name,
patent, patent right, license, trade secret or franchise, which violation or
infringement could reasonably be expected to have a material adverse effect on
the financial condition or operations of the Systems. There is not pending or,
to Seller's knowledge, threatened any action with respect to any such
infringement or breach.
3.18 Book and Records. All of the books, records, and accounts of the
Systems are in all material respects true and complete, are maintained in all
material respects in accordance with sound business practice and all applicable
Legal Requirements, accurately present and reflect in all material respects all
of
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the transactions therein described, and are reflected accurately in all material
respects in the financial statements provided to Buyer.
3.19 Accounts Receivable. Seller is the true and lawful owner of the
Accounts Receivable and has good and clear title to each account, free and clear
of all Liens, other than Permitted Liens, with the absolute right to transfer
any interest therein, subject to the Permitted Liens. Each such account is (i) a
valid obligation of the account debtor enforceable in all material respects in
accordance with its terms, and (ii) in all material respects, a true and correct
statement of the account for merchandise actually sold and delivered to, or for
actual services performed for and accepted by, such account debtor.
3.20 Bonds. Schedule 3.20 contains an accurate and complete list of all
bonds (franchise, construction, fidelity, or performance) of Seller which relate
in any way to the ownership or use of the Assets or the operation of the
Systems.
3.21 Accuracy of Schedules. All Schedule to this Agreement are accurate and
complete in all material respects as of the date of this Agreement.
3.22 Disclosure. No representation or warranty of Seller, or any statement
or certificate furnished by Seller to Buyer pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement, contains or
will contain at the Closing any untrue statement of a material fact or omits or
will at the Closing omit to state a material fact necessary to make the
statements contained therein not misleading.
3.23 Taxpayer Identification Number. Seller's U.S. Taxpayer Identification
Number is 06-1127909.
4. BUYER'S REPRESENTATIONS. Buyer hereby represents, warrants and covenants
to Seller as follows:
4.1 Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado, and has all
requisite power and authority to own and lease the properties and assets it
currently owns and leases and to conduct its activities and to carry on its
business as such activities and business are currently conducted. Buyer is duly
qualified to do business as a foreign corporation in good standing in the
Commonwealth of Virginia.
4.2 Authorization. Buyer has full corporate power and authority to execute,
deliver, and perform this Agreement and to consummate the
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transactions contemplated in this Agreement. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated in this Agreement on the part of Buyer have been duly and validly
authorized and approved by all necessary action on the part of Buyer, including
appropriate resolutions, if necessary, of the Board of Directors of the Buyer.
This Agreement has been duly and validly executed and delivered by Buyer, and is
the valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms except insofar as the enforceability hereof may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity.
4.3 No Conflicts; Consents. Subject to (i) obtaining (a) the approval of
the FCC to the transfer of the Licenses and (b) the consents of certain
franchising authorities to the transfer of the Franchises to Buyer, and (ii) the
expiration or termination of all applicable waiting periods under the HSR Act,
the execution, delivery and performance by Buyer of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (A)
violate any provision of any Legal Requirement (including, without limitation,
any FCC rule or regulation with respect to cross-ownership of media properties);
(ii) conflict with or violate any provision of the Articles of Incorporation or
bylaws of Seller; (iii) conflict with, violate or result in a material breach
of, constitute a material default under (without regard to requirements of
notice, lapse of time, or elections of other Persons, or any combination
thereof) accelerate or permit the acceleration of the performance required by,
any indenture or other material agreement or instrument by which Buyer or any of
its properties or assets may be bound or affected; (iv) result in the creation
or imposition of any Lien upon or with respect to any properties of Buyer; or
(v) require any consent, approval, or authorization of, or filing of any
certificate, notice, application, report, or other document with, any
Governmental Authority or other Person.
4.4 Litigation. There are no claims, actions, suits, proceedings or
investigations pending or, to Buyer's knowledge, threatened, by or before any
Governmental Authority, or any arbitrator, by or against or affecting or
relating to Buyer which, if adversely determined, would restrain or enjoin the
consummation of the transactions contemplated by this Agreement or declare
unlawful the transactions or events contemplated by this Agreement or cause any
of such transactions to be rescinded.
4.5 Funds. Buyer has sufficient cash on hand and availability under its
existing loan facilities to pay the entire Purchase Price hereunder. Buyer
expressly
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acknowledges and agrees that if it is unable to consummate the transactions
contemplated hereunder on a timely basis because it does not have sufficient
funds to do so, Seller shall be entitled to terminate this Agreement and to
cause the Escrow Agent to promptly pay to Seller the entire balance of the
Deposit, and all interest accrued thereon, pursuant to the terms of the Deposit
Escrow Agreement.
4.6 Disclosure. No representation or warranty of Buyer, or any statement or
certificate furnished by Buyer to Seller pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement, contains or
will contain at the Closing any untrue statement of a material fact or omits or
will at the Closing omit to state a material fact necessary to make the
statements contained therein not misleading.
4.7 Taxpayer Identification Number. Buyer's U.S. Taxpayer Identification
Number is 84-0613514.
5. COVENANTS.
5.1 Seller's Pre-Closing Obligations. Seller covenants and agrees that,
from and after the execution and delivery of this Agreement until and including
the Closing Date:
5.1.1 Access. Seller shall give Buyer and its representatives full
access during normal business hours and on reasonable advance notice to all of
the properties, books, and records relating to the Systems, and furnish Buyer
with such information concerning the Assets and the Systems as Buyer may
reasonably request. Notwithstanding any investigation that Buyer may conduct of
the Assets, unless Buyer has actual knowledge to the contrary, Buyer may fully
rely on Seller's representations, warranties and covenants herein, which will
not be waived or affected by or as a result of any such investigation.
5.1.2 Conduct of Business. Seller shall operate the Systems in the
ordinary and usual course and in substantial accordance with past practices,
which shall include, without limitation, (i) making all Ordinary Course Capital
Expenditures and all Approved Additional Capital Expenditures; (ii) continuing
to construct on its current schedule the current rebuild of the Systems
described in Schedule 5.1.2(a) (the "Current Rebuild"); (iii) maintaining
appropriate staff and management personnel at the Systems, consistent with past
practices; (iv) maintaining adequate inventories consistent with past practices;
(v) the provision of only one level of basic programming to the subscribers of
the Systems and the implementation of the marketing programs described on
Schedule 5.1.2(b); and (vi) completing line extensions, placing conduit or cable
in new developments
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and fulfilling installation requests. Seller shall duly comply in all material
respects with all applicable Legal Requirements, perform all of its material
obligations under all of the Franchises, Licenses, and Assumed Contracts and any
other Contracts which are material to the operation of the Systems, without
default, and maintain the books, records, and accounts relating to the Systems
in the usual, regular, and ordinary manner on a basis consistent with past
practices. Seller shall use reasonable efforts to keep available the services of
its employees providing services in connection with the Systems, continue normal
marketing, advertising, and promotional activities and expenditures with respect
to the Systems as described on Schedule 5.1.2(b), and preserve beneficial
business relationships with all customers, suppliers, and others having business
or other dealings with Seller relating to the Systems, including Governmental
Authorities having jurisdiction over Seller. Seller shall maintain the Assets in
good condition and repair, ordinary wear and tear excepted, and keep in effect
the casualty and liability insurance covering the Assets in force on the date of
this Agreement.
5.1.3 Negative Covenants. Seller shall not, except as Buyer may
otherwise consent in writing (which consent for actions described in Subsections
5.1.3(iii) and 5.1.3(ix) shall not be unreasonably withheld), (i) modify,
terminate, suspend, or abrogate any Material Assumed Contract other than in the
ordinary course of business, (ii) modify, terminate, suspend, or abrogate any
Franchise or License, (iii) transfer, convey, or otherwise dispose of any of the
Assets (except that Seller may use inventory and dispose of damaged or defective
or obsolete or excess equipment or material in the normal course of business),
(iv) take any action that would result in the creation of a Lien on any of the
Assets, other than Permitted Liens that would be released or terminated no later
than the Closing Date, (v) unless obligated to do so by Legal Requirements,
modify the rates charged by the Systems for cable services, other than to raise
its rates to the levels required by Section 6.1.9 hereof, (vi) unless obligated
to do so by Legal Requirements, add or delete any programming services on the
Systems, other than the addition of the programming service "fX" to the channel
lineup of the Systems, (vii) engage in any marketing, subscriber installation,
or collection practices that are materially inconsistent with the past practices
of Seller, as described on Schedule 5.1.2(b), (viii) take or omit to take any
action that would cause Seller to be in breach of its representations or
warranties in this Agreement in any material respect, or (ix) enter into any
contract or commitment relating to the Systems or the Assets for which Buyer
would have a liability following the Closing Date in excess of $10,000 as to any
single contract or commitment or $75,000 in the aggregate.
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5.1.4 Consents. Seller shall use its best efforts to obtain as promptly
as possible, and to provide to Buyer, at or prior to the Closing, all of the
Consents, in form and substance reasonably satisfactory to Buyer, including
approvals of the FCC, Governmental Authorities, and other Persons; provided that
Seller shall not be obligated or deemed obligated to make any payment (other
than the payment of usual and customary filing fees), provide any consideration,
waive any right or agree to any supplement, modification or amendment of any
Franchise, License or Assumed Contract in order to obtain any Consent. Seller
shall use its best efforts to obtain consents for transfers of Franchises and
Assumed Contracts, respectively, which are similar in all material respects to
the applicable forms attached as Exhibit C and Exhibit D, respectively;
provided, however, that the text enclosed in brackets on such Exhibits may be
omitted from such forms and are not required to be included in such Consents if
Seller has diligently attempted to include such text in the applicable Consents
but, despite such efforts, the consenting party has indicated that it will not
execute the form and provide such Consent unless such text is omitted; and
provided, further, that no Consent shall include any material change to the
terms of the underlying instrument to which the Consent applies without the
prior written approval of Buyer. Buyer will cooperate with Seller in obtaining
the Consents, but Buyer will not be required (i) to make any payment to any
Person from whom such Consent is sought other than the posting of performance
bonds or letters of credit required by the document for which such Consent is
sought, or making any deposit required by such document or (ii) to accept any
material changes in, or the imposition of any material adverse condition to any
Assumed Contract or Franchise as a condition to obtaining any Consent.
5.1.5 Vehicle Leases. Seller shall pay any remaining balance on any
leases, if any, for vehicles included in the Assets, and ensure that at Closing,
such vehicles are free and clear of all Liens.
5.1.6. No Shopping. None of Seller, the Managing General Partner, or
either of their agents or representatives will, during the period commencing on
the date of this Agreement and ending with the earlier to occur of the Closing
or the termination of this Agreement, directly or indirectly (i) solicit or
initiate the submission of proposals or offers from any Person for, (ii)
participate in any discussions pertaining to, or (iii) furnish any information
to any Person other than Buyer relating to, any direct or indirect acquisition
or purchase of all or any portion of the Assets.
5.1.7 Financial Statements. Seller shall promptly deliver to Buyer true
and complete copies of all monthly operating reports of Seller and any
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reports with respect to the operation of the Systems prepared by or for Seller
at any time from the date of this Agreement until the Closing.
5.1.8 Distant Broadcast Signals. Unless otherwise restricted or
prohibited by any Governmental Authority or applicable Legal Requirement, if
requested by Buyer, Seller shall delete prior to the Closing Date any distant
broadcast signals which Buyer reasonably determines will result in unacceptable
liability on the part of Buyer for copyright payments with respect to continued
carriage of such signals after the Closing Date.
5.1.9 Notification of Certain Matters. Seller will promptly notify Buyer
of (i) any notice from the FCC or any franchising authority or other
Governmental Authority concerning the revocation, suspension, violation, or
limitation of the rights under, or of any proceeding for the revocation,
suspension, termination or limitation of the rights of Seller under any FCC
License or Franchise, or any other license or permit held by it relating to the
Systems, (ii) all protests, complaints, challenges or other documents filed with
the FCC by third parties concerning any of the Systems and, promptly upon the
filing or making thereof, copies of Seller's responses to such filings, (iii)
the institution or written threat of any action against the Seller with respect
to any System in any court, or any action against the Seller relating to any
System before the FCC or any franchising authority; (iv) or any fact, event,
circumstance or action (a) which, if known on the date of this Agreement, would
have been required to be disclosed to Buyer pursuant to this Agreement or (b)
the existence or occurrence of which would cause any of Seller's representations
or warranties under this Agreement not to be complete in any material respect.
5.2 Employees of Seller. Without Buyer's prior written consent, Seller
shall make no change in the compensation payable or to become payable by Seller
to any Person employed in connection with the conduct of the business or
operations of any of the Systems, except (i) in accordance with existing
employment agreements and (ii) any bonus or severance payment or other
compensation which is to be paid solely by Seller. Seller shall comply with the
applicable provisions of the Worker Adjustment and Retraining Notification Act,
as amended, 29 U.S.C. sec. 2101, et. seq., as it relates to the transaction
contemplated hereby, including, without limitation, providing all affected
employees and other necessary persons with any notice that may be required under
such act, and shall indemnify and hold harmless Buyer from and against all
Losses arising with respect thereto. Seller shall terminate all of the employees
of the Systems as of the Closing Date, other than any employees whom Seller
intends to retain as its ongoing employees after the Closing Date. Except to the
extent that any adjustments to the Purchase Price have been
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otherwise made as of the Adjustment Time with respect thereto pursuant to
Section 2 hereof, Seller shall remain solely responsible for, and shall
indemnify and hold harmless Buyer from and against all Losses arising as a
result of the consummation of the transactions contemplated hereby, with respect
to all salaries and all severance, vacation, sick (to and only to the extent
described in Section 2.6.2(iii) hereof), holiday, and other benefits to which
employees of Seller may be entitled for periods prior to the Closing Date, the
termination of such employees, or otherwise or any other Losses claimed by any
of Seller's employees for periods prior to the Closing Date. Buyer shall be
solely responsible for, and shall indemnify and hold harmless Seller from and
against all Losses with respect to (i) all salaries and all vacation, sick,
holiday and other benefits of employment to which employees of Seller who are
retained by Buyer as employees at the Systems from and after the Closing Date
may be entitled to for periods on and after the Closing Date and (ii) all
salaries and all vacation, sick, holiday and other benefits of employment of
such employees for periods prior to the Closing Date, to the extent any
adjustments to the Purchase Price have been made with respect thereto pursuant
to Section 2 hereof. Seller acknowledges that Buyer may, but shall have no
obligation to, hire any of Seller's employees that render services in connection
with the operation of the Systems; provided, however, that Buyer shall give
Seller notice at least 45 days prior to the Closing Date of the name of any
employees of the Systems to whom Buyer does not plan to offer employment on and
after the Closing Date (a "Non-Hired Employee" and, collectively, "Non-Hired
Employees"). To assist Buyer in making such employment decisions, Seller shall
deliver to Buyer all personnel files with respect to the employees of the
Systems within 60 days after the date of this Agreement. Those employees of
Seller whom Buyer hires shall be entitled, in accordance with and subject to
Buyer's policies then in place, to transfer any of such employees' balances in
Seller's 401(k) plan to Buyer's 401(k) plan. Nothing in this Section 5.2 or in
any other provision of this Agreement is intended to confer upon any employee of
Seller or such employee's legal representative or heirs any rights as a third
party beneficiary or otherwise or any remedies of any kind whatsoever under or
by reason of this Agreement, or the transactions contemplated hereby, including
without limitation any rights of employment or continued employment with Seller
or Buyer or any Affiliate thereof. All rights and obligations created by this
Agreement are solely between the parties.
5.3 Title Matters. Seller shall use commercially reasonable efforts but
shall be under no obligation to, at least 30 days before the Closing, obtain and
furnish to Buyer (a) title insurance commitments (the "Title Commitments")
issued by a nationally recognized title insurance company (the "Title Company")
showing the status of record title to each fee parcel of the Real Property, and
agreeing to
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insure marketable title in fee simple to each such parcel, subject only to
Permitted Liens and (b) an ALTA survey on each such parcel. Any costs and
expenses incurred in connection with obtaining the Title Commitments and such
ALTA surveys shall be shared equally by Buyer and Seller. If Buyer shall notify
Seller within 20 days of its receipt of the Title Commitments of any Lien or
other matter (other than Permitted Liens) affecting title to the Real Property
which, in the reasonable determination of Buyer, renders title uninsurable or
unmerchantable, or which could materially adversely affect the use of any parcel
of the Real Property for the purpose for which it is currently used by Seller
(each, a "Title Defect"), Seller shall use commercially reasonable efforts but
shall be under no obligation to remove or, with the consent of Buyer, shall
cause the title company to commit to insure over, each Title Defect prior to the
Closing.
5.4 Forms 394. Within 15 days after the date of this Agreement, Seller and
Buyer shall, if required, prepare and file properly prepared Applications for
Franchise Authority Consent to Assignment or Transfer of Control of Cable
Television Franchise FCC 394 ("Forms 394") with the local Governmental
Authorities which have issued Franchises to Seller, and shall file with such
Forms 394 all additional information required by such Franchises or applicable
local Legal Requirements or that the Governmental Authorities deem necessary or
appropriate in connection with their consideration of the request of Seller and
Buyer that such Governmental Authorities approve the transfer of the Franchises
to Buyer.
5.5 HSR Act Compliance. Within 15 days after the date of this Agreement,
Seller and Buyer shall, if required, prepare and file all necessary and proper
premerger notification forms and affidavits in compliance with the HSR Act.
Seller and Buyer shall each pay one-half of all fees payable to Governmental
Authorities in connection with such filings. If following the filing of such
forms any Governmental Authority shall challenge the transactions contemplated
hereby, or make a formal second request for information, Seller and Buyer shall
cooperate in ascertaining the nature of the challenge and the likelihood that
the Governmental Authority will permit the transaction contemplated hereby to
proceed notwithstanding the challenge, and shall use their respective best
efforts to continue to cause the waiting period under the HSR Act to expire or
terminate as promptly as possible, including promptly furnishing such additional
materials or information as may be reasonably requested by such Governmental
Authority in connection therewith, promptly responding to all inquiries with
respect thereto and using all commercially reasonable efforts to overcome any
objections which may be raised by any Governmental Authority, whether or not
such party is deemed to be an acquiror or acquired person with respect to the
transactions contemplated hereby.
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5.6 Billing Obligations. Seller shall permit Buyer to use its CableData
billing Systems computers, software and other fixed assets relating thereto for
a period of up to 60 days after the Closing in order to complete the transition
to Buyer's billing Systems, to the extent that such assets have not been
transferred by Seller to Buyer at Closing and may be utilized by Buyer pursuant
to the terms of Seller's existing agreements with U.S. Computer Services dba
CableData without Seller incurring any additional costs and expenses with
respect thereto from and after the Adjustment Time. Seller shall cooperate with
all reasonable requests by Buyer in connection with the first billing cycle
following the Closing.
5.7 Programming. Each party shall execute and deliver such documents and
take such action as may reasonably be requested by the other party to enable
such other party to comply with the requirements of its programming agreements
with respect to divestitures and acquisitions of cable television systems. In
the case of programming agreements which are not Material Assumed Contracts or
Assumed Contracts pursuant to the terms hereof, the parties shall use their
respective best efforts and take such action as may be reasonably requested by
the other party to enable Seller to obtain acknowledgments, waivers or releases
from Seller's programmers which will enable Seller to terminate the programming
agreements it has with such parties without liability as of the Closing Date;
provided, however, that Buyer shall not be required hereunder to provide
specific programming or channels or to assume any liability with respect to or
under any of Seller's programming agreements which are not Assumed Contracts.
5.8 Financial Reporting. To the extent that the financial statements
described in Section 3.11 do not satisfy the requirements of Regulation S-X of
the Securities and Exchange Commission which are applicable to Buyer with
respect to its financial statements, Seller shall take whatever steps are
necessary to produce financial statements which meet such requirements, at
Buyer's sole cost and expense, and shall deliver such financial statements
within 60 days after the date hereof. Upon receipt of a request therefor from
Seller, Buyer shall promptly pay Seller for all costs and expenses paid or
payable by Seller in connection with the preparation of such financial
statements. Within 45 days after the Closing Date, Seller shall provide Buyer
with unaudited financial statements of the Systems for the interim period
between December 31, 1994 and the last day of the calendar month immediately
preceding the calendar month in which the Closing Date occurs, including an
income statement for the corresponding period of the preceding fiscal year.
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5.9 Post-Closing Rate Regulatory Matters. If at any time after Closing, any
Governmental Authority commences a Rate Regulatory Matter, Buyer promptly will
notify Seller. The parties will cooperate in their participation in such
proceeding, and each party will promptly deliver to the other all information
reasonably requested by such party as necessary or helpful in connection with
such proceeding. Without the other party's consent, which consent shall not be
unreasonably withheld, neither party shall settle any Rate Regulatory Matter for
which the other party would have any liability.
6. CONDITIONS PRECEDENT
6.1 Conditions Precedent to Buyer's Obligations. The obligations of Buyer
under this Agreement with respect to the purchase and sale of the Assets shall
be subject to the fulfillment on or prior to the Closing Date of each of the
following conditions, any of which may be waived by Buyer:
6.1.1 Accuracy of Representations; Performance of Agreements; and
Officer's Certificate. All of the representations and warranties of Seller
contained in this Agreement or any Transaction Document shall be true and
correct in all material respects at and as of the Closing Date. Seller shall
have complied in all material respects with and performed all of the agreements,
covenants, and conditions required by this Agreement to be performed or complied
with by it on or prior to the Closing. Seller shall have furnished Buyer with an
executed certificate of its Managing General Partner dated as of the Closing,
certifying to the fulfillment of the foregoing conditions.
6.1.2 Consents. Seller shall have obtained and delivered to Buyer each
of the Consents with no material adverse conditions imposed by such Consents.
6.1.3 No Litigation. There shall be no Legal Requirement, and no
Judgment shall have been entered and not vacated by any Governmental Authority
of competent jurisdiction in any Litigation or arising therefrom, which (i)
enjoins, restrains, makes illegal, or prohibits consummation of the transaction
contemplated by this Agreement or (ii) would prohibit Buyer's ownership or
operation of any portion of the Systems or any of the Assets which, alone or in
the aggregate, are material to the operation of the Systems.
6.1.4 HSR Act Compliance. All waiting periods under the HSR Act
applicable to this Agreement or the transactions contemplated hereby shall have
expired or been terminated.
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6.1.5 Deliveries. Seller shall have made or stand willing to and able to
make all of the deliveries to Buyer set forth in Section 7.2.
6.1.6 No Material Adverse Change. Between the date of this Agreement and
the Closing Date, there shall have been (i) no material adverse change in the
financial condition, Assets, liabilities, operations or prospects of the
Systems, whether or not caused by conditions beyond the control of Seller,
excepting any material adverse changes caused by any adjustment to rates or rate
rollbacks which may be ordered in connection with the Systems under the rate
regulations of the FCC, or any other governmentally mandated rate restructuring,
or by legislation, rulemaking or regulation affecting the cable television
industry generally and (ii) no material loss, damage, impairment, confiscation
or condemnation of any of the Assets which, alone or in the aggregate, are
material to the operation of the Systems that have not been repaired or
replaced.
6.1.7 Legal Matters. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental thereto and all related legal matters shall be reasonably
satisfactory to and approved by Buyer's counsel, and such counsel shall have
been furnished with such certified copies of actions and proceedings and such
other instruments and documents as it reasonably shall have requested.
6.1.8 Equivalent Billing Units. The aggregate number of Equivalent
Billing Units served by the Systems as of the Closing Date shall be no fewer
than 47,500.
6.1.9 Rates. Other than with respect to the Permitted Discounts, the
Systems shall be charging its paying subscribers a composite rate of $24.07 per
month (plus franchise fees) for basic service, with the exception of the Fort
Belvoir System, which shall be charging its paying subscribers a composite rate
of $23.37 per month (plus franchise fees) for basic service.
6.2. Conditions Precedent to Seller's Obligations. The obligations of
Seller under this Agreement with respect to the purchase and sale of the Assets
shall be subject to the fulfillment on or prior to the Closing of each of the
following conditions, any of which may be waived by Seller:
6.2.1 Accuracy of Representations; Performance of Agreements; and
Officer's Certificate. All of the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date, and Buyer shall have complied in all material
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respects with and performed all of the agreements, covenants, and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing. Buyer shall have furnished Seller with an executed certificate of
its President or any Vice President, dated as of the Closing, certifying to the
fulfillment of the foregoing conditions.
6.2.2 No Litigation. There shall be no Legal Requirement, and no
Judgment shall have been entered and not vacated by any Governmental Authority
of competent jurisdiction in any Litigation or arising therefrom, which enjoins,
restrains, makes illegal, or prohibits consummation of the transactions
contemplated by this Agreement.
6.2.3 HSR Act Compliance. All waiting periods under the HSR Act
applicable to this Agreement or the transactions contemplated hereby shall have
expired or been terminated.
6.2.4 Deliveries. Buyer shall have made or stand willing and able to
make all the deliveries to Seller set forth in Section 7.3.
6.2.5 Consents. Seller shall have obtained each of the Consents.
6.2.6 Equivalent Billing Units. The aggregate number of Equivalent
Billing Units served by the Systems as of the Closing Date shall be no fewer
than 47,500.
6.2.7 Limited Partners Approval. The consummation by Seller of the
transactions contemplated by this Agreement shall have been approved by the
Limited Partners in accordance with the terms of the Partnership Agreement.
6.2.8 Legal Matters. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental thereto and all related legal
matters shall be reasonably satisfactory to and approved by Seller's counsel,
and such counsel shall have been furnished with such certified copies of actions
and proceedings and such other instruments and documents as it reasonably shall
have requested.
7. CLOSING.
7.1 Time and Place. Subject to the satisfaction of the conditions set forth
in Sections 6.1 and 6.2, the Closing shall be held in the offices of Rubin Baum
Levin Constant & Friedman, 30 Rockefeller Plaza, New York, NY 10112, on such
date as Buyer and Seller may mutually agree; provided that the
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Closing Date shall be no earlier than the fifteenth Business Day of the month of
October, 1995 and no later than December 28, 1995 (the "Outside Closing Date").
If the closing does not occur on or prior to the Outside Closing Date, any party
that is not then in default under the Agreement may terminate the Agreement by
notice to the other party given on or after the Outside Closing Date.
Notwithstanding any provision to the contrary contained herein, if, after the
date of this Agreement, but prior to a scheduled Closing Date, a casualty or
unforeseen event beyond Seller's control occurs which reduces the Equivalent
Billing Units on such scheduled Closing Date to a number which is at least 250
Equivalent Billing Units less than the number of Equivalent Billing Units served
by the Systems as of the last day of the most recently completed calendar month
prior to such scheduled Closing Date (based on Seller's or Buyer's good faith
estimate of the total Equivalent Billing Units), then Seller may, by notice to
Buyer setting forth in reasonable detail the nature of the casualty or
unforeseen event which has caused the total Equivalent Billing Units to fall in
such manner, postpone the Closing for a period of up to two calendar months
following such scheduled Closing Date, but in no event shall the Closing Date be
later than February 29, 1996. If it is desirable or advantageous to Seller or
the Limited Partners (for tax reasons relating to the disposition by Seller of
certain assets other than the Assets) to either establish the Closing Date in
its sole discretion (subject to the satisfaction of the conditions set forth in
Sections 6.1 and 6.2) or to postpone the Closing Date to a day other than the
day otherwise agreed upon pursuant to the first sentence of this Section 7.1,
then Seller may, in its sole discretion, establish the Closing Date or postpone
the Closing from time to time by specifying the applicable Closing Date in a
notice delivered to Buyer, which Closing Date shall be at least ten days after
the date of the notice, but otherwise shall be the earliest practicable date
thereafter pursuant to the terms hereof, but not later than the Outside Closing
Date. If by October 15, 1995, the Limited Partners of Seller have voted to deny
their approval of the transactions contemplated by this Agreement, either party
may terminate this Agreement thereafter by notice to the other party.
7.2 Seller's Deliveries. At the Closing, Seller shall deliver or cause to
be delivered to Buyer the following:
7.2.1 Bill of Sale. An executed Bill of Sale and Assignment
substantially in the form attached hereto as Exhibit E;
7.2.2 Vehicle Titles. Title certificates to all vehicles included among
the Assets, endorsed for transfer of title to Buyer, and separate bills of sale
therefor if required by the laws of the Commonwealth of Virginia;
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7.2.3 Officer's Certificates. The certificates of the Managing General
Partner described in Sections 2.7 and 6.1.1;
7.2.4 Consents. The original, where practicable, of each Consent, and
otherwise, copies of the Consents;
7.2.5 Franchises, Licenses, Assumed Contracts, and Business Records. To
the extent not previously delivered, copies of all Franchises, Licenses, Assumed
Contracts, customer and subscriber lists, blueprints, schedules, drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with its operation of the Systems;
7.2.6 Noncompetition Agreements. Each executed Noncompetition Agreement;
7.2.7 Opinions of Counsel. The opinion of Rubin Baum Levin Constant &
Friedman, Seller's counsel, and the opinion of Cole, Raywid & Braverman, L.L.P.,
Seller's special FCC counsel, each addressed to Buyer and dated as of the
Closing Date, substantially in the forms attached hereto as Exhibit F-1 and F-2,
respectively;
7.2.8 Assignment and Assumption Agreement. An executed counterpart of an
Assignment and Assumption Agreement, substantially in the form attached hereto
as Exhibit G;
7.2.9 Indemnity Escrow Agreement. An executed counterpart of the
Indemnity Escrow Agreement; and
7.2.10 Title Policies. Seller shall use commercially reasonable efforts
but will be under no obligation to provide to Buyer (i) ALTA Form B (1987 Rev.)
owner's policies of title insurance, insuring Buyer's fee title in each parcel
of the Real Property owned by Seller and being transferred to Buyer, endorsed to
delete or modify to the reasonable satisfaction of Buyer the standard printed
exceptions and any Title Defects, the premiums and charges for which shall have
been shared equally by Seller and Buyer, or (ii) the irrevocable commitment of
the Title Company to deliver such policies.
7.2.11 Assignment. Evidence reasonably satisfactory to Buyer that Seller
has assigned the Assigned Claims to the Managing General Partner in accordance
with Section 9 hereof.
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7.2.12 Other Documents. Such other documents and instruments as shall be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated by this Agreement.
7.3 Buyers Obligations. At the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
7.3.1 Purchase Price. The Purchase Price, payable as provided in Section
2.4.1;
7.3.2 Assignment and Assumption Agreement. An executed counterpart of an
Assignment and Assumption Agreement, substantially in the form attached hereto
as Exhibit G;
7.3.3 Officer's Certificate. The certificate described in Section 6.2.1;
7.3.4 Opinion of Counsel. An opinion of Buyer's General Counsel,
substantially in the form of Exhibit H;
7.3.5 Indemnity Escrow Agreement. An executed counterpart of the
Indemnity Escrow Agreement; and
7.3.6 Other Documents. Such other documents and instruments as shall be
necessary to effect the intent of this Agreement and consummate the transactions
contemplated by this Agreement.
8. TERMINATION
8.1 Termination Events. This Agreement may be terminated and the
transaction contemplated by this Agreement may be abandoned:
(i) at any time, by the mutual agreement of Buyer and Seller;
(ii) by either Buyer or Seller, at any time, if the other is in
material breach or default of its respective covenants,
agreements, or other obligations in this Agreement, or if any of
its representations in this Agreement or any Transaction Document
are not true and accurate in all material respects when made or
when otherwise required by this Agreement to be true and
accurate; provided that such material breach or default is
incapable of cure or has not been cured within
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30 calendar days after receipt of written notice of such breach,
default or misrepresentation from the other party;
(iii) by either Buyer or Seller, upon written notice to the other,
if any of the conditions to its obligations set forth in Sections
6.1 and 6.2, respectively, shall not have been satisfied on or
before the Outside Closing Date for any reason other than (a) a
breach or default by such party of its respective covenants,
agreements, or other obligations hereunder, or (b) any of its
representations herein not being true and accurate when made or
when otherwise required by this Agreement to be true and accurate
in all material respects; or
(iv) as otherwise provided in this Agreement.
8.2 Effect of Termination.
8.2.1 Costs and Return of Information. Without limiting any other
provision of this Section 8.2, if the transactions contemplated by this
Agreement are terminated and abandoned as provided herein: (i) each party shall
pay the costs and expenses incurred by it in connection with this Agreement, and
no party (or any of its officers, directors, employees, agents, representatives
or shareholders) shall be liable to any other party for any costs, expenses or
damages except as expressly specified herein; (ii) each party shall promptly
redeliver all documents, work papers and other materials of the other party
relating to the transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same; (iii) all
confidential information received by either party hereto shall be treated in
accordance with Section 10.1 hereof; and (iv) neither party hereto shall have
any liability or further obligation to the other party to this Agreement except
(a) as stated in subparagraphs, (ii) and (iii) of this Section 8.2.1, and (b) to
the extent applicable, as set forth in Sections 8.2.2 and 8.2.3 below.
8.2.2 Buyer's Remedies. If both (a) this Agreement is terminated by
Buyer pursuant to Section 8.1(ii) or (iii) and (b) Seller is in breach in any
material respect of any of its representations and warranties made herein or its
covenants or agreements made herein (and Buyer is not in breach in any material
respect of any of its representations and warranties made herein or its
covenants or agreements made herein), the Deposit and all accrued interest
thereon shall be returned to Buyer, and Buyer shall also have as its sole and
exclusive remedy the right (in addition to its right to receive the Deposit and
all accrued interest
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thereon) to seek monetary damages from Seller resulting directly from Seller's
breach hereunder; provided, however, that any such damages resulting directly
from Seller's breach hereunder shall be expressly limited to a dollar amount
equal to the amount of the Deposit and the amount of interest accrued thereon
as of the date the Agreement is terminated.
8.2.3 Seller's Remedies. If both (a) this Agreement is terminated by
Seller pursuant to Section 8.1(ii) or (iii) and (b) Buyer is in breach in any
material respect of any of its representations and warranties made herein or its
covenants or agreements made herein (and Seller is not in breach in any material
respect of any of its representations and warranties made herein or its
covenants or agreements made herein), then Seller shall have as its sole and
exclusive remedy the right to receive the Deposit and all interest accrued
thereon as liquidated damages and not as a penalty.
9. SURVIVAL OF REPRESENTATIONS AND INDEMNITY.
9.1 Survival of Representations, Warranties and Covenants. All
representations, warranties, covenants and agreements contained in this
Agreement and in any Transaction Document shall be deemed continuing
representations, warranties, covenants and agreements and shall survive the
Closing Date as specified herein. The representations and warranties contained
in this Agreement and in any Transaction Document shall survive for a period
ending on the date which is 12 months after the Closing Date; provided, however,
that the representations and warranties set forth in Section 3.10 shall survive
for the period of the applicable statute of limitations, but Seller's liability
with respect thereto shall be limited to claims for Losses which have been
brought by Buyer against Seller within twelve (12) months following the Closing
Date and do not exceed the amount remaining in the General Indemnity Portion of
the Indemnity Escrow Fund pursuant to the Indemnity Escrow Agreement which is
not subject to other claims for Losses. Buyer hereby releases Seller and its
Affiliates (other than the Managing General Partner) from all liability for, and
the Managing General Partner shall be solely responsible for, any and all Losses
arising from claims made with respect to the representations and warranties set
forth in Section 3.10, (i) which exceed the amount available in the General
Indemnity Portion of the Indemnity Escrow Fund to cover such Losses and/or (ii)
which are brought by Buyer following the date which is twelve (12) months after
the Closing Date. Notwithstanding the limitation contained in the preceding
sentence, there shall be no time limitation other than as provided by law for
pending claims hereunder that were made on or before the date which is 12 months
after the Closing Date.
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9.2 Seller's Indemnity.
9.2.1 Seller's General Indemnity. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, but subject to the limitations set forth in Sections
9.1, 9.2.2, 9.5 and 9.6 hereof, Seller shall indemnify and hold Buyer, its
respective Affiliates, officers, directors, employees, agents, and
representatives, and any Person claiming by or through any of them, as the case
may be, harmless from and against any Losses arising out of or resulting from:
(i) all actual or purported liabilities and obligations of Seller,
and all claims and demands made in respect thereof whether or not
known or asserted at or prior to the Closing (except the Assumed
Liabilities), relating to the Systems for which no adjustment to
the Purchase Price has been made;
(ii) all refund liabilities due to subscribers for periods before the
Closing Date that arise in connection with Rate Regulatory
Matters or Rate Regulatory Reduction Orders;
(iii) upon completion of any pole audit by GTE, as described on
Schedule 3.8(II)(C), any amounts owing to GTE for the period
prior to the Adjustment Time, and all amounts reasonably expended
by Buyer to correct any clearance or other violations identified
by such audit which existed prior to the Adjustment Time (the
"GTE Pole Audit Liability");
(iv) the operation of the Systems prior to the Adjustment Time;
(v) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Seller under this
Agreement or any Transaction Document; and
(vi) any liabilities relating to any Non-Hired Employee asserted
under any federal, state or local law or regulation or otherwise
pertaining to any labor or employment matter arising out of
actions occurring prior to the Closing.
9.2.2. Limitation on Indemnity. In no event shall Buyer's right to
indemnity from Seller and its Affiliates (other than from the Managing General
Partner) arising hereunder exceed the amount then remaining in the General
Indemnity Portion of the Indemnity Escrow Fund, which shall be the sole source
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of indemnification payments from Seller and its Affiliates (other than the
Managing General Partner for (i) any claims for a breach of Seller's
representations and warranties set forth in Section 3. 10 or (ii) claims of
fraud on the part of Seller in connection with this Agreement or the
transactions contemplated hereby (together, the "Assigned Claims")) for any
claims by Buyer against Seller or its Affiliates (other than the Managing
General Partner) pursuant to the terms hereof or otherwise. Buyer shall be
entitled to indemnity from Seller and its Affiliates (other than the Managing
General Partner) only for those claims made under Section 9.2 as to which Buyer
has given Seller written notice thereof within twelve (12) months after the
Closing Date.
9.3 Buyer's Indemnity. Notwithstanding the Closing, and regardless of any
investigation made at any time by or on behalf of Seller or any information
Seller may have, Buyer shall indemnify and hold Seller, its respective
Affiliates, officers, directors, employees, agents, and representatives, and any
Person claiming by or through any of them, as the case may be, from and against
any Losses arising out of or resulting from:
(i) the Assumed Liabilities;
(ii) the operation of the Systems subsequent to the Adjustment
Time;
(iii) the use by Buyer of the names "Columbia Cable of Virginia",
"Cablevision of Prince William" and "Lake Ridge County", and all
derivations of such names and related tradenames, trade names and
service marks in use in the Systems on the Closing Date; and
(iv) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Buyer under this
Agreement or any Transaction Document.
9.4 Procedure for Indemnified Third Party Claim. Promptly after receipt by
a party entitled to indemnification under this Agreement (the "Indemnitee") of
written notice of the assertion or the commencement of any Litigation with
respect to any matter referred to in Sections 9.2 and 9.3, the Indemnitee shall
give prompt written notice (such notice to set forth in reasonable detail the
nature and basis of the claim and the actual or estimated amount thereof)
thereof to the party from whom indemnification is sought pursuant hereto (the
"Indemnitor") and thereafter shall keep the Indemnitor reasonably informed with
respect thereto; provided, however, that failure of the
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Indemnitee to give the Indemnitor notice as provided herein shall not relieve
the Indemnitor of its obligations hereunder. In case any Litigation shall be
brought against any Indemnitee, the Indemnitor shall be entitled to participate
in such Litigation and shall have the right to assume the defense thereof with
counsel reasonably satisfactory to the Indemnitee, at the Indemnitor's sole
expense. If the Indemnitor shall assume the defense of any Litigation, it shall
not settle the Litigation unless the settlement shall include as an
unconditional term thereof the giving by the claimant or the plaintiff of a
release of the Indemnitee, satisfactory to the Indemnitee, from all liability
with respect to such Litigation.
9.5 Determination of Indemnification Amounts. Seller and Buyer shall have
no liability under Sections 9.2 and 9.3, respectively, unless the aggregate
amount of Losses otherwise subject to its indemnification obligations thereunder
exceeds $75,000 (the "Threshold Amount"); provided, however, that when the
Losses of an Indemnitee exceed the Threshold Amount, the Indemnitor shall be
liable for both the Indemnitee's aggregate Losses up to the Threshold Amount and
any Losses in excess of the Threshold Amount and, provided, further, that Seller
shall be liable for the full amount of the GTE Pole Audit Liability, if any,
regardless of whether Buyer's aggregate amount of Losses otherwise subject to
Seller's indemnification obligations have exceeded the Threshold Amount. All
Losses shall be computed net of any insurance proceeds received which reduces
the Losses that would otherwise be sustained.
9.6 Indemnity Escrow. As described in Section 2.4.1 above, at Closing, the
Deposit is to be retained by Escrow Agent and applied in accordance with the
terms of the Indemnity Escrow Agreement. Notwithstanding any provision to the
contrary contained in this Agreement or any right or remedy which Buyer may
otherwise have at law or in equity, Buyer's right to make any claims or obtain
any recourse or redress against Seller or any of its Affiliates is expressly
limited to the making and pursuit of claims for Losses of the type specified in
Section 9.2 hereof (or for claims in connection with the Subscriber Adjustment
Amount and the Current Items Amount as described in Sections 2.5, 2.6, 2.7 and
2.9 above), and as to such claims, Buyer's sole remedy, other than (i) the
Assigned Claims, which Buyer may pursue pursuant to the terms hereof solely
against the Managing General Partner or (ii) claims against the Managing General
Partner or the other individuals delivering Noncompetition Agreements for
breaches of their respective Noncompetition Agreements, shall be to amounts for
which it makes claims under the Indemnity Escrow Agreement. The amount remaining
in the General Indemnity Portion of the Indemnity Escrow Fund at any given time
shall constitute the sole source of payment in respect of any Losses or claims
which might be due from Seller or its Affiliates (other than from the Managing
General
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Partner with respect to the Assigned Claims) to Buyer, pursuant to this
Agreement (other than any claims in connection with the Current Items Amount and
the Subscriber Adjustment Amount as described in Sections 2.5, 2.6, 2.7 and 2.9
above as to which the Indemnity Escrow Fund shall constitute the sole source of
payment); provided, however, that at Closing, all liabilities of Seller and its
Affiliates (other than the Managing General Partner) for the Assigned Claims
shall, to the extent not paid out of the General Indemnity Portion of the
Indemnity Escrow Fund, be assigned in their entirety to the Managing General
Partner, and Buyer acknowledges that it shall pursue any remedies it may have
with respect to any Assigned Claims against Seller under the Indemnity Escrow
Agreement solely against the Managing General Partner and not against Seller or
any of its other Affiliates directly. Buyer hereby releases Seller and its
Affiliates (other than the Managing General Partner) from all liability for, and
the Managing General Partner shall be solely responsible for, (a) any and all
liability of Seller for claims of any type, including the Assigned Claims, which
are brought by Buyer following the date which is twelve (12) months after the
Closing Date or (b) any and all Losses related to such claims which exceed the
amount available in the General Indemnity Portion of the Indemnity Escrow Fund
to cover such Losses.
10. CONFIDENTIALITY AND PRESS RELEASES.
10.1 Confidentiality. Each party shall hold in strict confidence all
documents and information concerning the other and its respective business and
properties (except that either party may disclose such documents and information
to any Governmental Authority reviewing the transactions contemplated hereby or
as required in either party's judgment pursuant to any Legal Requirement), and
if the transactions contemplated hereby should not be consummated, such
confidence shall be maintained, and all such documents and information (in
whatever form) and copies thereof shall immediately thereafter be destroyed, or
returned to the party originally furnishing the same.
10.2 Press Releases. No press release or public disclosure, either written
or oral, of the existence or terms of this Agreement shall be made by either
Buyer or Seller prior to the Closing without the consent of the other, and Buyer
and Seller shall each furnish to the other advance copies of any release which
it proposes to make public concerning this Agreement or the transactions
contemplated hereby and the date upon which Buyer or Seller, as the case may be,
proposes to make such press release. This provision shall not, however, be
construed to prohibit any party from making any disclosures to any Governmental
Authority which it is required to make under any Legal
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Requirement, or from filing this Agreement with, or disclosing the terms of this
Agreement to, any governmentally regulated institutional lender to such party.
11. BROKERAGE FEES. Each party hereto represents and warrants to the other
that it has not incurred any obligations or liabilities, contingent or
otherwise, for brokerage or finder's fees or agent's commissions or other like
payment in connection with this Agreement or the transactions contemplated
hereby for which it will have any liability, except (a) Buyer has retained Jones
Financial Group, Ltd. (the "Group") as its sole broker and finder in connection
with this Agreement and the transactions contemplated hereby, and Buyer has
agreed to pay the entire commissions, of the Group and (b) Seller has retained
Waller Capital Corporation ("Waller") as its sole broker and finder in
connection with this Agreement and the transactions contemplated hereby, and
Seller has agreed to pay the entire commissions of Waller. Buyer shall have no
liability or responsibility for the commissions payable to Waller. Seller shall
have no liability or responsibility for the commissions payable to the Group.
Buyer shall indemnify and hold Seller harmless against and in respect of any
breach by it of the provisions of this Section 11, and Seller shall indemnify
and hold Buyer harmless against and in respect of any breach by it of the
provisions of this Section 11.
12. CASUALTY LOSES. The risk of any loss or damage to the Assets resulting
from fire, theft or any other casualty (except reasonable wear and tear) shall
be borne by Seller at all times prior to the Adjustment Time. If any such loss
or damage to the Assets shall be sufficiently substantial so as to preclude and
prevent within 60 days from the occurrence of the event resulting in such loss
or damage resumption of normal operations of any material portion of the Systems
or replacement or restoration of any lost or damaged Assets which are material,
alone or in the aggregate, to the operation of the Systems, Seller shall
immediately notify Buyer in writing of its inability to resume normal operations
or to replace or restore any lost or damaged Assets which are material, alone or
in the aggregate, to the operation of the Systems, and Buyer, at any time within
10 days after receipt of such notice, may elect by written notice to Seller to
either (i) waive such defect and proceed toward consummation of the transactions
in accordance with terms of this Agreement, or (ii) terminate this Agreement. If
Buyer elects to terminate this Agreement, Buyer and Seller shall stand fully
released and discharged of any and all obligations hereunder, and the Deposit
and all interest accrued thereon shall be returned to Buyer. If Buyer shall
elect to consummate the transactions contemplated by this Agreement
notwithstanding such loss or damage and does so, all insurance proceeds payable
as a result of the occurrence of the event resulting in such loss or damage
shall be delivered by Seller to Buyer, or the rights thereto shall be
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assigned by Seller to Buyer (to the extent assignable under applicable state law
and the applicable insurance policies) if not yet paid over to Seller. To the
extent not so assignable, such claims may be pursued by Buyer, at its sole cost
and expense for its own account and benefit, in the name of Seller. Seller shall
cooperate with Buyer in any such matter pursued by Buyer.
13. MANAGING GENERAL PARTNER WAIVER. By its execution hereof, the Managing
General Partner does hereby waive any right of first refusal or purchase it may
have pursuant to Subsection 19.2 of the Partnership Agreement in respect of the
purchase of the Systems by the Buyer pursuant to this Agreement, as originally
executed. However, such waiver shall not apply to any different or subsequent
sale of any or all of the Systems, whether to the Buyer or any other Person, or
in respect of any material amendment or modification to this Agreement, except
an amendment or modification which does not reduce or effect a reduction in the
Purchase Price or in the time or manner of payment thereof and is otherwise
materially favorable to the Seller.
14. MISCELLANEOUS.
14.1 Further Assurances. From time to time after the Closing, Seller shall,
if requested by Buyer, make, execute and deliver to Buyer such additional
assignments, bills of sale, deeds and other instruments of transfer, as may be
reasonably necessary or proper to transfer to Buyer all of Seller's right,
title, and interest in and to the Assets.
14.2 Notices. All notices, requests, demands, and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if (i) mailed, registered or certified
mail, return receipt requested, postage prepaid, (ii) delivered by hand, (iii)
sent by facsimile transmission, or (iv) delivered by reputable overnight
courier, to the following addresses or telecopier numbers, or at such other
address or telecopier numbers as a party may designate by notice given in
accordance with this Section 14.2:
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(i) If to Buyer:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80155-3309
Attention: President
Telephone No.: (303) 792-3111
Telecopier No.: (303) 799-4675
With a copy to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80155-3309
Attention: General Counsel
Telephone No.: (303) 792-3111
Telecopier No.: (303) 799-1644
(ii) If to Seller:
Columbia Associates, L.P.,
c/o Columbia International, Inc.
9 Greenwich Office Park
Greenwich, CT 06830
Attn: Mr. Robert Rosencrans, President
Telephone No.: (203) 661-1509
Telecopier No.: (203) 661-7651
With a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, NY 10112
Attn: Jonathan D. Drucker, Esq.
Telephone No.: (212) 698-7700
Telecopier No.: (212) 698-7825
Notices delivered personally, by overnight courier or by registered or
certified mail shall be effective upon receipt by the intended recipient.
Notices transmitted by facsimile transmission shall be effective when
confirmation of transmission is received.
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14.3 Assignment; Binding Effect. No party hereto may assign or transfer its
rights or obligations arising under this Agreement, without the prior written
consent of the other party hereto; provided, however, that (i) Buyer shall have
the right in its sole discretion to assign its rights and obligations under this
Agreement and the documents and agreements executed in connection herewith,
including, without limitation, the Indemnity Escrow Agreement, to a wholly owned
subsidiary of Buyer if such assignment will not serve to hinder or delay the
Closing, it being understood and agreed that no such assignment shall relieve
Buyer of any of its duties, liabilities or obligations hereunder or under the
documents and agreements executed in connection herewith, including, without
limitation, the Indemnity Escrow Agreement, and (ii) at or after the Closing,
the Seller may assign its remaining rights and obligations hereunder and under
the documents and agreements executed in connection herewith, including, without
limitation, the Indemnity Escrow Agreement, to or for the benefit of (a) the
Managing General Partner or any Affiliate thereof in the event of the
consummation of the sale of substantially all of Seller's assets other than the
Assets to, or the merger of Seller with, certain other Persons or (b) any
liquidating trust established in the event of the liquidation of Seller and the
winding up of its affairs; provided, however, that Seller shall promptly notify
Buyer of the name and address of the trustee thereof. The parties hereto hereby
agree that in the event of any assignment from Seller to the Managing General
Partner or any Affiliate thereof or a liquidating trust pursuant to the
preceding sentence, Seller shall be permitted to assign and convey to the
Managing General Partner or any Affiliate thereof or such liquidating trust (and
the Managing General Partner or any Affiliate thereof or such liquidating trust,
as the case may be, shall assume) all of the rights and obligations of Seller
under this Agreement and any document or agreement executed in connection
herewith, including, without limitation, the Indemnity Escrow Agreement, in
respect of actions to be taken or decisions to be made hereunder or thereunder
during the period from and after the Closing Date under this Agreement,
including, without limitation, the full right, power and authority to effect all
post-closing adjustments and claims for indemnification hereunder (including the
adjudication and/or settlement of all disputes with respect to such adjustments
or claims) and the right to retain and receive any and all amounts paid or
payable by Buyer or the Indemnity Escrow Agent under the Indemnity Escrow
Agreement.
14.4 Expenses. Except as otherwise provided herein, each party shall bear
its own expenses and the fees and expenses of its legal counsel, accountants,
and other experts incurred in connection with the preparation of this Agreement
and the consummation of the transactions contemplated by this Agreement.
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14.5 Taxes. Any sales, use, transfer or documentary taxes imposed by any
Governmental Authority in connection with the sale and delivery of the Assets
and rights acquired by Buyer under this Agreement shall be shared equally by
Buyer and Seller.
14.6 Collection of Accounts. From and after the Closing Date, Buyer shall
have the right and authority, at its sole cost and expense, to collect for its
account all items to which it is entitled as provided in this Agreement and to
endorse with the name of Seller any checks or drafts received on account of any
such items.
14.7 Entire Agreement; Amendments; and Waivers. This Agreement, together
with the Schedules and Exhibits hereto, merges all previous negotiations between
the parties hereto and constitutes the entire agreement and understanding
between the parties with respect to the subject matter of this Agreement.
Without limiting the generality of the foregoing it is expressly understood and
agreed that Seller makes no representation or warranty with respect to (and, as
between Seller and Buyer, no action has been taken in reliance upon) the
accuracy or completeness of that certain Confidential Memorandum with respect to
the Systems prepared at the request of Seller by Waller. No alteration,
modification or change of this Agreement shall be valid except by an agreement
in writing executed by the parties hereto. No failure or delay by any party in
exercising any right, power or privilege hereunder (and no course of dealing
between or among any of the parties) shall operate as a waiver of any such
right, power, or privilege. No waiver of any default on any one occasion shall
constitute a waiver of any subsequent or other default. No single or partial
exercise of any such right, power, or privilege shall preclude the further or
full exercise thereof.
14.8 Counterparts. This Agreement may be executed in one or more
counterparts with the same effect as if all of the signatures on such
counterparts appeared on one document. All executed counterparts shall together
constitute one and the same agreement.
14.9 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provision to
other Persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
14.10 Schedules and Exhibits; Headings. All references herein to Schedules
and Exhibits are to the Schedules and Exhibits attached hereto, which
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shall be incorporated in and constitute a part of this Agreement by such
reference. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning of this Agreement.
14.11 Governing Law. The validity, performance, and enforcement of this
Agreement and all Transaction Documents, unless expressly provided to the
contrary, shall be governed by the laws of the State of Colorado, without giving
effect to the principles of conflicts of law of such State.
14.12 Third Parties; Joint Ventures. This Agreement constitutes an
agreement solely among the parties hereto for their benefit, and except as
otherwise provided herein, is not intended to and will not confer any rights,
remedies, obligations, or liabilities, legal or equitable, including any right
of employment, on any Person (including but not limited to any employee or
former employee of Seller) other than the parties hereto, and their respective
successors, or assigns, or otherwise constitute any Person a third party
beneficiary under or by reason of this Agreement. Nothing in this Agreement,
expressed or implied, is intended to or shall constitute the parties hereto
partners or participants in a joint venture.
14.13 Construction. This Agreement has been negotiated by Buyer and Seller
and their respective legal counsel, and legal or equitable principles that might
require the construction of this Agreement or any provision of this Agreement
against the party drafting this Agreement shall not apply in any construction or
interpretation of this Agreement.
14.14 Maintenance by Buyer of Books and Records. Following the Closing
Date, Buyer shall cooperate with Seller and its officers, agents,
representatives and employees in the preparation of the final list of
adjustments to be prepared pursuant to Section 2.9 hereof (the "Final
Adjustments List") and the resolution of any disputes with respect thereto,
including, without limitation, retaining the accounting, banking, tax and
similar books and records of Seller transferred to Buyer, in the locations where
they are located as of the Closing Date, maintaining in such locations the
computers on which such information is stored or which are used in the
preparation of monthly or other financial or operating reports by Seller and
making available to Seller and its representatives any accounting personnel
currently employed by Seller at such location who are retained by Buyer
following the Closing as employees at the Systems, for the purpose of providing
such information, data and reports to Seller as Seller and its representatives
may reasonably request. In addition, in the case of any such accounting
personnel of Seller currently working in such locations who are not retained by
Buyer following the Closing as employees at the Systems, but instead
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become employees of or consultants to Seller, the Managing General Partner or
any Affiliate thereof, Buyer shall provide such employees with work space in
such locations to the extent available, and allow them reasonable access to
personnel, records and computer equipment as may be necessary for the purposes
of the preparation and completion of the Final Adjustments List and the
resolution of any disputes with respect thereto. The above provisions of this
Section 14.14 shall not have any force or effect after the completion of the
Final Adjustments List pursuant to Section 2.9 hereof (including the resolution
of all disputes pursuant thereto), at which time Buyer shall be permitted to
relocate and maintain any of the aforementioned documents and records as and in
the manner not otherwise restricted by Section 2.1(viii) above. Any reasonable
out-of-pocket expenses incurred by Buyer as a result of the foregoing provisions
of this Section 14.14 shall be promptly paid by Seller upon receipt of a request
therefor from Buyer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
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SELLER:
COLUMBIA ASSOCIATES, L.P.,
a Delaware limited partnership
By: Columbia International, Inc.,
a Delaware corporation
and its Managing General Partner
By: /s/ Richard H. Rosencrans
Name: Richard H. Rosencrans
Title: Vice President
ACCEPTED AND AGREED TO WITH
RESPECT TO THE PROVISIONS OF
SECTION 9 HEREOF:
COLUMBIA INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Richard H. Rosencrans
Name: Richard H. Rosencrans
Title: Vice President
BUYER:
JONES INTERCABLE, INC.,
a Colorado corporation
By: /s/ Elizabeth Steele
Name: Elizabeth Steele
Title: Vice President
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EXHIBIT 2.9
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of the 11th day of August,
1995, by and between IDS/Jones Growth Partners 87-A, Ltd., a Colorado limited
partnership ("Seller"), and Jones Intercable, Inc., a Colorado corporation
("Buyer").
RECITALS
A. Seller owns and operates a cable television system in and
around Boone County, Carmel, Fortville, Hamilton County, Hancock County,
Ingalls, Madison County and Zionsville, Indiana (the "System").
B. Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the System upon the terms and conditions set forth in this
Agreement.
AGREEMENT
In consideration of the mutual promises contained in this Agreement
and other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set
forth in this Agreement, Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase from Seller, on the Closing Date (as
defined in Paragraph 9 hereof), all of Seller's interest in the System and the
Assets (as defined in Paragraph 2 hereof) then being transferred and sold
pursuant hereto, free and clear of all security interests, liens, pledges,
charges and encumbrances.
2. Assets.
(a) The assets to be conveyed to Buyer hereunder shall
consist of all of the assets and properties of Seller, whether real, personal,
tangible or intangible, of whatever description and wherever located, now owned
or used by Seller solely in connection with Seller's ownership or operation of
the System,
<PAGE> 2
Seller solely in connection with Seller's ownership or operation of the System,
including all additions made between the date hereof and the Closing Date, to
the end that all of Seller's assets owned on the Closing Date which are used or
owned solely in connection with Seller's ownership or operation of the System
shall be sold and transferred to Buyer (collectively, the "Assets"). The
Assets shall include, without limitation:
(i) all of Seller's towers, tower equipment,
antennas, aboveground and underground cable,
distribution systems, headend amplifiers, line
amplifiers, earth satellite receive stations and
related equipment, microwave equipment, testing
equipment, motor vehicles, office equipment,
furniture and fixtures, supplies, inventory and other
physical assets owned or used by Seller solely in
connection with Seller's ownership or operation of
the System;
(ii) the franchises, leases, agreements, permits,
consents, licenses and other contracts, pole line or
joint pole agreements, underground conduit
agreements, agreements for the reception or
transmission of signals by microwave, easements,
rights-of-way and construction permits, if any, and
any other obligations and agreements between Seller
and suppliers and customers, which are owned or used
by Seller solely in connection with Seller's
ownership and operation of the System, substantially
all of which are listed onExhibit A attached hereto;
(iii) the real property owned and used solely in
connection with the System;
(iv) all accounts receivable of Seller arising in
connection with the System;
(v) all engineering records, files, data,
drawings, blueprints, schematics, maps, reports,
lists and plans and
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processes owned or developed by or for Seller and
intended for use solely in connection with the
System;
(vi) all promotional graphics, original art work,
mats, plates, negatives and other advertising or
related materials developed by or for Seller and
intended for use solely in connection with the
System; and
(vii) all of Seller's correspondence files, lists,
records and reports concerning customers and
prospective customers of the System, concerning
television stations whose transmissions are or may be
carried as a part of the System and concerning all
dealings with Federal, state, and local regulatory
agencies relating to the ownership or operation of
the System, including all reports filed by or on
behalf of Seller with the Federal Communications
Commission (the "FCC") in connection with the System
and any Statements of Account of the System filed by
or on behalf of Seller with the United States
Copyright Office in connection with the System.
(b) The following properties and assets relating to the
System and its business operations shall be retained by Seller and shall not be
sold, assigned or transferred to Buyer:
(i) cash or cash equivalents on hand or in banks;
(ii) insurance policies and rights and claims
thereunder;
(iii) all claims, rights and interest in and to any
refunds for federal, state or local income or other
taxes or fees of any nature whatsoever for periods
prior to the Closing Date, including without
limitation, fees paid to the United States Copyright
Office; and
(iv) assets disposed of in the normal course of
business or with the written consent of Buyer between
the date hereof and the Closing Date.
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3. Purchase Price. Subject to the adjustments to be made in
accordance with Paragraph 4 hereof, the total purchase price for the Assets
shall be $44,235,333 (the "Purchase Price"), which Purchase Price represents
the average of three independent appraisals of the System. The Purchase Price
shall be payable to Seller at Closing in cash, by cashier's check or by wire
transfer of federal funds to a bank or banks designated by Seller.
4. Adjustments. All adjustments provided for herein with respect
to this transaction shall increase or decrease the Purchase Price, as
appropriate, and shall be made as of the close of business (5:00 p.m., Denver
time) on the Closing Date (the "Adjustment Time").
(a) Rent, pole rents, franchise fees, taxes, power and
utility fees and deposits, insurance premiums, licenses, customer prepayments
and deposits, and other prepayments and amounts due shall be prorated and
debited or credited to Seller or Buyer, as applicable. With respect to
subscriber accounts receivable, Seller shall be entitled to an amount equal to
the sum of (i) 90% of the face amount of all accounts receivable that are
current or 30 days or less past due as of the Adjustment Time, plus (ii) 80% of
the face amount of all accounts receivable that are between 31 days and 60 days
past due as of the Adjustment Time. For purposes of making "past due"
calculations, the monthly billing statements of Seller shall be deemed to be
due and payable on the first day of the month during which the service to which
such billing statements relate is provided.
(b) The Purchase Price shall be reduced by any accounts
payable, accrued expenses and vehicle lease obligations for which Seller would
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otherwise be liable hereunder, but for which the obligation for payment is
assumed by Buyer.
(c) Seller and Buyer shall jointly determine the
adjustments required by this Paragraph 4 at the Closing. The net amount to
which Buyer or Seller, as the case may be, is entitled pursuant hereto shall be
thereupon paid by Buyer or Seller, as the case may be, by an adjustment to the
Purchase Price. All adjustments made at Closing shall be tentative and shall
be subject to final adjustment within 90 days after Closing.
5. Assumption of Liabilities. Buyer shall assume and discharge
(i) all debts, liabilities and obligations of Seller arising with respect to
periods subsequent to the Closing Date under any franchise, license, permit,
lease, instrument or agreement transferred to Buyer hereunder, and (ii) with
respect to periods prior to and including the Closing Date, all obligations of
Seller to the extent that the Purchase Price is reduced pursuant to Paragraph
4(b) hereof to reflect Buyer's assumption of such obligations. Buyer shall
indemnify and hold harmless Seller from and against any and all damages, costs,
claims and expenses ("Claims") arising by reason of the ownership, operation or
control of the System after the Closing Date. Anything herein to the contrary
notwithstanding, there is hereby excluded from the Assumed Obligations, and
Seller shall retain and discharge, and indemnify and hold Buyer harmless from
and against, any and all Claims to the extent they arise from (a) any debt,
liability or obligation arising with respect to periods prior to the Closing
Date for which no reduction of the Purchase Price has been made pursuant to
Paragraph 4(b) hereof, or (b) any debt, liability or obligation of Seller not
expressly assumed hereunder, whenever arising.
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<PAGE> 6
6. Seller's Representations. Seller hereby represents and
warrants to Buyer that:
(a) Seller is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Colorado.
Seller has all requisite partnership power and authority to own and operate its
properties and to carry on its business as now and where being conducted.
(b) All necessary consents and approvals have been
obtained by Seller for the execution and delivery of this Agreement. The
execution and delivery of this Agreement by Seller has been duly and validly
authorized and approved by all necessary action of Seller. This Agreement is a
valid and binding obligation of Seller, enforceable against it in accordance
with its terms.
(c) Subject to the receipt of any required consents,
Seller has full legal power, right and authority to sell and convey to Buyer
legal and beneficial title to the Assets, and Seller's sale to Buyer shall
transfer good and marketable title thereto, free and clear of all security
interests, liens, pledges, charges and encumbrances of every kind.
(d) The execution, delivery and performance of this
Agreement by Seller will not violate any provision of law and will not, with or
without the giving of notice or the passage of time, conflict with or result in
any breach of any of the terms or conditions of, or constitute a default under,
any mortgage, agreement or other instrument to which Seller is a party or by
which Seller, the Assets or the System are bound. The execution, delivery and
performance of this Agreement by Seller will not result in the creation of any
security interest, lien, pledge, charge or encumbrance upon the Assets or the
System.
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<PAGE> 7
7. Conditions Precedent to Buyer's Obligations. The obligations
of Buyer under this Agreement with respect to the purchase and sale of the
Assets shall be subject to the fulfillment on or prior to the Closing Date of
each of the following conditions:
(a) All of the representations and warranties by Seller
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date. Seller shall have complied with and performed
all of the agreements, covenants and conditions required by this Agreement to
be performed or complied with by it on or prior to the Closing Date.
(b) Seller shall have delivered to Buyer such
instruments, consents and approvals of third parties as are necessary to
transfer the Assets to Buyer pursuant to this Agreement.
(c) The statutory waiting period applicable to this
Agreement and the transactions contemplated hereby under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have been
terminated or shall have expired.
8. Conditions Precedent to Seller's Obligations. The obligations
of Seller under this Agreement with respect to the purchase and sale of the
Assets shall be subject to the fulfillment on or prior to the Closing Date of
each of the following conditions:
(a) The statutory waiting period applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have
been terminated or shall have expired.
(b) Buyer shall have delivered the Purchase Price to
Seller in accordance with Paragraph 3 hereof.
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<PAGE> 8
9. Closing. The closing hereunder (the "Closing") shall be held
in the offices of Seller, 9697 East Mineral Avenue, Englewood, Colorado 80112,
on such date or dates as the parties hereto shall mutually agree (the "Closing
Date"), but in no event after June 30, 1996. At the Closing, all cash, checks,
notes, deeds, bills of sale, certificates of title, assignments and assumptions
and other instruments and documents referred to or contemplated by this
Agreement shall be exchanged by the parties hereto.
10. Brokerage. Seller represents and warrants to Buyer that
Seller will be solely responsible for, and pay in full, any and all brokerage
or finder's fees or agent's commissions or other like payment owing in
connection with Seller's use of any broker, finder or agent in connection with
this Agreement or the transactions contemplated hereby. Buyer represents and
warrants to Seller that Buyer will be solely responsible for, and pay in full,
any and all brokerage or finder's fees or agent's commissions or other like
payment owing in connection with Buyer's use of any broker, finder or agent in
connection with this Agreement or the transactions contemplated hereby. Each
party hereto shall indemnify and hold the other party hereto harmless against
and in respect of any breach by it of the provisions of this Paragraph 10.
11. Miscellaneous.
(a) Buyer shall have the right, upon notice to Seller, to
assign prior to the Closing Date, in whole or in part, its rights and
obligations hereunder to any affiliate of Buyer, including, without limitation,
to any subsidiary of Buyer or other entity controlled by, controlling or under
common control with Buyer, or, subject to Seller's consent, to any other
entity.
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<PAGE> 9
(b) From time to time after the Closing Date, Seller
shall, if requested by Buyer, make, execute and deliver to Buyer such
additional assignments, bills of sale, deeds and other instruments of transfer,
as may be necessary or proper to transfer to Buyer all of Seller's right, title
and interest in and to the Assets covered by this Agreement. Such efforts and
assistance shall be without cost to Buyer.
(c) This Agreement embodies the entire understanding and
agreement among the parties concerning the subject matter hereof and supersedes
any and all prior negotiations, understandings or agreements in regard thereto.
This Agreement shall be interpreted, governed and construed in accordance with
the laws of the State of Colorado. This Agreement may not be modified or
amended except by an agreement in writing executed by both Buyer and Seller.
(d) Any sales, use, transfer or documentary taxes imposed
in connection with the sale and delivery of the Assets and the rights acquired
by Buyer under this Agreement shall be paid by Buyer.
[EXECUTION PAGE FOLLOWS]
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IN WITNESS WHEREOF the parties have executed this Agreement as of the
day and year first above written.
IDS/JONES GROWTH PARTNERS 87-A, LTD.,
a Colorado limited partnership
By: Jones Cable Corporation,
a Colorado corporation,
as Managing General Partner
By: /s/ GLENN R. JONES
Glenn R. Jones
Chairman and Chief Executive Officer
JONES INTERCABLE, INC.,
a Colorado corporation
By: /s/ GLENN R. JONES
Glenn R. Jones
Chairman and Chief Executive Officer
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EXHIBIT A
to Purchase and Sale Agreement
dated as of August 11, 1995
FRANCHISES
County of Boone, Indiana
. Ordinance No. 82-9 dated September 20, 1982, granting a cable
television franchise to Omega of Zionsville Cable T.V. Co.
. Resolution No. 89-1 dated July 18, 1988, consenting to the assignment
of the franchise to Jones Intercable, Inc., or any affiliate of Jones,
including any limited partnership(s) of which Jones or any affiliate
of Jones is a general partner, or any joint venture or general
partnership of which Jones, any affiliate of Jones, or any such
limited partnership(s) is a constituent partner, or any other entity
controlled by, controlling or under common control with Jones
("Affiliate of Jones"); and consenting to any subsequent transfers
between Jones and any Affiliate of Jones
. Notice of Closing Date addressed to the County of Boone notifying the
County that pursuant to Section 2 of Resolution No. 89-1, the
franchise was transferred to Jones Intercable, Inc. as of September
30, 1988
. Notice of Closing Date addressed to the County of Boone notifying the
County that pursuant to Resolution No. 89-1, the franchise was
transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February 7,
1989
. Letter dated October 10, 1994, regarding the initiation of
negotiations for renewal of the franchise
Expiration Date: September 20, 1997
Franchise Fee: 3 percent
Assignment Provisions:
Section 27 of Ordinance No. 82-9 states, "The franchise and rights granted
herein to the Company (Omega of Zionsville Cable T.V. Co.) shall not be
assigned, transferred, sold or disposed of, without the prior consent of the
Commissioners expressed by resolution. Such consent shall not be unreasonably
withheld provided that the proposed assignee agrees to comply with all of the
provisions of this Ordinance and is able to provide proof of financial
responsibility and other qualifications satisfactory to the Commissioners. No
consent by the Board shall be required for a transfer in trust, mortgage, or
other instrument of hypothecation to secure an indebtedness of the Company.
The consent of the Board to any sale or other transfer shall not constitute a
waiver or release of any of the rights of the County under this Ordinance."
<PAGE> 12
City of Carmel, Indiana
. Agreement dated December 7, 1987, between the City of Carmel, Indiana
and AccuCable Co.
. Resolution No. 12-7-87-2 dated December 7, 1987, approving the amended
Agreement dated December 7, 1987
. Resolution No. 8-15-88-1 dated August 15, 1988, consenting to the
assignment of the franchise to Jones Intercable, Inc. ("Jones") and/or
to any limited partnership(s) of which Jones or Jones Cable
Corporation is a general partner, or to any joint venture or general
partnership(s) of which Jones or any such limited partnership is a
constituent partner ("Affiliate of Jones"); consenting to any
subsequent transfers between Jones and any Affiliate of Jones
(provided, however, that if the franchise is transferred to any
Affiliate of Jones, Jones shall act as the manager of the cable
television system operated pursuant to the franchise. If Jones shall
at any time be removed by the then holder of the franchise as the
manager of the system, the entity then holding the franchise shall,
within 90 days after such removal, replace the manager of the system
and obtain the City's consent to such new manager, which consent shall
not be unreasonably withheld); and further consenting to the grant of
a security interest in the franchise
. Notice of Closing Date addressed to the City of Carmel notifying the
City that pursuant to Section 3 of Resolution No. 8-15-88-1, the
franchise was transferred to Jones Intercable, Inc. as of September
30, 1988
. Notice of Closing Date addressed to the City of Carmel notifying the
City that pursuant to Resolution No. 8-15- 88-1, the franchise was
transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February 7,
1989
Expiration Date: December 7, 2007
Franchise Fee: 5 percent of basic and 2-1/2 percent of premium services
Assignment Provisions:
Section 9 of Agreement dated December 7, 1987 states, "A. The rights granted
to AccuCable by this Agreement may be exercised by any successor or successors,
assignee or assignees of AccuCable, but such successor or successors, assignee
or assignees shall be subject to and bound by all of the provisions, terms,
conditions and limitations prescribed in this Agreement. B. If during the
term of this Agreement, AccuCable shall sell, transfer, exchange or release, or
voluntarily permit the sale, transfer, exchange or release of more than
twenty-five (25%) per cent of the ownership of AccuCable to any person (except
to employees of AccuCable or any present partner of AccuCable) without the
prior written authorization of the City, which authorization shall not be
unreasonably withheld, then the City may at its option terminate this
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<PAGE> 13
Agreement. C. In seeking said prior written authorization under B above,
AccuCable shall have the responsibility: (1) To provide such relevant and
material information concerning the proposed transferee as the City may
reasonably request; and (2) To demonstrate that the financial standing of the
proposed transferee is such as shall enable it to maintain and operate the
Cable System for the remaining term of this Agreement. D. Any proposed
transferee shall execute an agreement, in a form and containing the conditions
approved by the City, that it will assume and be bound by all of the
provisions, terms and conditions of this Agreement and all applicable Federal,
State and local laws; and further that the transferee shall fulfill all legal
obligations set forth under this Agreement without, however, relieving
AccuCable of its obligations as accrued up to the date of transfer. E.
Nothing in any approval by the City or execution by the Mayor or
Clerk-Treasurer of an authorization of any transfer or assignment of any
ownership interest pursuant to this Section shall be construed to waive or
release any of the City's police powers, or as an exercise of eminent domain."
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<PAGE> 14
Town of Fortville, Indiana
. Ordinance No. 1981-6B dated June 23, 1981, granting a cable television
franchise to Fortville Cablevision, Inc.
. Resolution No. 1982-1A dated January 26, 1982, consenting to the
transfer of the franchise to Omega Cable TV of Fortville Co., of which
AccuCable Co. is successor by merger
. Resolution No. 1988-8-1 dated August 9, 1988, consenting to the
assignment of the franchise to Jones Intercable, Inc., or any
affiliate of Jones, including any limited partnership(s) of which
Jones or any affiliate of Jones is a general partner, or any joint
venture or general partnership of which Jones, any affiliate of Jones,
or any such limited partnership(s) is a constituent partner, or any
other entity controlled by, controlling or under common control with
Jones ("Affiliate of Jones"); consenting to any subsequent transfers
between Jones and any Affiliate of Jones; and further consenting to
the grant of a security interest in the franchise
. Notice of Closing Date addressed to the Town of Fortville notifying
the Town that pursuant to Section 3 of Resolution No. 1988-8-1, the
franchise was transferred to Jones Intercable, Inc. as of September
30, 1988
. Notice of Closing Date addressed to the Town of Fortville notifying
the Town that pursuant to Resolution No. 1988-8-1, the franchise was
transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February 7,
1989
Expiration Date: July 12, 2001
Franchise Fee: 3 percent
Assignment Provisions:
Section 3 of Resolution No. 1988-8-1 states, "Any subsequent transfer of the
Franchise between Jones and any Affiliate of Jones shall be effective upon
written notice being given to the Town by the entity then holding the
Franchise."
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<PAGE> 15
County of Hamilton (Fortville), Indiana
(Franchise restricted to Fortville and Zionsville or close proximity thereof)
. Franchise Grant dated July 19, 1982, granting a cable television
franchise to Omega Cable TV of Fortville Co., of which AccuCable Co.
is successor by merger
. Resolution No. 9/6/88 dated September 6, 1988, consenting to the
assignment of the franchise to Jones Intercable, Inc., or any
affiliate of Jones, including any limited partnership(s) of which
Jones or any affiliate of Jones is a general partner, or any joint
venture or general partnership of which Jones, any affiliate of Jones,
or any such limited partnership(s) is a constituent partner, or any
other entity controlled by, controlling or under common control with
Jones ("Affiliate of Jones"); consenting to any subsequent transfers
between Jones and any Affiliate of Jones; and further consenting to
the grant of a security interest in the franchise
. Notice of Closing Date addressed to the County of Hamilton notifying
the County that pursuant to Section 3 of Resolution No. 9/6/88, the
franchise was transferred to Jones Intercable, Inc. as of September
30, 1988
. Notice of Closing Date addressed to the County of Hamilton notifying
the County that pursuant to Resolution No. 9/6/88, the franchise was
transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February 7,
1989
. Letter dated August 5, 1994, regarding the initiation of negotiations
for renewal of the franchise
Expiration Date: July 19, 1997
Franchise Fee: 3 percent
Assignment Provisions:
Section 15 of the Franchise Grant states, "(a) This Franchise shall not be
assigned nor shall control of the Company be transferred without the prior
approval of the Commissioners, which approval shall not be unreasonably
withheld. (b) The Company shall not consolidate or merge or enter into any
agreement in restriction of competition with any other person, firm or
corporation engaged in the transmission of television signals by cable to
members of the public within limits of the County, and shall not purchase or
otherwise acquire all or any portion of any system or plant within the County
of any other person, firm or corporation engaged in the transmission of
television signals by cable to members of the public within the limits of the
County without prior consent of the Commissioners, which consent shall not be
unreasonably withheld."
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<PAGE> 16
County of Hamilton (Zionsville), Indiana
(Franchise restricted to Fortville and Zionsville or close proximity thereof)
. Franchise Grant dated July 19, 1982, granting a cable television
franchise to Omega of Zionsville Cable TV Co., now known as AccuCable
Co.
. Resolution No. 9/6/88 dated September 6, 1988, consenting to the
assignment of the franchise to Jones Intercable, Inc., or any
affiliate of Jones, including any limited partnership(s) of which
Jones or any affiliate of Jones is a general partner, or any joint
venture or general partnership of which Jones, any affiliate of Jones,
or any such limited partnership(s) is a constituent partner, or any
other entity controlled by, controlling or under common control with
Jones ("Affiliate of Jones"); consenting to any subsequent transfers
between Jones and any Affiliate of Jones; and further consenting to
the grant of a security interest in the franchise
. Notice of Closing Date addressed to the County of Hamilton notifying
the County that pursuant to Section 3 of Resolution No. 9/6/88, the
franchise was transferred to Jones Intercable, Inc. as of September
30, 1988
. Notice of Closing Date addressed to the County of Hamilton notifying
the County that pursuant to Resolution No. 9/6/88, the franchise was
transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February 7,
1989
. Letter dated August 5, 1994, regarding the initiation of negotiations
for renewal of the franchise
Expiration Date: July 19, 1997
Franchise Fee: 3 percent
Assignment Provisions:
Section 15 of the Franchise Grant states, "(a) This Franchise shall not be
assigned nor shall control of the Company be transferred without the prior
approval of the Commissioners, which approval shall not be unreasonably
withheld. (b) The Company shall not consolidate or merge or enter into any
agreement in restriction of competition with any other person, firm or
corporation engaged in the transmission of television signals by cable to
members of the public within limits of the County, and shall not purchase or
otherwise acquire all or any portion of any system or plant within the County
of any other person, firm or corporation engaged in the transmission of
television signals by cable to members of the public within the limits of the
County without prior consent of the Commissioners, which consent shall not be
unreasonably withheld."
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<PAGE> 17
County of Hamilton (Carmel), Indiana
. Resolution dated April 24, 1967, granting a cable television franchise
to Hamilton County CATV, Inc.
. Resolution dated January 20, 1987, confirming the transfer of the
original franchise to Amtech Cable of Indiana III ("Assignor");
confirming amendments to the original franchise; consenting to the
assignment of the franchise from Assignor to Omega of Zionsville Cable
TV Co. ("Assignee") (Assignee will merge with Omega Cable TV of
Fortville Co. which is wholly owned by the principals of Omega of
Zionsville Cable TV Co. and will change its name to Accucable Co.);
consenting to subsequent transfers of the franchise to affiliated
entities; and further consenting to the granting of a security
interest
. Resolution No. 9/6/88 dated September 6, 1988, consenting to the
assignment of the franchise to Jones Intercable, Inc., or any
affiliate of Jones, including any limited partnership(s) of which
Jones or any affiliate of Jones is a general partner, or any joint
venture or general partnership of which Jones, any affiliate of Jones,
or any such limited partnership(s) is a constituent partner, or any
other entity controlled by, controlling or under common control with
Jones ("Affiliate of Jones"); consenting to any subsequent transfers
between Jones and any Affiliate of Jones; consenting to the grant of a
security interest in the franchise; and extending the term of the
franchise to December 31, 1999
. Notice of Closing Date addressed to the County of Hamilton notifying
the County that pursuant to Section 4 of Resolution No. 9/6/88, the
franchise was transferred to Jones Intercable, Inc. as of September
30, 1988
. Notice of Closing Date addressed to the County of Hamilton notifying
the County that pursuant to Resolution No. 9/6/88, the franchise was
transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February 7,
1989
Expiration Date: December 31, 1999
Franchise Fee: 5 percent of basic and 2-1/2 percent of premium
services
Assignment Provisions:
Section XII of Resolution dated April 24, 1967 states, "This franchise is
granted to the Company or its successor in interest, provided, however, that it
may assign its right, title and interest hereunder to another corporation or
lawful business entity through the sale of stocks or assets, or otherwise,
provided that prior approval of such assignment shall be obtained from the
Hamilton County Commissioners, which said approval shall not be unreasonably
withheld, and further provided that such other corporation or lawful business
entity is duly authorized to receive such assignment and agrees to undertake
and assume all the obligations of the original corporation hereunder subject
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<PAGE> 18
to all of the terms and conditions of this franchise. In the event such
assignment takes place with such consent, then immediately upon the delivery to
the Hamilton County Commissioners of the aforesaid assumption agreement, duly
executed by assignor and assignee, all of the rights, obligations and
privileges herein granted to the Petitioner shall forthwith devolve upon the
said assignee, who shall in all respects stand in the place and stead of the
original corporation hereunder."
Section IV of Resolution dated January 20, 1987 states, "Without further action
by the County, Assignee shall have authority to assign and transfer the Cable
TV Franchise to any person or entity which is affiliated with Assignee through
direct, indirect and/or common control of ownership. Assignee and its
successor affiliate shall have the right to assign or pledge to any lender(s)
as collateral for loans, all of Assignee's or said affiliate's right, title and
interest in the Cable TV Franchise, and said Lender shall have the rights of a
secured creditor with respect thereto under the Uniform Commercial Code, as
enacted under the laws of the State of Indiana, including the right to sell and
transfer the Cable TV Franchise or any portion thereof in the event of a
foreclosure, provided approval is given therefor by the Hamilton County
Commissioners."
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<PAGE> 19
County of Hancock, Indiana
. Resolution No. 1982-3A dated March 15, 1982, granting a cable
television franchise to Omega Cable TV of Fortville Co., of which
AccuCable Co. is successor by merger
. Resolution No. 1988-2 dated July 18, 1988, consenting to the
assignment of the franchise to Jones Intercable, Inc., or any
affiliate of Jones, including any limited partnership(s) of which
Jones or any affiliate of Jones is a general partner, or any joint
venture or general partnership of which Jones, any affiliate of Jones,
or any such limited partnership(s) is a constituent partner, or any
other entity controlled by, controlling or under common control with
Jones ("Affiliate of Jones"); consenting to any subsequent transfers
between Jones and any Affiliate of Jones; and further consenting to
the grant of a security interest in the franchise
. Notice of Closing Date addressed to the County of Hancock notifying
the County that pursuant to Section 3 of Resolution No. 1988-2, the
franchise was transferred to Jones Intercable, Inc. as of September
30, 1988
. Notice of Closing Date addressed to the County of Hancock notifying
the County that pursuant to Resolution No. 1988-2, the franchise was
transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February 7,
1989
Expiration Date: April 4, 2002
Franchise Fee: 3 percent
Assignment Provisions:
Section 3 of Resolution No. 1988-2 states, "Any subsequent transfer of the
Franchise between Jones and any Affiliate of Jones shall be effective upon
written notice being given to the County by the entity then holding the
Franchise."
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<PAGE> 20
Town of Ingalls, Indiana
. Franchise Agreement dated December 30, 1982, granting a cable
television franchise to Omega Cable TV of Fortville Co., of which
AccuCable Co. is successor by merger
. Resolution No. 88-4 dated August 15, 1988, consenting to the
assignment of the franchise to Jones Intercable, Inc., or any
affiliate of Jones, including any limited partnership(s) of which
Jones or any affiliate of Jones is a general partner, or any joint
venture or general partnership of which Jones, any affiliate of Jones,
or any such limited partnership(s) is a constituent partner, or any
other entity controlled by, controlling or under common control with
Jones ("Affiliate of Jones"); and consenting to any subsequent
transfers between Jones and any Affiliate of Jones
. Notice of Closing Date addressed to the Town of Ingalls notifying the
Town that pursuant to Section 2 of Resolution No. 88-4, the franchise
was transferred to Jones Intercable, Inc. as of September 30, 1988
. Notice of Closing Date addressed to the Town of Ingalls notifying the
Town that pursuant to Resolution No. 88- 4, the franchise was
transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February 7,
1989
. Letter dated January 11, 1995, regarding the initiation of
negotiations for renewal of the franchise
Expiration Date: December 30, 1997
Franchise Fee: 3 percent
Assignment Provisions:
Section 11(c) of the Franchise Agreement states, "The Company shall not assign
the franchise except to an affiliated company without the consent in writing of
the town. Provided that this restriction of assignment shall not apply to a
bona fide assignment or mortgage of the assets and franchise of the Company for
the sole purpose of securing a loan from any lending institution; provided
further that the said Town shall not unreasonably withhold its consent from
such assignment of the franchise to any reputable person or company, if such
assignee has the demonstrated ability and means to operate the said
closed-circuit electronic system within the terms of the franchise."
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<PAGE> 21
County of Madison, Indiana
. Article 36 Cable Television Regulation of the Madison County Code
. Franchise Grant dated January 24, 1983, granting a cable television
franchise to Omega Cable TV of Fortville, of which AccuCable Co. is
successor by merger
. Resolution No. 1988-BC-R3 dated August 3, 1988, consenting to the
assignment of the franchise to Jones Intercable, Inc., or any
affiliate of Jones, including any limited partnership(s) of which
Jones or any affiliate of Jones is a general partner, or any joint
venture or general partnership of which Jones, any affiliate of Jones,
or any such limited partnership(s) is a constituent partner, or any
other entity controlled by, controlling or under common control with
Jones ("Affiliate of Jones"); consenting to any subsequent transfers
between Jones and any Affiliate of Jones; and further consenting to
the grant of a security interest in the franchise
. Notice of Closing Date addressed to the County of Madison notifying
the County that pursuant to Section 3 of Resolution No. 1988-BC-R3,
the franchise was transferred to Jones Intercable, Inc. as of
September 30, 1988
. Notice of Closing Date addressed to the County of Madison notifying
the County that pursuant to Resolution No. 1988-BC-R3, the franchise
was transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February
7, 1989
Expiration Date: Not specified
Franchise Fee: 3 percent
Assignment Provisions:
Section 3 of Resolution No. 1988-BC-R3 states, "Any subsequent transfer of the
Franchise between Jones and any Affiliate of Jones shall be effective upon
written notice being given to the County by the entity then holding the
Franchise."
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<PAGE> 22
Town of Zionsville, Indiana
. Ordinance No. 82-3 dated April 5, 1982, granting a cable television
franchise to Omega of Zionsville Cable TV Company (now known as
AccuCable Co.)
. Resolution No. 1 dated August 1, 1988, consenting to the assignment of
the franchise to Jones Intercable, Inc., or any affiliate of Jones,
including any limited partnership(s) of which Jones or any affiliate
of Jones is a general partner, or any joint venture or general
partnership of which Jones, any affiliate of Jones, or any such
limited partnership(s) is a constituent partner, or any other entity
controlled by, controlling or under common control with Jones
("Affiliate of Jones"); consenting to any subsequent transfers between
Jones and any Affiliate of Jones; consenting to the grant of a
security interest in the franchise; and extending the term of the
franchise to December 31, 1999
. Notice of Closing Date addressed to the Town of Zionsville notifying
the Town that pursuant to Section 4 of Resolution No. 1, the franchise
was transferred to Jones Intercable, Inc. as of September 30, 1988
. Notice of Closing Date addressed to the Town of Zionsville notifying
the Town that pursuant to Resolution No. 1, the franchise was
transferred to IDS/Jones Growth Partners 87-A, Ltd. as of February 7,
1989
Expiration Date: December 31, 1999
Franchise Fee: 3 percent
Assignment Provisions:
Article IX of Ordinance No. 82-3 states, "In the event the franchise is
transferred, in whole or in part, prior written consent of the Board to such
transfer shall be required. Such consent shall not be unreasonably withheld
provided that the proposed assignee or transferee agrees to comply with all the
provisions of this Ordinance and is able to provide proof of financial
responsibility and other qualifications as may be satisfactory to the Town.
The consent of the Town to any sale or other transfer shall not constitute a
waiver of release of any of the rights of the Town under this Ordinance."
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<PAGE> 23
FCC LICENSES
Business Radio (SMRS) WNJY700
Earth Station WV69 (Carmel)
Earth Station E890981 (Fortville)
Earth Station E890976 (Zionsville)
POLE AGREEMENTS/LINE CROSSING AGREEMENTS
1. Master License Agreement dated October 27, 1992, as amended, with PSI
Energy, Inc. (formerly Public Service Company of Indiana) for Boone,
Hamilton, Madison and Hancock Counties, the Cities of Carmel and
Fortville, and the Towns of Zionsville and Ingalls, Indiana.
2. License Agreement - CATV Pole Attachments dated February 7, 1989, with
Indianapolis Power & Light Company for the City of Carmel, Indiana.
3. License Agreement - CATV Pole Attachments dated February 7, 1989, with
Indianapolis Power & Light Company for Hamilton County, Indiana.
4. License Agreement - CATV Pole Attachments dated February 7, 1989, with
Indianapolis Power & Light Company for Hancock County, Indiana.
5. License Agreement for Aerial Facilities dated September 30, 1988, with
Indiana Bell Telephone Company, Incorporated for Carmel, Zionsville
and Hamilton County, Indiana.
6. Agreement for the Shared Use of Utility Poles dated June 15, 1991,
with United Telephone System for the City of Fortville, Hancock
County, Indiana.
7. Agreement for Joint Use of Rural Electric System Poles for Television
Antenna Service Attachments dated August 14, 1985, with Boone County
Rural Electric Membership Corporation for Zionsville and Boone County,
Indiana.
8. License Agreement dated January 1, 1983, as amended, with Hancock
County Rural Electric Membership Corporation for Hancock and Madison
Counties, Indiana.
9. License for Cable TV Appurtenances dated August 19, 1987, granted by
Otis C. Burrus and Ruth M. Burrus for attachment to utility pole owned
by Public Service Company of Indiana located on the rear portion of
the Burrus' property in Zionsville, Boone County, Indiana.
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<PAGE> 24
10. Utility Agreement dated September 16, 1991, with the City of Carmel,
Board of Public Works and Safety for the installation and maintenance
of aerial and/or underground television cables within the highway
right-of-way at the intersection of 116th Street and Gray Road in
Carmel, Indiana.
11. Utility Agreement signed by the Board of County Commissioners of the
County of Boone on October 14, 1991, for the installation and
maintenance of cable television lines and appurtenances within the
highway right-of-way at Zionsville Road where it crosses Eagle Creek.
INSTALLATION, SERVICE AND WIRING AGREEMENTS
1. Cable Television Installation and Service Subscription Agreement dated
April 19, 1990, as amended, with Baptist Homes of Indiana, Inc. for
Hoosier Village Retirement Center in Indianapolis, Indiana. NOTE:
Requires written notice of any transfer be given at least 30 days
prior to closing.
2. Access Agreement executed September 22, 1988, as amended, with Lenna
Ransburg, the Executrix of the Estate of Edwin M. Ransburg, to provide
cable television service to Twin Lakes Apartments in Carmel, Indiana.
3. Agreement executed July 19, 1984, with Alig and Associates, Inc. to
provide cable television service to Boone Village Shopping Center in
Zionsville, Indiana.
4. Access Agreement dated August 31, 1988, with Carefree Homes, Inc. to
provide cable television service to certain homes in Madison County,
Indiana.
5. Access Agreement dated May 27, 1986, with Robert Carter to provide
cable television service to Carter Apartments in Zionsville, Indiana.
6. Access Agreement executed July 14, 1983, with Larry Cochrin to provide
cable television service to Fortville Sports Building Apartments in
Fortville, Indiana.
7. Access Agreement dated August 31, 1988, with Steve Daney to provide
cable television service to Lakeview Health Care Center in Carmel,
Indiana.
8. Access Agreement signed by Owner, Oak Tree Development Corporation, on
April 19, 1985 to provide cable television service to Oak Tree
Subdivision in Boone County, Indiana.
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<PAGE> 25
9. Access Agreement executed June 21, 1983, with Steve Vendel of R & S
Enterprises to provide cable television service to the apartments
located at 425 North School Street, Fortville, Indiana.
10. Access Agreement executed August 16, 1983, with Jim Stone to provide
cable television service to Stone Crest Development Co. in Fortville,
Indiana.
11. Access Agreement dated May 19, 1983, with Townhome Builders, Inc. to
provide cable television service to the development located at the
corner of Dominion Drive and State Road 334 in Zionsville, Indiana.
12. Access Agreement dated April 30, 1987, with Arbors of Carmel Limited
Partnership to provide cable television service to The Arbors of
Carmel Apartments in Carmel, Indiana.
13. Cable Television Installation Agreement dated September 30, 1991, with
O'Malia Investment Co. to provide cable television service to
Brookshire Village Shopping Center in Carmel, Indiana.
14. Cable Television Installation Agreement dated April 19, 1990, with
Hoosier Manor, Inc. to provide cable television service to Crawford
Manor in Indianapolis, Indiana. NOTE: Requires written notice of any
transfer be given at least 30 days prior to closing.
15. Access Agreement signed by Owners, Carter M. Fortune and Russell
Fortune III, on October 5, 1983 to provide cable television service to
Walnut Hills Apartments in Zionsville, Indiana.
16. Access Agreement dated September 1, 1983, with Ann Compton to provide
cable television service to Zionsville Adult Village in Zionsville,
Indiana.
17. Agreement dated February 21, 1983, with Quail Run Apartments to
provide cable television service to Quail Run Apartments in
Zionsville, Indiana.
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<PAGE> 26
REAL PROPERTY LEASED
1. Indenture of Lease (office space) commencing April 1, 1990, between
Barnes Investment Co. and IDS/Jones Growth Partners 87-A, Ltd.; Letter
dated September 30, 1994, extending the term of the lease for an
additional two year period.
Description of Leased Premises:
4550 square feet (91' x 50')
516 E. Carmel Drive
Carmel, Indiana 46032
The foregoing Lease has not been recorded in the real property records
of Hamilton County, Indiana.
Expiration Date: April 1, 1997
Rental Payment: As of April 1, 1995, $3,102.88/month; thereafter
rental shall increase on each annual anniversary
date by the percentage change in the CPI.
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<PAGE> 27
2. Indenture of Lease (office space) dated December 6, 1994, between
W & W Properties and IDS/Jones Growth Partners 87-A, Ltd. (NOTE: No
consent is necessary, if Lessee assigns Lease to purchaser of Carmel,
Indiana cable system and related franchises. Written notice of the
assignment and current financial information shall be provided Lessor
30 days prior to any assignment.)
Description of Leased Premises:
Approximately 1,250 square feet
Cluster C, Wilson Office Plaza
987 Keystone Way
Carmel, Indiana 46032
The foregoing Lease has not been recorded in the real property records
of Hamilton County, Indiana.
Expiration Date: March 31, 1997, with two renewal options of
two years each.
Rental Payment: $13,200 annually for the period ending March
31, 1997, payable in equal monthly
installments of $1,100; rental for renewal
terms shall increase based on CPI.
3. Lease Agreement (warehouse) dated December 1, 1994, between James W.
Sawyer and Nancy Ann Sawyer and IDS/Jones Growth Partners 87-A, Ltd.
Description of Leased Premises:
Rear portion of building located at 120 State Road 32 E, Westfield,
Indiana, together with the rear parking behind and to the side of the
building.
The foregoing Lease has not been recorded in the real property records
of Hamilton County, Indiana.
Expiration Date: November 30, 1995, with two renewal options
of one year each.
Rental Payment: $7,680 annually, payable in equal monthly
installments of $640.
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<PAGE> 28
4. Lease dated May 20, 1987, between the City of Carmel and AccuCable Co.
for use of structures on that portion of the real estate designated as
Parcel I to place attachments (television antennas) and the exclusive
right to use that portion of the real estate designated as Parcel II
to place and locate a building and electronic and other equipment
necessary in the operation of a cable television system; Letter dated
July 22, 1988, consenting to the assignment and transfer of the Lease
from AccuCable Co. to Jones Intercable, Inc. (and to subsequent
assignments to and among affiliates of Jones), and further consenting
to the grant of a security interest in the Lease.
Description of Property:
PARCEL I
Part of the East Half of the Southeast Quarter of Section 25, Township
18 North, Range 3 East, Hamilton County, Indiana, and being more
particularly described as follows:
Commencing at a point on the North line of said Half Quarter Section
being North 90 degrees 00 minutes 00 seconds East (assumed bearing)
487.54 feet measured (488.2 feet deed) from the Northwest corner
thereof; thence South 0 degrees 00 minutes 00 seconds West 732.07 feet
measured (732.44 feet deed) to an iron pipe found marking the
Northeast corner of a tract conveyed to the City of Carmel in Deed
Record 318, page 96, in the Office of the Recorder of Hamilton County,
Indiana, said point being on the West right of way line of the Monon
Railroad; thence South 0 degrees 46 minutes 01 seconds West along said
right of way line, 252.31 feet to the point of beginning; thence
continuing South 0 degrees 46 minutes 01 seconds West along said right
of way line 51.58 feet to its intersection with the North face of an
existing concrete block building prolonged; thence North 89 degrees 47
minutes 27 seconds West along said North face of building prolonged
and North face of building 34.80 feet to a point on the East edge of
an existing concrete ramp; thence North 0 degrees 46 minutes 01
seconds East along said east edge and East face of an existing
building, 51.58 feet; thence South 89 degrees 47 minutes 27 seconds
East 34.80 feet to the point of beginning and containing 0.041 acres,
more or less.
PARCEL II
Part of the East Half of the Southeast Quarter of Section 25, Township
18 North, Range 3 East, Hamilton County, Indiana, and being more
particularly described as follows:
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Commencing at a point on the North line of said Half Quarter Section
being North 90 degrees 00 minutes 00 seconds East (assumed bearing)
487.54 feet measured (488.2 feet deed) from the Northwest corner
thereof; thence South 0 degrees 00 minutes 00 seconds West 732.07 feet
measured (732.44 feet deed) to an iron pipe found marking the
Northeast corner of a tract conveyed to the City of Carmel in Deed
Record 318, page 96, in the Office of the Recorder of Hamilton County,
Indiana, said point being on the West right of way line of the Monon
Railroad; thence South 0 degrees 46 minutes 01 seconds West along said
right of way line, 303.89 feet to its intersection with the North face
of an existing concrete block building prolonged and the point of
beginning; thence continue South 0 degrees 46 minutes 01 seconds West
along said right of way line, 53.00 feet; thence North 89 degrees 47
minutes 27 seconds West, parallel with said North face of building,
56.00 feet; thence North 0 degrees 46 minutes 01 seconds East,
parallel with said right of way line, 53.00 feet; thence South 89
degrees 47 minutes 27 seconds East along said North face of building
prolonged and North face of building, 56.00 to the point of beginning
and containing 0.068 acres, more or less.
The foregoing Lease has not been recorded in the real property records
of Hamilton County, Indiana.
Expiration Date: March 31, 2002
Rental Payment: $1,000/year.
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5. Lease dated August 17, 1982, between the Town of Fortville and Omega
Cable TV of Fortville Co. for the right to use water tower in the Town
of Fortville, Indiana to place up to four attachments (television
antennas) and cable thereon and to place and locate under or next to
water tower a satellite receiver (earth station); Letter dated July
22, 1988, consenting to the assignment and transfer of the Lease from
AccuCable Co., formerly Omega Cable TV of Fortville Co., to Jones
Intercable, Inc. (and to subsequent assignments to and among
affiliates of Jones), and further consenting to the grant of a
security interest in the Lease.
Description of Property:
Real Estate located in the Town of Fortville, Hancock County, Indiana
consisting of approximately 1500 square feet at the base of the Town
of Fortville Water Tower, including space for antennae and cables on
said Water Tower.
The foregoing Lease has not been recorded in the real property records
of Hancock County, Indiana.
Expiration Date: July 31, 1997
Rental Payment: $150/year.
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6. Lease dated July 1, 1992, between Zionsville Water Corporation and
IDS/Jones Growth Partners 87-A, Ltd. for the right to use water tower
in the Town of Zionsville, Indiana to place up to six attachments
(television antennas) and cable thereon and to place and locate under
or next to water tower a satellite receiver (earth station); By
Resolution dated July 27, 1992, the Eagle Union Community School
Corporation (formerly Eagle School Township) (owner of land subject to
the Lease) granted an extension of easement to IDS/Jones to run
concurrent with the Lease. The Easement consists of the parcel of
land described in the Lease plus additional land encompassed by
extending the southern border of the parcel by twenty (20) feet in a
southerly direction.
Description of Property:
A part of the Southwest Quarter of Section 35, Township 18 North,
Range 2 East located in Eagle Township, Boone County, Indiana being
bounded as follows:
Commencing at the Northeast corner of the West Half, of the Southwest
Quarter of Section 35, Township 18 North, Range 2 East; thence West
408.90 feet on and along the North line of said Southwest Quarter to a
point in the West line of the property deeded to the Eagle School
Township, Boone County, Indiana; thence South 1837.60 feet on and
long(sic) the West line of said School property to a point in the
North right-of-way line of West 117th Street; thence Eastwardly at
right angles to said West line 166 feet, more or less, on and along
the North right-of-way line of said 117th Street; thence North 60
feet, more or less, to the Southeast corner of an existing chain link
fence (10 Dec. 82) and the POINT OF BEGINNING of this description;
thence West 25 feet on and along said existing fence; thence South 25
feet; thence East 62 feet; thence North 53 feet; thence West 37 feet
to said existing fence; thence South 28 feet on and along said
existing fence to the POINT OF BEGINNING, containing 0.06 acres more
or less, being subject to all applicable easements and rights-of-way
of record.
Also an easement for ingress and egress being bounded as follows:
BEGINNING at the Southeast corner of the above described 0.06 acre,
more or less, tract of land; thence West 20 feet on and along the
South line of said 0.06 acre, more or less, tract of land; thence
South 60 feet more or less to the North right-of-way of 117th Street;
Thence East 20 feet on and along the North right-of-way line of 117th
Street; thence North 60 feet, more or less, to the POINT OF BEGINNING.
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<PAGE> 32
The foregoing Lease has not been recorded in the real property records
of Boone County, Indiana.
Expiration Date: June 30, 2002
Rental Payment: As of July 1, 1994, $1,100 annually; each
year thereafter, rental shall be adjusted and
an additional yearly sum of $50 shall be
added.
7. Oral agreement (business office) between Helen Kogan and IDS/Jones
Growth Partners 87-A, Ltd.
Description of Leased Premises:
180 South Main
Zionsville, Indiana
Expiration Date: Month-to-month term
Rental Payment: $500.00/month
MISCELLANEOUS CONTRACTS AND AGREEMENTS
1. Underground Line Easement dated November 22, 1991, granted by
Margarette E. Casler for a strip of land 10 feet in width located on a
certain piece of land in Bethenridge Subdivision, 1st Avenue, N.E.,
Carmel, Hamilton County, Indiana.
2. Agreement for Jones Intercable, Inc. (and/or any of its controlled
affiliates) to Deviate from Designated Easements signed by Grantor,
Robert Fecitt, on January 30, 1992, for the right to install, bury,
operate and maintain underground cable lines in areas outside
designated utility easements on the property located at 3412 Briar
Drive in Carmel, Indiana.
3. Subscriber Agreement effective January 1, 1994, as amended, with
Audiocom, Inc. for "Promotions on Hold" equipment and services.
4. Centrex Letter of Election and Letter of Agency dated December 1993,
with Indiana Bell Telephone for telephone service and equipment.
5. Contract dated November 25, 1991, with Atwood Irrigation for
installation, change of services, additional outlets and reconnects.
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<PAGE> 33
6. Contract dated June 22, 1992, with Morris Lucas, DBA Lucas Cable, for
new installs, reconnects, additional outlets, relocates, up/down
grades and disconnects.
7. Agreement dated August 30, 1994, with Tom E. Oaks for cable
installation services.
8. Contract dated March 30, 1993, with C.A.T. Communications, Inc. for
general underground CATV construction.
9. Contract dated January 11, 1993, with Clawson Communications for
general underground CATV construction.
10. Contract dated September 5, 1989, with Engler Quality Construction,
Inc. for cable television system rebuild, electronic upgrade and
general underground and aerial construction.
11. Agreement dated September 2, 1994, with Integrity, Inc. for cable
television construction services.
12. Contract dated March 25, 1993, with James Ray Construction to machine
bury and hand bury subscriber cable drops.
13. Contract dated March 30, 1993, with MCNS Quality Communications to
machine bury and hand bury subscriber cable drops.
14. Contract dated November 1, 1993, with Midwest Marking, Inc. for
underground plant location services.
15. Agreement dated June 1, 1995, with Hughey Builders, Inc. to remodel
the Carmel headend building.
16. Agreement dated February 6, 1995, with Rowland Trenching & Excavating,
Inc. for construction services.
17. Agreement dated April 1994, with Southwest Solutions, Inc. for field
engineering services.
18. Agreement dated October 19, 1994, with Subsurface of Indiana for joint
trenching services.
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<PAGE> 34
19. Agreement dated January 3, 1994, with Donovan & Assoc. for design and
drafting and as-built mapping services.
20. Contract dated July 22, 1991, with AMC Marketing Corp. for a system
tap audit.
21. Master Lease dated January 30, 1987, with Pitney Bowes Credit
Corporation for use of mail machine and scale for Carmel, Indiana
office.
22. Master Lease dated February 18, 1986, with Pitney Bowes Credit
Corporation for use of mail machine and scale for Zionsville, Indiana
office.
23. Agreement effective October 15, 1992, with Modern Vending, Inc. for
installation and operation of vending machine at Carmel, Indiana
office.
24. Pour-More Beverage Machine Lease effective September 16, 1992, with
Pour-More Beverage Systems, Inc. for the installation and operation of
water filtration unit.
25. Contract No. E23422 dated June 10, 1987, with Ram Communications of
Indiana, Inc. for mobile radio telephone service and equipment.
26. Contract No. E20747 dated February 3, 1987, with Ram Communications of
Indiana, Inc. for mobile radio telephone service and equipment.
27 Contract No. E20749 dated February 3, 1987, with Ram Communications of
Indiana, Inc. for mobile radio telephone service and equipment.
28. Specialized Mobile Radio User Agreement dated July 15, 1987, with
Motorola Communications and Electronics, Inc. for SMR service.
29. Installation and Service Agreement dated April 13, 1987, with Central
Security Systems, Inc. for security system at 180 S. Main Street,
Zionsville, Indiana.
30. Installation and Service Agreement dated April 9, 1987, with Central
Security Systems, Inc. for security system at 225 E. Mill Street,
Fortville, Indiana.
31. Installation and Service Agreement dated April 8, 1987, with Central
Security Systems, Inc. for security system at 1005 Bloor Lane,
Zionsville, Indiana.
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<PAGE> 35
32. Installation and Service Agreement dated January 29, 1987, with
Central Security Systems, Inc. for security system at 516 E. Carmel
Drive, Carmel, Indiana.
33. Installation and Service Agreement dated January 29, 1987, with
Central Security Systems, Inc. for security system at 211 2nd Street
S.W., Carmel, Indiana.
34. Equipment Lease dated December 31, 1991, with SportsChannel Cincinnati
Associates for three addressable receivers to carry the SportsChannel
programming service.
35. Advertising Sales Agreement dated April 1, 1994, with Insight
Communications Company, L.P. for Jones to sell commercial advertising
for Insight.
36. Self Service Storage Agreement dated September 12, 1994, with
Westfield Self Storage for a mini-storage unit in Westfield, Indiana
to store excess inventory.
MUST CARRY/RETRANSMISSION AGREEMENTS
1. Letter dated August 4, 1994, granting retransmission consent
(WNDE/radio signal-applicable to all three headends)
2. Letters, each dated July 28, 1993, electing must carry status
(WIIB-applicable to all three headends)
3. Retransmission Consent Agreement dated October 18, 1993
(WISH-applicable to all three headends)
4. Retransmission Consent Agreement dated October 6, 1993
(WRTV-applicable to all three headends)
5. Retransmission Consent Carriage Agreement dated October 21, 1993
(WTTV-applicable to all three headends)
6. Fox Broadcast Affiliate Retransmission Consent Agreement dated
February 22, 1994 (WXIN-applicable to all three headends)
7. Letter dated April 27, 1993, notifying station of carriage pursuant to
its must carry status (WTBU-applicable to all three headends)
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<PAGE> 36
8. Retransmission Consent Agreement dated September 15, 1993 (WTHR and
27ALIVE/formerly W27AR-applicable to all three headends)
9. Letter dated April 27, 1993, notifying station of carriage pursuant to
its must carry status (WCLJ-applicable to all three headends)
10. Letter dated April 27, 1993, notifying station of carriage pursuant to
its must carry status (WFYI-applicable to all three headends)
11. Letters, each dated June 17, 1993, electing must carry status
(WHMB-applicable to all three headends)
12. Letter dated June 14, 1993, electing must carry status
(WNDY-applicable to all three headends) Note: WNDY was formerly
WMCC. The new owner changed the call sign.
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<PAGE> 1
EXHIBIT 2.10
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of the 11th day of August,
1995, by and between Jones Cable Income Fund 1-B, Ltd., a Colorado limited
partnership ("Seller"), and Jones Intercable, Inc., a Colorado corporation
("Buyer").
RECITALS
A. Seller owns and operates a cable television system in and
around Orangeburg, South Carolina (the "System").
B. Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the System upon the terms and conditions set forth in this
Agreement.
AGREEMENT
In consideration of the mutual promises contained in this Agreement
and other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set
forth in this Agreement, Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase from Seller, on the Closing Date (as
defined in Paragraph 9 hereof), all of Seller's interest in the System and the
Assets (as defined in Paragraph 2 hereof) then being transferred and sold
pursuant hereto, free and clear of all security interests, liens, pledges,
charges and encumbrances.
2. Assets.
(a) The assets to be conveyed to Buyer hereunder shall
consist of all of the assets and properties of Seller, whether real, personal,
tangible or intangible, of whatever description and wherever located, now owned
or used by Seller solely in connection with Seller's ownership or operation of
the System, including all additions made between the date hereof and the
Closing Date, to the
<PAGE> 2
end that all of Seller's assets owned on the Closing Date which are used or
owned solely in connection with Seller's ownership or operation of the System
shall be sold and transferred to Buyer (collectively, the "Assets"). The
Assets shall include, without limitation:
(i) all of Seller's towers, tower equipment,
antennas, aboveground and underground cable,
distribution systems, headend amplifiers, line
amplifiers, earth satellite receive stations and
related equipment, microwave equipment, testing
equipment, motor vehicles, office equipment,
furniture and fixtures, supplies, inventory and other
physical assets owned or used by Seller solely in
connection with Seller's ownership or operation of
the System;
(ii) the franchises, leases, agreements, permits,
consents, licenses and other contracts, pole line or
joint pole agreements, underground conduit
agreements, agreements for the reception or
transmission of signals by microwave, easements,
rights-of-way and construction permits, if any, and
any other obligations and agreements between Seller
and suppliers and customers, which are owned or used
by Seller solely in connection with Seller's
ownership and operation of the System, substantially
all of which are listed on Exhibit A attached hereto;
(iii) the real property owned and used solely in
connection with the System;
(iv) all accounts receivable of Seller arising in
connection with the System;
(v) all engineering records, files, data,
drawings, blueprints, schematics, maps, reports,
lists and plans and processes owned or developed by
or for Seller and intended for use solely in
connection with the System;
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<PAGE> 3
(vi) all promotional graphics, original art work,
mats, plates, negatives and other advertising or
related materials developed by or for Seller and
intended for use solely in connection with the
System; and
(vii) all of Seller's correspondence files, lists,
records and reports concerning customers and
prospective customers of the System, concerning
television stations whose transmissions are or may be
carried as a part of the System and concerning all
dealings with Federal, state, and local regulatory
agencies relating to the ownership or operation of
the System, including all reports filed by or on
behalf of Seller with the Federal Communications
Commission (the "FCC") in connection with the System
and any Statements of Account of the System filed by
or on behalf of Seller with the United States
Copyright Office in connection with the System.
(b) The following properties and assets relating to the
System and its business operations shall be retained by Seller and shall not be
sold, assigned or transferred to Buyer:
(i) cash or cash equivalents on hand or in banks;
(ii) insurance policies and rights and claims
thereunder;
(iii) all claims, rights and interest in and to any
refunds for federal, state or local income or other
taxes or fees of any nature whatsoever for periods
prior to the Closing Date, including without
limitation, fees paid to the United States Copyright
Office; and
(iv) assets disposed of in the normal course of
business or with the written consent of Buyer between
the date hereof and the Closing Date.
3. Purchase Price. Subject to the adjustments to be made in
accordance with Paragraph 4 hereof, the total purchase price for the Assets
shall
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<PAGE> 4
be $18,347,667 (the "Purchase Price"), which Purchase Price represents the
average of three independent appraisals of the System. The Purchase Price
shall be payable to Seller at Closing in cash, by cashier's check or by wire
transfer of federal funds to a bank or banks designated by Seller.
4. Adjustments. All adjustments provided for herein with respect
to this transaction shall increase or decrease the Purchase Price, as
appropriate, and shall be made as of the close of business (5:00 p.m., Denver
time) on the Closing Date (the "Adjustment Time").
(a) Rent, pole rents, franchise fees, taxes, power and
utility fees and deposits, insurance premiums, licenses, customer prepayments
and deposits, and other prepayments and amounts due shall be prorated and
debited or credited to Seller or Buyer, as applicable. With respect to
subscriber accounts receivable, Seller shall be entitled to an amount equal to
the sum of (i) 90% of the face amount of all accounts receivable that are
current or 30 days or less past due as of the Adjustment Time, plus (ii) 80% of
the face amount of all accounts receivable that are between 31 days and 60 days
past due as of the Adjustment Time. For purposes of making "past due"
calculations, the monthly billing statements of Seller shall be deemed to be
due and payable on the first day of the month during which the service to which
such billing statements relate is provided.
(b) The Purchase Price shall be reduced by any accounts
payable, accrued expenses and vehicle lease obligations for which Seller would
otherwise be liable hereunder, but for which the obligation for payment is
assumed by Buyer.
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<PAGE> 5
(c) Seller and Buyer shall jointly determine the
adjustments required by this Paragraph 4 at the Closing. The net amount to
which Buyer or Seller, as the case may be, is entitled pursuant hereto shall be
thereupon paid by Buyer or Seller, as the case may be, by an adjustment to the
Purchase Price. All adjustments made at Closing shall be tentative and shall
be subject to final adjustment within 90 days after Closing.
5. Assumption of Liabilities. Buyer shall assume and discharge
(i) all debts, liabilities and obligations of Seller arising with respect to
periods subsequent to the Closing Date under any franchise, license, permit,
lease, instrument or agreement transferred to Buyer hereunder, and (ii) with
respect to periods prior to and including the Closing Date, all obligations of
Seller to the extent that the Purchase Price is reduced pursuant to Paragraph
4(b) hereof to reflect Buyer's assumption of such obligations. Buyer shall
indemnify and hold harmless Seller from and against any and all damages, costs,
claims and expenses ("Claims") arising by reason of the ownership, operation or
control of the System after the Closing Date. Anything herein to the contrary
notwithstanding, there is hereby excluded from the Assumed Obligations, and
Seller shall retain and discharge, and indemnify and hold Buyer harmless from
and against, any and all Claims to the extent they arise from (a) any debt,
liability or obligation arising with respect to periods prior to the Closing
Date for which no reduction of the Purchase Price has been made pursuant to
Paragraph 4(b) hereof, or (b) any debt, liability or obligation of Seller not
expressly assumed hereunder, whenever arising.
6. Seller's Representations. Seller hereby represents and
warrants to Buyer that:
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<PAGE> 6
(a) Seller is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Colorado.
Seller has all requisite partnership power and authority to own and operate its
properties and to carry on its business as now and where being conducted.
(b) All necessary consents and approvals have been
obtained by Seller for the execution and delivery of this Agreement. The
execution and delivery of this Agreement by Seller has been duly and validly
authorized and approved by all necessary action of Seller. This Agreement is a
valid and binding obligation of Seller, enforceable against it in accordance
with its terms.
(c) Subject to the receipt of any required consents,
Seller has full legal power, right and authority to sell and convey to Buyer
legal and beneficial title to the Assets, and Seller's sale to Buyer shall
transfer good and marketable title thereto, free and clear of all security
interests, liens, pledges, charges and encumbrances of every kind.
(d) The execution, delivery and performance of this
Agreement by Seller will not violate any provision of law and will not, with or
without the giving of notice or the passage of time, conflict with or result in
any breach of any of the terms or conditions of, or constitute a default under,
any mortgage, agreement or other instrument to which Seller is a party or by
which Seller, the Assets or the System are bound. The execution, delivery and
performance of this Agreement by Seller will not result in the creation of any
security interest, lien, pledge, charge or encumbrance upon the Assets or the
System.
7. Conditions Precedent to Buyer's Obligations. The obligations
of Buyer under this Agreement with respect to the purchase and sale of the
Assets
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<PAGE> 7
shall be subject to the fulfillment on or prior to the Closing Date of each of
the following conditions:
(a) All of the representations and warranties by Seller
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date. Seller shall have complied with and performed
all of the agreements, covenants and conditions required by this Agreement to
be performed or complied with by it on or prior to the Closing Date.
(b) Seller shall have delivered to Buyer such
instruments, consents and approvals of third parties as are necessary to
transfer the Assets to Buyer pursuant to this Agreement.
(c) The statutory waiting period applicable to this
Agreement and the transactions contemplated hereby under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have been
terminated or shall have expired.
8. Conditions Precedent to Seller's Obligations. The obligations
of Seller under this Agreement with respect to the purchase and sale of the
Assets shall be subject to the fulfillment on or prior to the Closing Date of
each of the following conditions:
(a) The statutory waiting period applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have
been terminated or shall have expired.
(b) Buyer shall have delivered the Purchase Price to
Seller in accordance with Paragraph 3 hereof.
9. Closing. The closing hereunder (the "Closing") shall be held
in the offices of Seller, 9697 East Mineral Avenue, Englewood, Colorado 80112,
on
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<PAGE> 8
such date or dates as the parties hereto shall mutually agree (the "Closing
Date"), but in no event after June 30, 1996. At the Closing, all cash, checks,
notes, deeds, bills of sale, certificates of title, assignments and assumptions
and other instruments and documents referred to or contemplated by this
Agreement shall be exchanged by the parties hereto.
10. Brokerage. Seller represents and warrants to Buyer that
Seller will be solely responsible for, and pay in full, any and all brokerage
or finder's fees or agent's commissions or other like payment owing in
connection with Seller's use of any broker, finder or agent in connection with
this Agreement or the transactions contemplated hereby. Buyer represents and
warrants to Seller that Buyer will be solely responsible for, and pay in full,
any and all brokerage or finder's fees or agent's commissions or other like
payment owing in connection with Buyer's use of any broker, finder or agent in
connection with this Agreement or the transactions contemplated hereby. Each
party hereto shall indemnify and hold the other party hereto harmless against
and in respect of any breach by it of the provisions of this Paragraph 10.
11. Miscellaneous.
(a) Buyer shall have the right, upon notice to Seller, to
assign prior to the Closing Date, in whole or in part, its rights and
obligations hereunder to any affiliate of Buyer, including, without limitation,
to any subsidiary of Buyer or other entity controlled by, controlling or under
common control with Buyer, or, subject to Seller's consent, to any other
entity.
(b) From time to time after the Closing Date, Seller
shall, if requested by Buyer, make, execute and deliver to Buyer such
additional assignments, bills of sale, deeds and other instruments of transfer,
as may be
-8-
<PAGE> 9
necessary or proper to transfer to Buyer all of Seller's right, title and
interest in and to the Assets covered by this Agreement. Such efforts and
assistance shall be without cost to Buyer.
(c) This Agreement embodies the entire understanding and
agreement among the parties concerning the subject matter hereof and supersedes
any and all prior negotiations, understandings or agreements in regard thereto.
This Agreement shall be interpreted, governed and construed in accordance with
the laws of the State of Colorado. This Agreement may not be modified or
amended except by an agreement in writing executed by both Buyer and Seller.
(d) Any sales, use, transfer or documentary taxes imposed
in connection with the sale and delivery of the Assets and the rights acquired
by Buyer under this Agreement shall be paid by Buyer.
[EXECUTION PAGE FOLLOWS]
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<PAGE> 10
IN WITNESS WHEREOF the parties have executed this Agreement as of the
day and year first above written.
JONES CABLE INCOME FUND 1-B, LTD.
a Colorado limited partnership
By: Jones Intercbale, Inc.
a Colorado corporation,
as General Partner
By: /s/ JAMES B. O'BRIEN
Title: President
JONES INTERCABLE, INC.,
a Colorado corporation
By: /s/ JAMES B. O'BRIEN
Title: President
(18673)
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<PAGE> 11
EXHIBIT A
to Purchase and Sale Agreement
dated as of August 11, 1995
FRANCHISES
Town of Cordova, South Carolina
. Cable Television Franchise dated March 21, 1983 granted by the Town of
Cordova, South Carolina to Orangeburg Cable TV, Inc.
. Resolution of the Town of Cordova, South Carolina dated November 17,
1986, assigning the cable television franchise to Jones Cable Income
Fund 1-B, Ltd.
. Assignment and Assumption Agreement dated November 25, 1986, between
Orangeburg Cable TV, Inc. (Assignor) and Jones Cable Income Fund 1-B,
Ltd. (Assignee)
. Letter dated March 20, 1995, regarding the initiation of negotiations
for renewal of the franchise
Expiration Date: March 21, 1998
Franchise Fee: 5 percent*
Assignment Provisions: None specified
*In 1987, an oral agreement was made with the Town of Cordova to increase the
franchise fee from 3 percent to 5 percent.
<PAGE> 12
City of Orangeburg, South Carolina
. Franchise Agreement dated May 4, 1995, between the City of Orangeburg
and Jones Cable Income Fund 1-B, Ltd.
Expiration Date: May 31, 2004
Franchise Fee: 5 percent
Assignment Provisions:
Section 12.1 of Agreement states, "No Transfer Without Consent. The Franchise
may not be assigned or transferred, in whole or part, or leased, subleased or
mortgaged by any means without prior consent of the City, which consent shall
not be unreasonably withheld. A change of control or ownership of Grantee
shall be considered a transfer. The term "control(sic) includes actual working
control in whatever manner exercised, and shall be deemed to have occurred upon
acquisition or accumulation by any person of thirty (30%) percent of the shares
of interests in Grantee or Guarantors. Grantee and the proposed transferee
must cooperate in the City's investigation of the transfer and each is required
to provide pertinent documents and respond to reasonable requests for
information, including specifically, requests for information regarding the
financial performance and rates of the Cable System after transfer."
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<PAGE> 13
County of Orangeburg, South Carolina
. Ordinance No. 94-5-4 adopted May 16, 1994, granting a cable television
franchise to Jones Cable Income Fund 1- B, Ltd.
Expiration Date: May 31, 2004
Franchise Fee: 5 percent
Assignment Provisions:
Section 15 of Ordinance No. 94-5-4 states, "Any sale, assignment or transfer of
the rights hereunder shall be made only with the prior consent of the County of
Orangeburg expressed by resolution. The said consent of the County may not be
arbitrarily refused provided, however, that the proposed transferee or assignee
must show financial responsibility to the satisfaction of the County and must
agree to comply with all the provisions of this ordinance; and provided further
that no such consent shall be required for a transfer by trust deed, or a deed
to secure debt or other hypothecation as a whole to secure an indebtedness.
Nothing herein shall prevent Grantee from placing a lien on its system for
purposes of financing and any sale under foreclosure from such financing will
be approved."
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FCC LICENSES
Business Radio KNHQ336
Earth Station WF86
POLE AGREEMENTS/LINE CROSSING AGREEMENTS
1. Pole Attachment Agreement dated November 21, 1967, as amended, with
the City of Orangeburg Department of Public Utilities.
2. License Agreement for Pole Attachment and/or Conduit Occupancy dated
April 27, 1987, as amended, with Southern Bell Telephone and Telegraph
Company for the City of Orangeburg, South Carolina and adjacent areas
surrounding the City.
3. Television Antenna System License Agreement for Use of Poles dated
April 15, 1992, with Tri-County Electric Cooperative, Inc. for
Orangeburg County, South Carolina.
4. License Agreement dated June 20, 1995, with Aiken Electric
Cooperative, Inc.
5. Agreement dated June 28, 1991, with Norfolk Southern Railway Company
for aerial and undergrade wireline crossings located at a point 2,145
feet South of Mile Post SC-79, at or near Orangeburg, South Carolina
on its Piedmont Division.
6. Agreement dated January 3, 1990, with Southern Railway Company for an
aerial wireline crossing located 1,184 feet, more or less, South of
Mile Post SC-84 at Jamison, South Carolina.
7. Agreement dated November 26, 1990, with Southern Railway Company for
an aerial wireline crossing located at a point 1,395 feet, more or
less, South of Mile Post SC-75 at or near Orangeburg, South Carolina.
8. Wireline Crossing Agreement No. RE-93918 dated April 25, 1990, with
CSX Transportation, Inc. for a crossing located at a point 899 feet
northwardly measured along the center line of Licensor's main track
from Milepost AK-372, Orangeburg Subdivision.
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<PAGE> 15
9. Wireline Crossing Agreement No. RE-93188 dated December 29, 1989, with
CSX Transportation, Inc. for a crossing located at a point 1,556 feet
southwardly measured along the center line of Licensor's main track
from Milepost AK-375, Orangeburg Subdivision.
10. Wireline Crossing Agreement No. CSX-021916 dated April 19, 1994, with
CSX Transportation, Inc. for a crossing located at a point 2,820 feet
southwardly measured along the center line of Licensor's main track
from Milepost AK-375, at or near the City of Orangeburg, County of
Orangeburg, South Carolina.
11. Wireline Crossing Agreement No. CSX-021917 dated April 19, 1994, with
CSX Transportation, Inc. for a crossing located at a point 2,286 feet
southwestwardly measured along the center line of Licensor's main
track from Milepost AK-374, at or near the City of Orangeburg, County
of Orangeburg, South Carolina.
INSTALLATION, SERVICE AND WIRING AGREEMENTS
Oral access agreements with the following multiple dwelling units:
Glenfield Apts. 111 units
2450 Columbia Rd.
Orangeburg Manor 97 units
1200 Wolfe Trail
St. Paul Wm. Ch. 77 units
203 Fletcher St. - 1690 Fletcher St.
Roosevelt Apts. 202 units
101 Roosevelt - 1418
Malibu Apts. 59 units
NE Green St. Apt. 101-904
Queens Village 32 units
A-1 NE Queens Village - H-4 NE Queens Village
Pecan Grove 67 units
1820 NE St. Mathews Rd. - A101-D406
Corona Apts. 84 units
1A NE Corona Apt. - 11H NE Corona Apt.
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<PAGE> 16
Southland Apts. 87 units
1135 Southland - 1295 Southland
Emory Towers 44 units
153 SE Russell St. Apt. 21-82
Northview Hills Apt. 35 units
1A Northview Hills - 6F Northview Hills
Threson Apts. 49 units
266 SW Threson St. - 398 SW Threson St.
Jolley Acres 17 units
1180 SW Wolfe Trail - 1180 SW Wolfe Trail
Clarendon Place 31 units
101 Clarendon Pl. - 704 Clarendon Pl.
Park Place 14 units
104 Park St. - 150 Park St.
Hillcrest Apts. 12 units
1727 NE St. Matthews Rd. - 1749 NE St. Matthews Rd.
Evergreen Circle 15 units
1104 Evergreen Cir. - 1182 Evergreen Cir.
Baugh Street 46 units
1653 Baugh St. - 1693 Baugh St.
Murray Road 19 units
237 SW Murray Rd. - 263 SW Murray Rd.
Douglas McArthur 37 units
1244 Douglas McArthur - 1291 Douglas McArthur
Marshall Apts. 41 units
1306 NE Marshall Apt. - 1362 NE Marshall Apt.
Lands End 23 units
1314 NE Lands End Rd. - 1373 NE Lands End Rd.
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B - Street 25 units
1716 B Street - 1795 B Street
Fred Street 21 units
1705 Fred St. - 1798 Fred St.
Cotton Ball Apts. 14 units
2590 Bamberg Rd.
Waring St. 19 units
128 NW Waring St. - 328 NW Waring St.
Palmetto Pl. Apts. 63 units
A-1 to M-4
Riverside Apts. 43 units
612 Riverside Dr. - 678 Riverside Dr.
Amelia Village 43 units
410 Amelia Vil. - 496 Amelia Vil.
Arbord Points Apts. 23 units
453 Murray Rd. - 573 Murray Rd.
Sifly St. 14 units
925 Sifly - 989 Sifly
Wannamaker St. 12 units
253 NE Wannamaker St. - 265 NE Wannamaker St.
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<PAGE> 18
REAL PROPERTY LEASED
1. Lease Agreement (headend site) dated December 28, 1982, between Stuart
Hyman Marcus, Trustee, and Samuel F. Reid, Jr., and Thomas B. Gue, as
Co-Executors and Trustees, and Orangeburg Cable TV, Inc.; Assignment
and Assumption Agreement dated November 25, 1986, assigning the Lease
from Orangeburg Cable TV, Inc. to Jones Cable Income Fund 1-B, Ltd.
Description of Property:
All that certain piece, parcel or lot of land, with any improvements
thereon, situate, lying and being in School District No. 5, off Goff
Avenue Extension, containing 3.89 acres, as shown on a plat by B.
Reese Earley, approved by H. Frank O'Cain, C.E., dated September 8 and
9, 1967, and recorded in the office of the Clerk of Court for
Orangeburg County in Plat Book 26, at page 20, and bounded and
measuring as follows: On the North by property now or formerly of the
Lessors and measuring thereon Four hundred ninety-nine and one-tenth
(499.1) feet; on the East and Southeast by property now or formerly of
the Lessors and measuring thereon Four hundred ninety-eight and
one-tenth (498.1) feet; on the Southwest by Lots No. 25 and 34,
property now or formerly of Rogers; a proposed street; and by property
now or formerly of Brailsford and measuring collectively thereon Three
hundred sixty-nine and two-tenths (369.2) feet; and on the West by
property now or formerly of the Lessors and measuring thereon Two
hundred ninety-two and six-tenths (292.6) feet.
The property hereinabove described does not include any portion of
Lots No. 13, 14, 15 and 16 in Block "K", on a plat by Clifton P.
Riley, R.L.S., dated October 1, 1969, and recorded in the office of
the Clerk of Court for Orangeburg County in Plat Book 31, at page 88.
The foregoing Lease has not been recorded in the real property records
of Orangeburg County, South Carolina.
Expiration Date: December 31, 1998
Rental Payment: $3,200/year.
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<PAGE> 19
2. Lease Agreement (office space) dated January 6, 1984, between the
Gressette Family Partnership and Barbara L. Mirmow and Orangeburg
Cable T.V., Inc.; Assignment dated January 6, 1984, assigning the
Lease to First National Bank in Orangeburg as security for a note and
mortgage of the Gressette Family Partnership; Letter dated November 7,
1986, whereby the Gressette Family Partnership consented to assignment
of the Lease from Orangeburg Cable T.V., Inc. ("Orangeburg Cable") to
Jones Cable Income Fund 1-B, Ltd.("Jones"); Letter dated November 7,
1986, whereby Barbara L. Mirmow consented to assignment of the Lease
from Orangeburg Cable to Jones; Letter dated November 7, 1986, whereby
First National Bank consented to assignment of the Lease from
Orangeburg Cable to Jones; Assignment and Assumption Agreement dated
November 25, 1986, assigning the Lease from Orangeburg Cable to Jones.
NOTE: Lease does not require consent to assign.)
Description of Property:
All that certain piece, parcel or lot of land, with any improvements
thereon, situate, lying and being in the City of Orangeburg,
Orangeburg County, South Carolina, bounded and measuring as follows:
On the Northeast by Broughton Street and measuring thereon Fifty-Two
(52) feet; on the Southeast by property now or formerly of Ralph
Thompson and by property now or formerly of Sandel and measuring
thereon Three hundred twenty-three feet, six inches (323 feet, 6
inches); on the Southwest by Cuttino Street and measuring thereon
Forty-Five (45) feet; and on the Northwest by Hampton Street and
measuring thereon Three hundred twenty (320) feet.
This being the same property conveyed to Gressette Family Partnership
and Barbara L. Mirmow by deed of Mary S. Gressette dated November 7,
1983, and recorded in the office of the Clerk of Court for Orangeburg
County in Deed Book 491, at page 981, on January 3, 1984.
The foregoing Lease was recorded in the real property records of
Orangeburg County, South Carolina on July 11, 1988 at Book 537, Page
605.
Expiration Date: December 31, 1999
Rental Payment: $2,000/month.
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<PAGE> 20
MISCELLANEOUS CONTRACTS AND AGREEMENTS
1. Easement and Right-of-Way dated October 21, 1993, with the City of
Orangeburg, South Carolina for the area alongside the roadway leading
to the entrance of the City Maintenance Facility.
2. Right-of-Way for Cable Television dated May 1, 1981, as amended,
granted by The Gressette Company, Inc. and Stewart H. Marcus, as
Trustee, for a certain strip of land, 20 feet in width, lying in the
North Brookdale Subdivision, near the City and County of Orangeburg,
South Carolina.
3. Agreement dated November 21, 1994, with Flight Trac, Inc. for an
aerial signal leakage survey.
4. Contract dated October 15, 1992, with Palmetto Construction Company
for aerial and underground construction services.
5. Agreement dated May 12, 1994, with Edisto Services, Inc. for cable
television installation services.
6. Sales and Audit Agreement effective February 15, 1995, with Cable
Sales, Inc.
7. Sales, Audit and Collection Agreement effective May 1, 1992, with
Edisto Services, Inc.
8. Unlimited Call Service Agreement effective December 1, 1985, with
Automated Business Systems, Inc. for copier/fax.
MUST CARRY/RETRANSMISSION AGREEMENTS
1. Letter dated April 29, 1993, notifying station of carriage pursuant to
its must carry status (WRLK)
2. Letter dated June 15, 1993, electing must carry status (WOLO)
3. Letter dated June 14, 1993, electing must carry status (WLTX)
4. Letter dated September 20, 1993, granting retransmission consent (WIS)
5. Fox Broadcast Affiliate Retransmission Consent Agreement dated
February 22, 1994 (WACH)
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<PAGE> 21
6. Letter dated August 16, 1993, granting retransmission consent (WCSC)
7. Retransmission Consent Agreement dated August 4, 1993 (WCIV)
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<PAGE> 1
EXHIBIT 2.11
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of the 11th day of August,
1995, by and between Cable TV Fund 12- BCD Venture, a Colorado general
partnership ("Seller"), and Jones Intercable, Inc., a Colorado corporation
("Buyer").
RECITALS
A. Seller owns and operates a cable television system in Tampa,
Florida (the "System").
B. Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the System upon the terms and conditions set forth in this
Agreement.
AGREEMENT
In consideration of the mutual promises contained in this Agreement
and other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set
forth in this Agreement, Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase from Seller, on the Closing Date (as
defined in Paragraph 9 hereof), all of Seller's interest in the System and the
Assets (as defined in Paragraph 2 hereof) then being transferred and sold
pursuant hereto, free and clear of all security interests, liens, pledges,
charges and encumbrances.
2. Assets.
(a) The assets to be conveyed to Buyer hereunder shall
consist of all of the assets and properties of Seller, whether real, personal,
tangible or intangible, of whatever description and wherever located, now owned
or used by Seller solely in connection with Seller's ownership or operation of
the System, including all additions made between the date hereof and the
Closing Date, to the
<PAGE> 2
end that all of Seller's assets owned on the Closing Date which are used or
owned solely in connection with Seller's ownership or operation of the System
shall be sold and transferred to Buyer (collectively, the "Assets"). The
Assets shall include, without limitation:
(i) all of Seller's towers, tower equipment,
antennas, aboveground and underground cable,
distribution systems, headend amplifiers, line
amplifiers, earth satellite receive stations and
related equipment, microwave equipment, testing
equipment, motor vehicles, office equipment,
furniture and fixtures, supplies, inventory and other
physical assets owned or used by Seller solely in
connection with Seller's ownership or operation of
the System;
(ii) the franchises, leases, agreements, permits,
consents, licenses and other contracts, pole line or
joint pole agreements, underground conduit
agreements, agreements for the reception or
transmission of signals by microwave, easements,
rights-of-way and construction permits, if any, and
any other obligations and agreements between Seller
and suppliers and customers, which are owned or used
by Seller solely in connection with Seller's
ownership and operation of the System, substantially
all of which are listed onExhibit A attached hereto;
(iii) the real property owned and used solely in
connection with the System;
(iv) all accounts receivable of Seller arising in
connection with the System;
(v) all engineering records, files, data,
drawings, blueprints, schematics, maps, reports,
lists and plans and processes owned or developed by
or for Seller and intended for use solely in
connection with the System;
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<PAGE> 3
(vi) all promotional graphics, original art work,
mats, plates, negatives and other advertising or
related materials developed by or for Seller and
intended for use solely in connection with the
System; and
(vii) all of Seller's correspondence files, lists,
records and reports concerning customers and
prospective customers of the System, concerning
television stations whose transmissions are or may be
carried as a part of the System and concerning all
dealings with Federal, state, and local regulatory
agencies relating to the ownership or operation of
the System, including all reports filed by or on
behalf of Seller with the Federal Communications
Commission (the "FCC") in connection with the System
and any Statements of Account of the System filed by
or on behalf of Seller with the United States
Copyright Office in connection with the System.
(b) The following properties and assets relating to the
System and its business operations shall be retained by Seller and shall not be
sold, assigned or transferred to Buyer:
(i) cash or cash equivalents on hand or in banks;
(ii) insurance policies and rights and claims
thereunder;
(iii) all claims, rights and interest in and to any
refunds for federal, state or local income or other
taxes or fees of any nature whatsoever for periods
prior to the Closing Date, including without
limitation, fees paid to the United States Copyright
Office; and
(iv) assets disposed of in the normal course of
business or with the written consent of Buyer between
the date hereof and the Closing Date.
3. Purchase Price. Subject to the adjustments to be made in
accordance with Paragraph 4 hereof, the total purchase price for the Assets
shall
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<PAGE> 4
be $110,395,667 (the "Purchase Price"), which Purchase Price represents the
average of three independent appraisals of the System. The Purchase Price
shall be payable to Seller at Closing in cash, by cashier's check or by wire
transfer of federal funds to a bank or banks designated by Seller.
4. Adjustments. All adjustments provided for herein with respect
to this transaction shall increase or decrease the Purchase Price, as
appropriate, and shall be made as of the close of business (5:00 p.m., Denver
time) on the Closing Date (the "Adjustment Time").
(a) Rent, pole rents, franchise fees, taxes, power and
utility fees and deposits, insurance premiums, licenses, customer prepayments
and deposits, and other prepayments and amounts due shall be prorated and
debited or credited to Seller or Buyer, as applicable. With respect to
subscriber accounts receivable, Seller shall be entitled to an amount equal to
the sum of (i) 90% of the face amount of all accounts receivable that are
current or 30 days or less past due as of the Adjustment Time, plus (ii) 80% of
the face amount of all accounts receivable that are between 31 days and 60 days
past due as of the Adjustment Time. For purposes of making "past due"
calculations, the monthly billing statements of Seller shall be deemed to be
due and payable on the first day of the month during which the service to which
such billing statements relate is provided.
(b) The Purchase Price shall be reduced by any accounts
payable, accrued expenses and vehicle lease obligations for which Seller would
otherwise be liable hereunder, but for which the obligation for payment is
assumed by Buyer.
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<PAGE> 5
(c) Seller and Buyer shall jointly determine the
adjustments required by this Paragraph 4 at the Closing. The net amount to
which Buyer or Seller, as the case may be, is entitled pursuant hereto shall be
thereupon paid by Buyer or Seller, as the case may be, by an adjustment to the
Purchase Price. All adjustments made at Closing shall be tentative and shall
be subject to final adjustment within 90 days after Closing.
5. Assumption of Liabilities. Buyer shall assume and discharge
(i) all debts, liabilities and obligations of Seller arising with respect to
periods subsequent to the Closing Date under any franchise, license, permit,
lease, instrument or agreement transferred to Buyer hereunder, and (ii) with
respect to periods prior to and including the Closing Date, all obligations of
Seller to the extent that the Purchase Price is reduced pursuant to Paragraph
4(b) hereof to reflect Buyer's assumption of such obligations. Buyer shall
indemnify and hold harmless Seller from and against any and all damages, costs,
claims and expenses ("Claims") arising by reason of the ownership, operation or
control of the System after the Closing Date. Anything herein to the contrary
notwithstanding, there is hereby excluded from the Assumed Obligations, and
Seller shall retain and discharge, and indemnify and hold Buyer harmless from
and against, any and all Claims to the extent they arise from (a) any debt,
liability or obligation arising with respect to periods prior to the Closing
Date for which no reduction of the Purchase Price has been made pursuant to
Paragraph 4(b) hereof, or (b) any debt, liability or obligation of Seller not
expressly assumed hereunder, whenever arising.
6. Seller's Representations. Seller hereby represents and
warrants to Buyer that:
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<PAGE> 6
(a) Seller is a partnership duly organized and validly
existing under the laws of the State of Colorado. Seller has all requisite
partnership power and authority to own and operate its properties and to carry
on its business as now and where being conducted.
(b) All necessary consents and approvals have been
obtained by Seller for the execution and delivery of this Agreement. The
execution and delivery of this Agreement by Seller has been duly and validly
authorized and approved by all necessary action of Seller. This Agreement is a
valid and binding obligation of Seller, enforceable against it in accordance
with its terms.
(c) Subject to the receipt of any required consents,
Seller has full legal power, right and authority to sell and convey to Buyer
legal and beneficial title to the Assets, and Seller's sale to Buyer shall
transfer good and marketable title thereto, free and clear of all security
interests, liens, pledges, charges and encumbrances of every kind.
(d) The execution, delivery and performance of this
Agreement by Seller will not violate any provision of law and will not, with or
without the giving of notice or the passage of time, conflict with or result in
any breach of any of the terms or conditions of, or constitute a default under,
any mortgage, agreement or other instrument to which Seller is a party or by
which Seller, the Assets or the System are bound. The execution, delivery and
performance of this Agreement by Seller will not result in the creation of any
security interest, lien, pledge, charge or encumbrance upon the Assets or the
System.
7. Conditions Precedent to Buyer's Obligations. The obligations
of Buyer under this Agreement with respect to the purchase and sale of the
Assets
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<PAGE> 7
shall be subject to the fulfillment on or prior to the Closing Date of each of
the following conditions:
(a) All of the representations and warranties by Seller
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date. Seller shall have complied with and performed
all of the agreements, covenants and conditions required by this Agreement to
be performed or complied with by it on or prior to the Closing Date.
(b) Seller shall have delivered to Buyer such
instruments, consents and approvals of third parties as are necessary to
transfer the Assets to Buyer pursuant to this Agreement.
(c) The statutory waiting period applicable to this
Agreement and the transactions contemplated hereby under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have been
terminated or shall have expired.
8. Conditions Precedent to Seller's Obligations. The obligations
of Seller under this Agreement with respect to the purchase and sale of the
Assets shall be subject to the fulfillment on or prior to the Closing Date of
each of the following conditions:
(a) The statutory waiting period applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have
been terminated or shall have expired.
(b) Buyer shall have delivered the Purchase Price to
Seller in accordance with Paragraph 3 hereof.
9. Closing. The closing hereunder (the "Closing") shall be held
in the offices of Seller, 9697 East Mineral Avenue, Englewood, Colorado 80112,
on
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<PAGE> 8
such date or dates as the parties hereto shall mutually agree (the "Closing
Date"), but in no event after June 30, 1996. At the Closing, all cash, checks,
notes, deeds, bills of sale, certificates of title, assignments and assumptions
and other instruments and documents referred to or contemplated by this
Agreement shall be exchanged by the parties hereto.
10. Brokerage. Seller represents and warrants to Buyer that
Seller will be solely responsible for, and pay in full, any and all brokerage
or finder's fees or agent's commissions or other like payment owing in
connection with Seller's use of any broker, finder or agent in connection with
this Agreement or the transactions contemplated hereby. Buyer represents and
warrants to Seller that Buyer will be solely responsible for, and pay in full,
any and all brokerage or finder's fees or agent's commissions or other like
payment owing in connection with Buyer's use of any broker, finder or agent in
connection with this Agreement or the transactions contemplated hereby. Each
party hereto shall indemnify and hold the other party hereto harmless against
and in respect of any breach by it of the provisions of this Paragraph 10.
11. Miscellaneous.
(a) Buyer shall have the right, upon notice to Seller, to
assign prior to the Closing Date, in whole or in part, its rights and
obligations hereunder to any affiliate of Buyer, including, without limitation,
to any subsidiary of Buyer or other entity controlled by, controlling or under
common control with Buyer, or, subject to Seller's consent, to any other
entity.
(b) From time to time after the Closing Date, Seller
shall, if requested by Buyer, make, execute and deliver to Buyer such
additional assignments, bills of sale, deeds and other instruments of transfer,
as may be
-8-
<PAGE> 9
necessary or proper to transfer to Buyer all of Seller's right, title and
interest in and to the Assets covered by this Agreement. Such efforts and
assistance shall be without cost to Buyer.
(c) This Agreement embodies the entire understanding and
agreement among the parties concerning the subject matter hereof and supersedes
any and all prior negotiations, understandings or agreements in regard thereto.
This Agreement shall be interpreted, governed and construed in accordance with
the laws of the State of Colorado. This Agreement may not be modified or
amended except by an agreement in writing executed by both Buyer and Seller.
(d) Any sales, use, transfer or documentary taxes imposed
in connection with the sale and delivery of the Assets and the rights acquired
by Buyer under this Agreement shall be paid by Buyer.
[EXECUTION PAGE FOLLOWS]
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<PAGE> 10
IN WITNESS WHEREOF the parties have executed this Agreement as of the
day and year first above written.
CABLE TV FUND 12-BCD VENTURE,
a Colorado joint venture
By: Cable TV Fund 12-B, Ltd.,
a Colorado limited partnership
By: Cable TV Fund 12-C, Ltd.,
a Colorado limited partnership
By: Cable TV Fund 12-D, Ltd.,
a Colorado limited partnership
By: Jones Intercable, Inc.,
their General Partner
By: /s/ JAMES B. O'BRIEN
Title: President
JONES INTERCABLE, INC.,
a Colorado corporation
By: /s/ JAMES B. O'BRIEN
Title: President
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<PAGE> 11
EXHIBIT A
to Purchase and Sale Agreement
dated as of August 11, 1995
FRANCHISES
City of Tampa, Florida
. Tampa Cable Communications Ordinance No. 7864-A dated January 28, 1982
providing for the franchising and regulation of cable television
systems within the City of Tampa
. Franchise Agreement dated December 30, 1982, between the City of
Tampa, Florida and Tampa Cable Television, Inc.
. Resolution No. 2787-H dated December 30, 1982, granting a cable
television franchise to Tampa Cable Television
. Resolution No. 1153-I dated October 2, 1986, authorizing the transfer
of the Franchise to Jones Intercable, Inc. and/or one or more of its
controlled affiliates and amending the Franchise Agreement
. Franchise Transfer, Acceptance and Consent to Transfer dated October
6, 1986, between Tampa Cable Television, Inc., Jones Intercable, Inc.
and/or one or more of its controlled affiliates and the City of Tampa
. Amendment to Franchise Agreement dated October 6, 1986, between the
City of Tampa, Florida and Tampa Cable Television, Inc. and approved
by Jones Intercable, Inc.
. Resolution No. 88-350 dated February 25, 1988, approving the transfer
in mortgage of the cable Franchisee's property used for the operation
of its cable television system serving the City of Tampa to secure
financing necessary for the acquisition, operation and improvement of
the cable television system
. Second Amendment to Franchise Agreement dated September 1, 1994,
between the City of Tampa, Florida and Cable TV Fund 12-BCD Venture
. Letter dated March 9, 1995, regarding the initiation of negotiations
for renewal of the franchise
Expiration Date: December 30, 1997
Franchise Fee: 5 percent
Assignment Provisions:
Article IV, Section 15 of Ordinance No. 7864-A states, "Transfer of Franchise
"A. A franchise granted under this ordinance shall be a privilege to be held
in personal trust by the Grantee. It shall not be assigned, transferred, sold
or disposed of, in whole
<PAGE> 12
or in part, by voluntary sale, sale and leaseback, merger, consolidation, or
otherwise or by forced or involuntary sale, without prior consent of the Mayor,
as authorized by resolution of the Council, and then on only such conditions as
may be therein prescribed. Any sale, transfer or assignment not made according
to the procedures set forth in this ordinance shall render the franchise void.
The sale, transfer, or assignment in bulk of the major part of the tangible
assets of the Grantee shall be considered an assignment and shall be subject to
the provisions of this Section.
"B. Any sale, transfer or assignment authorized by the City shall be made by a
bill of sale or similar document, an executed copy of which shall be filed with
the City within thirty (30) days after any such sale, transfer or assignment.
The City shall not withhold its consent unreasonably; provided, however, the
proposed assignee agrees to comply with all the provisions of this ordinance
and the franchise and reasonable amendments thereto, and must be able to
provide proof of legal, technical, financial, and character qualifications as
determined by the City.
"C. No such consent shall be required for a transfer in trust, mortgage, or
other instrument of hypothecation, in whole or in part, to secure an
indebtedness except when such hypothecation shall exceed seventy-five percent
(75%) of the fair market value (as defined in Section 1, Article II) of the
property used by the Grantee in the operation of its cable television system.
Prior consent of the City shall be required for such transfer and said consent
shall not be withheld unreasonably.
"D. Prior approval of the City shall be required where ownership or control of
ten percent (10%) or more of the right of control of the Grantee is acquired
during the term of the franchise in any transaction or series of transactions
by a person or group of persons acting in concert, none of whom owned or
controlled ten percent (10%) or more of such right of control, singularly or
collectively on the effective date of the franchise. By its acceptance of the
franchise, the Grantee specifically grants and agrees that any such acquisition
occurring without prior approval of the city shall render the franchise void.
"E. The consent of the City to any sale, transfer, lease, trust, mortgage, or
other instrument of hypothecation shall not constitute a waiver or release of
any of the rights of the City under this ordinance and the franchise."
Section 1 of Resolution No. 88-350 states, "That the transfer in mortgage of
the Cable Franchisee's property used for the operation of the System to secure
financing necessary for the acquisition, operation and improvement of the
System is hereby approved."
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FCC LICENSES
Business Radio KNGR354
Business Radio WNAS530
Earth Station E6439
Microwave Radio Station WNER856
Microwave Radio Station WNTT650
POLE AGREEMENTS/LINE CROSSING AGREEMENTS
1. Cable Company Pole Lease Agreement dated November 1, 1989, with GTE
Florida Incorporated for the City of Tampa, Florida.
2. Attachment Agreement dated May 10, 1983, as amended, with Tampa
Electric Company for the City of Tampa, Florida.
3. Hillsborough County Use Permit dated March 9, 1984, for construction
and maintenance of aerial CATV facilities at S. Manhattan Avenue,
Section 33, Township 29, Range 18, parallel to and crossing S.
Manhattan Avenue between Talcon Street and Sevilla Street.
4. Hillsborough County Use Permit dated March 9, 1984, for construction
and maintenance of aerial CATV facilities at S. Manhattan Avenue,
Section 33, Township 29, Range 18, crossing S. Manhattan Avenue at
Talcon Street.
5. Hillsborough County Use Permit dated March 9, 1984, for construction
and maintenance of aerial CATV facilities at S. Manhattan Avenue,
Section 33, Township 29, Range 18, crossing S. Manhattan Avenue at
Santiago Street.
6. Hillsborough County Use Permit dated March 9, 1984, for construction
and maintenance of aerial CATV facilities at S. Manhattan Avenue,
Section 33, Township 29, Range 18, parallel to and crossing S.
Manhattan Avenue between Corona Street and Bay Vista Avenue.
7. Hillsborough County Use Permit dated March 9, 1984, for construction
and maintenance of aerial CATV facilities at Manhattan Avenue, Section
4, Township 30, Range 18, between Euclid Avenue and Fairoaks Avenue.
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8. State of Florida Department of Transportation Utility Permit No.
10-290 dated March 1, 1984, for construction, operation and
maintenance of CATV facilities crossing State Road 600 between
Santiago Street and Talcon Street, Section 10130, from MP 6.520 to MP
6.711, in the City of Tampa, Hillsborough County, Florida.
9. State of Florida Department of Transportation Utility Permit No.
U-10-93-0070P dated September 3, 1993, for construction, operation and
maintenance of aerial and underground TV facilities crossing State
Road 93-A Frontage Road, Section 10075, MP/Station 36.185, in the City
of Tampa, Hillsborough County, Florida.
10. State of Florida Department of Transportation Utility Permit No.
94-H-796-0100 dated September 23, 1994, for construction, operation
and maintenance of aerial and underground fiber optic cable facilities
crossing State Road 60, Section 10140, from MP/Station 0.026 to 0.641,
in the City of Tampa, Hillsborough County, Florida.
11. State of Florida Department of Transportation Utility Permit No.
94-H-796-0093 dated September 27, 1994, for the installation of a
fiber optic cable into an existing TV conduit crossing State Road 93,
Section 10190, MP/Station 6.185, in the City of Tampa, Hillsborough
County, Florida.
12. State of Florida Department of Transportation Utility Permit No.
94-H-796-0104 dated October 10, 1994, for construction, operation and
maintenance of underground TV facilities crossing State Road 60,
Section 10140, MP/Station 0.641, in the City of Tampa, Hillsborough
County, Florida.
13. State of Florida Department of Transportation Utility Permit No.
94-H-796-0101 dated October 14, 1994, for construction, operation and
maintenance of aerial CATV facilities crossing S.R. 589 on existing TV
facilities, Section 10140, MP/Station 8.00, in the City of Tampa,
Hillsborough County, Florida.
14. State of Florida Department of Transportation Utility Permit No.
94-H-796-0104 dated October 14, 1994, for construction, operation and
maintenance of aerial and underground TV facilities crossing State
Road 589, Section 10140, from MP/Station 8.938 to 9.057, in the City
of Tampa, Hillsborough County, Florida.
15. State of Florida Department of Transportation Utility Permit No.
94-H-796-0008 dated November 16, 1994, for construction, operation and
maintenance of aerial TV crossing State Road 60, Section 10140,
MP/Station 5.131, in the City of Tampa, Hillsborough County, Florida.
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16. State of Florida Department of Transportation Utility Permit No.
95-H-796-0035 dated January 10, 1995, for construction, operation and
maintenance of aerial cable TV crossing S.R. 574, Section 10340,
MP/Station 4.805, in the City of Tampa, Hillsborough County, Florida.
17. Utility Relocation Agreement dated December 16, 1986, with the State
of Florida Department of Transportation for cable television
facilities located at State Road 685 (Tampa Street) at Highlands
Street and Woodlawn Avenue in Hillsborough County, Florida.
18. Application and Permit for Construction and Maintenance Operations
Within Public Rights of Way dated November 30, 1984, with the City of
Tampa for the installation of cable television facilities at Hyde Park
Street from Bayshore Ramp to Davis Islands.
19. Application and Permit for Construction and Maintenance Operations
Within Public Rights of Way dated October 10, 1985, with the City of
Tampa for the installation of cable television facilities at Reo
Street from Gray Street to Executive Drive.
20. Wireline Crossing Agreement No. CSX-019378 dated June 10, 1993, with
CSX Transportation, Inc. for the installation and maintenance of cable
television facilities at a point 2,966 feet southwardly measured along
the center line of Licensor's main track(s) from Milepost A-883, Tampa
Terminal Subdivision at or near the City of Tampa, Hillsborough
County, Florida.
21. Wireline Crossing Agreement No. CSX-018588 dated April 19, 1993, as
amended, with CSX Transportation, Inc. for the installation and
maintenance of cable television facilities at a point 696 feet
westwardly measured along the center line of Licensor's main track(s)
from Milepost A-883, Tampa Terminal Subdivision at or near the City of
Tampa, Hillsborough County, Florida.
22. General Agreement for CATV Wire Line Crossings dated December 13,
1983, as amended, with Seaboard System Railroad, Inc. (now in the name
CSX Transportation, Inc.) for the installation and maintenance of
cable television facilities at various points within the State of
Florida.
23. Utility Permit dated June 9, 1995, with the State of Florida
Department of Transportation for a joint trench for underground
construction along Kennedy Boulevard between Florida and Pierce. NOTE:
Permit has been signed by Jones, but is still being processed for
signature by DOT.
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24. Utility Permit dated March 21, 1995, with the State of Florida
Department of Transportation for an aerial crossing over Tampa Street
at West Estelle. NOTE: Permit has been signed by Jones, but is still
being processed for signature by DOT.
25. Utility Permit dated April 3, 1995, with the State of Florida
Department of Transportation to pull fiber optic thru existing conduit
crossing under I-275 on N. Marion St. NOTE: Permit has been signed by
Jones, but is still being processed for signature by DOT.
26. Utility Permit dated April 3, 1995, with the State of Florida
Department of Transportation to overlash fiber optic cable to existing
plant crossing Florida Ave. at Fortune. NOTE: Permit has been signed
by Jones, but is still being processed for signature by DOT.
27. Utility Permit dated April 3, 1995, with the State of Florida
Department of Transportation to overlash fiber optic cable to existing
plant crossing Florida Ave. at Estelle. NOTE: Permit has been signed
by Jones, but is still being processed for signature by DOT.
28. Utility Permit dated March 31, 1995, with the State of Florida
Department of Transportation to overlash fiber optic cable to existing
plant crossing Florida Ave. between Fortune and Tyler. NOTE: Permit
has been signed by Jones, but is still being processed for signature
by DOT.
29. Utility Permit dated April 20, 1995, with the State of Florida
Department of Transportation for aerial and underground fiber optic
line at SR 45 - 20th Ave. North to Jackson St. NOTE: Permit has been
signed by Jones, but is still being processed for signature by DOT.
30. Utility Permit dated March 20, 1995, with the State of Florida
Department of Transportation for aerial and underground fiber optic
cable to cross and parallel Crosstown Expressway from Bayshore Blvd.
to Tampa St. NOTE: Permit has been signed by Jones, but is still
being processed for signature by DOT.
31. Utility Permit dated March 8, 1995, with the State of Florida
Department of Transportation for an aerial crossing along North Blvd.
NOTE: Permit has been signed by Jones, but is still being processed
for signature by DOT.
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32. Utility Agreement (undated) with the State of Florida Department of
Transportation to relocate facilities along SR 884 from Colonial Blvd.
to Metro Parkway. NOTE: Agreement has been signed by Jones, but is
still being processed for signature by DOT.
33. Utility Agreement (undated) with the State of Florida Department of
Transportation to relocate facilities along SR 574 from Dale Mabry to
Armenia. NOTE: Agreement has been signed by Jones, but is still being
processed for signature by DOT.
34. Utility Agreement (undated) with the State of Florida Department of
Transportation to relocate facilities along SR 580 from Eisenhower
Blvd. to Dale Mabry Hwy. NOTE: Agreement has been signed by Jones,
but is still being processed for signature by DOT.
35. Utility Permit dated January 6, 1995, with the State of Florida
Department of Transportation to install fiber optic cable in conduit
purchased from Intermedia Communications of Florida, Inc. along
Courtney Campbell Pkwy. from Rocky Point Dr. to Memorial Hwy. NOTE:
Permit has been signed by Jones, but is still being processed for
signature by DOT.
36. Utility Relocation Agreement dated September 1, 1994, with the State
of Florida Department of Transportation. NOTE: Agreement has been
signed by Jones, but is still being processed for signature by DOT.
INSTALLATION, SERVICE AND WIRING AGREEMENTS
1. Agreement for Harbour Island Cable Television Channel dated March 3,
1995, with Harbour Island Inc. for installation of equipment and
channel space to distribute audio, video and character generated data
over a dedicated cable channel.
2. Agreement for Exclusive Television Programming Services dated May 28,
1986, with Consolidated Capital Properties III to provide cable
television service to Brittany Luxury Apartments.
3. Agreement dated January 20, 1986, as amended, with Browning Properties
Company to provide cable television service to Broadmoor Apartments.
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4. Easement Agreement dated October 19, 1990, as amended, with Ronald
Benderson, Randall Benderson and David H. Baldauf as Trustees under a
Trust Agreement dated October 14, 1985 known as the Benderson 85-1
Trust to provide cable television service to Brookside Apartments.
5. Agreement dated July 16, 1986, as amended, with Ralph Kaul and Emerson
G. Reinsch to provide cable television service to Colonial Village
Apartments.
6. Agreement dated March 27, 1986, as amended, with Lookout Pointe
Associates Ltd. to provide cable television service to Lookout Pointe
Apartments.
7. Easement Agreement dated December 3, 1990, as amended, with River
Hills Dr. Associates, Ltd. to provide cable television service to
River Del Rey/River Walk Apartments.
8. SMATV Agreement dated March 26, 1986, with Smuggler's Cove Apts. to
provide cable television service.
9. Satellite Master Antenna Television System Agreement dated May 13,
1985, as amended, with Interbay Colony Apts., Ltd. and Westminster
Chase Apts., Ltd. to provide cable television service to Westminster
Chase Apartments.
10. Agreement dated March 30, 1987, as amended, with Cheshire Management,
Ltd. to provide cable television service to Woodhaven Apartments a/k/a
Cedar Key.
11. CATV Service Agreement dated March 15, 1985, with Adalia Bayfront
Condominium Association Inc. to provide cable television service to
Adalia Condominiums.
12. Cable Television Installation and Service Subscription Agreement dated
June 11, 1993, with Adeste Condominium Assoc., Inc. to provide cable
television service to Adeste Condominiums.
13. Cable Television Installation and Service Subscription Agreement dated
August 17, 1988, with Mike Patel to provide cable television service
to The Alamo Motel.
14. Cable Television Installation and Service Subscription Agreement dated
December 6, 1989, with Parimal A. Butala to provide cable television
service to The Alaska Motel.
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15. Cable Television Installation and Service Subscription Agreement dated
November 15, 1989, with Ghanshyam L. Patel to provide cable
television service to the American Motel.
16. Cable TV Service Subscription Agreement dated March 21, 1988, with
Natu Amin to provide cable television service to The Antigua Motel.
17. Installation and CATV Service Agreement dated November 18, 1985, with
Robert G. Grieves to provide cable television service to Arbour House
Apts.
18. Cable Television Installation and Service Subscription Agreement dated
November 17, 1989, with Bhartat Patel to provide cable television
service to Base Motel.
19. Cable Television Installation Agreement dated July 31, 1987, with the
Bayshore Diplomat Condominium Association, Inc. to provide cable
television service to the Bayshore Diplomat Condominium.
20. Cable Television Installation and Service Subscription Agreement dated
January 18, 1989, with Mike Patel to provide cable television service
to The Bayview Motel.
21. Cable Television Installation and Service Subscription Agreement dated
August 14, 1991, with Chen Lin to provide cable television service to
the Bel-Air Motel.
22. Cable TV Service Subscription Agreement dated July 7, 1987, with Andy
Patel to provide cable television service to the Belmont Motel.
23. Cable Television Installation and Service Subscription Agreement dated
January 17, 1990, with Gremar Associates to provide cable television
service to the Best Western Safari Inn.
24. Cable Television Installation Agreement dated June 14, 1987, with CLM
Management Company to provide cable television service to the Teresa
Terrace Apartments.
25. Cable Television Installation and Service Subscription Agreement dated
October 4, 1991, with Vasant Patel to provide cable television service
to Casa Loma Motel.
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26. Cable Television Installation and Service Subscription Agreement dated
August 18, 1994, with Archemedes/Tampa Inns Limited Partnership to
provide cable television service to The Colony Resort.
27. Installation and CATV Service Agreement dated January 18, 1986, with
Colony Oaks Homeowners Association, Inc. to provide cable television
service to Colony Oaks.
28. Cable Television Installation and Service Agreement dated November 27,
1990, with Chesapeake Associates Limited Partnership to provide cable
television service to Chesapeake Apartments.
29. Cable Television Installation and Service Subscription Agreement dated
September 1, 1989, with Pradip Patel to provide cable television
service to Crosstown Inn.
30. Cable TV Service Subscription Agreement dated June 29, 1987, with Sam
MacMahon, Jr. to provide cable television service to Days Inn Busch
Gardens.
31. Cable Television Installation and Service Subscription Agreement dated
August 17, 1988, with Days Inn Downtown Tampa, a Corporation to
provide cable television service to Days Inn Downtown Tampa.
32. Cable TV Service Subscription Agreement dated July 20, 1988, with
Thirtieth Street Motel Assoc., Ltd. to provide cable television
service to Econo Inn.
33. Cable TV Service Subscription Agreement dated May 20, 1988, with Mike
Patel to provide cable television service to Eight Inn Motel.
34. Cable Television Installation Agreement dated January 4, 1988, with
Florida Gulf Coast Apts., Inc. to provide cable television service to
Florida Gulf Coast Apartments.
35. Cable Television Installation and Service Subscription Agreement dated
August 1, 1989, with Forest Hills Village Homeowners Association to
provide cable television service to Forest Hills Village Townhomes.
36. Cable TV Service Subscription Agreement dated December 8, 1986, with
Thakorbhai Patel to provide cable television service to Gardenview
Motel.
37. Cable TV Service Subscription Agreement dated May 27, 1987, with
Ghunshyan Patel to provide cable television service to the Granada
Motel.
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38. Cable Television Installation and Service Subscription Agreement dated
August 24, 1994, with Ishwar D. Patel to provide cable television
service to The Haven Motel.
39. Installation and CATV Services Agreement dated November 17, 1987, as
amended, with Hawthorne Pointe Condominiums to provide cable
television service to complex.
40. Cable Television Installation and Service Subscription Agreement dated
July 6, 1992, with H. Lee Moffitt Cancer Center to provide cable
television service to the hospital and research center.
41. Cable Television Installation and Service Subscription Agreement dated
February 7, 1989, with Khandu Patel to provide cable television
service to the Hacienda Motel.
42. Cable Television Installation and Service Subscription Agreement dated
February 26, 1992, with Harbour Court Condominium Association, Inc. to
provide cable television service to Harbour Court Condominiums.
43. Cable Television Installation and Service Subscription Agreement dated
January 4, 1990, with N. Pram Inc. to provide cable television service
to Hayes Motel.
44. Cable TV Service Subscription Agreement dated May 15, 1987, with
Equitel to provide cable television service to Holiday Inn Airport.
45. Cable Television Installation and Service Subscription Agreement dated
February 5, 1993, with Hyatt Corporation, as Agent for Tampa City
Center Associates, d/b/a Hyatt Regency Tampa to provide cable
television service to the Hyatt Regency.
46. Cable Television Installation and Service Subscription Agreement dated
December 15, 1990, with West Interbay II, Inc. to provide cable
television service to Interbay Colony.
47. Installation and CATV Service Agreement dated August 15, 1985, with
Island Chateau to provide cable television service to Island Chateau
Condominiums.
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48. Cable Television Installation and Service Subscription Agreement dated
May 22, 1989, with Knollwood Manor Inc. to provide cable television
service to Knollwood Manor.
49. Cable Television Installation and Service Subscription Agreement dated
November 22, 1994, with La Quinta Inns Inc. to provide cable
television service to La Quinta Inn.
50. Cable Television Installation Agreement dated November 17, 1987, as
amended, with TPA Apartments to provide cable television service to
Live Oaks Plantation, Phase I.
51. Cable Television Installation and Service Subscription Agreement dated
July 14, 1989, with Elvira LeRoy to provide cable television service
to Loma Linda Motel.
52. Cable TV Service Subscription Agreement dated March 20, 1987, with
Megan Patel to provide cable television service to the MacDill Motel.
NOTE: A new Cable Television Installation and Service Subscription
Agreement dated June 19, 1995 has been signed by Magan Patel, but is
still being routed for signature by Cable TV Fund 12-BCD Venture.
53. Cable TV Service Subscription Agreement dated May 20, 1988, with Natu
Amin to provide cable television service to Mac's Motel.
54. Cable Television Installation and Service Subscription Agreement dated
April 23, 1993, with Marina Club Condominium Association to provide
cable television service to Marina Club Condominiums.
55. Cable Television Installation and Bulk Service Agreement dated April
22, 1993, with Mariner North, Inc. to provide cable television service
to Mariner Condominium Apartments North.
56. Cable Television Installation Agreement dated November 21, 1986, with
Mary Walker Apts. to provide cable television service to complex.
57. Cable Television Installation and Service Subscription Agreement dated
September 28, 1994, with Memorial Hospital of Tampa to provide cable
television service to hospital.
58. Cable TV Service Subscription Agreement dated March 20, 1987, with
Ramesh Patel to provide cable television service to the Open Gate
Motel.
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59. CATV Service Agreement dated June 25, 1985, with Palma Ceia Place
Condominium Association to provide cable television service to Palma
Ceia Place.
60. Cable Television Installation and Service Subscription Agreement dated
November 19, 1991, with Megan Patel to provide cable television
service to the Park and Sleep Motel.
61. Cable TV Service Subscription Agreement dated March 23, 1987, with
Jidendra Patel to provide cable television service to the Park II
Motel.
62. Cable Television Installation and Service Subscription Agreement dated
January 31, 1989, with Park Place at Horatio Condo Assn., Inc. to
provide cable television service to Park Place Condominiums.
63. Cable Television Installation and Service Subscription Agreement dated
February 17, 1989, with Parkland Properties, Inc. to provide cable
television service to Parkland Condominiums.
64. CATV Service Agreement dated March 20, 1985, with Players Condominium
Association to provide cable television service to Players Condos.
65. Cable Television Installation and Service Subscription Agreement dated
April 6, 1989, as amended, with Busch- USF Development Group, Ltd. to
provide cable television service to Quality Suites-Busch Gardens.
66. Cable Television Installation Agreement dated June 7, 1987, with
Rivers Edge Club Apartments to provide cable television service to
complex.
67. Cable TV Service Subscription Agreement dated April 1, 1987, with
Ishver Patel to provide cable television service to the Royal Palm
Motel.
68. Cable Television Installation and Service Subscription Agreement dated
March 26, 1990, as amended, with St. Francis Residence, Inc., t/d/b/a
St. Joseph's Women's Hospital to provide cable television service to
hospital.
69. Cable TV Service Subscription Agreement dated March 21, 1988, with
Gordon Patel to provide cable television service to the Seminole
Motel.
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70. Installation and CATV Service Agreement dated January 28, 1985, as
amended, with Shaker Lakes Apartments Company to provide cable
television service to complex.
71. Cable TV Service Subscription Agreement dated December 5, 1986, with
GOM Enterprises, Inc. to provide cable television service to The Shaw
Motel.
72. Cable Television Installation Agreement dated August 13, 1987, with
Igor Vinnor to provide cable television service to Silver Oaks Trailer
Park.
73. Cable Television Installation and Service Subscription Agreement dated
March 23, 1989, with S & R Enterprises, Inc. to provide cable
television service to Sleep Inns of America.
74. Installation and CATV Service Agreement dated July 29, 1986, with
Arnold A. Segel to provide cable television service to Spruce Street
Apartments.
75. Cable Television Installation and Service Subscription Agreement dated
January 10, 1990, with Pankaj M. Patel to provide cable television
service to the Sunshine Motel.
76. Cable TV Service Subscription Agreement dated January 21, 1987, with
N.G. Patel to provide cable television service to Sunnysouth Motel.
77. Cable Television Installation Agreement dated June 1, 1987, with Tampa
Baptist Manor, Inc. to provide cable television service to Tampa
Baptist Manor.
78. Cable Television Installation and Service Subscription Agreement dated
April 25, 1991, with Associated Outdoor Clubs, Inc. to provide cable
television service to Tampa Greyhound Track. NOTE: Requires written
notice of any transfer be given within 30 days of closing.
79. Cable Television Installation and Service Subscription Agreement dated
April 19, 1994, with Transitional Hospitals of Tampa to provide cable
television service to hospital.
80. Cable TV Service Subscription Agreement dated May 4, 1987, with Jay
Patel to provide cable television service to Travel Inn Motel.
81. Service Agreement dated March 2, 1983, with United Shelter Development
to provide cable television service to University Oakwoods
Condominiums.
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82. Cable Television Installation and Service Subscription Agreement dated
December 15, 1990, with West Interbay I, Inc. to provide cable
television service to Westminster Chase Apartments.
83. CATV Service Agreement dated March 1, 1985, with Acorn Trace
Apartments to provide cable television service to complex.
84. Cable Television Installation Agreement dated July 25, 1994, with
Adam's House of Tampa Inc. to provide cable television service to
Adam's House of Tampa.
85. CATV Service Agreement dated July 31, 1984, with M.R.I. Management
Inc. to provide cable television service to an apartment building
known as Annie and Nebraska.
86. CATV Service Agreement dated June 19, 1985, with The Ambassador
Apartments to provide cable television service to complex.
87. Installation and CATV Service Agreement dated November 6, 1985, with
Asbury Park Condo Assoc. to provide cable television service to
Ashbury Park.
88. CATV Service Agreement dated August 23, 1984, with Ashley Square Apts.
to provide cable television service to complex.
89. CATV Service Agreement dated March 20, 1985, with The Atrium
Condominium Association to provide cable television service to The
Atrium.
90. Cable Television Installation Agreement dated March 30, 1987, with
Century Properties Fund XVII to provide cable television service to
Bay Oaks Apartments.
91. Cable Television Installation Agreement dated August 30, 1994, with
Bayshore Grande, Inc., as general partner for Bayshore Grande, LTD. to
provide cable television service to Bayside Gardens.
92. Cable Television Installation Agreement dated June 12, 1987, to
provide cable television service to Bayshore Apartments (no fully
executed agreement in file).
93. Cable Television Installation and Wiring Agreement dated November 21,
1989, with Bayshore 1 Partners Ltd. to provide cable television
service to Bayshore 1 Apartments.
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94. Cable Television Installation and Wiring Agreement dated February 20,
1990, as amended, with Bayshore Heights Associates Ltd. to provide
cable television service to Bayshore Heights.
95. Cable Television Installation and Wiring Agreement dated February 16,
1990, with 4807 Bayshore Partners to provide cable television service
to Bayshore Manor Homes.
96. Installation and CATV Service Agreement dated November 14, 1985, with
Bayshore Oaks to provide cable television service to complex.
97. CATV Service Agreement dated May 6, 1985, with Bayshore on the
Boulevard Condominiums to provide cable television service to
condominiums.
98. CATV Service Agreement dated February 14, 1985, with Bayshore Place
Associates to provide cable television service to Bayshore Place
Condos.
99. Cable Television Installation Agreement dated August 25, 1988, with
Tampa Presbyterian Community, Inc. to provide cable television service
to Bayshore Presbyterian Apartments.
100. Installation and CATV Service Agreement dated June 20, 1985, with
Bayshore Condo & Co. Inc. to provide cable television service to
Bayshore Royal.
101. CATV Service Agreement dated April 16, 1985, with Bayshore Trace
Condominium Association to provide cable television service to
Bayshore Trace Condos.
102. Installation and CATV Service Agreement dated November 6, 1985, with
Bayshore Towers Condo Assn. to provide cable television service to
Bayshore Towers.
103. Installation and CATV Service Agreement dated November 12, 1985, with
Tampa Bayshore Villas Condo Assn. Inc. to provide cable television
service to Bayshore Villas.
104. Cable Television Installation Agreement dated March 18, 1992, with
Lou's Too, Inc. to provide cable television service to Bayswater
Close.
105. Installation and CATV Service Agreement dated October 11, 1985, with
Brandychase Condo Assn. to provide cable television service to
Brandychase Condos.
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106. Cable Television Installation and Wiring Agreement dated May 7, 1992,
with Bristol Place Associates, Ltd. to provide cable television
service to Bristol Place Apartments.
107. CATV Service Agreement dated July 25, 1984, with Brittany Apts. to
provide cable television service to complex.
108. Cable Television Installation Agreement dated May 29, 1987, with
Bricks Mgt. & R/E Development, Inc. to provide cable television
service to Brookshire Condominiums.
109. Installation and CATV Service Agreement dated October 24, 1985, with
Robert G. Grieves to provide cable television service to Buccaneer
Apts.
110. CATV Service Agreement dated March 12, 1985, with The Canterbury Tower
to provide cable television service to complex.
111. CATV Service Agreement dated April 16, 1985, with Caribe Fantle
Apartments to provide cable television service to complex.
112. Cable Television Installation Agreement dated January 15, 1988, with
Unirealty Services Inc. to provide cable television service to Casa
Blanca Apartments.
113. Installation and CATV Service Agreement dated September 10, 1985, to
provide cable television service to Casa De Palma.
114. Cable Television Installation and Wiring Agreement dated April 26,
1990, with Roland Martino to provide cable television service to Casa
Marti.
115. CATV Service Agreement dated May 23, 1985, with The Cascades
Apartments to provide cable television service to complex.
116. Installation and CATV Service Agreement dated October 3, 1985, with
Parkinson & Associates to provide cable television service to Caymen
Islander.
117. CATV Service Agreement dated September 26, 1985, with Central Court
Apartments to provide cable television service to complex.
118. Installation and CATV Service Agreement dated August 16, 1985, to
provide cable television service to Century Oaks.
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119. Installation and CATV Service Agreement dated November 8, 1985, with
Golda Brunhild to provide cable television service to The Chateau
Apts.
120. CATV Service Agreement dated July 5, 1984, with Chateau de Seville
Condo Association Inc. to provide cable television service to Chateau
de Seville.
121. Cable Television Installation Agreement dated March 20, 1987, with
Christ the King Housing, Inc. to provide cable television service to
Kings Manor Apartments.
122. Cable Television Installation Agreement dated March 20, 1987, with
Christ the King Housing II, Inc. to provide cable television service
to Kings Arms Apartments.
123. Cable Television Installation Agreement dated February 12, 1987, with
Bayshore Partners to provide cable television service to the Clewis
Court Apartments.
124. CATV Service Agreement dated June 6, 1985, with Colony House
Apartments to provide cable television service to complex.
125. Cable Television Installation Agreement dated July 13, 1993, with
Colony Key Home Owners Association to provide cable television service
to Colony Key Subdivision.
126. CATV Service Agreement dated September 26, 1985, with Columbus Court
Apartments to provide cable television service to complex.
127. Installation and CATV Service Agreement dated September 25, 1985, with
Charles Fantle to provide cable television service to Commodores Cove.
128. Cable TV Service Subscription Agreement dated October 26, 1987, with
Vindo Patel to provide cable television service to Coral Motel.
129. CATV Service Agreement dated January 31, 1985, with The Tigert Company
to provide cable television service to Courtyards of Tampa Bay.
130. CATV Service Agreement dated June 11, 1985, with Crowder Manor to
provide cable television service to complex.
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131. Cable Television Installation Agreement dated June 23, 1988, with
Century Properties Fund XIX to provide cable television service to The
Cove Apartments.
132. Installation and CATV Service Agreement dated August 12, 1985, with
Jeanne R. Winter to provide cable television service to Davis Island
Towers.
133. CATV Service Agreement dated February 12, 1985, with The Oxford Co.
DBA Davphine, Ltd. to provide cable television service to Davphine
Apts.
134. Installation and CATV Service Agreement dated November 8, 1985, with
Golda Brunhild to provide cable television service to The DeLeon Apts.
135. CATV Service Agreement dated February 14, 1985, with Blue Sky
Management to provide cable television service to DeSoto Apts.
136. CATV Service Agreement dated February 14, 1984, with Everett and
Bonnie Evans to provide cable television service to Drew Park Trailer
Park.
137. Agreement dated January 8, 1985, with Russell B. Duink to provide
cable television service to Duink's N. Rome Trailer Park.
138. Cable Television Installation and Service Subscription Agreement dated
July 2, 1990, with Parimal A. Butala to provide cable television
service to East Gate Motel.
139. Installation and CATV Service Agreement dated September 23, 1985, with
Embassy Apartments to provide cable television service to complex.
140. Cable Television Installation and Wiring Agreement dated February 1,
1989, with Lincoln Property Company to provide cable television
service to Essex Place Apartments.
141. Cable Television Installation Agreement dated October 15, 1989, with
Fair Oaks Condominium Association, North to provide cable television
service to Fair Oaks North.
142. Cable Television Installation and Service Subscription Agreement dated
March 9, 1993, with Fair Oaks Condominium Assoc. South to provide
cable television service to Fair Oaks South.
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143. Cable Television Installation Agreement dated November 18, 1986, with
Fairfield Villas Development Corp. to provide cable television service
to Fairfield Villas.
144. Cable Television Installation Agreement dated February 20, 1990, with
51st Street Station Inc. to provide cable television service to 51st
Street Station Apartments.
145. CATV Service Agreement dated March 26, 1985, with Felicia Villa
Apartments to provide cable television service to complex.
146. Cable Television Installation Agreement dated July 2, 1989, with Arcon
Development Properties, Inc. to provide cable television service to
Flamingo Apartments.
147. Cable Television Installation Agreement dated May 13, 1988, with
Florida Gulf Coast Apts., Inc. to provide cable television service to
Florida Gulf Coast Apartments.
148. Installation and CATV Service Agreement dated November 6, 1985, with
Roger B. Curlin to provide cable television service to 4702 & 4704
Citrus Cir. and 4606, 08 & 10 Citrus Cir., Tampa, Florida.
149. CATV Service Agreement dated June 26, 1984, with Franklin Tampa
Associates to provide cable television service to The Falls.
150. Installation and CATV Service Agreement dated April 9, 1985, with
French Quarter Apartments Management to provide cable television
service to The French Quarter.
151. CATV Service Agreement dated February 25, 1985, with Garden Terrace I
& II to provide cable television service to complex.
152. CATV Service Agreement dated February 25, 1985, with Garden Terrace
III to provide cable television service to complex.
153. Installation and CATV Service Agreement dated August 15, 1985, with
S.M. Baksh to provide cable television service to Gate Trailer Park &
Apartments.
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154. Cable Television Installation Agreement dated June 29, 1987, with
Georgian Partners Limited to provide cable television service to The
Georgian Apartments.
155. Cable Television Installation and Wiring Agreement dated March 13,
1989, with Goodwill Industries-Suncoast Inc. to provide cable
television service to a development known as GIS.
156. Installation and Non-Pay Television Services Agreement dated June 19,
1985, with Greenhouse Apartments to provide cable television service
to The Green House.
157. Installation and CATV Service Agreement dated October 25, 1985, with
Joseph R. Bernardo to provide cable television service to Greenbriar
Apts.
158. CATV Service Agreement dated March 12, 1985, with Habana Park
Condominium Association to provide cable television service to Habana
Park Condos.
159. Cable Television Installation Agreement dated February 19, 1987, with
Haciendas De Ybor to provide cable television service to complex.
160. Cable Television Installation Agreement dated March 11, 1987, with
Hacienda Villas, Inc. to provide cable television service to Hacienda
Villas.
161. Cable Television Installation Agreement dated March 20, 1987, with
Hanna Oaks Retirement Community, Inc. to provide cable television
service to Hanna Oaks Retirement Community.
162. Cable Television Installation and Wiring Agreement dated August 31,
1988, with Harbor House Condominium Association to provide cable
television service to Harbor House.
163. Cable Television Conduit License and Service Agreement dated December
11, 1986, with Harbour Island Inc. to provide cable television service
to Harbour Island.
164. Cable Television Installation and Wiring Agreement dated April 25,
1991, as amended, with Richland Properties, Inc., successor in
interest to Highland Oaks Associates, to provide cable television
service to Highland Oaks Apartments.
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165. CATV Service Agreement dated January 10, 1985, with Hildale Apts. to
provide cable television service to complex.
166. CATV Service Agreement dated December 11, 1984, with Holiday Oaks to
provide cable television service to complex.
167. Cable Television Installation Agreement dated August 16, 1991, with
Colvin & Maryanne M. Rouse to provide cable television service to
Horatio Carlton Apartments.
168. CATV Service Agreement dated April 24, 1985, with Horizon Place
Apartments to provide cable television service to complex.
169. Cable Television Installation and Wiring Agreement dated January 4,
1990, with Manor House Corporation to provide cable television service
to Hudson Manor.
170. Agreement dated September 5, 1989, with Hunter's Green Community
Association, Inc. to provide cable television service to Hunter's
Green.
171. CATV Service Agreement dated November 8, 1984, with J.B. Management
Co. to provide cable television service to Hyde Park Towers Apts.
172. Cable Television Installation Agreement dated February 23, 1987, with
Indies East Partners Ltd. to provide cable television service to
Indies East Apartments.
173. Installation and CATV Service Agreement dated November 8, 1985, with
Coachman Development Corp. to provide cable television service to
Interbay Oaks Townhomes.
174. Cable Television Installation Agreement dated September 30, 1988, with
Jackson Heights Associates to provide cable television service to
Jackson Heights Estates.
175. Cable Television Installation and Service Agreement dated November 4,
1993, with Island Place Limited Partnership to provide cable
television service to Island Place Apartments.
176. Cable Television Agreement dated November 21, 1991, with Island Walk
Limited Partnership to provide cable television service to Island Walk
at Harbour Island.
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177. Installation and CATV Service Agreement dated July 5, 1984, with
Margaret Bennett to provide cable television service to Jefferson
Court.
178. CATV Service Agreement dated April 19, 1985, with Johnson Court
Apartments to provide cable television service to complex.
179. Installation and CATV Service Agreement dated July 31, 1985, with Jack
Dwyer Co., Inc. to provide cable television service to Kelly Ridge
Subdivision.
180. CATV Service Agreement dated April 19, 1985, with Kenneth Court
Apartments to provide cable television service to complex.
181. Cable Television Installation Agreement dated March 23, 1989, with
Lakeside Villas to provide cable television service to Lakeside Villas
Apartments.
182. CATV Service Agreement dated November 19, 1985, with Landmark East
Apartments to provide cable television service to complex.
183. Installation and CATV Service Agreement dated September 18, 1985, with
La Plaza del Sol Investors Ltd. to provide cable television service to
La Plaza Del Sol Apts.
184. CATV Service Agreement dated January 7, 1985, with Westcoast Realty
Management to provide cable television service to La Villa Apartments.
185. CATV Service Agreement dated July 26, 1984, with Lenox Place Apts. to
provide cable television service to complex.
186. Cable Television Installation and Wiring Agreement dated February 1,
1989, with TPA Apartments to provide cable television service to Live
Oaks Plantation, Phase II.
187. Cable Television Installation and Wiring Agreement dated July 3, 1990,
with TPA Apartments to provide cable television service to Live Oaks
Plantation, Phase III.
188. CATV Service Agreement dated January 7, 1985, with Westcoast Realty
Management to provide cable television service to Lorenzo Carolina
Apts.
189. Cable Television Installation and Service Subscription Agreement dated
June 29, 1990, with Lou's Too, Inc.- William A. Brown to provide cable
television service to 7908 N. Florida Avenue, Tampa, Florida.
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190. CATV Service Agreement dated February 15, 1985, with MacDill Apts.
L.T.D. to provide cable television service to MacDill Apts.
191. Installation and CATV Service Agreement dated September 11, 1985, with
Southend Investment Corp. to provide cable television service to
MacDill Condominiums.
192. CATV Service Agreement dated May 28, 1985, with The Mall Apartments to
provide cable television service to complex.
193. Cable Television Installation and Wiring Agreement dated February 17,
1989, with Azzarelli Construction Co. to provide cable television
service to Mallory Square.
194. Cable Television Installation Agreement dated December 28, 1992, with
Beverly Enterprises-Florida, Inc., d/b/a Beverly Gulf Coast-Florida,
Inc. d/b/a Manhattan Convalescent Center to provide cable television
service to Center.
195. Installation and CATV Service Agreement dated October 15, 1985, with
Irene Nickitas to provide cable television service to Manhattan East
Apts.
196. CATV Service Agreement dated December 11, 1984, with Manhattan Manor
Apts. to provide cable television service to complex.
197. Cable Television Installation Agreement dated January 15, 1988, with
Presbyterian Homes of Tampa to provide cable television service to
Manhattan Place. NOTE: If cable system is sold, owner must be
notified within 60 days of such sale.
198. Cable Television Installation Agreement dated February 26, 1990, with
Joe F. Lackey to provide cable television service to Manhattan South
Apts.
199. CATV Service Agreement dated November 19, 1984, with Marina Club of
Tampa Condo Association to provide cable television service to Marina
Club Condo's.
200. Installation and CATV Service Agreement dated September 14, 1985, with
5700 Mariner South Inc. to provide cable television service to Mariner
South Condos.
201. CATV Service Agreement dated March 22, 1985, with Marquis Apartments
to provide cable television service to complex.
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202. Cable TV Service Subscription Agreement dated May 25, 1988, with
Sharad Patel to provide cable television service to The Mayflower
Motel.
203. CATV Service Agreement dated May 22, 1984, with Cambridge Limited
Partnership to provide cable television service to Medical Towers
Building.
204. Cable Television Installation Agreement dated December 4, 1990, with
Hillhaven Corporation to provide cable television service to a
convalescent center known as Medicenter.
205. Cable Television Installation Agreement dated March 20, 1992, with
Onyx Asset Management as Management & Disposition Contractor for
Resolution Trust Corporation as Receiver for San Antonio Savings
Association, F.A. to provide cable television service to The Meridian
Apartments.
206. Cable Television Installation Agreement dated November 8, 1990, with
United Methodist Retirement Center of Tampa, Inc. to provide cable
television service to Methodist Place.
207. CATV Service Agreement dated February 15, 1985, with Monte Carlo
Developers to provide cable television service to Monte Carlo Towers.
208. CATV Service Agreement dated May 13, 1985, with Moon River to provide
cable television service to Moon River Condos.
209. CATV Service Agreement dated February 26, 1985, with G & O Properties
to provide cable television service to Morrison Court Apartments.
210. Cable Television Installation Agreement dated November 2, 1987, with
Bill Acebo to provide cable television service to My Chateau
Apartments.
211. CATV Service Agreement dated August 27, 1984, with National Alliance
of Postal & Federal Employees to provide cable television service to
NAPFE.
212. Cable Television Installation Agreement dated April 15, 1993, with
Equitable Life Assurance Society of the United States to provide cable
television service to the Nations Bank Building.
213. Cable TV Service Subscription Agreement dated October 6, 1987, with
Mike Patel to provide cable television service to the Oaks Motel.
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214. Cable Television Installation and Wiring Agreement dated January 18,
1990, with Oakcrest, Inc. to provide cable television service to N.
Oakcrest Townhomes & Villas.
215. CATV Service Agreement dated August 13, 1984, with Oakhurst Square
Apt., Ltd. to provide cable television service to Oakhurst Square
Apts.
216. CATV Service Agreement dated August 13, 1984, with Oakhurst Square
Apartments II, Ltd. to provide cable television service to Oakhurst
Square II.
217. Cable Television Installation Agreement dated July 17, 1987, with
Oakmont Apartments to provide cable television service to complex.
218. Cable Television Installation Agreement dated September 1, 1989, as
amended, with Old Hyde Park Village Residential Condominium
Association, Inc. to provide cable television service to Old Hyde Park
Village.
219. Cable Television Installation Agreement dated May 8, 1987, with One
Laurel Place Condominium Association to provide cable television
service to One Laurel Place.
220. Installation and CATV Service Agreement dated July 15, 1985, with
Wellington Manor to provide cable television service to complex at
10049 N. Florida Avenue, Tampa, Florida.
221. Installation and CATV Service Agreement dated July 18, 1985, with
Wayne Shaw to provide cable television service to 10212-32 Ojus Drive,
Tampa, Florida.
222. Cable TV Service Subscription Agreement dated May 25, 1988, with
Krishna Patel to provide cable television service to The Orange Motel.
223. CATV Service Agreement dated April 2, 1985, with Osborne Arms
Apartments to provide cable television service to complex.
224. Installation and CATV Service Agreement dated September 16, 1985, with
Palm Avenue Baptist Tower to provide cable television service to
complex.
225. Cable Television Installation Agreement dated September 14, 1988, with
Palma Ceia Oaks II Condominium Association to provide cable television
service to complex.
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226. Cable Television Installation and Wiring Agreement dated March 29,
1989, with Azzarelli and Associates to provide cable television
service to Palma Vista Condo's.
227. CATV Service Agreement dated May 13, 1985, with Panorama to provide
cable television service to condominiums.
228. Cable Television Installation Agreement dated June 30, 1989, as
amended, with Tampa-Fifty First Street Associates, Ltd. to provide
cable television service to Park Avenue Apartments.
229. CATV Service Agreement dated November 8, 1984, with J.B. Management
Co. to provide cable television service to Park Place Apts.
230. Installation and CATV Service Agreement dated August 19, 1985, with
Pinecrest Village Associates, Ltd. to provide cable television service
to Pinecrest Village II.
231. Cable Television Installation and Service Subscription Agreement dated
October 11, 1994, with The Pinnacle Condominium Association to provide
cable television service to The Pinnacle Condominiums.
232. CATV Service Agreement dated June 17, 1985, with The Place Apts. to
provide cable television service to complex.
233. Agreement dated March 13, 1995, with Post Apartment Homes, L.P. to
provide cable television service to Post Hyde Park. NOTE: Requires
written notice of any transfer be given at least 30 days prior to
closing.
234. Agreement dated January 27, 1995, with Post Apartment Homes, L.P. to
provide cable television service to Post Rocky Point. NOTE: Requires
written notice of any transfer be given at least 30 days prior to
closing.
235. CATV Service Agreement dated April 16, 1985, with Tampa Presbyterian
Village, Inc. to provide cable television service to Presbyterian
Village.
236. Cable Television Installation Agreement dated January 15, 1988, with
Presbyterian Homes of Florida to provide cable television service to
Presbyterian Villas. NOTE: If cable system is sold, owner must be
notified within 60 days of such sale.
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237. Installation and CATV Service Agreement dated July 18, 1985, with
Wayne Shaw to provide cable television service to The Regent.
238. CATV Service Agreement dated May 31, 1985, with Renmah Apartments to
provide cable television service to complex.
239. Service Agreement dated March 6, 1987, with River Club Apartments to
provide cable television service to complex.
240. Cable Television Installation Agreement dated June 3, 1988, with River
Garden Realty Group to provide cable television service to Rivergarden
Apartments.
241. CATV Service Agreement dated September 21, 1984, with River Grove
Apts. to provide cable television service to complex.
242. Cable Television Installation Agreement dated June 30, 1987, with
River Heights Marina & Yacht Club to provide cable television service
to development.
243. CATV Service Agreement dated April 22, 1985, with River Pines
Apartments to provide cable television service to complex.
244. Installation and Non-Pay Television Services Agreement dated June 19,
1985, with Dan J. Kistel to provide cable television service to The
Riverbrook.
245. Cable Television Installation Agreement dated July 27, 1987, with
David Hyman to provide cable television service to Riviera Manor
Apartments.
246. Installation and CATV Service Agreement dated July 18, 1985, with
Wayne Shaw to provide cable television service to Rolling Hills Apts.
247. CATV Service Agreement dated February 25, 1985, with Rosewood Apts. to
provide cable television service to complex.
248. Installation and CATV Service Agreement dated October 10, 1985, with
Rosewood Garden Inc. to provide cable television service to Rosewood
Garden.
249. CATV Service Agreement dated February 25, 1985, with Shaker Lake Apts.
L.T.D. to provide cable television service to The Seasons Apts.
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250. Installation and CATV Service Agreement dated November 14, 1985, with
Sheridan Woods Condominium Association to provide cable television
service to Sheridan Woods.
251. Cable Television Installation Agreement dated January 10, 1989, with
Margaret Mitchell to provide cable television service to Silver Oaks
Trailer Park.
252. Cable Television Installation and Wiring Agreement dated January 12,
1990, as amended, with Health Care Reit, Inc. to provide cable
television service to Sligh Oaks Retirement Community.
253. Cable Television Installation Agreement dated August 23, 1989, with
Lisa Goggins to provide cable television service to Smuggler's Cove
Apartments.
254. CATV Service Agreement dated October 1, 1984, with Snug Harbor Apts.
to provide cable television service to complex.
255. CATV Service Agreement dated March 12, 1985, with Snug Harbor Apts.
Phase II to provide cable television service to complex.
256. CATV Service Agreement dated October 10, 1985, with Sunset Park
Condominium Association to provide cable television service to Sunset
Park Condos.
257. CATV Service Agreement dated January 7, 1985, with Westcoast Realty
Management to provide cable television service to Southview-Westview
Apts.
258. CATV Service Agreement dated April 24, 1985, with Spring Oaks
Townhomes to provide cable television service to complex.
259. CATV Service Agreement dated February 14, 1985, with MacDill Partners
L.T.D. to provide cable television service to South Point Apts.
260. Cable Television Installation Agreement dated February 17, 1987, to
provide cable television service to South Shore Apartments.
261. Cable Television Installation Agreement dated September 19, 1992, with
Tampa United Methodist Centers, Inc. to provide cable television
service to Spring Oaks.
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262. CATV Service Agreement dated July 15, 1985, with James Burt, Inc. as
agents for The Stafford Condominium Association, Inc. to provide cable
television service to The Stafford Condominium.
263. Cable Television Installation Agreement dated January 21, 1994, with
Tampa City Center Associates to provide cable television service to
Tampa City Center Office Tower.
264. Installation and CATV Service Agreement dated October 2, 1985, with
Tampa Heights Apartments Phase I and Phase II to provide cable
television service to Tampa Heights Apartments.
265. Cable Television Installation Agreement dated May 22, 1989, with Tampa
Housing Authority to provide cable television service to various FHA
(HUD) developments.
266. Cable Television Installation Agreement dated January 15, 1988, with
Tampa Palms Golf & Country Club, Inc. to provide cable television
service to Tampa Palms Golf & Country Club.
267. Installation and CATV Service Agreement dated August 22, 1985, with
Tampa Villas South Homeowners Inc. to provide cable television service
to Tampa Villa South.
268. CATV Service Agreement dated June 12, 1984, with Tribune Company to
provide cable television service to Tampa Tribune Times.
269. Cable Television Installation Agreement dated July 2, 1989, with Arcon
Development Properties, Inc. to provide cable television service to
Tara House South Apartments.
270. Cable Television Installation Agreement dated July 2, 1989, with Arcon
Development Properties, Inc. to provide cable television service to
Tara Manor Apartments.
271. Installation and CATV Service Agreement dated September 28, 1985, with
B.J. Waldeck to provide cable television service to Tiffany Suites
Condos.
272. CATV Service Agreement dated March 15, 1985, with Triad Condominiums
to provide cable television service to the condominiums.
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273. Cable Television Installation Agreement dated August 31, 1993, with
United Medical Corporation to provide cable television service to
Vencor Hospital.
274. CATV Service Agreement dated February 11, 1985, with The Versailles
and La Costa Brava Apts. to provide cable television service to
complex.
275. Cable Television Installation and Wiring Agreement dated March 28,
1994, with Hyde Park Builders to provide cable television service to
Villagegate Condominiums.
276. Installation and CATV Service Agreement dated August 22, 1985, with
Vineyard Condominium Assoc. to provide cable television service to The
Vineyard Apartments.
277. Memorandum of Cable Television Installation and Wiring Agreement dated
October 26, 1994, with The Vinings at Hunter's Green Limited
Partnership to provide cable television service to the Vinings at
Hunter's Green.
278. Installation and CATV Service Agreement dated July 18, 1985, with
Wayne Shaw to provide cable television service to Washington Park
Apts.
279. Installation and CATV Service Agreement dated September 6, 1985, with
Charles R. Cardo to provide cable television service to Washington
Square Townhomes.
280. Cable Television Installation and Wiring Agreement dated March 7,
1990, with Waterside Condominium Association, Inc. to provide cable
television service to Waterside Condominiums.
281. Cable Television Installation Agreement dated July 13, 1989, with
Waterford Condominium Association to provide cable television service
to Waterford Condominiums.
282. CATV Service Agreement dated July 26, 1984, with Westchester Manor
Condominium Association to provide cable television service to
Westchester Manor.
283. Cable Television Installation Agreement dated July 26, 1994, with
Southside Properties Inc. to provide cable television service to
Westgate Apartments.
284. Installation and CATV Service Agreement dated September 23, 1985, with
West Shore Apartments to provide cable television service to complex.
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285. Agreement dated April 1, 1984, with Westshore Club II, Inc. to provide
cable television service to Westshore Club II.
286. Cable Television Installation Agreement dated June 14, 1990, with
N.S.I. Venture Fund IV, Willow Pond Limited Partnership to provide
cable television service to Willow Pond Apartments.
287. Cable Television Installation Agreement dated March 21, 1990, with Joe
F. Lackey to provide cable television service to Wyoming East
Apartments.
288. Cable Television Installation Agreement dated August 27, 1991, with
Brian & Patti Buxton to provide cable television service to an
apartment complex at 404 S. Newport Avenue, Tampa, Florida.
289. Cable Television Installation and Wiring Agreement dated April 15,
1992, with Hyde Park Builders, Inc. to provide cable television
service to Bayswater Close.
290. Cable Television Installation and Service Subscription Agreement dated
June 12, 1995, with The University of Tampa to provide cable
television service to the university.
291. Cable Television Installation and Service Subscription Agreement dated
February 27, 1995, with James Bush to provide cable television service
to the Quality Hotel.
292. Cable Television Installation and Service Subscription Agreement dated
June 27, 1995, with Dilip Kanji to provide cable television service to
the Days Inn Rocky Point. NOTE: The Agreement has been signed by
Owner, but is still being routed for signature by Cable TV Fund 12-BCD
Venture.
293. Cable Television Installation Agreement dated March 21, 1988, with
C.H. Chapman to provide cable television service to The Pavillions
Apartments.
294. Installation and CATV Service Agreement dated September 15, 1986, with
R. Patel to provide cable television service to The Dutch Motel.
295. Installation and CATV Service Agreement dated October 8, 1986, with
Kiran Patel to provide cable television service to El Rancho Motel.
296. Installation and CATV Service Agreement dated October 21, 1986, with
Kiran Patel to provide cable television service to the Swan Motel.
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297. Installation and CATV Service Agreement dated October 21, 1986, with
Vasant Patel to provide cable television service to the Village Motel.
298. Oral agreement effective April 20, 1989 to provide cable television
service to The Oasis Motel (9 units) located at 6720 N. Nebraska
Avenue, Tampa.
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REAL PROPERTY LEASED
1. Lease (office space) dated June 12, 1984, between The Koger
Partnership, Ltd. and Tampa Cable Television, Inc.; Letter dated May
5, 1988, consenting to the assignment and transfer of the Lease from
Tampa Cable Television, Inc. to Jones Intercable, Inc. and
subsequently to Cable TV Fund 12-BCD Venture, and further consenting
to the grant of a security interest in the Lease; Lease Renewal dated
June 15, 1988; Letter dated June 29, 1989, confirming renewal of
Lease.
Description of Leased Premises:
Suite 102 (approximately 445 square feet)
5444 Bay Center Drive
Tampa, Florida 33609
Part of Gov. Lot 3, Section 19, Township 29 South, Range 18 East,
Hillsborough County, Florida being more particularly described as
follows:
Commencing at the Northeast corner of Lot 40, MARINER ESTATES, Plat
Book 38, Page 61, Public Records of Hillsborough County, Florida, run
thence N.77o26'E., for 40.09 feet; thence along a curve to the left
(having a radius of 200 feet, chord distance of 138.88 feet, chord
bearing N.57o07'E., and central angle of 40o38') for 141.84 feet; run
thence along a curve to the left (having a radius of 200 feet, chord
distance of 34.86 feet, chord bearing of N. 31o48'E., and a central
angle of 10o) for 34.90 feet; thence N.21o19'42"W., for 72.57 feet;
thence N.68o40'18"E., for 340.36 feet; thence N.21o19'42"W., for 60
feet to the Point of Beginning of the tract herein described; run
thence S.68o40'18"W., for 245.36 feet; thence Northwesterly along a
curve to the right (having a radius of 25 feet, chord distance of
35.36 feet, chord bearing of N.66o19'42"W., and a central angle of
90o) for 39.27 feet; thence N.21o19'42"W., for 260 feet; thence
N.68o40'18"E., for 370 feet to the Westernmost corner of those lands
described in that certain deed, between the parties hereto, recorded
in Official Records Book 1252, Pages 24, 25 and 26, of the Public
Records of Hillsborough County, Florida; thence S.21o19'42"E., for
322.96 feet to an intersection with a curve concave to the South
(having a radius of 149.76 feet and a tangent bearing of
N.69o37'13"W.); thence Westerly along said curve (being a curve to the
left having a radius of 149.76 feet, chord distance of 106.63 feet,
chord bearing of S.89o31'32"W., and a central angle of 41o42'29") for
109.02 feet to the Point of Beginning.
The foregoing Lease has not been recorded in the real property records
of Hillsborough County, Florida.
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Expiration Date: June 30, 1995 (automatically renews for two
year terms unless terminated with 90 days
written notice prior to expiration of current
term)
Rental Payment: $819.01/month.
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2. Lease Agreement (public access studio) dated September 21, 1983,
between the University of Tampa, Inc. and Tampa Cable Television,
Inc.; Letter dated February 6, 1986, consenting to the assignment and
transfer of the Lease from Tampa Cable Television, Inc. to Jones
Intercable, Inc. or one or more of its controlled affiliates, and
further consenting to the grant of a security interest in the Lease;
Memorandum of Understanding, undated, between The University of Tampa
and Cable TV Fund 12-BCD Venture, amending the Lease.
Description of Leased Premises:
A portion of a building located on the following described property in
Hillsborough County, Florida:
Lot beginning at a point on the Westerly Right of Way line of North
Boulevard located 398.5' S and 24 1/3' NW of the NE corner of the SE
1/4 of the NE 1/4 of Section 23, Township 29 South, Range 18 East,
Hillsborough County Florida; Run thence West on a line parallel to the
northerly right of way line of North B Street to the Easterly right of
way line of Seaboard Coast Line Systems, Inc., Railroad right of Way
to a point; run thence in a Southwesterly direction to the point of
intersection of the Easterly Right of Way line of the Seaboard Coast
Line Railroad Right of Way with the North Right of Way line of North B
Street; run thence S 89o12'22" E (assumed bearing) 735.22' along the
north Right of Way Line of North B Street to the intersection of the
said North Right of Way Line of North B Street with the Easterly Right
of Way of North Boulevard, run thence N 333 1/4' more or less along
the Westerly Right of Way of North Boulevard to the Point of
Beginning.
The foregoing Lease was recorded in the real property records of
Hillsborough County, Florida on September 22, 1983 at Official Record
No. 4187, page 1782.
Expiration Date: September 30, 1998 (automatically renews for
one additional 15 year term unless terminated
with 30 days written notice prior to
expiration of current term)
Rental Payment: $3,542.55/month.
SUBLEASE
Lease Agreement for Tower Space and Site Sublease commencing March 1,
1993, between Cable TV Fund 12-BCD Venture and Bayfone of Tampa.
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3. Agreement (tower site) dated May 8, 1987, between the City of Tampa
and Cable TV Fund 12-BCD Venture.
Description of Property:
A tract of land at the Morris Bridge Water Treatment Facility site,
said tract more particularly described as:
Commence at the Northwest corner of Section 24, Township 27 South,
Range 19 East being marked by a 3" iron pipe; thence South 00o18'32"
West along the West boundary of said Section 24 a distance of 2632.49
feet to the West quarter corner of said Section 24; thence continue
South 00o18'32" West 321.34 feet; thence South 89o27'50" East 263.30
feet to the Point of Beginning; thence North 00o18'32" East 43.00
feet; thence South 89o27'50" East 58.00 feet; thence South 00o18'32"
West 43.00 feet; thence North 89o27'50" West 58.00 feet to the Point
of Beginning.
The foregoing Lease has not been recorded in the real property records
of Hillsborough County, Florida.
Expiration Date: December 30, 1997
Rental Payment: None.
SUBLEASE
Lease Agreement for Tower Space commencing March 9, 1992, between
Cable TV Fund 12-BCD Venture and Bayfone of Tampa.
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<PAGE> 48
4. Lease (store front) dated April 25, 1983, between Charles J. Bickimer,
Jr., Trustee and Tampa Cable Television, Inc.; Letter dated December
11, 1986, consenting to the assignment and transfer of the Lease from
Jones Intercable, Inc. to Cable TV Fund 12-BCD Venture, and further
consenting to the grant of a security interest in the Lease; Letters
dated January 12, 1988, January 7, 1993, January 11, 1993, and
February 26, 1993, all related to the exercise of options to extend
the term of the Lease.
Description of Leased Premises:
Approximately 2,000 square feet (approximately 25' x 80')
3814 Britton Plaza
Tampa, Florida 33611
The foregoing Lease has not been recorded in the real property records
of Hillsborough County, Florida.
Expiration Date: April 30, 1998 (automatically renews for
successive terms of 5 years each unless
terminated with 90 days written notice prior
to expiration of current term)
Rental Payment: $1,194.57/month.
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<PAGE> 49
5. Oral agreement (local origination office) between WTTA-Channel 38 and
Cable TV Fund 12-BCD Venture.
Description of Leased Premises:
Approximately 1800 square feet
5510 W. Gray Street
Unit #118
Tampa, Florida
Expiration Date: December 1, 1995
Rental Payment: $12.00 per square foot plus tax
MISCELLANEOUS CONTRACTS AND AGREEMENTS
1. Easement for cable created by site plat for Dockside Condominiums,
formerly known as Executive Landings, located at 2780 Riverside Drive,
and approved by the General Manager of the property on February 18,
1988.
2. Easement dated April 27, 1993, granted by Armando Hernandez for a
certain piece of land in Lynwood Addition, Hillsborough County,
Florida.
3. Underground Easement and Agreement dated April 25, 1984, granted by
the Hillsborough County Aviation Authority to enter upon the land at
Tampa International Airport in Hillsborough County, Florida.
4. Cable Television Easement dated November 4, 1993, granted by Island
Walk Limited Partnership for a 650 foot easement (10 feet in width)
from the development known as Island Walk at Island Harbour to the
contiguous property known as Island Place Apartments in Hillsborough
County, Florida.
5. Easement dated April 22, 1993, granted by Mariner North, Inc. for
installation and maintenance of cable television facilities on
property known as Mariner Condominium Apartments North, 5701 Mariner
Drive, Tampa, Florida.
6. Easement and Right of Way dated May 27, 1993, granted by Equitable
Life Assurance Society of the United States for certain property
located at 400 North Ashley Street, Tampa, Florida.
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<PAGE> 50
7. Easement and Right-of-Way dated November 16, 1993, granted by Patricia
Ann Miller for certain property located at Carroll City Center in
Hillsborough County, Florida.
8. Mutual Use Agreement dated February 6, 1992, with Tampa Electric
Company for installation and maintenance of cable television
facilities within a certain easement granted to Tampa Electric Company
by Harbour Island Inc. on property located in Hillsborough County,
Florida.
9. Joint Project Agreement, Utility Installation By Highway Contractor
dated November 18, 1986, with the State of Florida Department of
Transportation for installation and maintenance of cable television
facilities at Road No. 60 between Br. #100301 and Eisenhower Boulevard
in Hillsborough County, Florida.
10. Cable Equipment Lease and Cable Equipment Management Agreement, both
dated February 24, 1984, with The Parkland Condominium Association,
Inc. for a condominium project known as The Parkland, A Condominium in
Hillsborough County, Florida.
11. Channel Lease Agreement dated February 25, 1987, with Tampa Bay
Performing Arts Center, Inc.
12. License Agreement dated August 27, 1990, with The Production Garden
Library (A division of Taylor Media Productions, Inc.) for usage
rights in connection with the broadcast or non-broadcast, cablecast,
film, audio- visual, entertainment, or educational application of the
commercial production music, effects, and all materials contained in
The Production Garden Library.
13. Cable Television News Programming Distribution Agreement dated
December 16, 1991, with Tampa Television Inc. (WFLA-TV) for the
distribution of five minute segments of local news programming in the
five minute window provided on the CNN Headline News Network for such
purpose.
14. Right of Entry Agreement dated September 28, 1990, with Alfred S.
Austin/Daper Tampa, Inc. for entry onto certain real property located
at 1408 North Westshore Boulevard, Suite 908, Tampa, Florida to
provide cable television service to office tenant, Hugh F.
Culverhouse.
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15. Tampa Cable Television Trust dated December 30, 1982, by and between
Cable TV Fund 12-BCD Venture, as successor to Tribune Cable
Communications, Inc. and Tampa Cable Television, Inc., as amended, to
benefit the citizens of the City of Tampa by devoting and applying the
trust fund and the income derived therefrom for charitable,
scientific, literary, educational and/or cultural purposes.
16. Oral agreement with Telemundo Tampa, a television network whose
address is 8511 Florida Mining Boulevard, Tampa, Florida, whereby
Jones receives the national Telemundo feed from a satellite and
transmits it via FM signal to Telemundo Tampa. Telemundo Tampa
inserts local ad sales spots and transmits the signal back to Jones.
Jones then transmits the signal to cable subscribers on Channel 18 and
to Paragon Cable for distribution to its cable subscribers.
17. Letter agreement dated October 6, 1989, with Cable Video Store for
automated channel schedule management of pay-per-view services.
18. Confidentiality Agreement dated September 9, 1994, with Community
Shopping Service, Inc.
19. Contract dated May 1, 1994, with Cable Television Installation Service
for underground cable television construction services.
20. Agreement dated March 31, 1993, with P.D.Q. Cable Construction, Inc.
for fiber optic cable plant construction services.
21. Contract dated May 1, 1994, with Southern Communications Construction,
Inc. for underground cable television construction services.
22. Contract dated October 5, 1992, with Total Cable Communications for
construction maintenance services.
23. Contract dated September 15, 1994, with Volt Information Sciences for
aerial construction and maintenance services.
24. Agreement effective January 1, 1995, with Quality Cable Services, Inc.
for cable television installation services.
25. Joint Trenching Agreement dated September 28, 1987, with General
Telephone Company of Florida and Tampa Electric Company.
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<PAGE> 52
26. Joint Project Agreement for Utility Placement in Platt Street dated
May 16, 1994, with the City of Tampa, GTE Florida Incorporated, Tampa
Electric Company, and Peoples Gas System, Inc. for the relocation of
facilities.
27. CMS Lockbox Contract dated February 1, 1993, with Cash Management
Services, Inc. to collect, process and deposit payments by cable
television subscribers.
28. Maintenance Agreement commencing October 15, 1991, with TSI Southeast
Florida for TIE TC-22 telephone system.
29. Agreement commencing on or about March 18, 1993, as amended, with ASI
Market Research, Inc.
30. Membership and Notification Center Agreement dated December 30, 1993,
with Sunshine State One-Call of Florida, Inc. for membership in a
one-call toll free notification system of planned excavation or
demolition activities.
MUST CARRY/RETRANSMISSION AGREEMENTS
1. Letters dated July 8, 1993 and July 27, 1995, granting retransmission
consent (T57, known as W57BA Channel 57- Telemundo/radio signal)
2. Letter dated July 8, 1993, granting retransmission consent (WUSA/radio
signal)
3. Letter dated July 8, 1993, granting retransmission consent (WMNF/radio
signal)
4. Letter dated July 8, 1993, granting retransmission consent (WFLZ/radio
signal)
5. Letter dated July 8, 1993, granting retransmission consent (WDUV/radio
signal)
6. Letter dated July 8, 1993, granting retransmission consent (WMTX/radio
signal)
7. Letter dated July 8, 1993, granting retransmission consent (WCIE/radio
signal)
8. Letter dated July 8, 1993, granting retransmission consent (WKES/radio
signal)
9. Letter dated July 8, 1993, granting retransmission consent (WUSF/radio
signal)
10. Letter dated July 8, 1993, granting retransmission consent (WYNF/radio
signal) NOT: WYNF has changed its call letters to WARM.
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<PAGE> 53
11. Letter dated August 25, 1993, granting retransmission consent (WFLA)
12. Retransmission Consent Agreement dated September 13, 1993 (WTSP)
13. Retransmission Consent Agreement dated September 23, 1993 (WTVT)
14. Fox Broadcast Affiliate Retransmission Consent Agreement dated
February 22, 1994 (WFTS)
15. Letter dated June 14, 1993, electing must carry status (WTMV)
16. Letter dated June 15, 1993, electing must carry status (WTOG)
17. Letter dated August 3, 1993, electing must carry status (WBHS)
18. Letters dated August 2, 1994 and September 12, 1994, electing must
carry status (WFCT/formerly WTBG)
19. Letter dated July 8, 1993, granting retransmission consent
(W61BL/radio signal).
20. Letter dated July 26, 1995, granting retransmission consent
(WYUU/radio signal).
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<PAGE> 1
EXHIBIT 2.12
ASSET EXCHANGE AGREEMENT
BETWEEN
JONES INTERCABLE, INC.
AND
TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE PARTNERSHIP
DATED
August 11, 1995
<PAGE> 2
TABLE OF CONTENTS
(Table)
[CAPTION]
Page
[S] [C] [C] [C]
1. CERTAIN DEFINITIONS................................... 1
2. EXCHANGE OF ASSETS ................................... 9
2.1 Agreement to Exchange Assets ................. 9
2.2 Conveyance of the TWEAN Assets................ 9
2.3 TWCS Assets ................................. 10
2.4 Conveyance of the Jones Assets ............... 10
2.5 Cash Purchase Price ......................... 11
2.6 TWEAN Excluded Assets ........................ 11
2.7 Jones Excluded Assets ........................ 12
2.8 Current Items Amount ........................ 13
2.9 Current Items Amount Calculated............... 15
2.10 TWEAN Assumption of Liabilities .............. 15
2.11 Jones Assumption of Liabilities .............. 15
2.12 Exchange...................................... 16
2.13 Transfer of TWCS Assets ...................... 16
3. TWEAN'S REPRESENTATIONS............................... 16
3.1 Organization and Qualification................ 16
3.2 Authorization................................. 16
3.3 System Information............................ 17
3.4 No Other Operators............................ 17
3.5 Title and Condition of Personal Property...... 17
3.6 Franchises, Licenses, and System Contracts.... 18
3.7 No Conflicts: Consents........................ 18
3.8 Litigation.................................... 19
3.9 Employment Matters............................ 19
3.10 Taxes......................................... 20
3.11 Financial Statements.......................... 20
3.12 No Adverse Change............................. 21
3.13 Compliance with Legal Requirements............ 21
3.14 Environmental Laws and Regulations............ 23
3.15 Real Property................................. 24
3.16 Non-Infringement.............................. 24
3.17 Books and Records............................. 25
3.18 TWEAN Accounts Receivable..................... 25
3.19 Bonds......................................... 25
3.20 Tier Penetration.............................. 25
3.21 Accuracy of Schedules......................... 25
3.22 Disclosure.................................... 25
3.23 Taxpayer Identification Number................ 25
<PAGE> 3
4. JONES' REPRESENTATIONS............................................ 26
4.1 Organization and Qualification............................ 26
4.2 Authorization............................................. 26
4.3 System Information........................................ 26
4.4 No Other Operators........................................ 27
4.5 Title and Condition of Personal Property.................. 27
4.6 Franchises, Licenses, and System Contracts................ 27
4.7 No Conflicts; Consents.................................... 28
4.8 Litigation................................................ 28
4.9 Employment Matters........................................ 29
4.10 Taxes..................................................... 30
4.11 Financial Statements...................................... 30
4.12 No Adverse Change......................................... 30
4.13 Compliance with Legal Requirements........................ 31
4.14 Environmental Laws and Regulations........................ 32
4.15 Real Property............................................. 33
4.16 Non-Infringement.......................................... 33
4.17 Books and Records......................................... 34
4.18 Accounts Receivable....................................... 34
4.19 Bonds..................................................... 34
4.20 Tier Penetration.......................................... 34
4.21 Accuracy of Schedules..................................... 34
4.22 Disclosure................................................ 34
4.23 Taxpayer Identification Number............................ 34
5. COVENANTS......................................................... 34
5.1 Pre-Closing Obligations................................... 34
5.2 Financial Statements...................................... 36
5.3 Title Matters............................................. 36
5.4 Estoppel Certificates Regarding Leases.................... 36
5.5 Employees................................................. 37
5.6 Cooperation in the Obtaining of Consents.................. 37
5.7 HSR Act Compliance........................................ 38
5.8 Leased Vehicles........................................... 38
5.9 Transitional Billing Services............................. 38
5.10 Use of Names and Logos.................................... 38
5.11 Bulk Sales................................................ 39
5.12 Supplements to Schedules.................................. 39
5.13 Transfer Taxes............................................ 39
5.14 TWEAN Approvals........................................... 39
6. CONDITIONS PRECEDENT.............................................. 39
6.1 Conditions Precedent to TWEAN's Obligations............... 39
6.2 Conditions Precedent to Jones' Obligations................ 41
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<PAGE> 4
7. CLOSING............................................................ 42
7.1 Time and Place............................................. 42
7.2 Jones' Deliveries.......................................... 43
7.3 TWEAN's Deliveries......................................... 44
8. TERMINATION........................................................ 45
8.1 Termination Events......................................... 45
8.2 Effect of Termination...................................... 46
9. SURVIVAL OF REPRESENTATIONS AND INDEMNITY.......................... 46
9.1 Survival of Representations, Warranties and Covenants...... 46
9.2 TWEAN's Indemnity.......................................... 47
9.3 Jones' Indemnity........................................... 47
9.4 Procedure for Indemnified Third Party Claim................ 48
9.5 Limitation on Indemnification.............................. 48
9.6 Determination of Indemnification Amounts and
Related Matters.......................................... 49
10. CONFIDENTIALITY AND PRESS RELEASES................................. 49
10.1 Confidentiality............................................ 49
10.2 Press Releases............................................. 49
11. BROKERAGE FEES..................................................... 50
12. CASUALTY LOSSES.................................................... 50
13. MISCELLANEOUS...................................................... 50
13.1 Further Assurances......................................... 50
13.2 Notices.................................................... 51
13.3 Assignment; Binding Effect................................. 52
13.4 Expenses................................................... 52
13.5 Collection of Accounts..................................... 52
13.6 Entire Agreement; Amendments; and Waivers.................. 52
13.7 Counterparts............................................... 53
13.8 Severability............................................... 53
13.9 Schedules and Exhibits; Headings........................... 53
13.10 Governing Law.............................................. 53
13.11 Third Parties; Joint Ventures.............................. 53
13.12 Construction............................................... 53
13.13 Attorneys' Fees............................................ 53
13.14 Commercially Reasonable Efforts............................ 54
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<PAGE> 5
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made as of the 11th day
of August, 1995, by and between TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE
PARTNERSHIP, a New York general partnership ("TWEAN"), whose U.S. Taxpayer
Identification Number is 13-3790433, and JONES INTERCABLE, INC., a Colorado
corporation ("Jones"), whose U.S. Taxpayer Identification Number is 84-0613514.
RECITALS
A. As of Closing, Jones or one or more of its wholly-owned
subsidiaries will own and operate cable television systems that are franchised
or hold other operating authority and operate in and around the communities
listed on Schedule A (each, individually, a "Jones System" and, collectively,
the "Jones Systems").
B. TWEAN owns and operates cable television systems that are
franchised or hold other operating authority and operate in and around the
communities listed on Schedule B (each, individually, a "TWEAN System" and,
collectively, the "TWEAN Systems").
C. This Agreement sets forth the terms and conditions on which
TWEAN will convey to Jones substantially all of the assets of the TWEAN
Systems, and Jones will convey to TWEAN substantially all of the assets of the
Jones Systems, in such a manner as to effect a like-kind exchange of assets
under Section 1031 of the United States Internal Revenue Code, of 1986, as
amended.
AGREEMENTS
In consideration of the mutual promises and covenants hereinafter set
forth, TWEAN and Jones hereby agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms, whether in
singular or plural form, shall have the following meanings:
1.1 "Assets" means the Jones Assets or the TWEAN Assets,
as the context requires.
1.2 "Accounts Receivable" means the Jones Accounts
Receivable or the TWEAN Accounts Receivable, as the context requires.
<PAGE> 6
1.3 "Basic Cable" means the cable television services
described as Basic, Cable and/or Standard Tier, or Preferred on Schedule 3.3
with respect to each TWEAN System and described as Limited Basic, Basic Plus
and/or Tier on Schedule 4.3 with respect to each Jones System.
1.4 "Basic Cable Rate" means the fees and charges charged
to subscribers by a System as follows:
1.4.1 Jones Systems:
Orangeburg - $17.73
Tampa - $21.20
Carmel - $21.51
1.4.2 TWEAN Systems:
Prince George's - $21.90
County
Reston - $23.82
1.5 "Basic Subscriber" means any individual subscriber of
a System's Basic Cable as of the Closing Date (i) whose payment for service is
not more than 60 days past due from the billing date (provided that a
subscriber's account shall not be considered past due as a result of unpaid
amounts not exceeding $5.00 in respect of (A) customary late charges imposed
by the System and/or (B) disputed amounts); and (ii) who has not given or been
given notice of termination and who, consistent with the System's standing
policy, should not have been given notice of termination.
1.6 "Bulk Subscriber" means any commercial establishment
or multiple dwelling unit that pays a bulk rate for such System's Basic Cable
(either alone or in combination with any other service), provided that such
subscriber (i) has been a bulk subscriber for at least one full month and has
paid at least one month's payment in full without discount, together with any
applicable installation fee; (ii) is not delinquent in any payment for any such
service; and (iii) has not given or been given notice of termination, and,
consistent with the System's disconnect policy for bulk accounts, should not
have been given notice of termination. A Bulk Subscriber shall be deemed to be
delinquent if any part of such subscriber's account with the System is more
than 60 days past due from the first day of the period to which any outstanding
bill relates.
1.7 "Cable Act" means Title VI of the Communications Act
of 1934, as amended, 47 U.S.C. Section 151 et seq., and all other provisions of
the Cable Communications Policy Act of 1984, Pub. L. No. 98-549, and the
Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No.
102-385, as such statutes
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<PAGE> 7
may be amended from time to time, and the rules and regulations promulgated
thereunder.
1.8 "Closing" means the consummation of the transaction
contemplated by this Agreement in accordance with the provisions of Section 7.
1.9 "Closing Date" means the date of Closing.
1.10 "Code" shall mean the Internal Revenue Code of 1986,
as amended, and the regulations thereunder, or any subsequent legislative
enactment thereof, as in effect from time to time.
1.11 "Consents" means the Jones Consents or the TWEAN
Consents, as the context requires.
1.12 "Contracts" means leases, private easements, private
rights-of-way, multiple dwelling unit agreements, retransmission consent
agreements, pole attachment agreements, conduit agreements, subscriber
agreements and all other agreements, written or oral (including any amendments
and other modifications thereto).
1.13 "Equivalent Billing Unit" means, with respect to a
System, that number of subscribers, as of any date, calculated by adding (i)
the number of Basic Subscribers of the System and (ii) the number obtained by
dividing (A) the aggregate monthly billings of such System for Basic Cable to
Bulk Subscribers during the last full month ending on or prior to such date by
(B) such System's Basic Cable Rate.
1.14 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and rules and regulations promulgated thereunder and
published interpretations with respect thereto.
1.15 "FCC" means the Federal Communications Commission.
1.16 "Franchises" means the Jones Franchises or the TWEAN
Franchises, as the context requires.
1.17 "GAAP" means generally accepted accounting
principles consistently applied.
1.18 "Governmental Authority" means (A) the United States
of America, any state, commonwealth, territory, or possession thereof and any
political subdivision or quasi-governmental authority of any of the same,
including but not limited to courts, tribunals, departments, commissions,
boards, bureaus, agencies, counties, municipalities, provinces, parishes, and
other instrumentalities, and (B) any foreign (as to the United States of
America) sovereign entity, including but not limited to nations,
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<PAGE> 8
states, republics, kingdoms and principalities, any state, province,
commonwealth, territory or possession thereof, and any political subdivision,
quasi-governmental authority, or instrumentality of any of the same.
1.19 "Hazardous Substances" means (i) any "hazardous
waste" as defined by the Resources Conservation and Recovery Act of 1976
("RCRA") (U.S.C. Section 6901 et seq.), as amended, and rules and regulations
promulgated thereunder; (ii) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. Section 9601 et seq.) ("CERCLA"), as amended, and rules and
regulations promulgated thereunder; (iii) any substance regulated by the Toxic
Substances Act ("TSCA") (42 U.S.C. Section 2601 et seq.), as amended, and
rules and regulations promulgated thereunder; (iv) asbestos; (v)
polychlorinated biphenyls; (vi) any substances regulated under the provisions
of Subtitle I of RCRA relating to underground storage tanks; (vii) any
substance the presence, use, treatment, storage or disposal of which on the
Real Property is prohibited by any Legal Requirements; and (viii) any other
substance which by any Legal Requirements require special handling, reporting
or notification of any Governmental Authority in its collection, storage, use,
treatment, or disposal.
1.20 "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.21 "Jones Accounts Receivable" means the rights of Jones
to payment for services rendered by Jones prior to the Closing Date in
connection with the operation of the Jones Systems, as reflected on the billing
records of Jones.
1.22 "Jones Consents" means all of the consents, permits
or approvals of third parties necessary to transfer the Jones Assets to TWEAN
or otherwise to consummate lawfully,the transaction contemplated hereby.
1.23 "Jones Contracts" means all (i) Contracts to which
Jones is a party and which affect the Jones Assets or the business or
operations of the Jones Systems, as listed on Schedule 4.6 in accordance with
Section 4.6, (ii) Contracts identified in Section 4.6(i), (ii) or (iii) other
than vehicle leases or employee-related Contracts and (iii) any agreement
described in (i) above entered into by Jones in the ordinary course of business
and as permitted by this Agreement between the date hereof and the Closing Date
which would have been listed on Schedule 4.6 had they been in existence on the
date hereof and which TWEAN agrees in writing to assume.
1.24 "Jones Franchises" means all municipal, county, and
state franchises, franchise applications (if any), authorizations and permits
relating to the Jones Systems, other than the Jones Licenses.
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<PAGE> 9
1.25 "Jones Licenses" means all domestic satellite,
business radio, CARS, microwave and other licenses, and all authorizations and
permits relating to the Jones Systems granted to Jones by any Governmental
Authority, except the Jones Franchises or any public easements or rights-of-way
related thereto.
1.26 "Jones Personal Property" means all of the equipment,
plant, inventory, spare parts, supplies and other tangible personal property
which are owned or leased by Jones and used or useful as of the date hereof in
the conduct of the business or operations of the Jones Systems, other than the
Jones Excluded Assets, plus such additions thereto and deletions therefrom
arising in the ordinary course of business and as permitted by this Agreement
between the date of this Agreement and the Closing Date.
1.27 "Jones Real Property" means all of the fee estates
and buildings and other improvements thereon, leasehold interests in real
estate, private easements, private rights to access, private rights-of-way,
and other real property interests which are used by Jones, or owned by Jones
and useful, as of the date of this Agreement, in the conduct of the business
or operations of the Jones Systems, plus such additions thereto and deletions
therefrom arising in the ordinary course of business and permitted by this
Agreement between the date of this Agreement and the Closing Date.
1.28 "Judgment" means any judgment, writ, order,
injunction, award or decree of any court, judge, justice or magistrate,
including any bankruptcy court or judge, and any order of or by any
Governmental Authority.
1.29 "Knowledge" of any Person of or with respect to any
matter means that such Person (if a natural person) or any of the system
managers of such Person (if not a natural Person) has actual awareness or
knowledge of such matter.
1.30 "Legal Requirements" means applicable common law and
any statute, ordinance, code or other law, rule, regulation, order, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority, including Judgments.
1.31 "Licenses" means the Jones Licenses or the TWEAN
Licenses, as the context requires.
1.32 "Lien" means any security agreement, financing
statement filed with any Governmental Authority, conditional sale or other
title retention agreement, any lease, consignment or bailment given for
purposes of security, any lien, mortgage, indenture, pledge, option,
encumbrance, adverse interest, constructive trust or other trust, claim,
attachment, exception to or defect in title or other ownership interest
(including but not limited to reservations, rights of entry, possibilities of
reverter, encroachments, easement, rights-of-way, restrictive covenants, leases
and licenses) of any kind, which
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<PAGE> 10
otherwise constitutes an interest in or claim against property, whether arising
pursuant to any Legal Requirement, System Contract or otherwise.
1.33 "Litigation" means any claim, action, suit,
proceeding, arbitration, investigation, hearing or other activity or procedure
that could result in a Judgment, and any notice of any of the foregoing.
1.34 "Losses" means any claims, losses, liabilities,
damages, Liens, penalties, costs, and expenses, including but not limited to
interest which may be imposed in connection therewith, expenses of
investigation, reasonable fees and disbursements of counsel and other experts,
and the cost to any Person making a claim or seeking indemnification under this
Agreement with respect to funds expended by such Person by reason of the
occurrence of any event with respect to which indemnification is sought, but
shall in no event include incidental or consequential damages.
1.35 "Person" means any natural person, Governmental
Authority, corporation, general or limited partnership, joint venture, trust,
association or unincorporated entity of any kind.
1.36 "Personal Property" means the Jones Personal Property
or the TWEAN Personal Property, as the context requires.
1.37 "Real Property" means the Jones Real Property or the
TWEAN Real Property, as the context requires.
1.38 "Subject Property" means the parcel of Jones Real
Property described on Schedule 4.15, Orangeburg, South Carolina System, Real
Property Owned, paragraph 1.
1.39 "System" means A Jones System or A TWEAN System, as
the context requires.
1.40 "System Contract" means A Jones Contract or A TWEAN
Contract, as the context requires.
1.41 "Taxes" means all levies and assessments of any kind
or nature imposed by any Governmental Authority, including but not limited to
all income, sales, use, ad valorem, value added, franchise, severance, net or
gross proceeds, withholding, payroll, employment, excise or property taxes,
together with any interest thereon and any penalties, additions to tax or
additional amounts applicable thereto.
1.42 "Transaction Documents" means all instruments and
documents executed and delivered by TWEAN, TWCS or Jones or any officer,
director or affiliate
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<PAGE> 11
of either of them in connection with this Agreement or the transaction
contemplated hereby.
1.43 "TWEAN Accounts Receivable" means the rights of TWEAN
to payment for services rendered by TWEAN prior to the Closing Date in
connection with the operation of the TWEAN Systems, as reflected on the billing
records of TWEAN.
1.44 "TWEAN Consents" means all of the consents, permits
or approvals of third parties necessary to transfer the TWEAN Assets to Jones or
otherwise to consummate lawfully the transaction contemplated hereby.
1.45 "TWEAN Contracts" means all (i) Contracts to which
TWEAN is a party and which affect the TWEAN Assets or the business or
operations of the TWEAN Systems, as listed on Schedule 3.6 in accordance with
Section 3.6, (ii) Contracts identified in Section 3.6(i), (ii) or (iii) other
than vehicle leases or employee-related Contracts and (iii) any agreement
described in (i) above entered into by TWEAN in the ordinary course of business
and as permitted by this Agreement between the date hereof and the Closing Date
which would have been listed on Schedule 3.6 had they been in existence on the
date hereof and which Jones agrees in writing to assume.
1.46 "TWEAN Franchises" means all municipal, county, and
state franchises, franchise applications (if any), authorizations and permits
relating to the TWEAN Systems, other than the TWEAN Licenses.
1.47 "TWEAN Licenses" means all domestic satellite,
business radio, CARS, microwave and other licenses, and all authorizations and
permits relating to the TWEAN Systems granted to TWEAN by any Governmental
Authority, except the TWEAN Franchises or any public easements or rights-of-way
related thereto.
1.48 "TWEAN Personal Property" means all of the equipment,
plant, inventory, spare parts, supplies and other tangible personal property
which are owned or leased by TWEAN and used or useful as of the date hereof in
the conduct of the business or operations of the TWEAN Systems, other than the
TWCS Assets and the TWEAN Excluded Assets, plus such additions thereto and
deletions therefrom arising in the ordinary course of business and as permitted
by this Agreement between the date of this Agreement and the Closing Date.
1.49 "TWEAN Real Property" means all of the fee estates
and buildings and other improvements thereon, leasehold interests in real
estate, private easements, private rights to access, private rights-of-way, and
other real property interests which are used by TWEAN, or owned by TWEAN and
useful, as of the date of this Agreement, in the conduct of the business or
operations of the Systems, plus such additions thereto and deletions therefrom
arising in the ordinary course of business and permitted by this Agreement
between the date of this Agreement and the Closing Date.
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1.50 List of Additional Definitions. The following is a
list of additional terms used in this Agreement and a reference to the Section
hereof in which such term is defined:
Term Section
Acquired Jones Broadcast Contracts 2.7.2
Acquired TWEAN Broadcast Contracts 2.6.2
Adjustment Time 2.8
Cash Purchase Price 2.5
Current Items Amount 2.8
Estoppel Certificates 5.4
Final Adjustment Certificate 2.9
Hired Employee 5.5
Indemnitee 9.4
Indemnitor 9.4
Initial Adjustment Certificate 2.9
Initial Indemnification Claim Date 9.5
Jones Preamble
Jones Assets 2.4
Jones Assumed Liabilities 2.11
Jones Assumption Agreement 7.2.11
Jones Balance Sheet 4.11.1
Jones Broadcast Contracts 2.7.2
Jones Excluded Assets 2.7
Jones Subscriber Adjustment Amount 2.8.4
Jones System(s) Recitals
Non-Hired Employee 5.5
Outside Closing Date 7.1
Permitted Liens 5.3
Title Commitments 5.3
Title Defect 5.3
Transitional Billing Services 5.8
TWCS 2.2
TWCS Assets 2.3
TWEAN Preamble
TWEAN Assets 2.2
TWEAN Assumed Liabilities 2.10
TWEAN Assumption Agreement 7.2.12
TWEAN Balance Sheet 3.11.1
TWEAN Broadcast Contracts 2.6.2
TWEAN Excluded Assets 2.6
TWEAN Subscriber Adjustment Amount 2.8.4
TWEAN System(s) Recitals
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2. EXCHANGE OF ASSETS.
2.1 Agreement to Exchange Assets. Subject to the terms
and conditions set forth in this Agreement, at Closing TWEAN and Jones shall
effect an exchange of Assets as set forth below.
2.2 Conveyance of the TWEAN Assets. TWEAN shall (i) cause
TW Cable Service Co. ("TWCS"), or such other entity as TWEAN may designate in
writing at least five days prior to the Closing Date, to convey, assign,
transfer and deliver to Jones, free and clear of all Liens (except Liens for ad
valorem Taxes not yet due and payable), and with full warranties of title and
with full substitution and subrogation to all rights and actions of warranty
against all preceding owners, the TWCS Assets and (ii) convey, assign, transfer
and deliver to Jones, free and clear of all Liens (except Liens for ad valorem
Taxes not yet due and payable), and with full warranties of title and with full
substitution and subrogation to all rights and actions of warranty against all
preceding owners, the following described tangible and intangible assets used
or useful in connection with the conduct of the business or operations of the
TWEAN Systems (the "TWEAN Assets"):
2.2.1 The TWEAN Personal Property;
2.2.2 the TWEAN Real Property, subject also to
Permitted Liens;
2.2.3 the TWEAN Franchises;
2.2.4 the TWEAN Contracts;
2.2.5 the TWEAN Accounts Receivable;
2.2.6 the TWEAN Licenses;
2.2.7 All of TWEAN's proprietary information,
technical information and data, machinery and equipment warranties, maps,
computer disks and tapes, plans, diagrams, blueprints and schematics relating
to the TWEAN Systems, including filings with the FCC, other than as any of the
foregoing relate to the TWEAN Excluded Assets;
2.2.8 All books and records relating to the
business or operations of the TWEAN Systems, including executed copies of the
TWEAN Contracts and correspondence relating to retransmission agreements and
must-carry elections, subject to the right of TWEAN to have such books and
records made available to TWEAN for a reasonable period, not to exceed three
years from the Closing Date;
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2.2.9 The goodwill and going concern value
generated by TWEAN with respect to the TWEAN Systems, if any; and
2.2.10 All intangible assets of TWEAN relating to the
TWEAN Systems not specifically described above.
2.3 TWCS Assets. "TWCS Assets" means all of the tangible
and intangible assets used or useful in connection with the conduct of the
business or operations of the TWEAN Systems that are owned by TWCS, consisting
only of the following, all of which are described on Schedule 2.3: all earth
satellite receive stations and related equipment, antennae, satellite dishes
and intangible domestic satellite receive only (TVRO) registrations.
2.4 Conveyance of the Jones Assets. Jones shall convey,
assign, transfer and deliver to TWEAN (or, in the case of Jones Assets which
are earth satellite receive stations and related equipment, antennae, satellite
dishes and intangible domestic satellite receive only (TVRO) registrations, to
TWCS or such other entity as TWEAN may designate in writing at least five days
prior to the Closing Date), free and clear of all Liens (except Liens for ad
valorem Taxes not yet due and payable), and with fun warranties of title and
with full substitution and subrogation to all rights and actions of warranty
against all preceding owners, the following described tangible and intangible
assets used or useful in connection with the conduct of the business or
operations of the Jones Systems (the "Jones Assets"):
2.4.1 The Jones Personal Property;
2.4.2 the Jones Real Property, subject also to
Permitted Liens;
2.4.3 the Jones Franchises;
2.4.4 the Jones Contracts;
2.4.5 the Jones Accounts Receivable;
2.4.6 the Jones Licenses;
2.4.7 All of Jones' proprietary information,
technical information and data, machinery and equipment warranties, maps,
computer disks and tapes, plans, diagrams, blueprints and schematics relating
to the Jones Systems, including filings with the FCC, other than as any of the
foregoing relate to the Jones Excluded Assets;
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2.4.8 All books and records relating to the
business or operations of the Jones Systems, including executed copies of the
Jones Contracts and correspondence relating to retransmission agreements and
must-carry elections, subject to the right of Jones to have such books and
records made available to Jones for a reasonable period, not to exceed three
years from the Closing Date;
2.4.9 The goodwill and going concern value
generated by Jones, with respect to the Jones Systems, if any; and
2.4.10 All intangible assets of Jones relating to
the Jones Systems not specifically described above.
2.5 Cash Purchase Price. Jones will pay to TWEAN, by
wire transfer of immediately available funds, to such account or accounts as
are designated in writing by TWEAN to Jones, the sum of $3,500,000 (the "Cash
Purchase Price"), reflecting the agreed-upon difference in fair market value
between the TWEAN Assets and the Jones Assets.
2.6 TWEAN Excluded Assets. The following assets shall
not be transferred to Jones by TWEAN and are specifically excluded from the
Assets ("TWEAN Excluded Assets"):
2.6.1 TWEAN's cash on hand as of the Closing Date
and all other cash in any of TWEAN's bank or savings accounts, any and all
insurance policies, construction and performance bonds, intercompany
receivables with respect to any affiliate of TWEAN, letters of credit or other
similar items and any cash surrender value in regard thereto, and any stocks,
bonds, certificates of deposit and similar investments;
2.6.2 Any Contracts other than the TWEAN Contracts;
all programming Contracts relating to the TWEAN Systems; any retransmission
consents or will carry Contracts which TWEAN maintains with respect to the
TWEAN Systems (collectively, the "TWEAN Broadcast Contracts"), except as
otherwise agreed by Jones pursuant to written notice to TWEAN given no later
than ten days prior to the Closing Date to the effect that the Contracts named
in such notice are to be included in the TWEAN Contracts to be transferred to
Jones at the Closing (the "Acquired TWEAN Broadcast Contracts"); provided that
Jones may not designate as Acquired TWEAN Broadcast Contracts any TWEAN
Broadcast Contracts which relate to broadcast stations which are carried by
cable television systems other than the TWEAN Systems; and provided further
that TWEAN shall have no obligation to obtain consents to the assignment of the
Acquired TWEAN Broadcast Contracts to Jones unless Jones notifies TWEAN within
45 days after the date hereof that such Contracts shall be included in the
Acquired TWEAN Broadcast Contracts to be transferred to Jones at Closing;
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2.6.3 Any books and records that TWEAN is required
by law to retain, subject to the right of Jones to have access to and to copy
for a reasonable period, not to exceed three years from the Closing Date, and
TWEAN's minute books and other books and records related to internal matters
and financial relationships with TWEAN's lenders;
2.6.4 Any claims, rights and interests in and to
any refunds of federal, state or local franchise, income or other taxes or fees
for periods prior to the Closing Date;
2.6.5 The trademarks, trade names, service marks
and all other information and similar intangible assets relating to TWEAN or
the TWEAN Systems; and
2.6.6 The rights, assets and properties described
on Schedule 2.6.
2.7 Jones Excluded Assets. The following assets shall
not be transferred to TWEAN by Jones and are specifically excluded from the
Assets ("Jones Excluded Assets"):
2.7.1 Jones' cash on hand as of the Closing Date
and all other cash in any of Jones' bank or savings accounts, any and all
insurance policies, construction and performance bonds, intercompany
receivables with respect to any affiliate of Jones, letters of credit or other
similar items and any cash surrender value in regard thereto, and any stocks,
bonds, certificates of deposit and similar investments;
2.7.2 Any Contracts other than the Jones Contracts;
all programming Contracts relating to the Jones Systems; any retransmission
consents or will carry Contracts which Jones maintains with respect to the
Jones Systems (collectively the "Jones Broadcast Contracts"), except as
otherwise agreed by TWEAN pursuant to written notice given no later than ten
days prior to the Closing Date to the effect that the Contracts named in such
notice are to be included in the Jones Contracts to be transferred to TWEAN at
the Closing (the "Acquired Jones Broadcast Contracts"); provided that TWEAN may
not designate as Acquired Jones Broadcast Contracts any Jones Broadcast
Contracts which relate to broadcast stations which are carried by cable
television systems other than the Jones Systems; and provided further that
Jones shall have no obligation to obtain consents to the assignment of the
Acquired Jones Broadcast Contracts to TWEAN unless TWEAN notifies Jones within
45 days after the date hereof that such Contracts shall be included in the
Acquired Jones Broadcast Contracts to be transferred to TWEAN at Closing;
2.7.3 Any books and records that Jones is required
by law to retain, subject to the right of TWEAN to have access to and to copy
for a reasonable
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period, not to exceed three years from the Closing Date, and Jones' corporate
minute books and other books and records related to internal corporate
matters and financial relationships with Jones' lenders;
2.7.4 Any claims, rights and interests in and to
any refunds of federal, state or local franchise, income or other taxes or fees
for periods prior to the Closing Date;
2.7.5 The trademarks, trade names, service marks
and all other information and similar intangible assets relating to Jones or
the Jones Systems; and
2.7.6 The rights, assets and properties described
on Schedule 2.7.
2.8 Current Items Amount. TWEAN or Jones, as
appropriate, shall pay to the other the net amount in favor of the other of the
adjustments and prorations effected pursuant to Sections 2.8.1, 2.8.2, 2.8.3
and 2.8.4 below (the "Current Items Amount"). The adjustments provided for
herein shall be made as of the close of business (5:00 p.m., eastern standard
time) on the Closing Date (the "Adjustment Time").
2.8.1 Accounts Receivable.
(i) TWEAN shall be entitled to an amount
equal to the sum of (A) 90% of the face amount of all TWEAN Accounts Receivable
that are current or 30 days or less past due as of the Adjustment Time, plus
(B) 80% of the face amount of all TWEAN Accounts Receivable that are between 31
days and 60 days past due as of the Adjustment Time.
(ii) Jones shall be entitled to an amount
equal to the sum of (A) 90% of the face amount of all Jones Accounts Receivable
that are current or 30 days or less past due as of the Adjustment Time, plus
(B) 80% of the face amount of all Jones Accounts Receivable that are between 31
days and 60 days past due as of the Adjustment Time.
For purposes of the foregoing, an Account Receivable shall be deemed "past due"
when the payment due under an original monthly billing statement of TWEAN or
Jones, as applicable, has not been received by the System within 30 days
following the date of such original monthly billing statement,
2.8.2 Advance Payments and Deposits. TWEAN and
Jones each shall be entitled to an amount equal to the aggregate of (A) all
deposits of subscribers of the other's Systems for converters, decoders, and
similar items, and (B) all payments for services to be rendered by it to
subscribers of the other's Systems after the
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Adjustment Time, or for other services to be rendered by it to other third
parties after the Adjustment Time for cable television commercials, channel
leasing, or other services or rentals, to the extent all obligations of the
other party related thereto are assumed by it at Closing.
2.8.3 Expenses. As of the Adjustment Time, the
following expenses relating to each party's Systems shall be prorated, in
accordance with GAAP, so that, with respect to the TWEAN Systems, all expenses
for periods prior to the Adjustment Time shall be for the account of TWEAN, and
all expenses for periods after the Adjustment Time shall be for the account of
Jones and, with respect to the Jones Systems, all expenses for periods prior to
the Adjustment Time shall be for the account of Jones, and all expenses for
periods after the Adjustment Time shall be for the account of TWEAN: (i) all
payments and charges under the Franchises, the Licenses, and the System
Contracts; (ii) Taxes levied or assessed against any of the Assets; (iii)
Taxes, if any, payable with respect to cable television service and related
sales to subscribers of the Systems; (iv) charges for utilities and other goods
or services furnished to the Systems; (v) copyright fees based on signal
carriage by the Systems; and (vi) all other items of expense relating to the
Systems; provided, however, that TWEAN and Jones shall not prorate any items of
expense payable under any Excluded Assets, all of which shall remain and be
solely for the account of TWEAN and Jones, respectively.
2.8.4 Subscriber Adjustment. (i) Jones shall be
entitled to, an amount equal to the sum of (A) $2,132 for each Equivalent
Billing Unit less than 68,940 served by the TWEAN System operating in and
around Prince George's County, Maryland and (B) $2,132 for each Equivalent
Billing Unit less than 13,824 served by the TWEAN System operating in and
around Reston, Virginia, in each case calculated as of the Closing Date. If
Jones is entitled to receive an adjustment pursuant to the foregoing sentence
(the "TWEAN Subscriber Adjustment Amount"), then TWEAN shall be entitled to an
amount equal to the sum of (y) $2,132 for each Equivalent Billing Unit over
68,940 served by the Prince George's County System, and (z) $2,132 for each
Equivalent Billing Unit over 13,824 served by the Reston System, up to a
maximum of the TWEAN Subscriber Adjustment Amount.
(ii) TWEAN shall be entitled to an amount
equal to the sum of (A) $2,421 for each Equivalent Billing Unit less than
18,270 served by the Jones System operating in and around Carmel, Indiana, (B)
$1,464 for each Equivalent Billing Unit less than 12,533 served by the Jones
System operating in and around Orangeburg, South Carolina, and (C) $1,744 for
each Equivalent Billing Unit less than 63,300 served by the Jones System
operating in and around Tampa, Florida, in each case calculated as of the
Closing Date. If TWEAN is entitled to receive an adjustment pursuant to the
foregoing sentence (the "Jones Subscriber Adjustment Amount"), then Jones shall
be entitled to an amount equal to the sum of (x) $2,421 for each Equivalent
Billing Unit over 18,270 served by the Carmel System, (y) $1,464 for each
Equivalent Billing Unit over 12,533 served by the Orangeburg System, and (z)
$1,744 for each
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Equivalent Billing Unit over 63,300 served by the Tampa System, up to a maximum
of the Jones Subscriber Adjustment Amount.
2.9 Current Items Amount Calculated. The Current Items
Amount, as it relates to each party's Systems, shall be estimated in good faith
by TWEAN and Jones with respect to their respective Systems, and set forth,
together with a detailed statement of the calculation thereof, in a certificate
(the "Initial Adjustment Certificate") executed by a duly authorized
representative of TWEAN or Jones, as applicable, and delivered to the other
party not later than ten days prior to Closing. Each party shall use
reasonable efforts to keep the other informed during its preparation of the
Initial Adjustment Certificate. If accepted by the other party, each party's
Initial Adjustment Certificate shall constitute the basis on which the Current
Items Amount is calculated for purposes of Closing. At Closing, the party
against whose favor the estimated Current Items Amount is so determined shall
pay to the other the estimated Current Items Amount. Within 90 days after
Closing, TWEAN and Jones shall each deliver to the other a certificate (the
"Final Adjustment Certificate") showing in full detail the final determination
of the Current Items Amount, which certificate shall be accompanied by
appropriate documentation supporting the adjustments proposed in such
certificate, and which shall be executed by an officer of TWEAN or Jones, as
appropriate. Not later than 30 days after TWEAN and Jones shall have finally
agreed upon the Current Items Amount, TWEAN or Jones, as appropriate, shall pay
to the other the amount by which the Current Items Amount as finally determined
differs from the Current Items Amount as estimated in the Initial Adjustment
Certificate.
2.10 TWEAN Assumption of Liabilities. As of the Closing
Date, TWEAN shall assume, pay, discharge, and perform the following (the "TWEAN
Assumed Liabilities"): (i) all liabilities and obligations with respect to
acts, omissions or events occurring subsequent to the Closing Date under any
Jones Franchise, Jones License, or Jones Contract; (ii) other obligations and
liabilities of Jones only to the extent that there shall be an adjustment in
favor of TWEAN with respect thereto pursuant to Section 2.8; and (iii) all
obligations and liabilities arising out of TWEAN's ownership of the Jones
Assets or operation of the Jones Systems after the Closing Date. All debts,
liabilities, and obligations arising out of or relating to the Jones Assets or
the operation of the Jones Systems other than the TWEAN Assumed Liabilities
shall remain and be the obligations and liabilities solely of Jones.
2.11 Jones Assumption of Liabilities. As of the Closing
Date, Jones shall assume, pay, discharge, and perform the following (the "Jones
Assumed Liabilities"): (i) all liabilities and obligations with respect to
acts, omissions or events occurring subsequent to the Closing Date under any
TWEAN Franchise, TWEAN License, or TWEAN Contract; (ii) other obligations and
liabilities of TWEAN or TWCS only to the extent that there shall be an
adjustment in favor of Jones with respect thereto pursuant to Section 2.8; and
(iii) all obligations and liabilities arising out of Jones' ownership of the
TWEAN Assets, the TWCS Assets or operation of the TWEAN
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Systems after the Closing Date. All debts, liabilities, and obligations
arising out of or relating to the TWEAN Assets, the TWCS Assets or the
operation of the TWEAN Systems other than the Jones Assumed Liabilities shall
remain and be the obligations and liabilities solely of TWEAN or TWCS, as
applicable.
2.12 Exchange. Except as provided in Section 2.13, the
TWEAN Assets shall be transferred and given by TWEAN, and the TWCS Assets shall
be caused to be transferred and given by TWCS, to Jones in exchange or
consideration for the Jones Assets, and the Jones Assets shall be transferred
and given by Jones to TWEAN and TWCS in exchange or consideration for the
TWEAN Assets and the TWCS Assets.
2.13 Transfer of TWCS Assets. TWEAN shall have the right,
but not the obligation, to acquire the TWCS Assets prior to Closing. If TWEAN
so acquires the TWCS Assets, TWEAN shall convey to Jones the TWCS Assets by
means of the Bill of Sale in the form of Exhibit F and Jones shall convey all
of the Jones Assets to TWEAN.
3. TWEAN'S REPRESENTATIONS.
TWEAN represents, warrants, covenants and agrees to and with
Jones as follows:
3.1 Organization and Qualification. TWEAN is a general
partnership duly organized, validly existing, and in good standing under the
laws of the State of New York, and has all requisite power and authority to own
and lease the properties and assets it currently owns and leases and to conduct
its activities and to carry on its business as such activities and business are
currently conducted. TWEAN is duly qualified to do business as a foreign
partnership and is in good standing in all jurisdictions in which the ownership
or leasing of the TWEAN Assets or the nature of its activities in connection
with the TWEAN Systems makes such qualification necessary, except any such
jurisdiction where the failure to be so qualified and in good standing would
not have a material adverse effect on the validity, binding effect or
enforceability of this Agreement, or on the ability of TWEAN to perform its
obligations under this Agreement.
3.2 Authorization. TWEAN has full partnership power and
authority to execute, deliver, and perform this Agreement and to consummate the
transactions contemplated in this Agreement. Other than the approval of the
Executive Committee of Time Warner Entertainment Company, L.P., the execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated in this Agreement on the part of TWEAN have been duly
and validly authorized and approved by all necessary action on the part of
TWEAN and its general partners. This Agreement has been duly and validly
executed and delivered by TWEAN, and is the
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valid and binding obligation of TWEAN, enforceable against TWEAN in accordance
with its terms.
3.3 System Information. Schedule 3.3 sets forth a
materially true and accurate description of the following information as of the
dates set forth on such Schedule:
3.3.1 the number of miles of activated aerial and
underground plant included in the TWEAN Assets;
3.3.2 the minimum number of passings of the TWEAN
Systems and the approximate number of Equivalent Billing Units served by each
TWEAN System;
3.3.3 a description of the basic and tier services
available from each TWEAN System, the rates charged by TWEAN for each,
together with the approximate number of subscribers receiving each of the
services, and any other charges by TWEAN for services to subscribers;
3.3.4 with respect to each Bulk Subscriber:
(i) the name and address of, and, if
applicable, the number of units in, each such establishment, building,
condominium, hotel or motel which is served by each TWEAN System; and
(ii) a description of the cable
television services delivered to each such establishment, building,
condominium, hotel or motel on a bulk basis and the monthly rates charged for
each such service; and
3.3.5 the channel and megahertz capacity of each
TWEAN System, the stations and channels carried by each TWEAN System, the
channel position of each such signal and station, and all frequencies utilized
by each TWEAN System,
3.4 No Other Operators. Except as described on Schedule
3.4 and other than direct broadcast satellite services, (i) each TWEAN System
is the only multiple channel operator presently serving the communities which
it serves, (ii) to the best of TWEAN's knowledge, no other multiple channel
operator is presently contemplated by any person in the communities now served
by the TWEAN Systems, and (iii) no franchises or other authorizations other
than the TWEAN Franchises have been issued with respect to the communities
served by the TWEAN Systems.
3.5 Title and Condition of Personal Property. Schedule
3.5. contains a complete description of all material items of TWEAN Personal
Property, other than the Excluded Assets. The TWEAN Personal Property,
together with the TWCS Assets,
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constitutes all personal property necessary to conduct lawfully and properly
the business or operations of the TWEAN Systems as now conducted. Except as
described in Schedule 3.5, TWEAN has good and marketable title to all of the
TWEAN Personal Property, free and clear of all Liens, except ad valorem Taxes
not yet due and payable. All the TWEAN Personal Property is in good working
order and repair, ordinary wear and tear excepted.
3.6 Franchises, Licenses, and System Contracts. Schedule
3.6 contains a description of all of the TWEAN Franchises, TWEAN Licenses and
TWEAN Contracts, except for: (i) subscription agreements with individual
residential subscribers for the cable services provided by the Systems in the
ordinary course of business which may be cancelled by the Systems without
penalty on not more than 30 days notice; (ii) miscellaneous service contracts
terminable at will without penalty; (iii) other TWEAN Contracts not involving
either aggregate liabilities under all such TWEAN Contracts exceeding $25,000
or any material nonmonetary obligation; (iv) programming agreements; and (v)
Contracts described on Schedule 2.6. TWEAN has delivered to Jones true and
complete copies of each of the TWEAN Franchises, TWEAN Licenses, and written
TWEAN Contracts, including any amendments thereto, other than TWEAN Contracts
described in clauses (i), (ii), (iii) and (iv) above and motor vehicle leases.
Except as described on Schedule 3.6: (i) each of the TWEAN Franchises, TWEAN
Licenses, and TWEAN Contracts is valid, in full force and effect, and
enforceable in accordance with its terms against the parties thereto other than
TWEAN, and TWEAN has fulfilled when due, or has taken all action necessary to
enable it to fulfill when due, all of its obligations thereunder; (ii) there
has not occurred any default (without regard to lapse of time, the giving of
notice, the election of any Person other than TWEAN, or any combination
thereof) by TWEAN nor, to the knowledge of TWEAN, has there occurred any
default (without regard to lapse of time, the giving of notice, the election of
TWEAN, or any combination thereof) by any Person other than TWEAN under any of
the TWEAN Franchises, TWEAN Licenses, or TWEAN Contracts; and (iii) neither
TWEAN nor, to the knowledge of TWEAN, any other Person is in arrears in the
performance or satisfaction of its obligations under any of the TWEAN
Franchises, TWEAN Licenses, or TWEAN Contracts, and no waiver or indulgence has
been granted by any of the parties thereto. Except as described on Schedule
3.6, the TWEAN Franchises, TWEAN Licenses, and TWEAN Contracts are sufficient
to permit TWEAN to operate the TWEAN Systems lawfully in the manner in which
they are currently operated.
3.7 No Conflicts; Consents. Except as described on
Schedule 3.7 or on any other Schedule to this Agreement, the execution,
delivery, and performance by TWEAN of this Agreement does not and will not: (i)
violate any provision of any Legal Requirement; (ii) conflict with or violate
any provision of the partnership agreement of TWEAN; (iii) conflict with,
violate, result in a breach of, constitute a default under (without regard to
requirements of notice, lapse of time, or elections of other Persons, or any
combination thereof), accelerate, or permit the acceleration of the performance
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required by, any TWEAN Contract; (iv) result in the creation or imposition of
any Lien against or upon any of the TWEAN Assets; or (v) require any consent,
approval, or authorization of, or filing of any certificate, notice
application, report, or other document with, any Governmental Authority or
other Person,
3.8 Litigation. Except as described on Schedule 3.8, (i)
there is no outstanding Judgment against TWEAN requiring TWEAN to take any
action of any kind with respect to the TWEAN Assets or the operation of the
TWEAN Systems, or to which the TWEAN Systems or the TWEAN Assets are subject or
by which they are bound or affected; and (ii) there is no Litigation pending
or, to TWEAN's knowledge, threatened, against TWEAN that individually or in the
aggregate might result in any materially adverse change in the financial
condition or operation of any TWEAN System or materially and adversely affect
the TWEAN Assets or the ability of TWEAN to perform its obligations under this
Agreement. Except as described on Schedule 3.8, there are no proceedings
pending to which TWEAN is a party or, to TWEAN's knowledge, threatened, nor
have any demands been made by any Governmental Authority, utility, pole lessor,
or other party, which seeks or could result in the termination, modification,
suspension or limitation of TWEAN's rights or obligations with respect to the
TWEAN Franchises, TWEAN Licenses, or material TWEAN Contracts.
3.9 Employment Matters.
3.9.1 Neither TWEAN nor any Employee Benefit Plan
or, to TWEAN's knowledge, any Multiemployer Plan (as those terms are defined in
ERISA) maintained by TWEAN or to which TWEAN has or has had the obligation to
contribute in respect of any TWEAN employees that render services in connection
with the TWEAN Systems is in violation of the provisions of ERISA; no
reportable event, within the meaning of ERISA, Section 4043 (c)(1), (2), (3),
(5), (6), (7) or (10), has occurred and is continuing with respect to any such
Employee Benefit Plan or, to TWEAN's knowledge, any such Multiemployer Plan;
and no prohibited transaction, within the meaning of Title I of ERISA, has
occurred with respect to any such Employee Benefit Plan or, to TWEAN's
knowledge, any such Multiemployer Plan.
3.9.2 There are no collective bargaining agreements
applicable to any TWEAN employees that render services in connection with the
TWEAN Systems, and TWEAN has no duty to bargain with any labor organization
with respect to any such persons, There is not pending any demand for
recognition or any other request or demand from a labor organization for
representative status with respect to any Persons employed by TWEAN that render
services in connection, with the TWEAN Systems.
3.9.3 Schedule 3.9 contains a true and complete
list of names, positions and rates of compensation of all employees of the
TWEAN Systems.
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With respect to any Persons employed by TWEAN that render services in
connection with the TWEAN Systems, TWEAN is in compliance with all applicable
Legal Requirements respecting employment conditions and practices, has withheld
all amounts required by any applicable Legal Requirements or TWEAN Contracts to
be withheld from wages or salaries, and is not liable for any arrears of wages
or any taxes or penalties for failure to comply with any of the foregoing.
3.9.4 With respect to any Persons employed by TWEAN
that render services in connection with the TWEAN Systems, (i) TWEAN has not
engaged in any unfair labor practice within the meaning of the National Labor
Relations Act and has not violated any Legal Requirements prohibiting
discrimination on the basis of race, color, national origin, sex, religion,
age, marital status, or handicap in its employment conditions or practices; and
(ii) except as described on Schedule 3.9, there are no pending or, to TWEAN's
knowledge, threatened unfair labor practice charges or discrimination
complaints relating to race, color, national origin, sex, religion, age,
marital status, or handicap against TWEAN before any Governmental Authority
nor, to TWEAN's knowledge, does any basis therefor exist.
3.9.5 There are no existing or, to TWEAN's
knowledge, threatened, labor strikes, disputes, or grievances affecting the
TWEAN Systems or other labor controversies that could reasonably be expected to
have a material and adverse effect on the financial condition or operations of
the TWEAN Systems. There are no pending or, to the knowledge of TWEAN,
threatened arbitration proceedings under any TWEAN Contracts respecting TWEAN's
employees, nor to the knowledge of TWEAN, does any basis therefor exist.
3.10 Taxes. Except as described on Schedule 3.10, (i)
TWEAN has duly and timely paid all Taxes with respect to the TWEAN Systems that
have become due and payable by it; (ii) TWEAN has received no notice of, nor
does TWEAN have any knowledge of, any notice of deficiency or assessment of
proposed deficiency or assessment from any taxing Governmental Authority with
respect to the TWEAN Systems; and (iii) other than as may relate to TWEAN or
its general partners generally, there are no audits pending with respect to the
TWEAN Systems and there are no outstanding agreements or waivers by TWEAN that
extend the statutory period of limitations applicable to any federal, state,
local, or foreign tax returns or Taxes with respect to the TWEAN Systems.
3.11 Financial Statements. TWEAN has delivered to Jones
copies of the following financial statements, which are in accordance with all
books, records, and accounts of TWEAN:
3.11.1 Unaudited balance sheets as of the fiscal
years ended December 31, 1993 and 1994 (for the Reston System), August 31, 1994
(for the Prince George's County System), and an unaudited balance sheet as of
June 30, 1995 (for both
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Systems) (the "TWEAN Balance Sheet"), each of which fairly and accurately
present, as of the respective dates thereof, the financial condition, assets,
and liabilities of the TWEAN Systems; and
3.11.2 Unaudited statement of operations for the
twelve-month periods ended December 31, 1993 and 1994 (for the Reston System),
August 31, 1994 (as restated, for the Prince George's County System), and
unaudited statement of operations for the six months ended June 30, 1995 (for
both Systems). Except for the June 30, 1995 statement of operations for the
Prince George's County System, all of such statements of operations fairly and
accurately present the results of the operations of the TWEAN Systems for the
respective periods indicated. As of the date thereof, TWEAN was the owner
(except for certain leased equipment not material in amount) of all the
properties and assets set forth in the TWEAN Balance Sheet, and there are no
material liabilities, accrued, absolute, contingent or otherwise, that are not
reflected in the TWEAN Balance Sheet.
3.12 No Adverse Change.
3.12.1 Except as described on Schedule 3.12.1, there
has been no material adverse change in the TWEAN Assets relating to the Reston
System or the financial condition or operations of the Reston System since June
30, 1995, other than change arising from matters of a general economic nature
or matters caused by or arising from legislation, rulemaking or regulation
affecting the cable television industry in general, and since June 30, 1995,
the TWEAN Assets relating to the Reston system and the financial condition and
operations of the Reston System have not been materially and adversely affected
as a result of any fire, explosion, accident, casualty, labor trouble, flood,
drought, riot, storm, condemnation or act of God or public force or otherwise.
3.12.2 Except as described on Schedule 3.12.2, there
has been no material adverse change in the TWEAN Assets relating to the Prince
George's County System or the financial condition or operations of the Prince
Georges County System since August 31, 1994, other than change arising from
matters of a general economic nature or matters caused by or arising from
legislation, rulemaking or regulation affecting the cable television industry
in general, and since August 31, 1994, the TWEAN Assets relating to the Prince
George's County System and the financial condition and operations of the Prince
George's County System have not been materially and adversely affected as a
result of any fire, explosion, accident, casualty, labor trouble, flood,
drought, riot, storm, condemnation or act of God or public force or otherwise.
3.13 Compliance with Legal Requirements.
3.13.1 The operation of the TWEAN Systems as
currently conducted does not violate or infringe in any material respect any
Legal Requirements currently in effect or, to the knowledge of TWEAN, proposed
to become effective.
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TWEAN has received no notice of any violation by TWEAN or the TWEAN Systems of
any Legal Requirement applicable to the operation of the TWEAN Systems as
currently conducted, and knows of no basis for the allegation of any such
violation.
3.13.2 TWEAN is permitted under all applicable TWEAN
Franchises and FCC rules, regulations and orders to distribute the
transmissions (whether television, satellite, radio or otherwise) of video
programming or other information that TWEAN makes available to subscribers of
the TWEAN Systems and to utilize all carrier frequencies generated by the
operations of the TWEAN Systems, and is licensed to operate all the facilities
required by law to be licensed, including without limitation any business radio
and any cable television relay service system being operated as part of the
TWEAN Systems. Other than requests for network nonduplication and syndex
protection and as described on Schedule 3.13, no written requests have been
received by TWEAN during the three years preceding the date of this Agreement
from the FCC, the United States Copyright Office or any other Person
challenging or questioning the right of TWEAN's operation of the TWEAN Systems
and of any FCC-licensed or registered facility used in conjunction with TWEAN's
operation of the TWEAN Systems. Except as provided in Schedule 3.13, TWEAN's
operation of the TWEAN Systems, and of any FCC-licensed or registered facility
used in conjunction with TWEAN's operation of the TWEAN Systems, is in
compliance in all material respects with the FCC's rules and regulations and
the provisions of the Communications Act of 1934, as amended. TWEAN has not
violated any laws or any duty or obligation with regard to protecting the
privacy rights of any past or present subscribers of the TWEAN Systems.
3.13.3 TWEAN has conducted all system and microwave
performance tests and all Cumulative Leakage Index ("CLI") related tests
required with respect to the TWEAN Systems, TWEAN has (i) maintained
appropriate log books and other recordkeeping which accurately and completely
reflect in all material respects all results required to be shown thereon; (ii)
to the extent required by the rules and regulations of the FCC, corrected any
radiation leakage of the TWEAN Systems required to be corrected in connection
with TWEAN's monitoring obligations under the rules and regulations of the FCC,
and (iii) otherwise complied in all material respects with all applicable CLI
rules and regulations in connection with the operation of the TWEAN Systems.
3.13.4 TWEAN has deposited with the United States
Copyright Office all statements of account and other documents and instruments,
and paid all royalties, supplemental royalties, fees and other sums to the
United States Copyright Office required under the Copyright Act with respect to
the business and operations of the TWEAN Systems as are required to obtain,
hold and maintain the compulsory copyright license for cable television systems
prescribed in Section 111 of the Copyright Act. TWEAN is in compliance in all
material respects with the Copyright Act and the rules and regulations of the
Copyright Office with respect to the operation of the
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TWEAN Systems, except as to potential copyright liability arising from the
performance, exhibition or carriage of any music on the Systems as to which
TWEAN makes no representation, TWEAN is entitled to hold and does hold the
compulsory copyright license described in Section 111 of the Copyright Act,
which compulsory copyright license is in full force and effect and has not been
revoked, cancelled, encumbered or adversely affected in any manner.
3.13.5 All of the broadcast television signals
carried by the TWEAN Systems are carried either pursuant to the must-carry
requirements or pursuant to executed retransmission consent agreements.
3.13.6 TWEAN's operation of the TWEAN Systems has
not and does not violate the Cable Act, except for violation(s) which,
individually or in the aggregate, reasonably could not be expected to have a
material adverse effect on the TWEAN Systems. TWEAN has delivered or will
deliver promptly after the date hereof to Jones complete and correct copies of
all reports and filings for the past three years made or filed pursuant to the
Cable Act, the Communications Act or FCC rules or regulations with respect to
the operation of the TWEAN Systems, including, without limitation, FCC Forms
159 (Remittance Advice), 159C, 328, 329, 393, 1200, 1205, 1210 and 1215, copies
of TWEAN's correspondence with any Governmental Authority relating to rate
regulation generally or specific rates charged to subscribers of the TWEAN
Systems including, without limitation, copies of any complaints filed with the
FCC with respect to TWEAN's rates charged to such subscribers and any other
documentation supporting an exemption from the rate regulation provisions of
the Cable Act. TWEAN has provided Jones with true and complete copies of all
requests for franchise renewal which have been filed since 1992 with
Governmental Authorities with respect to the TWEAN Franchises.
3.14 Environmental Laws and Regulations.
3.14.1 TWEAN is not the subject of any "Superfund"
evaluation or investigation in connection with the TWEAN Real Property, and to
its knowledge is not the subject of any investigation or proceeding of any
Governmental Authority evaluating whether any remedial action is necessary to
respond to any release of Hazardous Substances on or in connection with the
TWEAN Real Property.
3.14.2 All material permits, licenses, permissions,
and other authorizations relating to the TWEAN Real Property which are required
under applicable Legal Requirements with respect to pollution or protection of
the environment have been obtained, including Legal Requirements relating to
actual or threatened emissions, discharges, or releases of Hazardous Substances
into ambient air, surface water, ground water, land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Substances. TWEAN is in compliance in all
respects with all terms and conditions of
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such permits, licenses, permissions, and authorizations, and is in material
compliance in all respects with all other limitations, restrictions,
obligations, schedules, and time-tables of such Legal Requirements or of any
other environmental, health, or safety Legal Requirements relating to the TWEAN
Real Property. Except as described on Schedule 3.14, TWEAN has not received
notice of, and has no knowledge of circumstances relating to, any past,
present, or future events, conditions, circumstances, activities, practices,
incidents, actions, or plans, including but not limited to the presence, use,
generation, manufacture, disposal, release, or threatened release of any
Hazardous Substances from the TWEAN Real Property, which could interfere with
or prevent continued compliance, or which are reasonably likely to give rise to
any liability, based upon or related to the processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release, or threatened release into the environment, of any
Hazardous Substance from or attributable to the TWEAN Real Property.
3.14.3 TWEAN has delivered to Jones copies of all
environmental reports and studies that TWEAN has commissioned with respect to
the TWEAN Real Property, and such copies are true, complete and accurate copies
of such reports and studies.
3.15 Real Property. Schedule 3.15 contains descriptions
of all the TWEAN Real Property, which comprises all real property interests
necessary to conduct the business or operations of the TWEAN Systems as now
conducted. TWEAN is not aware of any easement or other real property interest,
other than those described on Schedule 3.15, that is required, or that has been
asserted by a Governmental Authority or a third-party to be required, to
conduct the business or operations of the TWEAN Systems. TWEAN has delivered
to Jones true and complete copies of all deeds, leases, easements,
rights-of-way or other instruments pertaining to the TWEAN Real Property
(including any and all amendments and other modifications of such instruments).
TWEAN has good and marketable fee simple title to all of the fee estates
(including the improvements thereon) listed in Schedule 3.15, free and clear of
all liens, mortgages, pledges, covenants, easements, restrictions,
encroachments, leases, charges and other claims and encumbrances of any nature
whatsoever, except for Permitted Liens. All TWEAN Real Property (including the
improvements thereon) (A) is in good condition and repair consistent with its
present use, (B) is available to TWEAN for immediate use in the conduct of the
business or operations of the TWEAN Systems, and (C) complies in all material
respects with all applicable building or zoning codes and the regulations of
any governmental authority having jurisdiction.
3.16 Non-Infringement. The operation of the TWEAN Systems
as currently conducted does not infringe upon, or otherwise violate, the rights
of any person or entity in any copyright, trade name, trademark right, service
mark, service name, patent, patent right, license, trade secret or franchise,
and there is not pending or, to
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TWEAN's knowledge, threatened any action with respect to any such infringement
or breach.
3.17 Books and Records. All of the books, records, and
accounts of the TWEAN Systems are in all material respects true and complete,
are maintained in accordance with good business practice and all applicable
Legal Requirements, and accurately present and reflect in all material respects
all of the transactions therein described.
3.18 TWEAN Accounts Receivable. Except as described in
Schedule 3.18, TWEAN is the true and lawful owner of the TWEAN Accounts
Receivable and has good and clear title to each TWEAN Account, free and clear
of all Liens, with the absolute right to transfer any interest therein. Each
such TWEAN Account is (i) a valid obligation of the account debtor enforceable
in accordance with its terms, and (ii) in all material respects, a true and
correct statement of the account for merchandise actually sold and delivered
to, or for actual services performed for and accepted by, such account debtor.
3.19 Bonds. Schedule 3.12 contains an accurate and
complete list of all bonds (franchise, construction, fidelity, or performance)
of TWEAN that relate in any way to the ownership or use of the TWEAN Assets or
the operation of the TWEAN Systems.
3.20 Tier Penetration. The number of Basic Subscribers
who subscribe to expanded basic, preferred, standard, or tier or similar
services is at least 95% of the total number of Basic Subscribers served by the
TWEAN Systems.
3.21 Accuracy of Schedules. All Schedules to this
Agreement relating to the TWEAN Assets or the TWEAN Systems are accurate and
complete in all material respects as of the date of this Agreement,
3.22 Disclosure. No representation or warranty by TWEAN,
or any statement or certificate furnished by TWEAN to Jones pursuant to this
Agreement or in connection with the transaction contemplated by this
Agreement, contains or will at Closing contain any untrue statement of a
material fact or omits or will at Closing omit to state a material fact
necessary to make the statements contained therein not misleading.
3.23 Taxpayer Identification Number. TWEAN's U.S.
Taxpayer Identification Number is as set forth in the introductory paragraph of
this Agreement.
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4. JONES' REPRESENTATIONS.
Jones represents, warrants, covenants and agrees to and with
TWEAN as follows:
4.1 Organization and Qualification. Jones is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Colorado, and has all requisite power and authority to own
and lease the properties and assets it currently owns and leases and to conduct
its activities and to carry on its business as such activities and business are
currently conducted. Jones is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the
ownership or leasing of the Jones Assets or the nature of its activities in
connection with the Jones Systems makes such qualification necessary, except
any such jurisdiction where the failure to be so qualified and in good standing
would not have a material adverse effect on the validity, binding effect or
enforceability of this Agreement, or on the ability of Jones to perform its
obligations under this Agreement.
4.2 Authorization. Jones has full corporate power and
authority to execute, deliver, and perform this Agreement and to consummate the
transactions contemplated in this Agreement. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated in this Agreement on the part of Jones have been duly and validly
authorized and approved by all necessary action on the part of Jones, including
appropriate resolutions of the Board of Directors of Jones. This Agreement has
been duly and validly executed and delivered by Jones, and is the valid and
binding obligation of Jones, enforceable against Jones in accordance with its
terms.
4.3 System Information. Schedule 4.3 sets forth a
materially true and accurate description of the following information as of the
dates set forth on such Schedule:
4.3.1 the number of miles of activated aerial and
underground plant included in the Jones Assets;
4.3.2 the minimum number of passings of the Jones
Systems and the approximate number of Equivalent Billing Units served by each
Jones System;
4.3.3 a description of the basic and tier services
available from each Jones System, the rates charged by Jones for each, together
with the approximate number of subscribers receiving each of the services, and
any other charges by Jones for services to subscribers;
4.3.4 with respect to each Bulk Subscriber:
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(i) the name and address of, and, if
applicable, the number of units in, each such establishment, building,
condominium, hotel or motel which is served by each Jones System; and
(ii) a description of the cable
television services delivered to each such establishment, building,
condominium, hotel or motel on a bulk basis and the monthly rates charged for
each such service; and
4.3.5 the channel and megahertz capacity of each
Jones System, the stations and channels carried by each Jones System, the
channel position of each such signal and station, and all frequencies utilized
by each Jones System.
4.4 No Other Operators. Except as described on Schedule
4.4 and other than direct broadcast satellite services, (i) each Jones System
is the only multiple channel operator presently serving the communities that it
serves, (ii) to the best of Jones' knowledge, no other multiple channel
operator is presently contemplated by any person in the communities now served
by the Jones Systems, and (iii) no franchises or other authorizations other
than the Jones Franchises have been issued with respect to the communities
served by the Jones Systems.
4.5 Title and Condition of Personal Property. Schedule
4.5 contains a complete description of all material items of Jones Personal
Property, other than the Jones Excluded Assets, The Jones Personal Property
constitutes all personal property necessary to conduct lawfully and properly
the business or operations of the Jones Systems as now conducted. Except as
described in Schedule 4.5, Jones has good and marketable title to all of the
Jones Personal Property, free and clear of all Liens, except ad valorem Taxes
not yet due and payable, All the Jones Personal Property is in good working
order and repair, ordinary wear and tear excepted.
4.6 Franchises, Licenses, and System Contracts. Schedule
4.6 contains a description of all of the Jones Franchises, Jones Licenses and
Jones Contracts, except for: (i) subscription agreements with individual
residential subscribers for the cable services provided by the Jones Systems in
the ordinary course of business which may be cancelled by the Jones Systems
without penalty on not more than 30 days notice; (ii) miscellaneous service
contracts terminable at will without penalty; (iii) other Jones Contracts not
involving either aggregate liabilities under all such Jones Contracts
exceeding $25,000 or any material nonmonetary obligation; (iv) programming
agreements; and (v) Contracts described on Schedule 2.7. Jones has delivered to
TWEAN true and complete copies of each of the Jones Franchises, Jones Licenses,
and written Jones Contracts, including any amendments thereto, other than Jones
Contracts described in clauses (i), (ii), (iii) and (iv) above and motor
vehicle leases. Except as described on Schedule 4.6: (i) each of the Jones
Franchises, Jones Licenses, and Jones Contracts is valid, in full force and
effect, and enforceable in accordance with its terms against the parties
thereto other than Jones, and Jones has fulfilled when due, or has
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taken all action necessary to enable it to fulfill when due, all of its
obligations thereunder; (ii) there has not occurred any default (without regard
to lapse of time, the giving of notice, the election of any Person other than
Jones, or any combination thereof) by Jones nor, to the knowledge of Jones, has
there occurred any default (without regard to lapse of time, the giving of
notice, the election of Jones, or any combination thereof) by any Person other
than Jones under any of the Jones Franchises, Jones Licenses, or Jones
Contracts; and (iii) neither Jones nor, to the knowledge of Jones, any other
Person is in arrears in the performance or satisfaction of its obligations
under any of the Jones Franchises, Jones Licenses, or Jones Contracts, and no
waiver or indulgence has been granted by any of the parties thereto. Except as
described on Schedule 4.6, the Jones Franchises, Jones Licenses, and Jones
Contracts are sufficient to permit Jones to operate the Jones Systems lawfully
in the manner in which they are currently operated.
4.7 No Conflicts; Consents. Except as described on
Schedule 4.7 or on any other Schedule to this Agreement, the execution,
delivery, and performance by Jones of this Agreement does not and will not: (i)
violate any provision of any Legal Requirement; (ii) conflict with or violate
any provision of the Articles of Incorporation or Bylaws of Jones; (iii)
conflict with, violate, result in a breach of, constitute a default under
(without regard to requirements of notice, lapse of time, or elections of other
Persons, or any combination thereof), accelerate, or permit the acceleration of
the performance required by, any Jones Contract; (iv) result in the creation or
imposition of any Lien against or upon any of the Jones Assets; or (v) require
any consent, approval, or authorization of, or filing of any certificate,
notice, application, report, or other document with, any Governmental Authority
or other Person.
4.8 Litigation. Except as described on Schedule 4.8, (i)
there is no outstanding Judgment against Jones requiring Jones to take any
action of any kind with respect to the Jones Assets or the operation of the
Jones Systems, or to which the Jones Systems or the Jones Assets are subject or
by which they are bound or affected; and (ii) there is no Litigation pending
or, to Jones' knowledge, threatened, against Jones which individually or in the
aggregate might result in any materially adverse change in the financial
condition or operation of any Jones System or materially and adversely affect
the Jones Assets or the ability of Jones to perform its obligations under this
Agreement. Except as described on Schedule 4.8, there are no proceedings
pending to which Jones is a party or, to Jones' knowledge, threatened, nor have
any demands been made by any Governmental Authority, utility, pole lessor, or
other party, winch seeks or could result in the termination, modification,
suspension or limitation of Jones' rights or obligations with respect to the
Jones Franchises, Jones Licenses, or material Jones Contracts.
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4.9 Employment Matters.
4.9.1 Neither Jones nor any Employee Benefit Plan
or to Jones' knowledge, any Multiemployer Plan (as those terms are defined in
ERISA) maintained by Jones or to which Jones has or has had the obligation to
contribute in respect of any Jones employees that render services in connection
with the Jones Systems is in violation of the provisions of ERISA; no
reportable event, within the meaning of ERISA, Section 4043 (c)(1), (2), (3),
(5), (6), (7) or (10), has occurred and is continuing with respect to any such
Employee Benefit Plan or, to Jones' knowledge, any such Multiemployer Plan; and
no prohibited transaction, within the meaning of Title I of ERISA, has occurred
with respect to any such Employee Benefit Plan or, to Jones' knowledge, any
such Multiemployer Plan.
4.9.2 There are no collective bargaining agreements
applicable to any persons employed by Jones that render services in connection
with the Jones Systems, and Jones has no duty to bargain with any labor
organization with respect to any such persons. There is not pending any demand
for recognition or any other request or demand from a labor organization for
representative status with respect to any Persons employed by Jones that render
services in connection with the Jones Systems.
4.9.3 Schedule 4.9 contains a complete and true
list of the names, positions and rates of compensation of all employees of the
Jones Systems. With respect to any Persons employed by Jones that render
services in connection with the Jones Systems, Jones is in compliance with all
applicable Legal Requirements respecting employment conditions and practices,
has withheld all amounts required by any applicable Legal Requirements or Jones
Contracts to be withheld from wages or salaries, and is not liable for any
arrears of wages or any taxes or penalties for failure to comply with any of
the foregoing.
4.9.4 With respect to any Persons employed by Jones
that render services in connection with the Jones Systems, (i) Jones has not
engaged in any unfair labor practice within the meaning of the National Labor
Relations Act and has not violated any Legal Requirements prohibiting
discrimination on the basis of race, color, national origin, sex, religion,
age, marital status, or handicap in its employment conditions or practices; and
(ii) except as described on Schedule 4.9, there are no pending or, to Jones'
knowledge, threatened unfair labor practice charges or discrimination
complaints relating to race, color, national origin, sex, religion, age,
marital status, or handicap against Jones before any Governmental Authority
nor, to Jones' knowledge, does any basis therefor exist.
4.9.5 There are no existing or, to Jones'
knowledge, threatened, labor strikes, disputes, or grievances affecting the
Jones Systems or other labor controversies which could reasonably be expected
to have a material and adverse
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effect on the financial condition or operations of the Jones Systems. There
are no pending or, to the knowledge of Jones, threatened arbitration
proceedings under any Jones Contracts respecting Jones' employees, nor to the
knowledge of Jones, does any basis therefor exist.
4.10 Taxes. Except as described on Schedule 4.10,(i)
Jones has duly and timely paid all Taxes with respect to the Jones Systems
which have become due and payable by it; (ii) Jones has received no notice of,
nor does Jones have any knowledge of, any notice of deficiency or assessment of
proposed deficiency or assessment from any taxing Governmental Authority with
respect to the Jones Systems; and (iii) other than as may relate to Jones
generally, there are no audits pending with respect to the Jones Systems and
there are no outstanding agreements or waivers by Jones that extend the
statutory period of limitations applicable to any federal, state, local, or
foreign tax returns or Taxes with respect to the Jones Systems.
4.11 Financial Statements. Jones has delivered to TWEAN
copies of the following financial statements, which are in accordance with all
books, records, and accounts of Jones.
4.11.1 Unaudited balance sheets as of the fiscal
years ended December 31, 1993 and 1994, and an unaudited balance sheet as of
June 30, 1995 (the "Jones Balance Sheet"), each of which fairly and accurately
present, as of the respective dates thereof, the financial condition, assets,
and liabilities of the Jones Systems; and
4.11.2 Unaudited statement of operations for the
twelve-month periods ended December 31, 1993 and 1994, and unaudited statement
of operations for the six months ended June 30, 1995, all of which fairly and
accurately present the results of the operations of the Jones Systems for the
respective periods indicated. As of the date thereof, Jones was the owner
(except for certain leased equipment not material in amount) of all the
properties and assets set forth in the Jones Balance Sheet, and there are no
material liabilities, accrued, absolute, contingent or otherwise, that are not
reflected in the Jones Balance Sheet.
4.12 No Adverse Change. Except as described on Schedule
4.12, there has been no material adverse change in the Jones Assets or the
financial condition or operations of the Jones Systems since June 30, 1995,
other than change arising from matters of a general economic nature or matters
caused by or arising from legislation, rulemaking or regulation affecting the
cable television industry in general, and since June 30, 1995 the Jones Assets
and the financial condition and operations of the Jones Systems have not been
materially and adversely affected as a result of any fire, explosion, accident,
casualty, labor trouble, flood, drought, riot, storm, condemnation or act of
God or public force or otherwise.
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4.13 Compliance with Legal Requirements.
4.13.1 The operation of the Jones Systems as
currently conducted does not violate or infringe in any material respect any
Legal Requirements currently in effect or, to the knowledge of Jones, proposed
to become effective. Jones has received no notice of any violation by Jones or
the Jones Systems of any Legal Requirement applicable to the operation of the
Jones Systems as currently conducted, and knows of no basis for the allegation
of any such violation.
4.13.2 Jones is permitted under all applicable Jones
Franchises and FCC rules, regulations and orders to distribute the
transmissions (whether television, satellite, radio or otherwise) of video
programming or other information that the Jones makes available to subscribers
of the Jones Systems and to utilize all carrier frequencies generated by the
operations of the Jones Systems, and is licensed to operate all the facilities
required by law to be licensed, including without limitation any business radio
and any cable television relay service system being operated as part of the
Jones Systems. Other than requests for network nonduplication and syndex
protection and as described on Schedule 4.13, no written requests have been
received by Jones during the three years preceding the date of this Agreement
from the FCC, the United States Copyright Office or any other Person
challenging or questioning the right of Jones' operation of the Jones Systems
and of any FCC-licensed or registered facility used in conjunction with Jones'
operation of the Systems. Except as provided in Schedule 4.13, Jones'
operation of the Jones Systems, and of any FCC-licensed or registered facility
used in conjunction with Jones' operation of the Jones Systems, is in
compliance in all material respects with the FCC's rules and regulations and
the provisions of the Communications Act of 1934, as amended. Jones has not
violated any laws or any duty or obligation with regard to protecting the
privacy rights of any past or present subscribers of the Jones Systems.
4.13.3 Jones has conducted all system and microwave
performance tests and all CLI related tests required with respect to the Jones
Systems. Jones has (i) maintained appropriate log books and other
recordkeeping which accurately and completely reflect in all material respects
all results required to be shown thereon; (ii) to the extent required by the
rules and regulations of the FCC, corrected any radiation leakage of the Jones
Systems required to be corrected in connection with Jones' monitoring
obligations under the rules and regulations of the FCC, and (iii) otherwise
complied in all material respects with all applicable CLI rules and regulations
in connection with the operation of the Jones Systems.
4.13.4 Jones has deposited with the United States
Copyright Office all statements of account and other documents and
instruments, and paid all royalties, supplemental royalties, fees and other
sums to the United States Copyright Office required under the Copyright Act
with respect to the business and operations of the Jones Systems as are
required to obtain, hold and maintain the compulsory copyright
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license for cable television systems prescribed in Section 111 of the Copyright
Act. Jones is in compliance in all material respects with the Copyright Act
and the rules and regulations of the Copyright Office with respect to the
operation of the Jones Systems, except as to potential copyright liability
arising from the performance, exhibition or carriage of any music on the
Systems as to which Jones makes no representation. Jones is entitled to hold
and does hold the compulsory copyright license described in Section 111 of the
Copyright Act, which compulsory copyright license is in full force and effect
and has not been revoked, cancelled, encumbered or adversely affected in any
manner.
4.13.5 All of the broadcast television signals
carried by the Jones Systems are carried either pursuant to the must-carry
requirements or pursuant to executed retransmission consent agreements.
4.13.6 Jones' operation of the Jones Systems has not
and does not violate the Cable Act, except for violation(s) which, individually
or in the aggregate, reasonably could not be expected to have a material
adverse effect on the Jones Systems. Jones has delivered or will deliver
promptly after the date hereof to TWEAN complete and correct copies of all
reports and filings for the past three years made or filed pursuant to the
Cable Act, the Communications Act or FCC rules or regulations with respect to
the operation of the Jones Systems, including, without limitation, FCC Forms
159 (Remittance Advice), 159C, 328, 329, 393, 1200, 1205, 1210 and 1215, copies
of Jones' correspondence with any Governmental Authority relating to rate
regulation generally or specific rates charged to subscribers of the Jones
Systems including, without limitation, copies of any complaints filed with the
FCC with respect to Jones' rates charged to such subscribers and any other
documentation supporting an exemption from the rate regulation provisions of
the Cable Act. Jones has provided TWEAN with true and complete copies of all
requests for franchise renewal which have been filed since 1992 with
Governmental Authorities with respect to the Jones Franchises.
4.14 Environmental Laws and Regulations.
4.14.1 Jones is not the subject of any "Superfund"
evaluation or investigation in connection with the Jones Real Property, and to
its knowledge is not the subject of any investigation or proceeding of any
Governmental Authority evaluating whether any remedial action is necessary to
respond to any release of Hazardous Substances on or in connection with the
Jones Real Property.
4.14.2 All material permits, licenses, permissions,
and other authorizations relating to the Jones Real Property which are required
under applicable Legal Requirements with respect to pollution or protection of
the environment have been obtained, including Legal Requirements relating to
actual or threatened emissions, discharges, or releases of Hazardous Substances
into ambient air, surface water, ground
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water, land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Substances. Jones is in compliance in all respects with all terms
and conditions of such permits, licenses, permissions, and authorizations, and
is in material compliance in all respects with all other limitations,
restrictions, obligations, schedules, and time-tables of such Legal
Requirements or of any other environmental, health, or safety Legal
Requirements relating to the Jones Real Property. Except as described on
Schedule 4.14, Jones has not received notice of, and has no knowledge of
circumstances relating to, any past, present, or future events, conditions,
circumstances, activities, practices, incidents, actions, or plans, including
but not limited to the presence, use, generation, manufacture, disposal,
release, or threatened release of any Hazardous Substances from the Jones Real
Property, which could interfere with or prevent continued compliance, or which
are reasonably likely to give rise to any liability, based upon or related to
the processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, release, or threatened release into the
environment, of any Hazardous Substance from or attributable to the Jones Real
Property.
4.14.3 Jones has delivered to TWEAN copies of all
environmental reports and studies that Jones has commissioned with respect to
the Jones Real Property, and such copies are true, complete and accurate copies
of such reports and studies.
4.15 Real Property. Schedule 4.15 contains descriptions
of all the Jones Real Property, which comprises all real property interests
necessary to conduct the business or operations of the Jones System as now
conducted. Jones is not aware of any easement or other real property interest,
other than those described on Schedule 4.15, that is required, or that has been
asserted by a Governmental Authority or a third-party to be required, to
conduct the business or operations of the Jones Systems. Jones has delivered
to TWEAN true and complete copies of all deeds, leases, easements,
rights-of-way or other instruments pertaining to the Jones Real Property
(including any and all amendments and other modifications of such instruments).
Except for the Subject Property, Jones has good and marketable fee simple title
to all of the fee estates (including the improvements thereon) listed in
Schedule 4.15, free and clear of all liens, mortgages, pledges, covenants,
easements, restrictions, encroachments, leases, charges and other claims and
encumbrances of any nature whatsoever, except for Permitted Liens. All Jones
Real Property (including the improvements thereon) (A) is in good condition and
repair consistent with its present use, (B) is available to Jones for immediate
use in the conduct of the business or operations of the Jones Systems, and (C)
complies in all material respects with all applicable building or zoning codes
and the regulations of any governmental authority having jurisdiction.
4.16 Non-Infringement. The operation of the Jones Systems
as currently conducted does not infringe upon, or otherwise violate, the rights
of any person or entity in any copyright, trade name, trademark right, service
mark, service name,
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patent, patent right, license, trade secret or franchise, and there is not
pending or, to Jones' knowledge, threatened any action with respect to any such
infringement or breach.
4.17 Books and Records. All of the books, records, and
accounts of the Jones Systems are in all material respects true and complete,
are maintained in accordance with good business practice and all applicable
Legal Requirements, and accurately present and reflect in all material respects
all of the transactions therein described.
4.18 Accounts Receivable. Except as described in Schedule
4.18, Jones is the true and lawful owner of the Jones Accounts Receivable and
has good and clear title to each Jones Account, free and clear of all Liens,
with the absolute right to transfer any interest therein. Each such Jones
Account is (i) a valid obligation of the account debtor enforceable in
accordance with its terms, and (ii) in all material respects, a true and
correct statement of the account for merchandise actually sold and delivered
to, or for actual services performed for and accepted by, such account debtor.
4.19 Bonds. Schedule 4.19 contains an accurate and
complete list of all bonds (franchise, construction, fidelity, or performance)
of Jones which relate in any way to the ownership or use of the Jones Assets or
the operation of the Jones Systems.
4.20 Tier Penetration. The number of Basic Subscribers
who subscribe to basic plus or tier services is at least 93% of the total
number of Basic Subscribers served by the Jones Systems.
4.21 Accuracy of Schedules. All Schedules to this
Agreement relating to the Jones Assets or the System Systems are accurate and
complete in all material respects as of the date of this Agreement.
4.22 Disclosure. No representation or warranty by Jones,
or any statement or certificate furnished by Jones to TWEAN pursuant to this
Agreement or in connection with the transaction contemplated by this Agreement,
contains or will at Closing contain any untrue statement of a material fact or
omits or will at Closing omit to state a material fact necessary to make the
statements contained therein not misleading.
4.23 Taxpayer Identification Number. Jones' U.S. Taxpayer
Identification Number is as set forth in the introductory paragraph of this
Agreement.
5. COVENANTS.
5.1 Pre-Closing Obligations. Each of TWEAN with respect
to the TWEAN Systems and the TWEAN Assets and Jones with respect to the Jones
Systems
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and the Jones Assets covenants and agrees that, from and after the execution
and delivery of this Agreement until and including the Closing Date:
5.1.1 Access. It shall give the other party and
its representatives full access during normal business hours to all of the
properties, books, and records relating to its Systems, and furnish the other
party with such information concerning its Assets and its Systems as the other
party may reasonably request.
5.1.2 Conduct of Business. It shall operate its
Systems in the ordinary and usual course and in accordance with past practices,
which shall include, without limitation, maintaining appropriate staff and
management personnel (consistent with past practices) at its Systems. It shall
duly comply in all material respects with all applicable Legal Requirements,
perform all of its material obligations under all of its Franchises, Licenses,
and System Contracts without default, and maintain the books, records, and
accounts relating to its Systems in the usual, regular, and ordinary manner on a
basis consistent with past practices. It shall use reasonable efforts to keep
available the services of its employees providing services in connection with
its Systems, continue normal marketing, advertising, and promotional
expenditures with respect to its Systems, and preserve beneficial business
relationships with all customers, suppliers, and others having business or
other dealings it has relating to its Systems, including Governmental
Authorities having jurisdiction over it. It shall maintain its Assets in good
condition and repair, ordinary wear excepted, and keep in effect the casualty
and liability insurance covering its Assets in force on the date of this
Agreement.
5.1.3 Negative Covenants. Each of TWEAN with
respect to the TWEAN Systems and the TWEAN Assets and Jones with respect to the
Jones Systems and the Jones Assets shall not, except as the other party may
otherwise consent in writing, (i) modify, terminate, renew, suspend, or
abrogate any of its System Contracts other than in the ordinary course of
business, (ii) modify, terminate, renew, suspend, or abrogate any of its
Franchises or Licenses, (iii) transfer, convey, or otherwise dispose of any of
its Assets (except that it may use inventory and dispose of damaged or
defective equipment or material in the normal course of business), (iv) take
any action that would result in the creation of a Lien on any of its Assets,
(v) engage in any marketing, subscriber installation, or collection practices
that are inconsistent with its past practices, or (vi) implement any material
increase or decrease in the rates charged for Basic Cable except in the
ordinary course or pursuant to a Legal Requirement or Judgment.
5.1.4 Consents. It shall use reasonable efforts to
obtain as promptly as possible all approvals, authorizations, and Consents
relating to its Systems required to consummate the transactions contemplated by
this Agreement, including approvals of the FCC, Governmental Authorities, and
other Persons to the transfer or assignment by it to the other party of all
rights under and pursuant to its Franchises, Licenses, and System Contracts.
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5.1.5 Employment Matters. Without the other
party's prior written consent, it shall make no change in the compensation
payable or to become payable by it to any Person employed in connection with
the conduct of the business or operations of any of its Systems, except in
accordance with past practices. Notwithstanding the foregoing, either party may
incent its employees to remain employees of its System through the Closing Date
without violating this paragraph; provided, however, that the other party shall
have no obligation to make or continue any incentives or similar payments after
the Closing Date.
5.2 Financial Statements. TWEAN and Jones shall promptly
deliver to the other party true and complete copies of all of its monthly
operating reports and any reports with respect to the operation of its Systems
prepared by or for it at any time from the date of this Agreement until
Closing. Upon the reasonable request of Jones and at the expense of Jones,
TWEAN shall provide assistance and such financial and other information as
shall be necessary or desirable to permit Jones to prepare or to cause to be
prepared audited financial statements concerning the TWEAN Systems in
conformance with Regulation S-X of the Securities and Exchange Commission.
5.3 Title Matters. No later than 45 days after the date
hereof, each of TWEAN and Jones shall obtain and furnish to the other party, at
the obtaining party's cost, title insurance commitments (the "Title
Commitments") issued by a nationally recognized title insurer showing the status
of record title to each fee parcel of its Real Property, except for the Subject
Property, and agreeing to insure marketable title in fee simple to each such
parcel, at its cost, subject only to (i) zoning restrictions, prohibitions, and
other requirements imposed by any Governmental Authority having jurisdiction
over its Real Property; (ii) public utility easements of record; (iii) liens
for taxes not yet due and payable; and (iv) easements, rights-of-way,
restrictions, and other similar encumbrances incurred in the ordinary course of
business that do not materially interfere with the ordinary use of the property
(collectively, the "Permitted Liens"). If TWEAN or Jones shall notify the
other within 20 days of its receipt of the Title Commitments of any Lien or
other matter (other than Permitted Liens) affecting title to the Real
Property of the other that, in the determination of TWEAN or Jones, as
applicable, renders title uninsurable or unmerchantable, or that could
adversely affect the use of any parcel of the Real Property of the other for
the purpose for which it is currently used by it (each, a "Title Defect"), the
other shall exercise its best efforts to remove or, with the consent of the
other party, cause the title company to commit to insure over, each Title
Defect prior to Closing.
5.4 Estoppel Certificates Regarding Leases. Each party
shall use its reasonable efforts to provide to the other, at or prior to
Closing, a certificate, reasonably satisfactory to the other, of the lessor of
each Real Property lease to the effect that such lease is valid, in full force
and effect and not in default, and has been approved, if necessary, for
transfer to the other (collectively, the "Estoppel Certificates").
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5.5 Employees. Each of TWEAN and Jones shall comply with
the provisions of the Worker Adjustment and Retraining Notification Act, as
amended, 29 U.S.C. Section 2101, et seq., as it relates to the transactions
contemplated hereby, and shall indemnify and hold harmless the other party from
and against all Losses arising with respect thereto. Each of TWEAN and Jones
acknowledges that Jones or TWEAN, as applicable, may, but shall have no
obligation to, hire any of the other's employees that render services in
connection with the operation of its System ("Hired Employees"), provided,
however, that the other shall give TWEAN or Jones, as applicable, notice at
least 30 days prior to the Closing Date of the name of any employees of the
TWEAN or Jones Systems, as applicable, to whom the other party does not plan to
offer employment on and after the Closing Date (a "Non-Hired Employee"). Each
of TWEAN and Jones shall remain solely responsible for, and shall indemnify and
hold harmless the other party from and against all Losses arising with respect
to, all salaries and all severance, vacation, sick, holiday, and other benefits
to which employees of TWEAN or Jones, as applicable, may be entitled, as a
result of consummation of the transactions contemplated hereby or otherwise.
Notwithstanding the foregoing sentence, each Hired Employee shall be given
credit for, and allowed to take as vacation days, the number of vacation days
accrued but not used by such Hired Employee during employment with the
non-hiring party as of the Closing Date, up to the maximum number of vacation
days that such Hired Employee would have accrued under the applicable vacation
policy of the hiring party had the hiring party owned the System during the
same period of employment. If a Hired Employee carries over a number of
accrued vacation days exceeding the maximum number of vacation days permitted
under the hiring party's vacation leave policy for that same period, the hiring
party shall have no obligation to permit such Hired Employee to take such
excess vacation days, but, if it does not, shall pay such Hired Employee for
such excess vacation days an amount equal to the amount of the adjustment
effected pursuant to Section 2.8.3 corresponding to such excess vacation days.
In no event shall the liability assumed by the hiring party as of Closing under
this paragraph exceed the amount by which an adjustment for accrued excess
vacation pay is made in favor of the hiring party under Section 2.8.3.
5.6 Cooperation in the Obtaining of Consents.
5.6.1 Each party shall fully cooperate with the
other, do all things reasonably necessary to assist the other, and use its
commercially reasonable efforts at its own expense to obtain all Consents,
reasonably satisfactory in form and substance to the other, necessary for the
transfer of or assignment to the appropriate party of its Franchises, Leases
and System Contracts, including the furnishing of all financial and other
information reasonably required by the party whose Consent is being sought.
5.6.2 Subsequent to Closing, each of TWEAN and
Jones, shall continue to use its commercially reasonable efforts at its own
expense to obtain in writing as promptly as possible any Consent required to be
obtained by it that was not
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obtained on or before Closing, and deliver copies of such, reasonably
satisfactory in form and substance, to the other. The obligations set forth in
this subsection shall survive Closing and shall not be merged in the
consummation of the transactions contemplated hereby,
5.6.3 From Closing until each Consent is obtained,
TWEAN or Jones, as applicable, shall act as the agent for the other, and shall
preserve the benefit of and enforce the System Contract, Lease or other right
to which such Consent pertains to the fullest extent permissible under the
applicable System Contract, Lease or other right. Upon request by the other
party, at Closing, TWEAN and Jones shall enter into an agency agreement in a
form mutually satisfactory to each party specifying the terms of such agency.
5.7 HSR Act Compliance. Within 30 days after the date of
this Agreement, TWEAN and Jones shall, if required, prepare and file proper
premerger notification forms and affidavits in compliance with the HSR Act.
TWEAN and Jones shall each pay one-half of all fees payable to Governmental
Authorities in connection with such filings. If following the filing of such
forms any Governmental Authority shall challenge the transaction contemplated
hereby, or request additional filings or information, TWEAN and Jones shall
take preliminary steps to attempt to ascertain the nature of the challenge and
the likelihood that the Governmental Authority will permit the transaction
contemplated hereby to proceed notwithstanding the challenge. After taking
such preliminary steps, neither TWEAN nor Jones shall have any obligation to
contest such challenge or make or provide any such filing or information, and
each shall be entitled, at its option, to withdraw its filing and terminate
this Agreement.
5.8 Leased Vehicles. Each party shall pay the remaining
balances on any leases for vehicles included in its Personal Property, and
deliver title to such vehicles free and clear of all Liens to the other party
at Closing.
5.9 Transitional Billing Services. TWEAN and Jones shall
each provide to the other, upon written request and at the cost of the other,
subscriber billing services ("Transitional Billing Services") in connection
with the Systems acquired by the other for a period of up to 90 days following
Closing to allow for conversion of existing billing arrangements. Each party
shall notify the other in writing at least 30 days prior to Closing as to
whether it desires the other to provide Transitional Billing Services. Each
party shall cooperate with all reasonable requests by the other in connection
with the first billing cycle following Closing.
5.10 Use of Names and Logos. For a period of 60 days
after Closing, TWEAN and Jones shall each be entitled to use the trademarks,
trade names, service marks, service names, logos, and similar proprietary
rights of the other to the extent incorporated in or on the Assets transferred
to it at Closing, provided that each
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shall exercise efforts to remove all such names, marks, logos, and similar
proprietary rights of the other from the Assets as soon as reasonably
practicable following Closing.
5.11 Bulk Sales. TWEAN and Jones each waives compliance
by the other with Legal Requirements relating to bulk sales applicable to the
transaction contemplated hereby.
5.12 Supplements to Schedules. Each of TWEAN and Jones
shall, from time to time prior to Closing, supplement the Schedules to this
Agreement with additional information that, if existing or known to it on the
date of this Agreement, would have been required to be included in one or more
Schedules to this Agreement. For purposes of determining the satisfaction of
any of the conditions to the obligations of TWEAN and Jones in Sections 6.1 and
6.2 and the liability of TWEAN or Jones following Closing for breaches of its
respective representations or warranties under this Agreement, the Schedules to
this Agreement shall be deemed to include only the information contained
therein on the date of this Agreement or added to the Schedules by written
amendments or supplements to this Agreement delivered prior to Closing by the
party making such amendment and accepted in writing by the other party.
5.13 Transfer Taxes. All sales, use, transfer, and similar
taxes or assessments, including but not limited to transfer fees and similar
assessments for Franchises, Licenses and System Contracts, arising from or
payable by reason of the conveyance of the TWEAN Assets or the TWCS Assets
shall be paid by TWEAN and those arising from or payable by reason of the
conveyance of the Jones Assets shall be paid by Jones.
5.14 TWEAN Approvals. On or prior to September 15, 1995,
TWEAN shall submit this Agreement for approval to the Executive Committee of
Time Warner Entertainment Company, L.P.
6. CONDITIONS PRECEDENT.
6.1 Conditions Precedent to TWEAN's Obligations. The
obligations of TWEAN under this Agreement shall be subject to the fulfillment
on or prior to the Closing Date of each of the following conditions, any of
which may be waived by TWEAN:
6.1.1 Accuracy of Representations; Performance of
Agreements: and Officer's Certificate. All of the representations and
warranties of Jones contained in this Agreement or any Transaction Document
shall be true and correct in all material respects at and as of the Closing
Date, and Jones shall have complied with and performed in all material respects
all of the agreements, covenants, and conditions required by this Agreement to
be performed or complied with by it on or prior to Closing. Jones shall have
furnished TWEAN with an executed certificate of its President
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or any Vice President, dated as of Closing, certifying to the fulfillment of
the foregoing conditions.
6.1.2 Consents and Estoppel Certificates. Jones
shall have obtained and delivered to TWEAN each of the Consents designated on
Schedule 4.7 as material, with no adverse conditions imposed by such Consent,
and each of the Estoppel Certificates.
6.1.3 Title Defects. There shall exist no Title
Defects with respect to the Jones Real Property that shall not have been cured
or removed or which the title company shall not have, with the consent of
TWEAN, committed to insure over.
6.1.4 No Litigation. There shall be no Legal
Requirement, and no Judgment shall have been entered and not vacated by any
Governmental Authority of competent jurisdiction in any Litigation or arising
therefrom, that (i) enjoins, restrains, makes illegal, or prohibits
consummation of the transaction contemplated by this Agreement, or (ii)
requires separation or divestiture by TWEAN of all or any significant portion
of the Jones Assets after Closing, and there shall be no Litigation pending or
threatened that seeks, or which if successful would have the effect of, any of
the foregoing.
6.1.5 HSR Act Compliance. All waiting periods under
the HSR Act applicable to this Agreement or the transaction contemplated hereby
shall have expired or been terminated.
6.1.6 Deliveries. Jones shall have made or stand
willing to and able to make all of the deliveries to TWEAN set forth in Section
7.2.
6.1.7 No Adverse Change. Between the date of this
Agreement and the Closing Date, there shall have been (i) no material adverse
change in any of the Jones Systems or their financial condition, taken as a
whole, other than any change arising out of matters of a general economic
nature or matters (including, without limitation, competition caused by or
arising from multichannel multipoint distribution service and/or direct
broadcast satellite, and legislation, rulemaking or regulation) affecting the
cable television industry (national or regional) generally, and (ii) no
material loss, damage, impairment, confiscation or condemnation of any of the
Jones Assets that has not been repaired or replaced.
6.1.8 Legal Matters. All actions, proceedings,
instruments and documents required to carry out this Agreement or incidental
thereto and all related legal matters shall be reasonably satisfactory to and
approved by TWEAN's counsel, and such counsel shall have been furnished with
such certified copies of actions and proceedings and such other instruments and
documents as it reasonably shall have requested.
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6.1.9 Minimum Equivalent Billing Units. The number
of Equivalent Billing Units served by the Jones Systems shall not be less than
89,400 as of the Closing Date.
6.1.10 Approvals. This Agreement and the
transactions contemplated hereby shall have been approved by the Executive
Committee of Time Warner Entertainment Company, L.P. provided that this
condition shall be deemed satisfied unless TWEAN gives notice to Jones on or
before September 15, 1995, that the Executive Committee of Time Warner
Entertainment Company, L.P. has failed to approve this Agreement, in which case
either Jones or TWEAN shall have the right to terminate this Agreement without
further obligation to the other.
6.2 Conditions Precedent To Jones' Obligations. The
obligations of Jones under this Agreement shall be subject to the fulfillment
on or prior to Closing of each of the following conditions, which may be waived
by Jones:
6.2.1 Accuracy of Representations; Performance of
Agreements; and Officer's Certificate. All of the representations and
warranties of TWEAN contained in this Agreement or any Transaction Document
shall be true and correct in all material respects at and as of the Closing
Date, and TWEAN shall have complied with and performed in all material respects
all of the agreements, covenants, and conditions required by this Agreement to
be performed or complied with by it on or prior to Closing. TWEAN shall have
furnished Jones with an executed certificate of the President or any Vice
President of its general partner, dated as of Closing, certifying to the
fulfillment of the foregoing conditions.
6.2.2 Consents and Estoppel Certificates. TWEAN
shall have obtained and delivered to Jones each of the Consents designated on
Schedule 3.7 as material, with no adverse conditions imposed by such Consent,
and each of the Estoppel Certificates.
6.2.3 Title Defects. There shall exist no Title
Defects with respect to the TWEAN Real Property that shall not have been cured
or removed or which the title company shall not have, with the consent of
Jones, committed to insure over.
6.2.4 No Litigation. There shall be no Legal
Requirement, and no Judgment shall have been entered and not vacated by any
Governmental Authority of competent jurisdiction in any Litigation or arising
therefrom, that (i) enjoins, restrains, makes illegal, or prohibits
consummation of the transaction contemplated by this Agreement, or (ii)
requires separation or divestiture by Jones of all or any significant portion
of the TWEAN Assets after Closing, and there shall be no Litigation pending or
threatened that seeks, or which if successful would have the effect of, any of
the foregoing.
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6.2.5 HSR Act Compliance. All waiting periods
under the HSR Act applicable to this Agreement or the transaction contemplated
hereby shall have expired or been terminated.
6.2.6 Deliveries. TWEAN shall have made or stand
willing to and able to make all of the deliveries to Jones set forth in Section
7.3.
6.2.7 No Adverse Change. Between the date of this
Agreement and the Closing Date, there shall have been (i) no material adverse
change in any of the TWEAN Systems or their financial condition, taken as a
whole, other than any change arising out of matters of a general economic
nature or matters (including, without limitation, competition caused by or
arising from multichannel multipoint distribution service and/or direct
broadcast satellite, and legislation, rulemaking or regulation) affecting the
cable television industry (national or regional) generally, and (ii) no
material loss, damage, impairment, confiscation or condemnation of any of the
TWEAN Assets that has not been repaired or replaced.
6.2.8 Legal Matters. All actions, proceedings,
instruments and documents required to carry out this Agreement or incidental
thereto and all related legal matters shall be reasonably satisfactory to and
approved by Jones' counsel, and such counsel shall have been furnished with
such certified copies of actions and proceedings and such other instruments and
documents as it reasonably shall have requested.
6.2.9 Minimum Equivalent Billing Units. The number
of Equivalent Billing Units served by the TWEAN Systems shall not be less than
78,600 as of the Closing Date.
6.2.10 Franchise Extension or Renewal. The TWEAN
Franchise for Prince Georges's County shall have been extended or renewed so
that the expiration date of the Franchise is no earlier than, the third
anniversary of the Closing Date and on other terms and conditions not
materially more burdensome than the current Franchise terms and conditions.
7. CLOSING.
7.1 Time and Place. Closing shall be held in the offices
of Jones Intercable, Inc., 9697 East Mineral Avenue, Englewood, Colorado,
80112, on the last calendar day of the month in which occurs the first business
day after all conditions set forth in Sections 6.1 and 6.2 have been satisfied
or waived, or on such other date as TWEAN and Jones may mutually agree, but in
no event shall Closing be held later than June 30, 1996 (the "Outside Closing
Date").
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7.2 Jones' Deliveries. At Closing, Jones shall deliver
or cause to be delivered to TWEAN the following:
7.2.1 Cash Purchase Price.
7.2.2 Bill of Sale. An executed Bill of Sale and
Assignment in the form attached hereto as Exhibit A;
7.2.3 TWCS Bill of Sale, Assignment and Assumption
Agreement. An executed counterpart of a Bill of Sale, Assignment and
Assumption Agreement from TWCS (the "TWCS Bill of Sale") with respect to the
TWCS Assets in the form attached hereto as Exhibit B;
7.2.4 Vehicle Titles. Title certificates to all
vehicles included among the Jones Assets, endorsed for transfer of title to
TWEAN, and separate bills of sale therefor if required by the laws of the
states in which such vehicles are titled;
7.2.5 Deeds. Executed General Warranty Deeds
conveying to TWEAN, subject only to the Permitted Liens reflected on the Title
Commitments, each fee parcel of the Jones Real Property, except for the Subject
Property, which shall be conveyed by Quitclaim Deed;
7.2.6 Title Commitments. Updated Title
Commitments, to the extent required to remove or insure over any Title Defects
reflected on previously delivered Title Commitments;
7.2.7 FIRPTA Affidavit. A FIRPTA Non-Foreign
Seller Affidavit certifying that Jones is not a foreign person within the
meaning of Section 1445 of the Code, reasonably satisfactory in form and
substance to TWEAN;
7.2.8 Officer's Certificate. The certificate
described in Section 6.1.1;
7.2.9 Consents and Estoppel Certificates. The
original of each Consent, to the extent designated material on Schedule 4.7,
and the original (to the extent such original is reasonable available, and if
not so available, a copy) of each Estoppel Certificate;
7.2.10 Jones Franchises, Jones Licenses, Jones
Contracts, and Business Records. To the extent not previously delivered,
copies of all Jones Franchises, Jones Licenses, Jones Contracts, customer and
subscriber lists, blueprints, schedules, drawings, plans, projections,
engineering records, and all files and records used by Jones in connection with
its operation of the Jones Systems;
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7.2.11 Opinions of Counsel. Opinions of Elizabeth
M. Steele, Jones' counsel, and Dow Lohnes & Albertson, Jones' special
communications counsel, addressed to TWEAN and dated as of the Closing Date,
substantially in the forms attached hereto as Exhibit C-1 and Exhibit C-2,
respectively;
7.2.12 Jones Assumption Agreement. An executed
counterpart of an Assumption Agreement from Jones, substantially in the form
attached hereto as Exhibit D (the "Jones Assumption Agreement");
7.2.13 TWEAN Assumption Agreement. An executed
counterpart of an Assumption Agreement from TWEAN, substantially in the form
attached hereto as Exhibit E (the "TWEAN Assumption Agreement"); and
7.2.14 Other Documents. Such other documents and
instruments as shall be necessary to effect the intent of this Agreement and
consummate the transaction contemplated by this Agreement.
7.3 TWEAN's Deliveries. At Closing, TWEAN shall deliver
or cause to be delivered to Jones the following:
7.3.1 Bill of Sale. An executed Bill of Sale and
Assignment in the form attached hereto as Exhibit F;
7.3.2 TWCS Bill of Sale, Assignment and Assumption
Agreement. A counterpart of the TWCS Bill of Sale executed by TWCS;
7.3.3 Vehicle Titles. Title certificates to all
vehicles included among the TWEAN Assets, endorsed for transfer of title to
Jones, and separate bills of sale therefor if required by the laws of the
states in which such vehicles are titled;
7.3.4 General Warranty Deeds. Executed General
Warranty Deeds conveying to Jones, subject only to the Permitted Liens
reflected on the Title Commitments, each fee parcel of the TWEAN Real Property;
7.3.5 Title Commitments. Updated Title
Commitments, to the extent required to remove or insure over any Title Defects
reflected on previously delivered Title Commitments;
7.3.6 FIRPTA Affidavit. A FIRPTA Non-Foreign
Seller Affidavit certifying that TWEAN is not a foreign person within the
meaning of Section 1445 of the Code, reasonably satisfactory in form and
substance to Jones;
7.3.7 Officer's Certificate. The certificate
described in Section 6.2.1;
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7.3.8 Consents and Estoppel Certificates. The
original of each Consent, to the extent designated material on Schedule 3.7,
and the original (to the extent such original is reasonable available, and if
not so available, a copy) of each Estoppel Certificate;
7.3.9 TWEAN Franchises, TWEAN Licenses, TWEAN
Contracts, and Business Records. To the extent not previously delivered,
copies of all TWEAN Franchises, TWEAN Licenses, TWEAN Contracts, customer and
subscriber lists, blueprints, schedules, drawings, plans, projections,
engineering records, and all files and records used by TWEAN in connection with
its operation of the TWEAN Systems;
7.3.10 Opinions of Counsel. Opinions of Linda
Weiler, Esq., counsel to TWEAN, and Bryan Cave, TWEAN's special communications
counsel, addressed to Jones and dated as of the Closing Date, substantially in
the forms attached hereto as Exhibit G-1 and Exhibit G-2, respectively;
7.3.11 Jones Assumption Agreement. An executed
counterpart of the Jones Assumption Agreement;
7.3.12 TWEAN Assumption Agreement. An executed
counterpart of the TWEAN Assumption Agreement; and
7.3.13 Other Documents. Such other documents and
instruments as shall be necessary to effect the intent of this Agreement and
consummate the transaction contemplated by this Agreement.
8. TERMINATION.
8.1 Termination Events. This Agreement may be
terminated and the transaction contemplated by this Agreement may be abandoned:
8.1.1 at any time, by the mutual agreement of TWEAN
and Jones;
8.1.2 by either TWEAN or Jones, at any time, if the
other is in material breach or default of its respective covenants, agreements,
or other obligations in this Agreement, or if any of its representations in
this Agreement or any Transaction Document are not true and accurate in all
material respects when made or when otherwise required by this Agreement to be
true and accurate;
8.1.3 by either TWEAN or Jones, upon written notice
to the other, if any of the conditions to its obligations set forth in Sections
6.1 and 6.2, respectively, shall not have been satisfied on or before the
Outside Closing Date for any reason other than a material breach or default by
such party of its respective covenants,
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agreements, or other obligations hereunder, or any of its representations
herein not being true and accurate in all material respects when made or when
otherwise required by this Agreement to be true and accurate in all material
respects; or
8.1.4 as otherwise provided in this Agreement.
8.2 Effect of Termination.
8.2.1 Without limiting any other provision of this Section,
if the transaction contemplated by this Agreement is terminated and abandoned
as provided herein: (i) each party shall pay the costs and expenses incurred by
it in connection with this Agreement, and no party (or any of its officers,
directors, employees, agents, representatives or shareholders) shall be liable
to any other party for any costs, expenses or damages except as expressly
specified herein; (ii) each party shall redeliver all documents, work papers
and other materials of the other party relating to the transaction contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; (iii) all confidential information received by either
party hereto shall be treated in accordance with Section 10.1 hereof, and (iv)
neither party hereto shall have any liability or further obligation to the
other party to this Agreement except (A) as stated in subparagraphs (ii) and
(iii) of this Section 8.2.1 and (B) to the extent applicable, as set forth in
Section 8.2.2 below.
8.2.2 If both (i) this Agreement is terminated by one party
pursuant to Section 8.1.2 for any reason and (ii) the other party shall be in
breach in a material respect of any of its representations and warranties made
herein or its covenants or agreements made herein, then the terminating party
shall have as its sole and exclusive remedy the right to seek monetary damages
from the other party.
9. SURVIVAL OF REPRESENTATIONS AND INDEMNITY.
9.1 Survival of Representations, Warranties and
Covenants. All representations, warranties, covenants and agreements contained
in this Agreement and in any Transaction Document shall be deemed continuing
representations, warranties, covenants and agreements and shall survive the
Closing Date as specified herein. The representations, warranties, covenants
and agreements contained in this Agreement and in any Transaction Document
shall survive for a period ending on the date which is 12 months after the
Closing Date, except for representations and warranties set forth in Sections
3.1, 3.2, 4.1 and 4.2 which shall survive indefinitely, the representations and
warranties set forth in Sections 3.3 and 4.3 which shall survive for a period
ending on a date which is 60 days after the Closing Date, and the
representations and warranties set forth in Sections 3.9, 3.10, 3.13, 3.14,
4.9, 4.10, 4.13 and 4.14, which shall survive for the period of the applicable
statute of limitations. If Closing occurs, neither party shall have liability
to the other (for indemnification or otherwise) with respect to any
representation or warranty or any covenant, agreement or obligation to the
extent required to be
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performed prior to the Closing Date, unless on or prior to the end of the
applicable survival period such party is given notice of a claim with respect
thereto and specifying the factual basis of that claim in reasonable detail to
the extent then known to the claiming party.
9.2 TWEAN's Indemnity. Notwithstanding Closing, and
regardless of any investigation made at any time by or on behalf of Jones or
any information Jones may have, TWEAN shall indemnify and hold Jones, their
respective affiliates, officers, directors, employees, agents, and
representatives, and any Person claiming by or through any of them, as the case
may be, harmless from and against any Losses arising out of or resulting from:
9.2.1 all actual or purported liabilities and
obligations of TWEAN, and all claims and demands made in respect thereof
whether or not known or asserted at or prior to Closing (except the Jones
Assumed Liabilities), relating to the TWEAN Systems;
9.2.2 the operation of the TWEAN Systems prior to
the Adjustment Time;
9.2.3 any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of TWEAN under this
Agreement or any Transaction Document; and
9.2.4 any liabilities relating to any Non-Hired
Employee asserted under any federal, state or local law or regulation or
otherwise pertaining to any labor or employment matter arising out of actions
occurring prior to Closing.
If, by reason of the claim of any third party
relating to any of the matters subject to such indemnification, a Lien,
attachment, garnishment, or execution is placed or made upon any of the
properties or assets owned or leased by Jones or any other indemnitee under
this Section, in addition to any indemnity obligation of TWEAN under this
Section, TWEAN shall furnish a bond sufficient to obtain the prompt release
thereof within five days from receipt of notice relating thereto.
9.3 Jones' Indemnity. Notwithstanding Closing, and
regardless of any investigation made at any time by or on behalf of TWEAN or
any information TWEAN may have, Jones shall indemnify and hold TWEAN, its
affiliates, officers, directors, employees, agents, and representatives, and
any Person claiming by or through any of them, as the case may be, from and
against any Losses arising out of or resulting from:
9.3.1 all actual or purported liabilities and
obligations of Jones, and all claims and demands made in respect thereof
whether or not known or
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asserted at or prior to Closing (except the TWEAN Assumed Liabilities),
relating to the Jones Systems;
9.3.2 the operation of the Jones Systems prior to
the Adjustment Time;
9.3.3 any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of Jones under this
Agreement or any Transaction Document; and
9.3.4 any liabilities relating to any Non-Hired
Employee asserted under any federal, state or local law or regulation or
otherwise pertaining to any labor or employment matter arising out of actions
occurring prior to Closing.
If, by reason of the claim of any third party
relating to any of the matters subject to such indemnification, a Lien,
attachment, garnishment, or execution is placed or made upon any of the
properties or assets owned or leased by TWEAN or any other indemnitee under
this Section, in addition to any indemnity obligation of Jones under this
Section, Jones shall furnish a bond sufficient to obtain the prompt release
thereof within five days from receipt of notice relating thereto.
9.4 Procedure for Indemnified Third Party Claim.
Promptly after receipt by a party entitled to indemnification under this
Agreement (the "Indemnitee") of written notice of the assertion or the
commencement of any Litigation with respect to any matter referred to in
Sections 9.2 and 9.3, the Indemnitee shall give written notice thereof to the
party from whom indemnification is sought pursuant hereto (the "Indemnitor")
and thereafter shall keep the Indemnitor reasonably informed with respect
thereto; provided, however, that failure of the Indemnitee to give the
Indemnitor notice as provided herein shall not relieve the Indemnitor of its
obligations hereunder. In case any Litigation shall be brought against any
Indemnitee, the Indemnitor shall be entitled to participate in such Litigation
and, at the request of the Indemnitee, shall assume the defense thereof with
counsel satisfactory to the Indemnitee, at the Indemnitor's sole expense. If
the Indemnitor shall assume the defense of any Litigation, it shall not settle
the Litigation unless the settlement shall include as an unconditional term
thereof the giving by the claimant or the plaintiff of a release of the
Indemnitee, satisfactory to the Indemnitee, from all liability with respect to
such Litigation.
9.5 Limitation on Indemnification. Notwithstanding
anything other provision contained in this Article 9 except for Section 9.7,
neither party shall make a claim for indemnification hereunder until the
earlier of (i) 60 days after the Closing Date or (ii) the date on which such
party's indemnification claims equal or exceed $75,000 (the "Initial
Indemnification Claim Date"). Following the Initial Indemnification Claim
Date, either party may make a claim for indemnification on any date on which
the amount of the indemnification claim exceeds one dollar.
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9.6 Determination of Indemnification Amounts and Related
Matters.
9.6.1 Amounts payable by the Indemnitor to the
Indemnitee in respect of any Losses under this Section 9 shall be payable by
the Indemnitor as incurred by the Indemnitee.
9.6.2 In calculating amounts payable to an
Indemnitee under this Agreement, the amount of the indemnified Losses shall be
"grossed-up" by the amount of any increase in the Indemnitee's liability for
Taxes resulting from indemnification by the Indemnitor under this Agreement.
9.7 Indemnification for Subject Property.
Notwithstanding any provision to the contrary contained in this Agreement,
Jones immediately shall indemnify and hold harmless TWEAN from and against any
and all Losses incurred by TWEAN, up to a maximum of $50,000 (prior to the
application of Section 9.6.2), arising out of or resulting from any third-party
claim made with respect to the ownership of the Subject Property which are
brought within three years of the Closing Date.
10. CONFIDENTIALITY AND PRESS RELEASES.
10.1 Confidentiality. Each party shall hold in strict
confidence all documents and information concerning the other and its business
and properties (except that either party may disclose such documents and
information to any Governmental Authority reviewing the transactions
contemplated hereby or as required in either party's judgment pursuant to any
Legal Requirement), and if the transaction contemplated hereby should not be
consummated, such confidence shall be maintained, and all such documents and
information (in whatever form) and copies thereof shall immediately thereafter
be destroyed, or returned to the party originally furnishing the same.
10.2 Press Releases. No press release or public
disclosure, either written or oral, of the existence or terms of this Agreement
shall be made by either TWEAN or Jones prior to Closing without the consent of
the other, and TWEAN and Jones shall each furnish to the other advance copies
of any release that it proposes to make public concerning this Agreement or the
transactions contemplated hereby and the date upon which TWEAN or Jones, as
the case may be, proposes to make such press release. This provision shall
not, however, be construed to prohibit any party from making any disclosures to
any Governmental Authority which it is required to make under any Legal
Requirement, or from filing this Agreement with, or disclosing the terms of
this Agreement to, any governmentally regulated institutional lender to such
party.
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11. BROKERAGE FEES.
Each of TWEAN and Jones represents and warrants to the other
that it has not incurred any obligations or liabilities, contingent or
otherwise, for brokerage or finder's fees or agent's commissions or other like
payment in connection with this Agreement or the transactions contemplated
hereby for which the other party will have any liability, except that Jones has
retained Jones Financial Group, Ltd. (the "Group") as its sole broker and
finder in connection with this Agreement and the transactions contemplated
hereby, and Jones has agreed to pay the entire commission of the Group. TWEAN
shall have no liability or responsibility for the commissions payable to the
Group, TWEAN shall indemnify and hold Jones harmless against and in respect of
any breach by it of the provisions of this Section, and Jones shall indemnify
and hold TWEAN harmless against and in respect of any breach by it of the
provisions of this Section.
12. CASUALTY LOSSES.
The risk of any loss or damage to the TWEAN Assets or the
Jones Assets resulting from fire, theft or any other casualty (except
reasonable wear and tear) shall be borne by TWEAN or Jones, respectively, at
all times prior to the Adjustment Time. In the event that any such loss or
damage shall be sufficiently substantial so as to preclude and prevent within
30 days from the occurrence of the event resulting in such loss or damage
resumption of normal operations of any material portion of the Systems or
replacement or restoration of the lost or damaged Assets, TWEAN or Jones, as
appropriate, shall immediately notify the other in writing of its inability to
resume normal operations or to replace or restore the lost or damaged Assets,
and the other, at any time within 10 days after receipt of such notice, may
elect by written notice to the notifying party to either (i) waive such defect
and proceed toward of the transaction in accordance with terms of this
Agreement, or (ii) terminate this Agreement. If the other elects to terminate
this Agreement, both parties shall stand fully released and discharged of any
and all obligations hereunder. If the other shall elect to consummate the
transaction contemplated by this Agreement notwithstanding such loss or damage
and does so, all insurance proceeds payable as a result of the occurrence of
the event resulting in such loss or damage shall be delivered by the notifying
party to the other, or the rights thereto shall be assigned by the notifying
party to the other if not yet paid over to the notifying party, and the
notifying party shall pay to the other an amount equal to the difference
between the amount of such insurance costs and the full replacement cost of the
damaged or lost Assets.
13. MISCELLANEOUS.
13.1 Further Assurances. From time to time after Closing,
each of TWEAN and Jones shall, if requested by the other, make, execute and
deliver to the other such additional assignments, bills of sale, deeds and
other instruments of transfer,
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as may be necessary or proper to transfer to the other all of its right, title,
and interest in and to its Assets. Such efforts and assistance shall be
without cost to the requesting party.
13.2 Notices. All notices, requests, demands, and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (i) mailed,
registered or certified mail, return receipt requested, postage prepaid, (ii)
delivered by hand, (iii) sent by facsimile transmission, or (iv) delivered by
courier, to the following addresses, or at such other address as a party may
designate by notice given in accordance with this Section:
If to Jones: Jones Intercable, Inc.
9697 East Mineral Avenue
P.O. Box 3309
Englewood, Colorado 80155-3309
Attention: President
Facsimile: 303-799-4675
With a copy to: Jones Intercable, Inc.
9697 East Mineral Avenue
P.O. Box 3309
Englewood, Colorado 80155-3309
Attention: General Counsel
Facsimile: 303-799-1644
If to TWEAN: Time Warner Entertainment - Advance/Newhouse
Partnership
c/o Time Warner Entertainment Company, L.P.
300 First Stamford Place
Stamford, Connecticut 06902-6732
Attention: Jeffrey D. Elberson
Facsimile: 203-328-4828
With copies to: Holland & Hart
555 Seventeenth Street, Suite 2900
P.O. Box 8749
Denver, Colorado 80202
Attention: Davis O. O'Connor, Esq.
Facsimile: 303-295-8261
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and
Sabin, Bermant & Gould
350 Madison Avenue
New York, New York 10017
Attention: Arthur J. Steinhauer, Esq.
Facsimile: 212-692-4406
Notices delivered personally or by courier shall be effective upon
delivery to the intended recipient. Notices transmitted by facsimile
transmission shall be effective when confirmation of transmission is received.
Notices delivered by registered or certified mail shall be effective on the
delivery date set forth on the receipt of registered or certified mail, or
three days after deposit in the mail, whichever is earlier.
13.3 Assignment: Binding Effect. Neither party may assign
this Agreement or any interest herein without the prior written consent of the
other party; provided that either TWEAN or Jones may assign this Agreement and
its respective rights and duties hereunder to any other Person controlling,
controlled by or under common control with TWEAN or Jones, respectively,
without the consent of the other party. For purposes of this paragraph, a
change in control of TWEAN or Jones shall not constitute an assignment of this
Agreement or any of the rights and duties hereunder. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
13.4 Expenses. Each party shall bear its own expenses and
the fees and expenses of its legal counsel, accountants, and other experts
incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated by this Agreement.
13.5 Collection of Accounts. From and after the Closing
Date, each of TWEAN and Jones, as applicable, shall have the right and
authority, at its expense, to collect for its account all items to which it is
entitled as provided in this Agreement and to endorse with the name of the
other any checks or drafts received on account of any such items.
13.6 Entire Agreement: Amendments: and Waivers. This
Agreement merges all previous negotiations between the parties hereto and
constitutes the entire agreement and understanding between the parties with
respect to the subject matter of this Agreement. No alteration, modification
or change of this Agreement shall be valid except by an agreement in writing
executed by the parties hereto. No failure or delay by any party in exercising
any right, power or privilege hereunder (and no course of dealing between or
among any of the parties) shall operate as a waiver of any such right, power,
or privilege. No waiver of any default on any one occasion shall constitute a
waiver of
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any subsequent or other default. No single or partial exercise of any such
right, power, or privilege shall preclude the further or full exercise thereof.
13.7 Counterparts. This Agreement may be executed in one
or more counterparts with the same effect as if all of the signatures on such
counterparts appeared on one document. All executed counterparts shall together
constitute one and the same agreement.
13.8 Severability. If any provision of this Agreement or
the application thereof to any Person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
13.9 Schedules and Exhibits: Headings. All references
herein to Schedules and Exhibits are to the Schedules and Exhibits attached
hereto, which shall be incorporated in and constitute a part of this Agreement
by such reference. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning of this
Agreement.
13.10 Governing Law. The validity, performance, and
enforcement of this Agreement and all Transaction Documents, unless expressly
provided to the contrary, shall be governed by the laws of the State of
Colorado, without giving effect to the principles of conflicts of law of such
State.
13.11 Third Parties: Joint Ventures. This Agreement
constitutes an agreement solely among the parties hereto, and except as
otherwise provided herein, is not intended to and will not confer any rights,
remedies, obligations, or liabilities, legal or equitable, including any right
of employment, on any Person (including but not limited to any employee or
former employee of either of TWEAN or Jones) other than the parties hereto and
their respective successors, or assigns, or otherwise constitute any Person a
third party beneficiary under or by reason of this Agreement. Nothing in this
Agreement, expressed or implied, is intended to or shall constitute the parties
hereto partners or participants in a joint venture.
13.12 Construction. This Agreement has been negotiated by
TWEAN and Jones and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement shall not
apply in any construction or interpretation of this Agreement.
13.13 Attorneys' Fees. Notwithstanding any other provision
of this Agreement, the prevailing party in any Litigation between TWEAN and
Jones with respect to this Agreement or the transactions contemplated hereby
shall be entitled to
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recover from the nonprevailing party its reasonable attorneys' fees and costs
of the Litigation.
13.14 Commercially Reasonable Efforts. As used in this
Agreement, the phrase "commercially reasonable efforts" shall not be deemed to
require a party to undertake extraordinary measures, including the initiation
or prosecution of legal proceedings or the payment of amounts in excess of
normal and usual filing and processing fees, if any.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Asset Exchange
Agreement as of the date first written above.
JONES INTERCABLE, INC.
By: /s/ JAMES B. O'BRIEN
Name: James B. O'Brien
Title: President
TIME WARNER ENTERTAINMENT -
ADVANCE/NEWHOUSE PARTNERSHIP
By: Time Warner Entertainment Company,
L.P., its general partner
By: American Television and
Communications Corporation, its
general partner
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
<PAGE> 60
IN WITNESS WHEREOF, the parties have executed this Asset Exchange
Agreement as of the date first written above.
JONES INTERCABLE, INC.
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
TIME WARNER ENTERTAINMENT -
ADVANCE/NEWHOUSE PARTNERSHIP
By: Time Warner Entertainment Company,
L.P., its general partner
By: American Television and
Communications Corporation, its
general partner
By: /s/ DAVID E. O'HAYRE
Name: David E. O'Hayre
Title: Vice President - Investments
<PAGE> 1
EXHIBIT 3.2
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned Corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the Corporation is JONES INTERCABLE, INC.
SECOND: The following amendment was adopted by the shareholders of the
Corporation on July 10, 1995, and the number of votes cast for
the amendment by each voting group entitled to vote separately on
the amendment was sufficient for approval by that voting group:
The first sentence of the Fifth Article of the Articles of
Incorporation of the Corporation shall be amended by striking out
and eliminating the sentence in its entirety and substituting the
following in its stead:
"The number of shares which this Corporation shall have authority to issue
shall be an aggregate of 65,550,000 shares, which shall be divided into two
classes: 5,550,000 shares of Common Stock, each share having a par value of
$.01, and 60,000,000 shares of Class A Common Stock, each share having a par
value of $.01."
THIRD: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares
provided for in the amendment shall be effected, is as follows:
No change.
JONES INTERCABLE, INC.
BY: ELIZABETH M. STEELE
Elizabeth M. Steele
Corporate Secretary
<PAGE> 1
EXHIBIT 3.3
AS REVISED DECEMBER 9, 1994
BYLAWS
OF
JONES INTERCABLE, INC.
---------------------
ARTICLE I
OFFICES
The principal offices of the corporation shall be in Englewood, Colorado,
but the Board of Directors, in its discretion, may keep and maintain offices
wherever the business of the corporation may require.
ARTICLE II
MEETING OF SHAREHOLDERS
(1) Time and Place: Any meeting of the shareholders may be held at such
time and such place, within or without the State of Colorado, as may be fixed by
the Board of Directors or as shall be specified in the notice of the meeting or
in the waiver of notice thereof.
(2) Annual Meeting: The Annual meeting of the shareholders shall be held on
the last Friday in October of each year or at such other dates and times as the
Board of Directors may determine.
(3) Special Meetings: Special meetings of the shareholders, for any purpose
or purposes, may be called by the Chief Executive Officer, President, the Board
of Directors, or the holders of not less than one-tenth of all of the shares
entitled to vote at the meeting (regardless of the number of votes such shares
are entitled to cast at such meeting).
(4) Record Date: For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any proper purpose, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date
<PAGE> 2
in any case to be not more than fifty days and, in the case of a meeting of
shareholders, not less than ten days prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken.
(5) Voting List: After fixing a record date for a shareholders meeting, the
Secretary of the corporation shall make or cause to be made a complete list of
the shareholders entitled to vote at such meeting, arranged in alphabetical
order, with the address and number of shares held by each shareholder. Said list
shall be kept on file at the principal office of the corporation beginning the
earlier of ten days before the meeting date or two business days after notice of
the meeting is given, shall be produced and kept open at the meeting and shall
be subject to inspection by any shareholder at such principal office or during
the course of the meeting.
(6) Notices: Written or printed notice stating the place, day and hour of
the meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than fifty
days before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting, except
that if it is proposed that the authorized shares of the corporation be
increased, at least thirty days' notice shall be given. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the shareholder at his address as it appears on
the stock transfer books of the corporation.
(7) Quorum: Except as otherwise provided by law, a majority of the votes
entitled to be cast on the matter by the voting group constitutes a quorum of
that voting group for action on that matter. If, however, a quorum shall not be
present or represented, the shareholders present in person or by proxy may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until the requisite number of shares to constitute a quorum shall
be present. At any such adjourned meeting at which a quorum is represented, any
business may be transacted which might have been transacted at the meeting of
which notice originally was given. The shareholders present or represented at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
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(8) Voting: (a) A shareholder may vote either in person or by proxy
executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. Voting shall be oral, except
as otherwise provided by law, but shall be by written ballot if such written
vote is demanded by any shareholder present in person or by proxy and entitled
to vote. Except as otherwise provided by law, or the Articles of Incorporation,
as amended, or these bylaws, action on a matter is approved if the votes cast
within the voting group favoring the action exceed the votes cast within the
group opposing the action.
(b) The holders of shares of Common Stock, $.01 par value, and the holders
of shares of Class A Common Stock, $.01 par value, shall be entitled to vote as
separate classes on any plan of merger or plan of consolidation of the
corporation, on any proposal to liquidate the corporation, on any proposal to
sell all or substantially all of the assets of the corporation not in the
ordinary course of business, on any proposed amendment to the Articles of
Incorporation affecting the relative rights of that class of stock, and on all
matters specified in the Colorado Corporation Code as requiring a separate class
vote.
(9) Waiver: Attendance of a shareholder of the corporation, either in
person or by proxy, at any meeting, either annual or special, shall constitute
waiver of notice of such meeting, except where a shareholder attends a meeting
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. A written waiver of notice or
manner of calling any such meeting signed by a shareholder or shareholders
entitled to such notice, whether before, at or after the time stated therein,
shall be equivalent to the giving of such notice. The signatures of the
shareholders in person or by proxy subscribed to the minutes of any meeting
shall be deemed to be a written waiver of notice hereinabove provide for.
(10) Action Without Meeting: Any action which is required to or which may
be taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the subject matter thereof.
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ARTICLE III
DIRECTORS
(1) Number: The number of Directors of this corporation shall be thirteen;
pursuant to the Articles of Incorporation, the holders of shares of Common
Stock, $.01 par value, will be entitled to elect nine Directors and the holders
of shares of Class A Common Stock, $.01 par value, will be entitled to elect
four Directors. In the event the number of Directors is decreased (whether
pursuant to an amendment to these bylaws or otherwise), such decrease will not
change the term of any Director then in office.
(2) Election: The Board of Directors shall be elected at the annual meeting
of the shareholders or at a special meeting called for that purpose.
(3) Term: Each Director shall be elected to hold office until the next
annual meeting of shareholders and until his successor shall have been elected
and qualified.
(4) Removal and Resignation: Any Director may be removed at any time, with
or without cause, if the number of votes cast in favor of removal exceeds the
number of votes cast against removal at a meeting expressly called for that
purpose. Only the shareholders of the voting group that elected the Director may
participate in the vote to remove the Director. Any Director may resign at any
time by giving written notice to the President or to the Secretary, and
acceptance of such resignation shall not be necessary to make it effective.
(5) Vacancies: Any vacancy occurring on the Board of Directors and any
directorship to be filled by reason of an increase in the size of the Board of
Directors shall be filled by the remaining directors though less than a quorum
of the Board of Directors, unless the remaining directors elect to call a
special meeting of the shareholders for the purpose of filling such vacancy. If
the vacancy is to be filled by directors, it shall be filled by the affirmative
vote of a majority of the directors elected by the same voting group remaining
in office or if the vacancy is to be filled by the shareholders, only the
holders of shares of that voting group shall be entitled to vote to fill the
vacancy. A director elected to fill a vacancy shall hold office during the
unexpired term of his predecessor in office. A director elected to fill a
position resulting from an increase in the Board of Directors shall hold office
until the next annual meeting of shareholders and until his successor shall have
been elected and qualified.
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(6) Meetings: A regular meeting of the Board of Directors shall be held
without other notice than this bylaw immediately after, and at the same place
as, the annual meeting of shareholders. The Board of Directors may, by
resolution, establish a time and place for additional regular meetings which may
thereafter be held without further notice. Special meetings of the Board of
Directors may be called by the Chief Executive Officer, President or any two
members of the Board of Directors. Any Director unable to participate in person
at any meeting of the Board of Directors shall be given the opportunity to
participate by telephone.
(7) Notices: Two days' notice of special meetings shall be given to each
member of the Board of Directors by the Secretary, the President or the members
of the Board calling any meeting thereof. Any such notice shall state the time
and place of the special meeting and shall include a description of the general
nature of the business to be transacted at such special meeting and no other
business may be transacted at such special meeting.
Notices will be sent to each Director by (i) hand delivery, (ii) express
mail (or an overnight courier service such as Federal Express, Airborne or DHL)
addressed to each Director at the residence or usual place of business of such
Director as such may appear on the books of the corporation or (iii) facsimile
transmission to a facsimile machine at the residence or usual place of business
of any Director. Notice by hand delivery will be deemed to be given when such
notice is delivered to the Director, by express mail (or overnight courier
service) on the business day immediately following the day on which such notice
was deposited in the mails (or given to the courier) and by facsimile when
transmitted.
(8) Quorum: A majority of the number of directors fixed by these Bylaws
shall constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors, except as otherwise specifically
required by law. If less than such majority is present, the director or
directors present may adjourn the meeting from time to time without further
notice.
(9) Waiver: Attendance of a Director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. A
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written waiver of notice or manner of calling any such meeting signed by the
Director or Directors entitled to such notice, whether before, at or after the
time stated therein, shall be equivalent to the giving of such notice. The
signatures of the Directors subscribed to the minutes of any meeting shall
constitute such a written waiver of notice.
(10) Attendance by Telephone: Any director shall be deemed present at a
meeting of directors, and will be counted for quorum and voting purposes, if
that director is present by telephone, if he can hear the other directors and if
he can be heard by the other directors, throughout the meeting.
(11) Action Without Meeting: Any action which is required to or which may
be taken at a meeting of the Board of Directors may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the Directors.
(12) Committees: The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Any
such committee, to the extent provided in the resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers which
may require it, provided that no such committee shall have the power or
authority to (i) authorize distributions, (ii) approve or propose to
shareholders action that the Colorado Business Corporation Act requires to be
approved by shareholders, (ii) fill vacancies on the board of directors or on
any of its committees, (iv) amend articles of incorporation, (v) adopt, amend,
or repeal bylaws, (vi) approve a plan of merger not requiring shareholder
approval, (vii) authorize or approve reacquisition of shares, except according
to a formula or method prescribed by the board of directors or (viii) authorize
or approve the issuance or sale of shares, or a contract for the sale of shares,
or determine the designation and relative rights, preferences, and limitations
of a class or series of shares, provided that the board of directors may
authorize a committee or an officer to take the actions described in this clause
(viii) within limits specifically prescribed by the Board. Each
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committee shall keep regular minutes of its meetings and report the same to the
Board of Directors.
No action taken by any such committee shall be valid unless taken at a
regular meeting or a special meeting for which adequate notice has been duly
given as described in Section (7) above, or waived by the members of such
committee. Any such notice for a special meeting shall include a description of
the general nature of the business to be transacted at such special meeting and
no other business may be transacted at such meeting. Any committee member unable
to participate in person at any meeting shall be given the opportunity to
participate by telephone.
Each committee may determine its manner of acting and fix the time and
place of its meetings, unless the Board shall otherwise provide. A majority of
the members of each committee shall constitute a quorum for the transaction of
business by such committee, and the act of a majority of the members of each
committee present at a meeting at which a quorum shall be present shall be the
act of such committee.
Each member of a committee shall continue to act as such only so long as he
shall be a Director of the corporation. Until an Event Date (as defined in the
Shareholders Agreement), Investor (as defined in the Shareholders Agreement)
will be entitled to have at least one Investor Nominee (as defined in the
Shareholders Agreement) on each committee. For purposes of these bylaws,
"Shareholders Agreement" means the Shareholders Agreement dated ,
1994 among the corporation, Bell Canada International Inc., Glenn R. Jones and
Jones International, Ltd.
(a) Executive Committee: The Board of Directors may, by resolution adopted
by a majority of the whole Board, designate three Directors to act as an
Executive Committee. The Executive Committee will have no more than two members
who are officers of the corporation. The Executive Committee, except as limited
by law, the Articles of Incorporation, these Bylaws or resolution of the Board,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the corporation.
(b) Audit Committee: The Board may, by resolution adopted by a majority of
the whole Board designate three Directors to act as an Audit Committee of the
Board. No officer of the corporation shall be a member of the Audit Committee
and at least two members will be Independent Directors (as defined in the
Shareholders
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Agreement). The Audit Committee shall (i) make recommendations to the Board as
to the independent accountants to be appointed by the Board, (ii) review with
the independent accountants the financial statements of the corporation and the
scope of their examination, (iii) receive the reports of the independent
accountants and meet with representatives of such accountants for the purpose of
reviewing and considering questions relating to their examination and such
reports, (iv) review, either directly or through the independent accountants,
the internal accounting and auditing procedures of the corporation, (v) review
related party transactions and (vi) perform such other functions as may be
assigned to it from time to time by the board.
(c) Compensation Committee: The Board may, by resolution adopted by a
majority of the whole Board, designate three Directors to act as a Compensation
Committee of the Board. No officer of the corporation other than the Chief
Executive Officer shall be a member of the Compensation Committee and at least
one member will be an Independent Director. The Compensation Committee, or any
subcommittee thereof established from time to time to satisfy requirements of
applicable law, shall (i) have and may exercise the powers and authority of the
corporation under any stock option or other incentive compensation plan for
employees of the corporation or any of its subsidiaries, (ii) review and, where
appropriate, approve the compensation of officers and employees of the
corporation and its subsidiaries and (iii) have such others powers, authorities
and responsibilities as are normally incident to the functions of a compensation
committee or as may determined by the Board.
(13) Chairman of the Board: The Directors may, at any regular or special
meeting, elect a Chairman of the Board of Directors. A Director elected to fill
this position shall hold office until the next annual meeting of shareholders
and until his successor shall have been elected and qualified. When present, the
Chairman of the Board shall preside at all shareholders' and Directors'
meetings. In connection with such meetings, the Vice Chairman of the Board may
act in the stead of the Chairman of the Board in case of the absence, inability
to act, or disability of the Chairman of the Board. In the event of the absence,
inability to act, or disability of both the Chairman of the Board and the Vice
Chairman of the Board, the President may act in their stead as chairman of the
meeting.
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ARTICLE IV
OFFICERS
(1) Number and Election: The officers of the corporation shall be a Chief
Executive Officer, President, one or more Vice Presidents, a Secretary and a
Treasurer, who shall be elected by the Board of Directors to serve at the
pleasure of the Board of Directors. Such other officers as may be deemed
necessary may also be elected or appointed by the Board of Directors. The Chief
Executive Officer may appoint such assistant officers as he may deem necessary.
Any two or more offices may be held by the same person, except the offices of
President and Secretary.
(2) Chief Executive Officer: The Chief Executive Officer shall be the
senior executive of the corporation and shall have overall supervision of the
affairs of the corporation, and may assign duties and responsibilities to other
officers of the corporation from time to time as such officer deems appropriate.
(3) President: The President shall, subject to the control of the Chief
Executive Officer and of the Board of Directors, have general supervision of the
operations of the Corporation, and shall perform such duties and have such
responsibilities as the Chief Executive Officer or the Board of Directors may,
from time to time, assign. The Vice President may act in place of the President
in case of the absence, inability to act or disability of the President. If
there shall be more than one Vice President, their priority shall be as from
time to time determined by the Board of Directors or Executive Committee. The
President shall serve at the pleasure of the Board of Directors.
(4) Vice President: The Vice President shall perform such duties and have
such responsibilities as the Chief Executive Officer of the Board of Directors
may, from time to time, assign. The corporation may have more than one Vice
President. The Vice President may act in the President's stead in case of the
absence, inability to act or disability of the President. If there shall be more
than one Vice President, their priority shall be as from time to time determined
by the Board of Directors or the Executive Committee. All Vice Presidents shall
serve at the pleasure of the Board of Directors.
(5) Secretary: The Secretary shall keep the minutes of all meetings, have
charge of the corporate seal and stock certificate book and in general perform
all duties incident to the office of secretary and such other duties as from
time to time may be assigned by the Chief Executive
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Officer or by the Board of Directors. The Secretary shall serve at the pleasure
of the Board of Directors.
(6) Treasurer: The Treasurer shall have custody of all moneys and
securities of the corporation, shall keep regular books of account, and in
general perform all of the other duties incident to the office of treasurer and
such other duties as may, from time to time, be assigned by the Chief Executive
Officer or by the Board of Directors. The Treasurer shall serve at the pleasure
of the Board of Directors.
(7) Removal and Resignation: Any officer may be removed by the Board of
Directors whenever in its judgment the best interests of the corporation will be
served thereby. Any officer may resign at any time by giving written notice
thereof to the Chief Executive Officer or the Secretary; and acceptance of such
resignation shall not be necessary to make it effective.
(8) Compensation: Officers shall receive such compensation for their
services as may be authorized or ratified by the Compensation Committee or the
Board of Directors. Election of an officer shall not of itself create contract
rights to compensation for services performed as such officer.
ARTICLE V
STOCK
(1) Certificates: Certificates representing shares of the capital stock of
the corporation shall be in such form as may be approved by the Board of
Directors and shall be signed by the President, or the Vice President and by the
Secretary or an Assistant Secretary. Such signatures may be facsimiles if the
certificate is countersigned by a transfer agent of the corporation or
registered by a registrar, other than the corporation itself or an employee
thereof. In case any officer whose facsimile signature has been placed on a
certificate has ceased to be such an officer before such certificate is issued,
such certificate may be issued with the same effect as if he were such officer
at the date of its issue. All certificates shall be consecutively numbered and
the names of the owners, the number of the shares and the date of issued shall
be entered on the books of the corporation. Each certificate representing shares
shall state upon the face thereof (a) that the corporation is organized under
the laws of the State of Colorado, (b) the name of the person to whom issued
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and (c) the number of shares which such certificate represents.
(2) Transfers of Stock: The capital stock of the corporation shall be
subject to such valid restrictions on the transfer thereof as the Board of
Directors may by resolution determine prior to the issuance of the stock subject
to such restriction, to such restrictions as shall be agreed upon in writing by
all the persons owning or having subscribed for any shares of stock in the
corporation at the time of such written agreement, and to such restrictions as
the corporation and the person owning stock subject to such restrictions may
agree upon in writing. Any certificate representing shares of stock subject to
any such restriction or transfer shall have typed or printed on the face thereof
a statement that the shares of stock represented by such certificate are subject
to restrictions on their transfer and shall make reference to the provisions of
the restrictions and designate the agreement or minutes of the Board of
Directors in which all of the terms of the restrictions may be found. A copy of
such agreement or of the minutes of the meeting of the Board of Directors shall
be kept at the principal office of the corporation and shall be open for the
inspection of any shareholder at all reasonable times. Subject to any
restrictions which may be established as hereinbefore provided, the shares of
the capital stock of the corporation shall be transferable on the books of the
corporation only by the person named in the certificate, or his attorney or
legal representative, lawfully constituted and appointed in writing, and upon
surrender of the certificate therefor, in accordance with the laws of the State
of Colorado, now or hereafter in effect.
(3) Lost Certificates: The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors, the
Secretary or the transfer agent may, in his or its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificate of his legal representative, to give the
corporation a bond in such sum as it may direct as indemnity against any claims
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
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ARTICLE VI
SEAL
The Board of Directors may adopt a seal which shall have inscribed thereon
the name of the corporation and the words "SEAL" and "COLORADO" which, when
adopted, shall constitute the corporate seal of the corporation.
ARTICLE VII
FISCAL YEAR
The Board of Directors, by resolution, may adopt a fiscal year for this
corporation.
ARTICLE VIII
INDEMNIFICATION
(1) Advancement of Expenses: Expenses incurred by a person in defending a
civil or criminal action, suit or proceeding by reason of the fact that he or
she is or was a director or officer of the corporation, for which such director
or officer may be entitled to indemnification under the corporation's articles
or incorporation, shall be paid by the corporation in advance of the final
disposition of such action, suit, or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
corporation, and upon satisfaction of any other requirements of applicable law.
(2) Insurance: The corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or loss
under applicable law.
ARTICLE IX
These bylaws may at any time and from time to time be amended, altered or
repealed by the Board of Directors; provided, however, that the provisions of
Article II, Section 8(b) relating to class voting shall not be amended
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except upon the unanimous vote of all shareholders of the corporation.
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EXHIBIT 10.1.6
JONES COMPUTER NETWORK
AFFILIATE AGREEMENT
THIS AGREEMENT is made as of the 1st day of August, 1994, by and between JONES
COMPUTER NETWORK, LTD., a Colorado corporation ("JCN"), and JONES PROGRAMMING
SERVICES, INC. and JONES INTERCABLE, INC., both Colorado corporations
(collectively, "Affiliate"), whose address is 9697 E. Mineral Avenue, Englewood,
Colorado 80112.
IN CONSIDERATION OF THE MUTUAL COVENANTS, STIPULATIONS AND REPRESENTATIONS
CONTAINED HEREIN, THE PARTIES HERETO AGREE AS FOLLOWS:
1. GRANT OF LICENSE
(a) Subject to the terms and conditions of this Agreement, JCN hereby
grants to Affiliate the non-exclusive license to distribute the "Jones
Computer Network" service (the "Service") within the operating area (as
hereinafter defined) of any cable or satellite master antenna television
system(s) owned or managed by Affiliate as listed on the attached Exhibit
A, as such list may be amended from time to time (the "System(s)") by
mutual agreement of JCN and Affiliate. Affiliate shall give written notice
to JCN within thirty (30) days of the date Affiliate desires to add a
System to Exhibit A. Affiliate shall not delete any System from Exhibit A
during the term of this Agreement.
(b) For purposes of this Agreement, the "Operating Area" of any System
shall mean, with respect to a cable television system, the geographical
area where Affiliate is authorized to construct, operate, manage or
maintain a cable television system by appropriate governmental authority,
and with respect to a satellite
<PAGE> 2
master antenna television system, the geographical area where Affiliate is
authorized to construct, operate, manage or maintain a satellite master
antenna television system by agreement with a third party.
2. TERM
(a) The term of this Agreement shall commence on August 1, 1994, and
terminate fifteen (15) years thereafter. This Agreement shall automatically
renew for successive one (1) year terms unless either party gives written
notice of termination at least forty-five (45) days prior to the expiration
of the then current term.
(b) Except as otherwise provided herein, neither Affiliate nor JCN may
terminate this Agreement except upon sixty (60) days prior written notice
and then only if the other has made a misrepresentation herein or breaches
any of its material obligations hereunder and such misrepresentation or
breach (which shall be specified in such notice) is not or cannot be cured
within sixty (60) days of such notice.
3. CONTENT OF SERVICE
(a) JCN shall have the exclusive authority to determine the content and
format of the Service, and the selection, scheduling, substitution and
withdrawal of any program or advertisement shall remain within the sole
discretion of JCN. Affiliate shall distribute the Service without addition,
deletion, alteration, editing or amendment, including any copyright
notices, credits and similar notices, trademarks or trade names contained
therein.
(b) JCN shall make available to Affiliate not less than four (4) minutes of
commercial advertising time in each programming hour for use by Affiliate
in inserting local advertising or promotions. All such availabilities shall
be at such points in the transmission of the Service as JCN determines in
its sole discretion. JCN shall signal Affiliate's commercial advertising
time by a hidden cue tone. Affiliate shall use its best efforts to assure
that all commercial matter or advertisements it inserts with the Service
(i) are not offensive in nature; (ii) do not suggest an affiliation between
JCN or any programming contained in the Service, and third party
advertisers, and (iii) are generally compatible with the commercial
standards of JCN including, but not
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limited to, a prohibition on advertising related to adult entertainment.
Affiliate's commercial advertising time shall be fixed, nonrecapturable and
nonpreemptible except in the event that JCN gives thirty (30) days' notice
to Affiliate preempting Affiliate's specific commercial time, provided that
JCN makes available to Affiliate, within sixty (60) days of such
preemption, an equal amount of commercial time in a like time period.
4. RATES AND PAYMENTS
(a) On or before the thirtieth (30th) day following each month throughout
the term of this Agreement, Affiliate shall pay to JCN for each Subscriber
of each System during the preceding month, at the address specified by JCN,
license fees in an amount calculated in accordance with the attached
Exhibit B.
(b) JCN's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Affiliate of its obligation to make any
payment in a timely manner consistent with the terms of this Agreement.
Past due payments shall bear interest at a rate equal to the lesser of (i)
one and one-half percent (1-1/2%) per month or (ii) the maximum legal rate
permitted under law, and Affiliate shall be liable for all reasonable costs
and expenses (including, without limitation, reasonable court costs and
attorneys' fees) incurred by JCN in collecting any past due payments.
(c) JCN shall have the right, on sixty (60) days prior written notice, to
modify the applicable monthly rates to be paid by Affiliate as specified
herein. Each such notice of rate increase shall be attached to and become a
part of this Agreement.
(d) For purposes of this Agreement, the term "Subscriber" shall mean (i)
each residential customer and commercial or business establishment
(including any restaurant, barbershop, lounge, tavern, social, athletic or
country club, bar, business office, sales office, store or shop) receiving
and separately paying for basic cable television service from each System,
and (ii) the number of basic equivalent subscribers computed by dividing
the monthly revenue for basic cable television service paid by bulk
accounts (such as apartment buildings, cooperatives, condominiums, mobile
home parks, hotels, and
-3-
<PAGE> 4
motels) of each System by the standard residential rate for basic cable
television service of that System.
(e) Accompanying each payment during the term of this Agreement, Affiliate
shall provide to JCN a true and complete monthly report, signed by the
chief financial officer of Affiliate or his/her authorized designee, in a
form satisfactory to JCN, specifying for each System the average number of
Subscribers of each System during the subject payment period (computed by
dividing the number of Subscribers on the first and last day of the
payment, period by 2) and certifying the accuracy of such information and
containing such other information as may be reasonably required by JCN for
accurate billing purposes.
(f) Affiliate shall keep true and accurate books and records directly
relating to this Agreement in accordance with generally accepted accounting
principles. All such books and records shall be maintained by Affiliate for
a period of three (3) years following the year to which such books and
records relate. JCN or its authorized representatives shall have the right
to inspect, audit and copy any such books and records of Affiliate.
Acceptance by JCN of any payment by Affiliate shall not be construed as
acceptance of any calculation thereof or any aforementioned Subscriber
count supplied in the monthly report, or as a waiver of any rights of JCN
hereunder.
5. DELIVERY AND DISTRIBUTION
(a) During the term of this Agreement, each of the Systems shall,
commencing with each such Systems' first date of carriage of the Service as
listed on Exhibit A ("Launch Date"), and subject to compliance with the
terms of this Agreement, offer the Service either as part of such System's
Basic Service, Expanded Basic Service or on an A La Carte basis. "Basic
Service" shall mean the television service package which is received by all
of Affiliate's customers in a particular System. "Expanded Basic Service"
shall mean the cable television service package which is received by the
second greatest number of Affiliate's customers in a particular System and
which does not include any "pay services" (e.g., HBO, Cinemax, The Disney
Channel). "A La Carte" basis shall mean that the Service is available
individually to a Subscriber without any requirement that the Subscriber
subscribe to any service or package beyond Basic Service, provided,
however, that the Service is also
-4-
<PAGE> 5
available in any such System as part of a package composed of at least
three (3) other satellite delivered services, which additional services are
also available for purchase individually by a Subscriber. Affiliate shall
designate one (1) channel on each System for the carriage of the Service
prior to the commencement of the delivery of the Service on such System.
Affiliate may change, from time to time, the channel designation on which
the Service is carried; provided, however, that Affiliate shall give JCN
written notice of the change and the new channel designation at least sixty
(60) days prior to the effective date of such change, and no such change.
(b) Affiliate agrees to deliver the Service at the hours it is initially
transmitted by JCN.
(c) JCN will initially transmit the Service by means of domestic
communications satellite GE American C-3, Transponder 20, and may, from
time to time, transmit the Service by means of other satellites. JCN will
notify Affiliate of any change in satellite not less than thirty (30) days
prior to the scheduled change. In the event of any such change, Affiliate
agrees to make such arrangements as may be necessary to receive the signal
from the new satellite. Notwithstanding the above, if JCN delivers the
Service to a domestic communications satellite which does not carry the
signal transmission of (i) HBO or SHOWTIME or (ii) at least three (3) of
the following basic services: ESPN, MTV, Lifetime, The Nashville Network,
C-Span, CNN, TNT, or Headline News; and where it reasonably appears that
Affiliate will incur expenses for additional receiving equipment that will
not be reimbursed by any third party for a particular System to receive the
Service, then in that event, Affiliate will be entitled to delete the
affected System from Exhibit A of this Agreement within thirty (30) days of
receiving notice from JCN of the satellite selected for delivery of the
Service, unless JCN agrees to pay its pro rata share (based on number of
signals to be received by any System from such new satellite) of the costs
associated with the additional receiving equipment. If JCN agrees to pay
such costs, then the affected System may not be deleted from Exhibit A and
such System shall continue to distribute the Service through the remaining
term of this Agreement. JCN and Affiliate shall each use their respective
best efforts to maintain a high quality of signal transmission for the
Service.
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<PAGE> 6
(d) Subject to then existing law, Affiliate shall not itself, and shall not
authorize others to, copy, tape or otherwise reproduce any part of the
Service without JCN's prior written authorization, and shall take
reasonable and practical security measures to prevent the unauthorized
copying or taping by others; provided, however, that nothing herein shall
prohibit Affiliate from assisting its residential subscribers in connecting
video cassette recorders to record the Service. JCN shall endeavor to
advise Affiliate of copyright, literary and dramatic rights of, and
restrictions and limitations imposed by, program originators (including but
not limited to JCN) affecting the distribution of the Service, as they
exist from time to time ("Intellectual Property Rights and Requirements").
As between the parties to this Agreement, Affiliate shall be solely
responsible for compliance with any and all Intellectual Property Rights
and Requirements of which it has been given notice. Affiliate shall not
distribute or exhibit, and shall not authorize, license or permit the
distribution or exhibition of, the Service by any means or device, whether
now known or hereafter devised, other than through the Systems now or
hereafter listed in Exhibit A hereto and in accordance with the terms of
this Agreement.
6. PROMOTION AND RESEARCH
(a) Affiliate shall use reasonable efforts to promote, market and sell the
Service to Subscribers and to the general public within the Operating Area
of each System. Advertising, promotional, marketing and/or sales materials
concerning the Service which are provided to Affiliate by JCN shall be used
without any alteration, deletion, addition or any other change, unless such
changes are approved by JCN prior to use by Affiliate.
(b) At JCN's request, Affiliate shall provide JCN with all available data
regarding the marketing and promotion of the Service by Affiliate. Subject
to applicable federal, state and local law (including the franchises, if
any, pursuant to which the Systems are operated), Affiliate also agrees to
render such other assistance to JCN as JCN may request and which Affiliate
may reasonably provide in connection with any marketing test, survey, poll
or other research which JCN may undertake in connection with the Service.
JCN shall treat as confidential any names and addresses of Subscribers
which JCN receives from Affiliate, and shall not utilize any such names or
addresses except in connection with such research.
-6-
<PAGE> 7
7. NOTICES
All notices, statements and other communications given hereunder shall be
in writing and shall be delivered by facsimile transmission, telegraph,
personal delivery, certified mail, return receipt requested, or by next day
express delivery, addressed, if to JCN at 9697 East Mineral Avenue,
Englewood, Colorado 80112, Attn: President, JCN, (Fax: 303-799-1644), with
a copy to the Legal Department and, if to Affiliate, at its address set
forth herein or by facsimile at 303-700-1644. The date of such facsimile
transmission, telegraphing or personal delivery or the next day if by
express delivery, or the date three (3) days after mailing, shall be deemed
the date on which such notice is given and effective.
8. TRADEMARKS
All right, title and interest in and to the Service, and all materials,
ideas, formats and concepts, computer software or other rights of whatever
nature related thereto shall remain the property of JCN. Further, Affiliate
acknowledges and agrees that all names, logos, marks, copyright notices or
designations utilized by JCN in connection with the Service (the "Marks")
are the sole and exclusive property of JCN and/or its affiliates, and no
rights or ownership are intended to be or shall be transferred to
Affiliate. Affiliate's use of the Marks shall be limited to the advertising
and promotion of its carriage of the Service over the Systems pursuant to
this Agreement. JCN shall provide Affiliate with samples of the Marks which
Affiliate shall use in their entirety (including all service mark and
trademark notices) whenever the Marks are used by Affiliate.
9. REPRESENTATIONS AND INDEMNIFICATION
(a) JCN represents and warrants to Affiliate that (i) it is a corporation
duly organized and validly existing under the laws of the State of
Colorado; (ii) JCN has the corporate power and authority to enter into this
Agreement and to fully perform its obligations hereunder; (iii) JCN is
under no contractual or other legal obligation which in any way interferes
with its ability to fully, promptly and completely perform hereunder; and
(iv) nothing contained in the Service shall violate the civil or property
rights, copyrights, trademark rights or right
-7-
<PAGE> 8
of privacy of any person, firm or corporation except that no representation
and warranty is given with respect to music performance rights.
(b) Affiliate represents and warrants to JCN that (i) Affiliate is a
corporation duly organized and validly existing under the laws of the State
of Colorado; (ii) Affiliate has the requisite power and authority to enter
into this Agreement and to fully perform its obligations hereunder; (iii)
Affiliate's Systems are operating, with respect to any cable television
system, pursuant to valid franchise agreements, or licenses or other
permits duly authorized by proper local authorities, or with respect to any
satellite master antenna television systems, pursuant to valid agreements
with third parties granting affiliate all necessary rights; and (iv)
Affiliate is under no contractual or other legal obligation which in any
way interferes with its ability to fully, promptly and completely perform
hereunder.
(c) Affiliate and JCN shall each indemnify and forever hold harmless the
other, the other's affiliate companies and their respective officers,
directors, employees and agents from all liabilities, claims, costs,
damages and expenses (including, without limitation, reasonable counsel
fees) arising out of any breach or claimed breach by it of any
representation or any of its obligations pursuant to this Agreement. JCN
will credit Affiliate for any continuous interruption of Service caused by
JCN of twenty-four (24) hours or longer, such interruption measured from
the time Affiliate notifies JCN of the interruption or from the time a
major outage is known to JCN. The amount so credited shall be an amount
equal to that portion of the monthly license fees applicable to the period
during which the Service was interrupted. JCN's liability for damages
arising out of its inability or failure to deliver the Service shall be
limited to the license fee credits set forth in the preceding sentence.
(d) The party entitled to indemnification hereunder (the "Indemnified
Party") shall notify the other party hereto (the "Indemnifying Party") in
writing of the claim or action for which such indemnity allegedly applies.
The Indemnifying Party shall undertake the defense of any such claim or
action and permit the Indemnified Party to participate therein at the
Indemnified Party's own expense. The settlement of any such claim or action
by an Indemnified Party without the Indemnifying Party's prior written
consent shall release the Indemnifying Party from its obligations hereunder
with respect to such claim or action so settled.
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<PAGE> 9
(e) Neither party hereto shall be liable to the other for the failure to
fulfill its obligations hereunder (other than the obligation to make all
payments when due hereunder) to the extent such failure is caused by or
arises out of an act of God, war, strike, riot, labor dispute, national
disaster, technical failure (including the failure of all or part of any
domestic communications satellite on which the Service is delivered), or
any other reason beyond the control of the party whose obligation is
prevented during the period of such occurrence.
10. CONFIDENTIALITY
Neither Affiliate nor JCN shall disclose to any third party (other than its
respective employees, in their capacity as such), any information with
respect to the terms and provisions of this Agreement, including by way of
press release(s), except: (i) to the extent necessary to comply with law or
legal reporting or disclosure requirements or the valid order of a court of
competent jurisdiction, in which event the party making such disclosure
shall so notify the other as promptly as practicable (and, if possible,
prior to making such disclosure) and shall seek confidential treatment of
such information; (ii) as part of its normal reporting or review procedure
to its parent company, its auditors and its attorneys; provided, however,
that such parent company, auditors and attorneys agree to be bound by the
provisions of this Section; (iii) in order to enforce its rights pursuant
to this Agreement; and (iv) if mutually agreed by Affiliate and JCN in
writing.
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<PAGE> 10
11. GENERAL
(a) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. Notwithstanding
the foregoing, this Agreement may not be assigned by Affiliate without the
prior written consent of JCN.
(b) Nothing contained herein shall be deemed to create, and the parties do
not intend to create, any relationship of partners or joint venturers as
between Affiliate and JCN. Neither Affiliate nor JCN shall be or hold
itself out as the agent of the other under this Agreement. The obligations
of Affiliate and JCN under this Agreement are subject to all applicable
federal, state and local laws, rules and regulations including, but not
limited to, the Communications Act of 1934, as amended and the rules and
regulations of the Federal Communications Commissions.
(c) A waiver by either party of any term or condition of this Agreement in
any one instance shall not be deemed or construed as a continuing waiver or
a waiver of any subsequent breach thereof. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter
hereof and supersedes all prior understandings and agreements, oral or
written between the parties hereto. This Agreement may not be modified
except in a writing executed by both parties hereto.
(d) This Agreement and all collateral matters shall be construed in
accordance with the internal laws of the State of Colorado applicable to
agreements fully made and to be performed therein, irrespective of the
place of actual execution or performance.
(e) The invalidity or unenforceability of any provision of this Agreement
shall in no way affect the validity or enforceability of any other
provision of this Agreement.
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<PAGE> 11
(f) JCN agrees that if, at any time during the term of this Agreement, it
enters into an agreement with any other cable operator having, in the
aggregate, an equal or fewer number of basic subscribers under ownership or
management than Affiliate, pursuant to which such other operator receives
lower license fee rates for the Service than Affiliate is paying hereunder,
JCN shall promptly offer such lower license fee rates to Affiliate to apply
to Affiliate for such time as such lower license fee rates shall be given
or offered to the other operator. JCN shall certify to Affiliate compliance
with this provision upon request.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first set forth above.
<TABLE>
<S> <C>
JONES INTERCABLE, INC. JONES COMPUTER NETWORK, LTD.
By: _______________________ By: _______________________
(Signature) (Signature)
Its: ______________________ Its: ______________________
Date: _____________________ Date: _____________________
JONES PROGRAMMING SERVICES, INC.
By: _______________________
(Signature)
Its: ______________________
Date: _____________________
</TABLE>
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<PAGE> 12
EXHIBIT A
<TABLE>
<CAPTION>
LIST EACH
FRANCHISE AREA NO. OF
SERVED BY EACH SYSTEM LAUNCH DATE SUBSCRIBERS
-------------------------------------------- ----------------------- --------------------
<S> <C> <C>
</TABLE>
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<PAGE> 13
EXHIBIT B
LICENSE FEES
August 1, 1994 through December 30, 1994 $.082 per
Subscriber per month
December 31, 1994 through December 30, 1995 $.10 per
Subscriber per month
An increase of $.01 in the monthly license fee during each successive twelve
month period thereafter during the term of the agreement.
<PAGE> 1
EXHIBIT 10.1.7
JONES INFOMERCIAL NETWORKS, INC.
AFFILIATE AGREEMENT
THIS AGREEMENT is made as of the 1st day of August, 1994, by and
between JONES INFOMERCIAL NETWORKS, INC., a Colorado corporation ("JIN"), and
JONES INTERCABLE, INC. ("Affiliate"), whose address is 9697 E. Mineral Avenue,
Englewood, Colorado 80112.
IN CONSIDERATION OF THE MUTUAL COVENANTS, STIPULATIONS AND
REPRESENTATIONS CONTAINED HEREIN, THE PARTIES HERETO AGREE AS FOLLOWS:
1. GRANT OF LICENSE
(a) Subject to the terms and conditions of this Agreement, JIN hereby
grants to Affiliate the non-exclusive license to distribute the "Jones
Infomercial Networks" programming service (the "Service") within the
operating area (as hereinafter defined) of any cable or satellite master
antenna television system(s) owned or managed by Affiliate as listed on the
attached Exhibit I, as such list may be amended from time to time (the
"System(s)") by mutual agreement of JIN and Affiliate. Affiliate shall give
written notice to JIN within thirty (30) days of the date Affiliate desires
to add a System to Exhibit I. Affiliate shall not delete any System from
Exhibit I during the term of this Agreement.
(b) For purposes of this Agreement, the "Operating Area" of any System
shall mean, with respect to a cable television system, the geographical
area where Affiliate is authorized to construct, operate, manage or
maintain a cable television system by appropriate governmental authority,
and with respect to a satellite master antenna television system, the
geographical area where Affiliate is authorized to construct, operate,
manage or maintain a satellite master antenna television system by
agreement with a third party.
2. TERM
(a) The term of this Agreement shall commence on August 1, 1994, and
terminate ten (10) years thereafter. This Agreement shall
<PAGE> 2
automatically renew for successive equal terms unless either party gives
written notice of termination at least forty-five (45) days prior to the
expiration of the then current term.
(b) Except as otherwise provided herein, neither Affiliate nor JIN may
terminate this Agreement except upon sixty (60) days prior written notice
and then only if the other has made a misrepresentation herein or breaches
any of its material obligations hereunder and such misrepresentation or
breach (which shall be specified in such notice) is not or cannot be cured
within sixty (60) days of such notice.
3. CONTENT OF SERVICE
JIN shall have the exclusive authority to determine the content and format
of the Service, and the selection, scheduling, substitution and withdrawal
of any program or advertisement shall remain within the sole discretion of
JIN. Affiliate shall distribute the Service without addition, deletion,
alteration, editing or amendment, including any copyright notices, credits
and similar notices, trademarks or trade names contained therein.
4. RATES AND PAYMENTS
(a) on or before the thirtieth (30th) day following each month throughout
the term of this Agreement, JIN shall pay to Affiliate the appropriate
rebate of network revenue earned (the "rebate") in the operating area
identified by zip codes provided in Exhibit I, and calculated in accordance
with Exhibit II.
(b) JIN's failure, for any reason, to send a particular monthly payment
within the time frame specified shall not relieve Affiliate of its
obligation to carry the Network consistent with the terms of this
Agreement.
(c) During the term of this Agreement, each month Affiliate shall provide
to JIN a true and complete monthly report, signed by the chief financial
officer of Affiliate or his/her authorized designee, in a form satisfactory
to JIN, specifying for each System the total number of hours the Network
was carried each day of that month and the number of channels on which the
Network was viewed. In addition, Affiliate will
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<PAGE> 3
provide JIN a monthly report of the specific dayparts of each day during
which the Network was broadcast to each System.
(d) JIN shall keep true and accurate books and records directly relating to
this Agreement in accordance with generally accepted accounting principles.
All such books and records shall be maintained by JIN for a period of three
(3) years following the year to which such books and records relate.
Affiliate or its authorized representatives shall have the right to
inspect, audit and copy any such books and records of Affiliate. Acceptance
of any rebate by Affiliate shall be construed as acceptance of any
calculation thereof.
5. DELIVERY AND DISTRIBUTION
(a) During the term of this Agreement, each of the Systems shall,
commencing with each such Systems' first date of carriage of the Service as
listed on Exhibit I ("Launch Date"), designate a minimum of one (1) channel
on each System for the carriage of the Service prior to the commencement of
the delivery of the Service on such System. Affiliate may change, from time
to time, the channel designation on which the Service is carried. Affiliate
agrees to deliver the Service a minimum of four hours per day.
(b) JIN will initially transmit the Service by means of domestic
communications satellite GE American Communications C-3, Transponder 20.
Effective September 6, 1994, JIN will transmit a digitally compressed
signal on the GE American Communications C-3 satellite. JIN will notify
Affiliate of any change in satellite not less than ninety (90) days prior
to the scheduled change. In the event of any such change, Affiliate agrees
to make such arrangements as may be necessary to receive the signal from
the new satellite. If JIN delivers the Service to a domestic communications
satellite where it reasonably appears that Affiliate will incur expenses
for additional receiving equipment other than those associated with
receiving a digitally compressed signal that will not be reimbursed by any
third party for a particular System to receive the Service, then in that
event, Affiliate will be entitled to delete the affected System from
Exhibit I of this Agreement within thirty (30) days of receiving notice
from JIN of the satellite selected for delivery of the
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<PAGE> 4
Service, unless JIN agrees to pay its pro rata share (based on number of
signals to be received by any System from such new satellite) of the costs
associated with the additional receiving equipment. If JIN agrees to pay
such costs, then the affected System may not be deleted from Exhibit I and
such System shall continue to distribute the Service through the remaining
term of this Agreement. JIN and Affiliate shall each use their respective
best efforts to maintain a high quality of signal transmission for the
Service.
(c) Subject to then existing law, Affiliate shall not itself, and shall not
authorize others to, copy, tape or otherwise reproduce any part of the
Service without JIN's prior written authorization, and shall take
reasonable and practical security measures to prevent the unauthorized
copying or taping by others; provided, however, that nothing herein shall
prohibit Affiliate from assisting its residential subscribers in connecting
video cassette recorders to record the Service. JIN shall endeavor to
advise Affiliate of copyright, literary and dramatic rights of, and
restrictions and limitations imposed by, program originators (including but
not limited to JIN) affecting the distribution of the Service, as they
exist from time to time ("Intellectual Property Rights and Requirements").
As between the parties to this Agreement, Affiliate shall be solely
responsible for compliance with any and all Intellectual Property Rights
and Requirements of which it has been given notice. Affiliate shall not
distribute or exhibit, and shall not authorize, license or permit the
distribution or exhibition of, the Service by any means or device, whether
now known or hereafter devised, other than through the Systems now or
hereafter listed in Exhibit I hereto and in accordance with the terms of
this Agreement.
6. PROMOTION AND RESEARCH
(a) Affiliate shall use reasonable efforts to promote, market and sell the
Service to Subscribers and to the general public within the Operating Area
of each System. Advertising, promotional, marketing and/or sales materials
concerning the Service which are provided to Affiliate by JIN shall be used
without any alteration, deletion, addition or any other change, unless such
changes are approved by JIN prior to use by Affiliate.
-4-
<PAGE> 5
(b) At JIN's request, Affiliate shall provide JIN with all available data
regarding the marketing and promotion of the Service by Affiliate. Subject
to applicable federal, state and local law (including the franchises, if
any, pursuant to which the Systems are operated), Affiliate also agrees to
render such other assistance to JIN as JIN may request and which Affiliate
may reasonably provide in connection with any marketing test, survey, poll
or other research which JIN may undertake in connection with the Service.
JIN shall treat as confidential any names and addresses of Subscribers
which JIN receives from Affiliate, and shall not utilize any such names or
addresses except in connection with such research.
7. NOTICES
All notices, statements and other communications given hereunder shall be
in writing and shall be delivered by facsimile transmission, telegraph,
personal delivery, certified mail, return receipt requested, or by next day
express delivery, addressed, if to JIN at 9697 East Mineral Avenue,
Englewood, Colorado 80112, Attn: President, Jones Infomercial Networks,
Inc. (Fax: 303-799-1644), with a copy to the Legal Department and, if to
Affiliate, at its address set forth herein or by facsimile at (303)
799-1644. The date of such facsimile transmission, telegraphing or personal
delivery or the next day if by express delivery, or the date three (3) days
after mailing, shall be deemed the date on which such notice is given and
effective.
8. TRADEMARKS
All right, title and interest in and to the Service, and all materials,
ideas, formats and concepts, computer software or other rights of whatever
nature related thereto shall remain the property of JIN. Further, Affiliate
acknowledges and agrees that all names, logos, marks, copyright notices or
designations utilized by JIN in connection with the Service (the "Marks")
are the sole and exclusive property of JIN and/or its affiliates, and no
rights or ownership are intended to be or shall be transferred to
Affiliate. Affiliate's use of the Marks shall be limited to the advertising
and promotion of its carriage of the Service over the Systems pursuant to
this Agreement. JIN shall provide Affiliate with samples of the Marks
-5-
<PAGE> 6
which Affiliate shall use in their entirety (including all service mark and
trademark notices) whenever the Marks are used by Affiliate.
9. REPRESENTATIONS AND INDEMNIFICATION
(a) JIN represents and warrants to Affiliate that (i) it is a corporation
duly organized and validly existing under the laws of the State of
Colorado; (ii) JIN has the corporate power and authority to enter into this
Agreement and to fully perform its obligations hereunder; (iii) JIN is
under no contractual or other legal obligation which in any way interferes
with its ability to fully, promptly and completely perform hereunder; and
(iv) nothing contained in the Service shall violate the civil or property
rights, copyrights, trademark rights or right of privacy of any person,
firm or corporation except that no representation and warranty is given
with respect to music performance rights.
(b) Affiliate represents and warrants to JIN that (i) Affiliate is a
corporation duly organized and validly existing under the laws of the State
of Colorado; (ii) Affiliate has the requisite power and authority to enter
into this Agreement and to fully perform its obligations hereunder; (iii)
Affiliate's Systems are operating, with respect to any cable television
system, pursuant to valid franchise agreements, or licenses or other
permits duly authorized by proper local authorities, or with respect to any
satellite master antenna television systems, pursuant to valid agreements
with third parties granting affiliate all necessary rights; and (iv)
Affiliate is under no contractual or other legal obligation which in any
way interferes with its ability to fully, promptly and completely perform
hereunder.
(c) Affiliate and JIN shall each indemnify and forever hold harmless the
other, the other's affiliate companies and their respective officers,
directors, employees and agents from all liabilities, claims, costs,
damages and expenses (including, without limitation, reasonable counsel
fees) arising out of any breach or claimed breach by it of any
representation or any of its obligations pursuant to this Agreement.
(d) The party entitled to indemnification hereunder (the "Indemnified
Party") shall notify the other party hereto (the "Indemnifying Party") in
-6-
<PAGE> 7
writing of the claim or action for which such indemnity allegedly applies.
The Indemnifying Party shall undertake the defense of any such claim or
action and permit the Indemnified Party to participate therein at the
Indemnified Party's own expense. The settlement of any such claim or action
by an Indemnified Party without the Indemnifying Party's prior written
consent shall release the Indemnifying Party from its obligations hereunder
with respect to such claim or action so settled.
(e) Neither party hereto shall be liable to the other for the failure to
fulfill its obligations hereunder (other than the obligation to make all
payments when due hereunder) to the extent such failure is caused by or
arises out of an act of God, war, strike, riot, labor dispute, national
disaster, technical failure (including the failure of all or part of any
domestic communications satellite on which the Service is delivered), or
any other reason beyond the control of the party whose obligation is
prevented during the period of such occurrence.
10. CONFIDENTIALITY
Neither Affiliate nor JIN shall disclose to any third party (other than its
respective employees, in their capacity as such), any information with
respect to the terms and provisions of this Agreement, including by way of
press release(s), except: (i) to the extent necessary to comply with law or
legal reporting or disclosure requirements or the valid order of a court of
competent jurisdiction, in which event the party making such disclosure
shall so notify the other as promptly as practicable (and, if possible,
prior to making such disclosure) and shall seek confidential treatment of
such information; (ii) as part of its normal reporting or review procedure
to its parent company, its auditors and its attorneys; provided, however,
that such parent company, auditors and attorneys agree to be bound by the
provisions of this Section; (iii) in order to enforce its rights pursuant
to this Agreement; and (iv) if mutually agreed by Affiliate and JIN in
writing.
11. GENERAL
(a) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
-7-
<PAGE> 8
Notwithstanding the foregoing, this Agreement may not be assigned by
Affiliate without the prior written consent of JIN.
(b) Nothing contained herein shall be deemed to create, and the parties do
not intend to create, any relationship of partners or joint venturers as
between Affiliate and JIN. Neither Affiliate nor JIN shall be or hold
itself out as the agent of the other under this Agreement. The obligations
of Affiliate and JIN under this Agreement are subject to all applicable
federal, state and local laws, rules and regulations including, but not
limited to, the Communications Act of 1934, as amended and the rules and
regulations of the Federal Communications Commissions.
(c) A waiver by either party of any term or condition of this Agreement in
any one instance shall not be deemed or construed as a continuing waiver or
a waiver of any subsequent breach thereof. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter
hereof and supersedes all prior understandings and agreements, oral or
written between the parties hereto. This Agreement may not be modified
except in a writing executed by both parties hereto.
(d) JIN reserves the right to terminate this Agreement at any time and
without cause in connection with the termination of the Service upon thirty
(30) days prior written notice.
(e) This Agreement and all collateral matters shall be construed in
accordance with the internal laws of the State of Colorado applicable to
agreements fully made and to be performed therein, irrespective of the
place of actual execution or performance.
(f) The invalidity or unenforceability of any provision of this Agreement
shall in no way affect the validity or enforceability of any other
provision of this Agreement.
(g) There is not an adequate remedy at law for a breach by Affiliate of
this Agreement, and JIN will suffer irreparable harm as a result of such a
breach. Therefore, if a breach or threatened breach of this Agreement by
Affiliate occurs, in addition to any other rights and remedies it may have,
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JIN shall be entitled to injunctive relief restraining Affiliate from doing
any act in violation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first set forth above.
JONES INTERCABLE, INC. JONES INFOMERCIAL NETWORKS, INC.
By: _____________________ By: ________________________
(Signature) (Signature)
Its: ____________________ Its: _______________________
Date: ___________________ Date: ______________________
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<PAGE> 10
EXHIBIT I
<TABLE>
<CAPTION>
LIST EACH LIST ZIP CODE
FRANCHISE AREA CHANNEL CARRIAGE NO. OF WITHIN EACH
SERVED BY EACH SYSTEM POSITION HOURS LAUNCH DATE SUBSCRIBERS FRANCHISE AREA
---------------------- -------- --------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE> 1
EXHIBIT 10.1.8
SERVICES AGREEMENT
THIS SERVICES AGREEMENT ("Agreement") is entered into as of the day of
December, 1994, by and between JONES INTERCABLE, INC. (the "Owner"), and JONES
INTERACTIVE, INC., a company incorporated under the laws of Colorado (the
"Interactive").
R E C I T A L S
A. Interactive is engaged in the management and operation of information
technology systems and has experience in all phases of such management and
operations.
B. Owner desires to obtain the benefit of the experience, knowledge,
trained personnel, supervision and services of Interactive, and desires to
retain Interactive, upon the terms and conditions set forth herein; and
Interactive desires to promote such services, upon the terms and conditions
herein after set forth.
A G R E E M E N T
In consideration of the premises and the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
RETENTION OF INTERACTIVE; THE SERVICES
1.1 Retention of Interactive. The Owner hereby retains Interactive and
Interactive hereby agrees to provide services (the "Services") to the Owner upon
the terms hereinafter contained until its appointment shall be terminated as
hereinafter provided.
<PAGE> 2
1.2 The Services.
Interactive shall (subject to the overall policy and supervision of the
Owner) provide and perform the Services in a diligent, professional and
businesslike manner. The Services shall consist of the following:
(a) Design, Construction and Maintenance of Software. Interactive shall
be responsible for the design, construction, installation and maintenance or
acquisition of all computer software, including (i) the operating systems, (ii)
applications, (iii) tools and languages including data bases, interfaces and
such other software as may become available over the term of this Agreement.
(b) Design, Construction and Maintenance of Data and Voice
Communications Facilities. Interactive shall be responsible for designing,
constructing and maintaining all data and voice communications facilities
necessary to support the employees of the Owner in utilizing the Services. This
shall include all services and connections to external data resources (e.g.
InterNet, Prodigy, and similar services). Interactive will, in consultation with
the Owner, select all equipment and vendors in support of this data
communications service.
(c) Operation of the Data Center. For purposes of this Agreement, the
term "Data Center" shall mean (i) the portion of the Owner's headquarters'
premises consisting of all computer rooms, data and voice communications rooms,
(ii) all computer equipment located in central or regional sites; (iii) all
equipment related to the environmental control and operational stability of the
subject facility including power regulation, water detection, fire detection and
suppression, access security, electrical cabling, computer cabling, including
local area networks, wide area networks, data libraries, tape libraries; (iv)
and all related facilities and services. Interactive shall be responsible for
all aspects of the daily operation of the Data Center, including (i) hardware
operations, (ii) hardware maintenance, acquisition and disposal, (iii) staffing
(but not at the system level), (iv) changes and rearrangements, (v) backups and
related off-site backup storage, (vi) disaster recovery planning and
implementation, and (vii) all related activities necessary to the proper and
effective operation of the Data Center. Notwithstanding anything in the
foregoing to the contrary, the parties understand and agree that in the
nonheadquarters premises of the Owner (i.e. its system offices), that
Interactive's Services shall be with respect to the equipment within the
computer rooms (but
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<PAGE> 3
not the computer rooms themselves), nor shall Interactive be responsible for any
local staffing for information services at such regional offices.
(d) Remote Offices of Owner. With regard to remote offices, this
Agreement anticipates that there will be some data processing equipment and
services that will be provided by the local management of the Owner's offices.
In all cases, the acquisition of such equipment will be coordinated with
Interactive and will conform to and be part of the Annual Plan referenced in
Section 2.1. The intent of this Agreement is that information processing
throughout the Owner's organization will be part of an overall strategy and
architecture that is prepared (and revised if necessary) by Interactive for
Owner's review and approval. This Agreement also anticipates that some computer
and telecommunications computer rooms will be provided and staffed by the
personnel of the remote offices. The Owner will take all reasonable measures to
provide that such facilities are secure and environmentally safe, consistent
with the housing of electronic computers and telecommunications equipment.
(e) Help Desk and Problem Management. Interactive shall provide Help
Desk (a resource for answering questions regarding the Services) and problem
resolution support to all employees of the Owner as is necessary to use the
software, data and voice communications, hardware, and similar related
activities of the Owner. Interactive will coordinate the training of Owner's
employees in all aspects associated with the Services.
(f) Desktop Workstations. Interactive shall provide all desktop
workstation support for personal computers, X-terminals, terminals, telephone
devices and other similar workstation devices which either provide access to
information or data held in the Data Center or provide computing capacity at an
employee's desk or place of work; and
(g) Records Management. Interactive shall implement and support records
management policies and procedures necessary to insure the safe and secure
electronic storage and retention of all computer-based data of the Owner as
defined by the Owner. These policies and procedures will include, but are not
limited to (i) security policies and procedures, (ii) backup procedures
(including a comprehensive disaster recovery plan), (iii) off-site vaulting, and
(iv) data base structures and standards. Ownership of all data associated with
Owner's use of Interactive's services shall remain with the Owner. Ownership of
other Interactive customers' data will remain with those other customers. No
data will be exchanged between customers without the express, written consent
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<PAGE> 4
of all affected customers. Security of Owner's data will be the responsibility
of Interactive but the integrity of such data will be the responsibility of the
Owner. For this purpose, the term "integrity" refers to the accuracy of the data
contained within the date base.
(h) Consulting Service. Interactive associates will, at the Owner's
request, participate in various planning, consulting, review, and other such
meetings and committees outside the scope of the annual plan. Such participation
will be considered a service and will be reimbursed as an employee expense as
defined in Section 3.1(b).
1.3 Miscellaneous Rights and Powers of Interactive. Subject to the terms
and conditions of this Agreement, and in accordance with the respective Annual
Plans pursuant to Section 2.1, Interactive shall have the right and power (in
the name of the Owner or Interactive, as appropriate) to perform on behalf of
Owner the following services or to cause the same to be performed:
(a) If not provided for in an Annual Plan, the purchase or lease of
property in an amount not to exceed $25,000 per item or an aggregate of $100,000
in any quarter, without the written consent of the Owner;
(b) Enter into such contracts on behalf of and in the name of the Owner
for the furnishing of utilities and maintenance of the Data Center as
Interactive deems necessary for the proper operation and maintenance thereof and
which are consistent with the Annual Plans, as hereafter defined.
1.4 Performance. Interactive agrees that it shall use its best efforts to
provide the Services in accordance with the standards herein set forth and
consult with and keep Owner advised as to all material matters relating thereto.
1.5 Indemnification. Interactive hereby undertakes to hold harmless and
indemnify the Owner against all actions, proceedings, claims, costs, demands and
expenses which may be brought against, suffered or incurred by the Owner by
reason of Interactive's non-performance of its duties under the terms of this
Agreement, including all legal, professional and other expenses incurred by
Owner insofar as the claim shall arise from the negligence, bad faith, fraud or
willful default in the performance or non-performance by Interactive of its
obligations and duties under the terms of this Agreement.
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<PAGE> 5
ARTICLE II
ANNUAL PLANS
2.1 Annual Plan. Each year during the term of this Agreement Interactive
shall prepare and submit to Owner a plan (the "Annual Plan") for that year which
shall provide for a service level agreement, a development plan and a financial
budget (including the Pay-Per-View and Ad Sales divisions). The Annual Plan will
be presented to the Owner at least 90 days prior to the start of a new year and
Owner will respond to Interactive with additions or changes at least 60 days
prior to the start of the new year. The Annual Plan will also provide a
forecasted general plan for the next thirty-six (36) months, including a
forecast of the gross amount of capital expenditures. Any differences existing
between Owner and Interactive 60 days prior to the start of the Plan year will
be resolved by mutual negotiations. If, 30 days prior to the start of the Plan
year the Plan has not been agreed to, the prior year's budget will be renewed
for the following year, increased or decreased by the current year's Consumer
Price Index - all items. This renewed budget will be in full force and effect
until such time as the Annual Plan is finalized.
(a) Each service level agreement will form the basis of understanding
between Interactive and Owner for the year involved as to the level of service
for (i) computer response time limits, (ii) data storage requirements, (iii)
acceptable response times for service calls such as Help Desk, PC Support,
Problem determination and resolution, (iv) data communications circuit
performance, and (v) related performance metrics and standards associated with
the efficient operation of a Data Center and related system facilities.
(b) Each development plan prepared by Interactive will list, with
associated level of effort estimates, all known outstanding requests for
software acquisition, modification, development and all related software
activities. Interactive will consult with Owner to establish possible priorities
for these requests. Each development plan will list all associated hardware,
staff, data communications, and related resources which will be required to
implement the plan with costs for these items being itemized in the budget
portion of the Annual Plan. If the Owner approves the development plan, the
Owner must also approve all of the associated hardware, staff and related items
in the budget that are necessary to support the development.
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<PAGE> 6
(c) Each annual budget will be prepared to reflect the anticipated
expenses of Interactive and will be subject to the approval of Owner. The budget
will also reflect the anticipated charges to all Owner-affiliated Interactive
customers, including the Owner. Additionally, Interactive will maintain a budget
which will be comprised of those costs associated with the current CableData
customer billing system. Interactive will also provide budget figures on a
fiscal as well as on a calendar basis, as needed. If the parties are not able to
reach agreement on a budget, the procedure for resolution of disputes set forth
in (e) below shall be followed.
(d) Quarterly reports will be prepared by Interactive which will compare
actual performance to the approved Annual Plan. This quarterly report will be
presented to Owner within 30 days of the availability of appropriate data.
(e) In case of a dispute with regard to an Annual Plan pending the
settlement thereof, Interactive will be entitled to continue to provide the
Services in accordance with the standards herein set forth at levels of
expenditure contained in the Annual Plan for the current year. In addition, the
parties agree to use their reasonable efforts to resolve such dispute promptly.
If not resolved in thirty (30) days, the parties agree to submit the matter to
mediation by a single mediator which they shall select. If such mediator is not
selected within the ten (10) days following such thirty day period, the mediator
shall be selected by the General Counsel of Owner.
(f) Interactive shall at all times comply with the applicable Annual
Plan; providing, however, that Interactive upon the written approval of Owner
shall be entitled to reallocate the amount budgeted with respect to any item in
such Annual Plan to another item budgeted herein. Reallocations which total less
than $10,000 in the aggregate annually do not require such approval. Interactive
shall be entitled to make additional reasonable and appropriate expenditures up
to $25,000 not authorized under the then applicable Annual Plan in case of
emergencies arising out of unforeseen circumstances. In all cases, Interactive
and Owner may negotiate additional expenditures to meet changing business needs
without renegotiating this entire contract or the existing Annual Plan.
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<PAGE> 7
ARTICLE III
REIMBURSEMENT OF EXPENSES; MANAGEMENT FEE
3.1 Reimbursement of the Expenses of Interactive. In consideration of the
performance of the Services, the Owner shall reimburse Interactive for those
costs set forth in its Annual Plans under the categories "J250" and "C203"
consisting of:
(a) Such percentage of the costs of Interactive's corporate overhead as
is fairly attributable to its services hereunder;
(b) The cost of employees of Interactive which are provided to Owner to
accomplish the objectives pursuant to Agreement. Such reimbursements shall be at
cost and shall include all direct and indirect charges (including reasonable
allowances for overhead costs), and all related out-of-pocket costs and expenses
properly and necessarily incurred by Interactive in performing its services
hereunder;
(c) All other out-of-pocket costs and expenses properly and necessarily
incurred by Interactive in performing its services hereunder;
(d) All expenses incurred in the providing of the services outlined in
this Agreement [including an allocation of hardware and equipment expenses;]
The total of (a) through (d) above is herein referred to as
"Interactive's Costs"
3.2 Monthly Reimbursement. Interactive's Costs shall be calculated and
reimbursed monthly.
3.3 Management Fee. For its services under this Agreement, Interactive
shall be entitled to receive a fee (the "Management Fee"). The management fee
shall be 10% of Interactive's Costs, exclusive of those costs which are set
forth in an Annual Plan as relating to certain equipment owned by Owner and
designated in the Annual Plan under the category "C203". The Management Fee
shall be calculated and payable monthly.
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<PAGE> 8
ARTICLE IV
TERM AND TERMINATION RIGHTS
4.1 Term. The term of this Agreement shall commence on the date first above
written and shall expire at midnight on November 30, 2004. Thereafter, this
Agreement shall be renewable from year to year unless terminated by either party
upon 90 days notice given in any such year.
4.2 Defaults by Interactive. The following events shall constitute defaults
by Interactive under this Agreement:
(a) Interactive shall fail to keep, observe or perform any material
covenant, agreement, term or provision of this Agreement to be kept, observed or
performed by Interactive and any such default shall continue for a period of
thirty (30) days after notice thereof to Interactive; or
(b) If Interactive shall apply for or consent to the appointment of a
receiver, trustee or liquidator of Interactive or of all or a substantial part
of its assets, file a voluntary petition in bankruptcy, or admit in writing its
inability to pay its debts as they come due, making a general assignment for the
benefit of creditors, file a petition or an answer seeking reorganization or
arrangement with creditors or to take advantage of any insolvency law, or file
an answer admitting the material allegations of a petition filed against
Interactive in any bankruptcy, reorganization or insolvency proceeding, or if an
order, judgment or decree shall be entered by any court of competent
jurisdiction, on the application of a creditor, adjudicating Interactive a
bankrupt or insolvent or approving a petition seeking reorganization of
Interactive or appointing a receiver, trustee or liquidator of Interactive or of
all or a substantial part of its assets, and such order, judgment or decree
shall continue unstayed and in effect for any period of sixty (60) consecutive
days.
Upon the occurrence of (a) or (b) above, Owner shall have the right to
terminate this Agreement effective upon ten (10) days written notice.
4.3 Defaults by Owner. The following events shall constitute defaults by
Owner under this Agreement:
(a) Owner shall, without fault of Interactive, fail to keep, observe or
perform any material covenant, agreement, term or provision of this
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<PAGE> 9
Agreement to be kept, observed or performed by Owner, and such default shall
continue for a period of thirty (30) days after notice thereof by Interactive;
or
(b) If Owner shall apply for or consent to the appointment of a
receiver, trustee or liquidator of Owner or of all or a substantial part of its
assets, file a voluntary petition in bankruptcy or admit in writing its
inability to pay its debts as they come due, make a general assignment for the
benefit of creditors, file a petition or an answer seeking reorganization or
arrangement with creditors or to take advantage of any insolvency law, or file
an answer admitting the material allegations of a petition filed against Owner
in any bankruptcy, reorganization or insolvency proceeding, or if an order,
judgment or decree shall be entered by any court of competent jurisdiction, on
the application of a creditor, adjudicating Owner a bankrupt or insolvent or
approving a petition seeking reorganization of Owner or appointing a receiver,
trustee or liquidator of Owner of all or a substantial part of the assets of
Owner and such order, judgment or decree shall continue unstayed and in effect
for any period of ten (10) consecutive days.
Upon the occurrence of (a) or (b), above, Interactive shall have the
right to terminate this Agreement effective upon ten (10) days written notice.
4.4 Effect of Termination.
(a) The termination of this Agreement under the provision of this
Article shall not affect the rights of a party with respect to any damages it
has suffered as a result of any breach of this Agreement, nor shall such
termination affect the rights of a party with respect to liability or claims
accrued, or arising out of events occurring, prior to the date of termination.
(b) In the event of termination of this Agreement, all sums due to
Interactive pursuant to Article III hereof, shall be calculated as of the date
of such termination and shall be paid by Owner within ten (10) days of such
termination.
4.5 Remedies Cumulative. Neither the right of termination nor the right to
sue for damages nor any other remedy available to either party hereunder shall
be exclusive of any other remedy given hereunder or now or hereafter existing at
law or in equity.
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<PAGE> 10
ARTICLE V
ASSIGNMENT
5.1 Consent Required. Neither party shall assign this Agreement without the
prior written consent of the other. It is understood and agreed that any consent
granted to any assignment shall not be deemed a waiver of the covenants herein
contained against assignment in any subsequent case.
5.2 Successors and Assigns. Subject to the foregoing, this Agreement shall
inure to the benefit of and be binding upon the parties hereto, their respective
heirs, legal representatives, permitted successors and assigns.
ARTICLE VI
GENERAL PROVISIONS
6.1 Non-Exclusivity. Nothing herein contained shall prevent Interactive or
any of its Affiliates (the "interested party") from (i) selling goods or
services or otherwise contracting or entering into any transaction with the
Owner or others or (ii) from being interested in any such transaction, and the
interested party shall not be called upon to account in respect of any such
contract or transaction or benefit derived therefrom. Interactive will develop
computer related software products on behalf of the Owner. If a product is so
developed and paid for by the Owner, and is deemed to have value to third
parties, Interactive will obtain approval from the Owner before marketing such
product and the parties will negotiate in good faith for fair and reasonable
compensation to the Owner for any sales of such product.
6.2 Force Majeure. Interactive shall not be responsible for the loss of or
damage to any property of the Owner or for any failure to fulfill its duties
hereunder if such loss damage or failure shall be caused by or directly or
indirectly due to war damage, enemy action, the act of any Government or other
authority, riot, civil commotion, rebellion, storm, tempest, accident, fire,
lockout, strike or other cause whether similar or not beyond the control
Interactive provided that Interactive shall use its reasonable efforts to
minimize the effects of the same.
6.3 Confidentiality. Neither of the parties hereto shall (except under
compulsion of law), either before or after the termination of this
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<PAGE> 11
Agreement, disclose to any person not authorized by the relevant party to
receive the same any confidential information relating to such party or to the
affairs of such party of which the party disclosing the same shall have become
possessed during the period of this Agreement and each party shall use all
reasonable endeavors to prevent any such disclosure as aforesaid.
6.4 Delays. No failure on the part of any party to exercise, and no delay
on its part in exercising, any right or remedy under this Agreement will operate
as a waiver thereof nor will any single or partial exercise of any right or
remedy preclude any other right or remedy. The rights and remedies provided in
this Agreement are cumulative and not exclusive of any rights or remedies
provided by law.
6.5 Amendments. Any provision of this Agreement may be amended only if the
parties so agree in writing.
6.6 Illegality. The illegality, invalidity or unenforceability of any
provision of this Agreement under the law of any jurisdiction shall not affect
its legality, validity or enforceability under the law of any other jurisdiction
nor the legality, validity or enforceability of any other provision.
6.7 Counterparts. This Agreement may be executed in any number of
counterparts and by each party hereto on separate counterparts, both of which
when so executed shall be an original, but all the counterparts shall together
constitute one and the same instrument.
6.8 Notices. Any notice by either party to the other shall be in writing
and shall be given, and be deemed to have been duly given, if either delivered
personally, telecopied or mailed to the address of such party set forth below.
Either party may at any time change the address for notices to such party by
delivery or mailing, as aforesaid, of a notice stating the change and setting
forth the changed address. Such notices shall be sent as follows:
If to Owner, to: Jones Intercable, Inc.
9697 East Mineral Avenue
P.O. Box 3309
Englewood, Colorado 80155-3309
Attention: President
Telephone: (303) 792-3111
Copy to: General Counsel
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<PAGE> 12
If to Interactive, to: Jones Interactive, Inc.
9697 East Mineral Avenue
P.O. Box 3309
Englewood, Colorado 80155-3309
Attention: President
Telephone: (303) 792-3111
Copy to: General Counsel
6.9 No Partnership or Joint Venture; Agency. In the performance of its
duties hereunder, Interactive shall act solely as agent of Owner. Nothing herein
shall constitute or be construed to be or create a partnership or joint venture
between the Owner and Interactive.
6.10 Understanding and Agreements. This Agreement constitutes the entire
agreement between the parties relating to the subject matter hereof, superseding
all prior agreements or undertakings, oral or written.
6.11 Headings and References. The Article and Clause headings contained
herein are for convenience of reference only and are not intended to define,
limit or describe the scope or intent of any provision of this Agreement. Except
as otherwise specifically indicated, all references to Clause and Article
numbers refer to Clause and Article numbers of this Agreement, and the words
"herein," "hereunder," "hereinafter" and words of similar import refer to this
Agreement as a whole and not to any particular section or subdivision thereof.
6.12 Third Parties. None of the obligations hereunder of either party shall
run to, operate for the benefit of, or be enforceable by any party other than
the parties to this Agreement or by a party deriving rights hereunder as a
result of an assignment permitted pursuant to the terms hereof.
6.13 Law of the Contract. This Agreement shall be governed by and construed
in accordance with the laws of Colorado.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed, all as of the day and year first above written.
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<PAGE> 13
JONES INTERCABLE, INC.
By:_________________________
JONES INTERACTIVE, INC.
By:_________________________
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<PAGE> 1
EXHIBIT 10.3.2
OFFICE BUILDING LEASE
THIS OFFICE BUILDING LEASE (this "Lease") is made and entered into as of
the 9th day of December, 1994, between JONES PANORAMA PROPERTIES, INC., a
Colorado corporation ("Landlord"), and JONES INTERCABLE, INC., a Colorado
corporation ("Tenant").
Recitals
A. Landlord owns the real property located in Arapahoe County, Colorado and
described on Exhibit A attached hereto and by this reference made part hereof
(the "Land"), including the office building and related improvements constructed
thereon (the "Building"). The Land and the Building shall include any and all
future additions or expansions to the existing Land or Building in which
Landlord may from time to time acquired an interest or develop for use in
connection with the existing Land or Building.
B. Tenant has leased and occupied space in the Building prior to Landlord's
acquisition of the Building pursuant to a lease between Tenant and the prior
owner of the Building (the "Traveler's Lease").
C. The parties now wish to provide for the continued occupancy of space in
the Building by Tenant.
Lease
NOW, THEREFORE, in consideration of the promises and agreements of the
parties set forth herein, the sufficiency of which is hereby acknowledged by the
parties hereto, Landlord and Tenant do hereby promise and agree as follows:
I. GRANT OF LEASE
1.1 Lease. On and subject to the terms and conditions set forth in this
Lease, Landlord hereby leases and demises to Tenant, and Tenant hereby leases
from Landlord, the Leased Premises (as defined in Section 1.2 hereof).
1.2 Leased Premises. As used herein, the term "Leased Premises" shall mean
the space containing a total of 24,521 rentable square feet in the Building.
1.3 Condition of Premises. Tenant shall accept the Leased Premises in
their "AS IS" condition as of the Commencement Date. Tenant hereby releases
Landlord and waives any and all claims against Landlord arising from or in any
way
<PAGE> 2
related to any defect or other condition in, on, or about any part of the Leased
Premises or the Building. Tenant hereby acknowledges and agrees that the Leased
Premises shall be delivered to Tenant without any representation or warranty
from Landlord of any kind or nature whatsoever and without any obligation by
Landlord to alter or improve the Leased Premises in any manner or respect.
1.4 Quiet Enjoyment. Landlord shall warrant and defend Tenant in the quiet
enjoyment and possession of the Leased Premises during the Term of this Lease,
subject to the terms and conditions set forth in this Lease.
II. TERM
2.1 Term. The term of this Lease (the "Term") shall commence as of
December 1, 1994 (the "Commencement Date") and shall expire on November 30,
1999, unless terminated sooner pursuant to any term or provision set forth in
this Lease.
2.2 Early Termination Option. Provided that there is no uncured Event of
Default by Tenant as of the date of the Termination Notice or as of the
Termination Date (as hereinafter defined), Tenant shall have the option (the
"Termination Option") to terminate this Lease prior to the expiration of the
full Term. The Termination Option may be exercised by Tenant to provide for a
termination of this Lease at any time after the second anniversary of the
Commencement Date. The Termination Option shall be exercised by written notice
(the "Termination Notice") given by Tenant to Landlord at least 180 days prior
to the Termination Date. As used herein, the "Termination Date" shall mean the
date specified by Tenant in the Termination Notice as the date for the
termination of this Lease, which date shall be after the second anniversary of
the Commencement Date and at least 180 days after the date of Landlord's receipt
of the Termination Notice. If Tenant exercises the Termination Option in
accordance with the terms set forth in this Section 2.2, then Tenant shall pay
to Landlord, on or before the Termination Date, the sum of the following
amounts:
(A) All Rent due under this Lease through the Termination Date.
(B) The amount representing the unrecovered cost to Landlord as of the
Termination Date for the Improvement Allowance paid by Landlord to
Tenant pursuant to Section 4.1 of this Lease based upon the full
amortization of such amount over the initial five year Term of this
Lease at an interest rate of 10% per annum.
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<PAGE> 3
(C) The amount representing the unrecovered cost to Landlord as of the
Termination Date for any Offer Allowances paid by Landlord to Tenant
with respect to any Offer Space taken by Tenant pursuant to Section
13.1 of this Lease based upon, for each such amount, the full
amortization of such amount from the date paid by Landlord through
the balance of the initial five year Term of this Lease at an
interest rate of 10% per annum.
2.3 Option to Extend. Landlord hereby grants to Tenant the option (the
"Extension Option") to extend the Term of this Lease for one additional five
year renewal term (referred to herein as the "Extended Term").
(A) Exercise of Option. The Extension Option may be exercised by
Tenant only if, at the time the Extension Option is exercised and at the
commencement of the Extended Term, there is no uncured Event of Default by
Tenant under this Lease. The Extension Option shall be exercised by Tenant
by written notice delivered to Landlord at least 180 days prior to the
expiration of the initial Term of this Lease. If Tenant gives Landlord
timely notice of exercise, such notice shall irrevocably extend the Term of
this Lease for the Extended Term on the terms and conditions set forth in
this Section 2.3. If for any reason Tenant fails to exercise the Extension
Option in accordance with the terms set forth in this Section 2.3, Tenant
shall be deemed irrevocably not to have exercised the Extension Option and
Tenant shall have no further right hereunder to extend the Term of this
Lease.
(B) Terms. If the Extension Option is exercised by Tenant in
accordance with the terms set forth in this Section 2.3, the terms of
Tenant's lease of the Leased Premises for the Extended Term shall be as
follows:
(1) The Extended Term shall commence on December 1, 1999 and shall
expire on November 30, 2004.
(2) Tenant shall take and accept the Leased Premises in their AS IS
condition with any improvements or alterations to the Leased
Premises to be Tenant's responsibility and at Tenant's expense.
(3) Base Rent for the Leased Premises shall be equal to the Base Rent
payable as of the expiration of the initial Term and shall
thereafter be calculated and
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payable in accordance with the terms set forth in Article III of
this Lease. The annual Index adjustments to the Base Rent
provided for in Section 3.1 of this Lease shall continue in full
force and effect for each year of the Extended Term.
(4) All other terms and conditions set forth herein (except for the
option to extend the Term as set forth in this Section 2.3) shall
remain in full force and effect during the Extended Term. All
references herein to the Term shall be deemed to refer to the
Extended Term.
III. RENT
3.1 Base Rent. The "Base Rent" for the first year of the Term shall be
equal to $294,252.00, which amount is determined at the rate of $12.00
multiplied by the number of rentable square feet contained in the Leased
Premises as of the Commencement Date. Base Rent shall be payable in monthly
installments of $24,521.00 each. For each subsequent year of the Term (and, if
applicable, the Extended Term) (the "Subject Lease Year"), the Base Rent shall
be the Base Rent for the year immediately prior to the Subject Lease Year (the
"Prior Lease Year") or, if the Index (as defined below) for the Subject Lease
Year (the "Subject Index") is greater than the Index for the Prior Lease Year
(the "Prior Index"), the Base Rent shall be increased for the Subject Lease Year
to equal the product of (i) the Base Rent for the Prior Lease Year multiplied by
(ii) a fraction, the numerator of which is the Subject Index and the denominator
of which is the Prior Index. As used herein:
(A) The "Index" shall mean the Consumer Price Index for All Items All
Urban Consumers (CPI-U) (1982-84 = 100) for Denver, Colorado, as
published by the United States Department of Labor's Bureau of Labor
Statistics (the "Bureau"). Should the Bureau discontinue the
publication of the above Index, or publish the same less frequently,
or alter the same in some other manner, then Landlord shall, from
time to time, adopt a substitute Index or substitute procedure which
reasonably reflects and monitors consumer prices, which adoption
shall be effective by notice to Tenant identifying such substitute
Index or procedure.
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(B) The "Prior Index" shall be the Index for the third month prior to
the first calendar month of the Prior Lease Year.
(C) The "Subject Index" shall be the Index for the third month prior to
the first calendar month of the Subject Lease Year.
3.2 Payment of Base Rent. The annual amount of Base Rent shall be payable
in twelve equal installments, payable monthly, in advance, without notice,
offset, deduction, or abatement, beginning on the Commencement Date and
continuing thereafter on the first day of each subsequent month until the last
month of the Term. If the Term ends on a day other than the last day of a
calendar month, the installment of Base Rent payable on the first day of the
last calendar month of the Term shall be equal to the prorated portion of the
normal monthly installment of Base Rent.
3.3 Additional Rent. Tenant shall pay to Landlord additional rent
("Additional Rent") in accordance with the following terms:
(A) Definitions. As used in this Section 3.3, the following terms
shall have the meanings indicated:
(1) The "Pro Rata Share" shall mean that proportion which the
rentable area of the Leased Premises bears to 60,727 square feet,
which is the total rentable area of the Building. As of the
Commencement Date, the rentable area of the Leased Premises is
that number of square feet stated in Section 1.2 of this Lease.
Any increase in the rentable area of the Leased Premises
resulting from any exercise by Tenant of the Offer Option set
forth in Section 13.1 of this Lease, or any other expansion,
contraction, or relocation of any portion of the Leased Premises
permitted by Landlord, and any change in the total rentable area
of the Building resulting from any partial condemnation or
casualty, or from presently-unplanned expansion of or addition to
the Building, shall require a recalculation of the Pro Rata
Share.
(2) The "Operating Expenses" shall mean all costs and expenses of
every kind and nature, other than expenditures required to be
capitalized for federal income tax purposes, which are paid or
incurred by
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Landlord in operating, managing, equipping, protecting, insuring,
heating, cooling, lighting, ventilating, repairing, replacing,
renewing, cleaning and maintaining all rentable components and
common areas of the Building and the Land, including appropriate
reserves and including Taxes (as defined below). If Landlord
makes any modifications to the Building or any part thereof to
comply with any changes in any law, ordinance, code, rule, or
other governmental regulation enacted, imposed, or passed after
the initial construction of the Building, the Operating Expenses
shall include the capitalized costs (amortized, together with
interest at 15% per annum, over their depreciable life for
federal income tax purposes) incurred by Landlord in making such
modifications.
(3) The "Taxes" shall mean all general and special ad valorem taxes
and assessments (calculated on an accrual basis) levied upon or
assessed against the Land, the Building, or any equipment,
machinery, furnishings, and fixtures owned by Landlord and
attached to or located within the Building. If the method of
property taxation prevailing at the date of this Lease is changed
so that taxes now levied or assessed on real or personal property
are replaced partly or completely by a tax levied or assessed
upon Landlord, as a capital levy or otherwise, or on or measured
by rents received by Landlord from the Building, then such new or
altered taxes attributable to the Building shall be deemed
included within the definition of Taxes as used in this Section
3.3(A)(3).
(4) The "Base Year" shall mean the 1994 calendar year.
(5) The "Operating Expense Increase" shall mean, for any calendar
year after the Base Year, the amount, if any, by which Operating
Expenses for such year exceed Operating Expenses for the Base
Year.
(B) Payment of Additional Rent. As early as reasonably possible in
each calendar year during the
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Term of this Lease (and, if applicable, during the Extended Term), Landlord
shall notify Tenant of Landlord's estimate (which may be revised from time
to time) of the Operating Expense Increase, if any, which Landlord
anticipates for or during such calendar year. Tenant shall pay to Landlord,
with each monthly installment of Base Rent during such calendar year, 1/12
of the Pro Rata Share of the amount so estimated (as such estimate may be
revised from time to time by Landlord).
(C) Subsequent Adjustments. As soon as reasonably possible after the
end of each calendar year, Landlord shall furnish Tenant a reasonably
detailed statement of the Operating Expenses actually paid or incurred with
respect to such calendar year, prepared by Landlord in accordance with
sound accounting practices. If the Pro Rata Share of the Operating Expense
Increase with respect to the calendar year covered by such statement
exceeds the Additional Rent previously paid by Tenant pursuant to this
Section 3.3, Tenant shall, within 5 days after receiving such statement,
pay the deficiency to Landlord. If Landlord has received more than the Pro
Rata Share, determined in accordance with such statement, the excess shall
be applied first to reduce any items of Rent then payable by Tenant under
the terms of this Lease, and the balance, if any, shall be returned to
Tenant.
3.4 Supplementary Amounts. Tenant shall also pay, from time to time, as
provided in this Lease, all other amounts, liabilities, and obligations (the
"Supplementary Amounts") which Tenant herein assumes or agrees to pay. As used
in this Lease, the term "Rent" shall mean the sum of Base Rent, Additional Rent,
and all Supplementary Amounts.
3.5 Place for Payments. All items of Rent shall be paid by Tenant to
Landlord at the address for Landlord set forth in Section 13.7 of this Lease or
at such other address as Landlord may notify Tenant in writing.
IV. TENANT IMPROVEMENTS
4.1 Improvement Allowance. Landlord shall provide to Tenant an allowance
(the "Improvement Allowance") for the design and construction of real property
improvements to be made by Tenant to the Leased Premises (the "Tenant
Improvements"). The Improvement Allowance shall be equal to $294,252.00, which
amount is determined at the rate of $12.00 multiplied by the number of rentable
square feet contained in the Leased Premises as of the Commencement Date.
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4.2 Construction of Improvements. Tenant shall coordinate all work related
to the Tenant Improvements; provided that Tenant shall comply with any
reasonable restrictions or procedures adopted by Landlord from time to time to
protect the rights or concerns of other tenants in the Building or to protect
the Landlord's interest in the Land and Building. Tenant shall prepare plans and
specifications for the Tenant Improvements (the "Plans"). Tenant shall submit
the Plans to Landlord for Landlord's review and approval, which approval shall
not be unreasonably withheld. The Improvement Allowance shall be used by Tenant
for refurbishing, renewing, and upgrading the condition and appearance of the
Leased Premises in general and shall not be applied in a disproportionate manner
to an specific portion or portions of the Leased Premises. The general
contractor and all subcontractors shall be selected by Tenant and such selection
shall be subject to Landlord's approval, which approval shall not be
unreasonably withheld. The status of Tenant's progress in completing the Tenant
Improvements shall not affect in any way the Commencement Date or the Term of
this Lease or give Tenant any right to any abatement of Rent.
4.3 Payment of Improvement Allowance. Tenant shall submit to Landlord from
time to time copies of invoices for costs and expenses incurred in connection
with the completion of the Tenant Improvements, together with evidence of the
payment of such invoices, progress payment statements, lien waivers, AIA
documentation, and other information relating thereto reasonably requested by
Landlord. Subject to Landlord's approval of such information, which approval
shall not be unreasonably withheld, Landlord shall pay to Tenant from time to
time the amount of such invoices as promptly as reasonably possible up to the
total amount of the Improvement Allowance.
V. INSURANCE AND TAXES
5.1 Liability Insurance. Tenant shall obtain, and keep in full force and
effect during the Term of this Lease, and pay the premiums and costs of,
broad-form general comprehensive liability insurance covering public liability
with respect to the use and operation of the Leased Premises, with limits and in
amounts, and with deductibles, retentions, and self-insurance provisions, as
shall be approved by Landlord, which approval shall not be unreasonably withheld
(the "Liability Insurance").
5.2 Casualty Insurance. Tenant shall obtain, and keep in full force and
effect during the Term of this Lease, and pay the premiums and costs of, fire
and extended casualty insurance covering all of the improvements, trade
fixtures, equipment, furnishings, and other personal property owned by Tenant
and located at the Leased Premises, with limits and in amounts, and with
deductibles, retentions, and self-insurance provisions, as shall be approved by
Landlord, which approval shall not be unreasonably withheld (the "Casualty
Insurance").
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5.3 General Provisions Regarding Insurance. The Liability Insurance and the
Casualty Insurance coverages to be obtained by Tenant shall:
(A) Be written on forms and with insurers of national stature.
(B) Name Landlord and Tenant as insureds as their interests may appear.
(C) Provide that the coverage shall not be canceled or altered except
upon 30 days prior written notice to Landlord.
A certificate of insurance evidencing the Liability Insurance and the Casualty
Insurance coverages shall be delivered to Landlord promptly after the
Commencement Date, and the originals of each policy of Liability Insurance and
Casualty Insurance shall be available and subject to inspection and copying by
Landlord. The Liability Insurance and the Casualty Insurance to be obtained by
Tenant hereunder may be under blanket coverage policies covering Tenant and any
parent, subsidiary, or affiliated corporation of Tenant.
5.4 Taxes and Assessments. Tenant shall pay all taxes, assessments, or
other impositions, general or special, ordinary or extraordinary, of every kind
or nature which may be levied, assessed, or imposed upon or with respect to all
of Tenant's improvements, trade fixtures, equipment, furnishings, and other
personal property at any time situated upon the Leased Premises.
VI. TENANT'S COVENANTS
6.1 Use of Leased Premises. Tenant shall use and occupy the Leased Premises
solely as general business offices for the business of Tenant as initially
conducted in the Leased Premises, and not, without Landlord's prior written
consent, any other activities or businesses.
6.2 Maintenance and Repair. Except to the extent that Landlord is
responsible therefor pursuant to the terms of Article VII of this Lease, Tenant
shall, at Tenant's expense, maintain in good order, condition, and repair the
Leased Premises and all improvements, trade fixtures, equipment, furnishings,
and other personal property located therein.
6.3 Nuisance. Tenant shall not cause or maintain any nuisance in or about
the Leased Premises or the Building and shall keep the Leased Premises free of
anything of a dangerous, noxious, or offensive nature or which could cause a
fire or other hazard or which might otherwise impair the value of the same or
constitute a waste.
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6.4 Compliance With Laws. Tenant shall comply with all federal, state, and
local laws, ordinances, orders, rules, codes, and regulations applicable to the
use and occupancy of the Leased Premises.
6.5 No Hazardous or Regulated Materials. Tenant shall not cause or permit
the disposal, transportation, generation, storage, treatment, or use in or upon
any portion of the Leased Premises, the Building, or the Land of any hazardous
or environmentally regulated materials or substances and shall not bring onto,
store, generate, treat, dispose of, or otherwise permit any hazardous or
environmentally regulated materials or substances on any portion of the Leased
Premises, the Building, or the Land, except for normal amounts of the same which
are necessary and normally used for the regular and normal cleaning of the
Leased Premises and the operation of normal copiers, fax machines, and similar
business machines on the Leased Premises, in which case Tenant shall use all
reasonable safeguards in dealing with such materials or substances. Tenant shall
indemnify and hold Landlord harmless from and against any and all loss, cost,
expense, damage, or liability (including, without limitation, reasonable
attorneys' fees) resulting from any breach or violation by Tenant of the
covenants set forth in this Section 6.5.
6.6 Alterations by Tenant. Tenant shall not improve, change, alter, add to,
remove, or demolish any portion of the Leased Premises without the prior written
consent of Landlord, which consent shall not be unreasonably withheld. Tenant
shall pay when due all amounts payable on account of any alterations made by
Tenant or at the instance or request of Tenant. Any and all liens on any portion
of the Land or Building resulting from any such alterations shall be removed by
Tenant within 15 days after notice thereof is given to Tenant.
VII. OBLIGATIONS OF LANDLORD
7.1 Services to the Leased Premises. Landlord shall, at Landlord's expense
(subject to Tenant's obligation to pay Additional Rent pursuant to the terms of
Section 3.3 hereof), provide the following services to the Leased Premises,
subject to such temporary interruptions thereof as may be necessary for routine
repair and maintenance or other interruptions which are caused by circumstances
beyond the reasonable control of Landlord:
(A) At all times, electric power to the Leased Premises sufficient for
normal lighting and operation of normal business office equipment.
(B) During normal business hours, heat, ventilation, and air-conditioning
as
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necessary for the comfortable use and occupancy of the Leased Premises.
(C) Janitorial services five days per week as reasonably required to keep
the Leased Premises in a clean condition, provided that Tenant shall
leave the Leased Premises in a reasonably tidy condition at the end of
each business day.
(D) At all times, hot and cold running water, separate men's and women's
washroom facilities, and sewer service.
(E) At all times, access to and egress from the Leased Premises.
7.2 Services to the Building. Landlord shall, at Landlord's expense
(subject to Tenant's obligation to pay Additional Rent pursuant to Section 3.3
hereof), provide the following services to the Building, subject to such
temporary interruptions thereof as may be necessary for routine repair and
maintenance or other interruptions which are caused by circumstances beyond the
reasonable control of Landlord:
(A) Heat, ventilation, air-conditioning, electric power, domestic water,
and janitorial services as and when necessary, as determined by Landlord
in its reasonable discretion, in those areas of the Building from time
to time designated by Landlord for use during normal business hours by
Tenant in common with all other tenants and other occupants of the
Building.
(B) At all times, access to and egress from the Building.
7.3 Maintenance. Landlord shall, at Landlord's expense (subject to Tenant's
obligation to pay Additional Rent pursuant to Section 3.3 hereof), operate,
maintain, repair, and replace the systems, facilities, and equipment in and
about the Building, including, without limitation, all HVAC, plumbing, and
electrical facilities serving the Building, the foundations, structures, and
roof of the Building, and the furnishings and fixtures located in the common
areas of the Building. Landlord hereby reserves the right to make any
modifications, replacements, limitations, or other changes in and to the
systems, facilities, and equipment serving the Leased Premises, the Building, or
any of the common areas in or about the Building which, in Landlord's reasonable
discretion, are necessary or desirable for the efficient or convenient
management or operation of the Building.
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7.4 Taxes and Insurance. During the Term of this Lease, subject to Tenant's
obligation to pay Additional Rent pursuant to the terms of Section 3.3 hereof,
Landlord shall pay all Taxes and all premiums for all policies of insurance
maintained by Landlord with respect to its interest in the Land and Building.
7.5 Additional Services. If from time to time requested by Tenant and to
the extent that it is reasonably able to do so, Landlord shall provide to the
Leased Premises services in addition to those set forth in Section 7.1 above. If
any such services are provided to Tenant, Tenant shall, within 10 days after its
receipt of an invoice therefor, pay to Landlord the charges for such services as
determined from time to time by Landlord in its reasonable discretion.
7.6 Disproportionate Use. If Landlord shall from time to time determine in
its reasonable discretion that the use of any electric power or other service in
the Leased Premises is disproportionate to the use of other tenants in the
Building, Landlord may separately charge Tenant for the excess costs
attributable to such disproportionate use. Tenant shall pay such charges to
Landlord within 10 days after its receipt of an invoice therefor.
VIII. LANDLORD'S ENTRY
8.1 Landlord's Right to Enter. Landlord shall have the right to enter upon
the Leased Premises at any reasonable time during normal business hours and upon
reasonable advance notice to Tenant (or at any other time with Tenant's prior
approval) to examine, inspect, repair, maintain, or show the same to prospective
lenders, tenants, investors, or buyers of the Land or the Building.
IX. CONDEMNATION
9.1 Substantial Taking. If there is a Substantial Taking (as hereinafter
defined) with respect to the Leased Premises, the Term of this Lease shall
terminate on the date of the vesting of title pursuant to such Substantial
Taking, and Landlord shall refund to Tenant any Rent then paid by Tenant which
is attributable to the period subsequent to the termination of this Lease.
9.2 Insubstantial Taking. If there is an Insubstantial Taking (as
hereinafter defined) with respect to the Leased Premises, this Lease shall
continue in full force and effect, Landlord shall cause the Leased Premises to
be restored as near as reasonably possible to the original condition thereof,
and there shall be an abatement of Rent proportionate to the extent of the
Leased Premises so taken.
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9.3 Awards. In connection with any such Taking, Landlord shall be entitled
to receive and retain the entire award or consideration given for the affected
lands, improvements, property, rights, and interests. Tenant shall not advance
any claim against Landlord for the value of any of its property, rights, or
interests which may be affected by any such Taking. Nothing herein shall
prohibit Tenant from seeking and recovering on its own account from the
condemning authority any award or compensation for any damages suffered or
incurred by Tenant in connection with any such Taking.
9.4 Definitions. For purposes of this Article IX, the following terms shall
have the meanings indicated:
(A) A "Taking" shall mean the taking of all or any portion of the
Land, the Building, or the Leased Premises by any governmental body
or agency through the exercise of the power of eminent domain or
condemnation for public or quasi-public use or the sale or other
transfer of all or part of the Land, the Building, of the Leased
Premises under the threat of condemnation.
(B) A "Substantial Taking" shall mean a Taking of so much of the Land,
the Building, or the Leased Premises that the Leased Premises
cannot thereafter be reasonably used by Tenant for carrying on the
business theretofore conducted by Tenant on the Leased Premises.
(C) An "Insubstantial Taking" shall mean a Taking such that the Leased
Premises can thereafter continue to be used by Tenant for carrying
on the business theretofore conducted by Tenant on the Leased
Premises, without unreasonable interference.
X. CASUALTY
10.1 Damage or Destruction. In the event that all or a material portion of
the Leased Premises are damaged or destroyed by fire or other casualty, both
Landlord and Tenant shall have the right to terminate this Lease as of the date
of such casualty upon written notice given to the other within 60 days after the
occurrence of such casualty. If neither party terminates this Lease, or if any
lesser damage or destruction occurs with respect to the Leased Premises,
Landlord shall promptly restore the Leased Premises to a condition as near as
reasonably possible to the condition which existed prior to such casualty, this
Lease shall remain in full force and effect, and there shall be no abatement of
Rent.
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XI. EVENTS OF DEFAULT
11.1 Defaults by Tenant. An "Event of Default" by Tenant under this Lease
shall exist if:
(A) Tenant fails to pay, when due, any item of Rent payable by Tenant
under the terms of this Lease and such failure continues uncured
for a period of ten days after written notice thereof is given by
Landlord to Tenant.
(B) Tenant breaches or fails to comply with any agreement, term,
covenant or condition in this Lease applicable to Tenant (except
for the payment of Rent), and any such breach or failure continues
uncured for a period of 30 days after written notice thereof is
given by Landlord to Tenant.
(C) Tenant abandons the Leased Premises.
(D) Tenant's interest under this Lease or in the Leased Premises shall
be taken upon execution or by other process of law directed against
Tenant or shall be subject to any attachment at the instance of any
creditor or claimant against Tenant and said attachment shall not
be discharged or disposed of within 15 days after levy thereof.
(E) Tenant shall file a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the
United States or under any similar act of any state, or shall
voluntarily take advantage of any such law or act by answer or
otherwise.
(F) Tenant shall be dissolved or shall make an assignment for the
benefit of creditors, or if involuntary proceedings under any such
bankruptcy or insolvency law or for the dissolution of Tenant shall
be instituted against Tenant or a receiver or trustee shall be
appointed for the Leased Premises or for all or substantially all
of the property of Tenant and such proceeding shall not be
dismissed or such receivership or trusteeship vacated within 60
days after such institution or appointment.
11.2 Landlord's Remedies. Upon the occurrence of any Event of Default,
Landlord shall have the right, at
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Landlord's election, then or at any time thereafter, to exercise any one or more
of the following remedies:
(A) To make any payment or take any action Landlord may deem reasonably
necessary or desirable to cure any such Event of Default in such
manner and to such extent as Landlord may deem reasonably necessary
or desirable, in which event Tenant shall pay to Landlord, within 10
days after demand, all advances, costs, and expenses of Landlord in
connection with the making of any such payment or the taking of any
such action, including, without limitation, reasonable attorneys'
fees, together with interest thereon at the rate of 12% per annum
from the date of payment of any such advances, costs, and expenses by
Landlord.
(B) To terminate this Lease, effective at such time as may be specified
by written notice to Tenant and to recover possession of the Leased
Premises from Tenant and to recover from Tenant all damages
occasioned by such Event of Default.
(C) To maintain Tenant's right to possession, in which case this Lease
shall continue in effect, whether or not Tenant has vacated or
abandoned the Leased Premises, and Landlord shall be entitled to
enforce all of Landlord's rights and remedies under this Lease,
including, without limitation, the right to recover Rent as it
becomes due hereunder.
(D) To pursue any other remedy now or hereafter available to Landlord in
law or in equity, including, without limitation, specific performance
and injunctive relief.
Unpaid amounts due under this Lease shall bear interest at the rate of 12% per
annum, and Landlord shall be entitled to all costs and expenses, including,
without limitation, reasonable attorneys, fees, in the enforcement of its rights
and remedies under this Lease.
XII. SURRENDER
12.1 Surrender Upon Lease Expiration. Upon the expiration or earlier
termination of this Lease, or on the date specified in any demand for possession
by Landlord after any Event of Default, Tenant shall surrender possession of the
Leased
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Premises to Landlord, or of so much thereof as to which this Lease may have been
terminated, in the same condition as when Tenant first occupied the same,
ordinary wear and tear excepted.
12.2 Trade Fixtures. Upon the expiration or earlier termination of this
Lease, Tenant shall promptly remove all trade fixtures, equipment, furnishings,
and personal property owned by Tenant and located on or about the Leased
Premises or the Building, whether or not attached or affixed thereto. Tenant
shall, at Tenant's expense, promptly repair any damage to the Leased Premises or
the Building caused by such removal. Any such items left by Tenant on or about
the Leased Premises after such time shall conclusively be deemed to be abandoned
by Tenant and may be kept or disposed of in any manner determined by Landlord.
12.3 Improvements. Upon the expiration or earlier termination of this
Lease, all improvements, including any alterations, additions, or modifications
thereto, made to the Leased Premises shall remain with the Leased Premises and
shall become the property of Landlord, to do with as it chooses in its sole and
absolute discretion, whether or not such improvements were originally paid for
by Landlord or Tenant.
12.4 Holdover. If Tenant continues to hold possession of the Leased
Premises after the expiration of the Term of this Lease with the consent of
Landlord, Tenant shall become a tenant from month-to-month upon the terms herein
specified, at a monthly rental equal to one-twelfth (1/12) of the annual Base
Rent in effect immediately before the end of the Term, payable in advance on the
first day of each month and otherwise subject to all the conditions, provisions,
and obligations of this Lease insofar as the same are applicable to a
month-to-month tenancy, and shall continue to be such tenant until such tenancy
shall be terminated by either Landlord or Tenant on written notice given at
least 10 days prior to the end of any calendar month.
XIII. MISCELLANEOUS
13.1 Right of First Offer.
(A) Offer Space. So long as there is no uncured Event of Default by
Tenant under this Lease, Landlord shall from time to time give Tenant the
option (the "Offer Option") to lease additional space in the Building by
giving written notice of the availability of any such space (the "Offer
Space") as and when any such Offer Space becomes available to Landlord for
leasing. Offer Space shall be deemed to become available for leasing when
any lease existing on the date of this Lease expires or terminates and any
prior rights existing on the date of this Lease to lease any such Offer
Space expire or terminate.
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(B) Notice of Availability. As to any Offer Space which becomes
available during the Term of this Lease, Landlord shall give Tenant notice
thereof (the "Offer Notice"), specifying the following:
(1) The size and location of the Offer Space.
(2) The date that the Offer Space is expected to be available for
occupancy.
(C) Exercise of Offer Option. Tenant shall have 30 days after
receiving any Offer Notice to exercise the Offer Option as to the Offer
Space identified in the Offer Notice. If Tenant gives notice to Landlord
exercising the offer Option within such period, the Offer Space shall be
added to the Leased Premises under this Lease on the terms provided herein.
If Tenant fails to give notice to Landlord exercising the Offer option
within such period, Tenant shall have relinquished its Offer Option as to
such Offer Space, and Landlord shall be free to lease the Offer Space to
another tenant.
(D) Effect of Exercise. If Tenant exercises the Offer Option as to any
Offer Space:
(1) Such Offer Space shall be added to and become part of the Leased
Premises as of the fifteenth (15th) day after Tenant gives notice
of such exercise, or, if later, the date on which such Offer
Space has been vacated by the prior occupant.
(2) The Basic Rent for the Offer Space shall be calculated and
determined in the same manner as the Basic Rent for the other
portions of the Leased Premises than leased by Tenant hereunder,
and, therefore, the Basic Rent shall thereafter be increased to
reflect the increase in the square footage of the Leased Premises
resulting from the addition of the Offer Space to the Leased
Premises. All other terms and conditions of this Lease shall
apply to such Offer Space and the term Leased Premises shall
thereafter mean the Leased Premises as modified by the addition
of such Offer Space.
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(3) Tenant shall accept delivery of such Offer Space in its then
current condition, AS IS, and Landlord shall have no obligation
to improve such Offer Space; provided that, for each portion of
the Offer Space taken by Tenant, Landlord shall provide to Tenant
an improvement allowance (the "Offer Allowance") for the design
and construction of real property improvements to be made by
Tenant to such Offer Space. Each Offer Allowance shall be in an
amount equal to the product of $.20 multiplied by the number of
rentable square feet contained in the Offer Space then taken by
Tenant, which product shall then be multiplied by the number of
calendar months then remaining in the initial Term of this Lease,
or, if the Extension Option has then been exercised by Tenant,
the number of calendar months remaining in the Extended Term (not
to exceed a total of 60 months). Tenant's construction of all
such improvements shall be conducted in accordance with the terms
set forth in Section 4.2 of this Lease.
(4) The term of Tenant's lease of the Offer Space shall be
coterminous with the Term of this Lease, including any extension
thereof.
13.2 Subordination. This Lease, at Landlord's option, shall be subject and
subordinate to any ground lease, mortgage, or deed of trust, now or hereafter
placed upon the Land and/or the Building or any part thereof and to any and all
advances made on the security thereof and to all renewals, modifications,
consolidations, replacements, and extensions thereof. The provisions of this
Section 13.1 shall be operative without any further writing, but Tenant shall,
upon request, execute any instrument requested by Landlord to confirm the
subordination provided for herein. Notwithstanding the foregoing, in the event
that the Leased Premises are transferred to any person or entity by reason of
foreclosure or other enforcement of any such ground lease, mortgage, or deed of
trust, this Lease and Tenant's rights hereunder shall continue undisturbed so
long as no Event of Default exists.
-18-
<PAGE> 19
13.3 Assignment. Tenant shall not make or permit any Transfer (as
hereinafter defined) without Landlord's prior written consent, which consent
shall not be unreasonably withheld; provided that Tenant shall have the right,
without obtaining Landlord's consent, to make or permit any Transfer to any
entity controlling, controlled by, or under common control with Tenant. As used
herein, a "Transfer" shall mean an assignment of this Lease, a sublease of all
or any part of the Leased Premises, or any assignment, sublease, transfer,
mortgage, pledge, or encumbrance of all or any part of Tenant's interest under
this Lease or in the Leased Premises, by operation of law or otherwise, or the
use or occupancy of all or any part of the Leased Premises by anyone other than
Tenant and Tenant's officers, agents, or employees.
13.4 Relationship of Landlord and Tenant. Nothing in this Lease shall be
construed as creating the relationship of principal and agent or of partnership
or of joint venture, it being the intent of the parties to this Lease to create
solely the relationship of landlord and tenant.
13.5 Survival. Any and all obligations of Landlord and Tenant hereunder
which are not fully performed or satisfied by or through the expiration or
termination of the Term of this Lease shall survive such expiration or
termination And continue in full force and effect.
13.6 No Implied Surrender of Waiver. No failure by Landlord to insist upon
the strict performance of any term, covenant, or agreement contained in this
Lease, no failure by Landlord to exercise any right or remedy under this Lease,
and no acceptance of full or partial payment during the continuance of any Event
of Default, shall constitute a waiver of any such term, covenant, or agreement
or a waiver of any such right or remedy or a waiver of any such Event of
Default. No act or thing done by Landlord, or any of its agents or employees,
during the Term of this Lease shall be deemed a termination of this Lease or an
acceptance of a surrender of the Leased Premises, and no agreement to terminate
this Lease or accept a surrender of the Leased Premises shall be valid, unless
in writing signed by Landlord. The delivery of keys to the Leased Premises or
the Building to any of Landlord's agents or employees shall not operate as a
termination of this Lease or a surrender of the Leased Premises.
13.7 Notices. All notices or demand required or permitted to be given under
this Lease shall be in writing and shall be deemed properly given and received
when actually given and received, if delivered by hand, sent by commercial
overnight courier, sent by registered or certified United States mail, postage
prepaid, return receipt requested, or sent by successful facsimile transmission,
addressed to the party to receive such notice at the following address or at
such other address as either party may notify the other party in writing:
-19-
<PAGE> 20
If to Landlord:
Jones Panorama Properties, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: Mr. Timothy J. Burke
Facsimile: (303) 799-1644
Telephone: (303) 792-3111
With a copy to:
Jones Panorama Properties, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: General Counsel
Facsimile: (303) 799-1644
Telephone: (303) 792-3111
If to Tenant:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: President
Facsimile: (303) 799-1644
Telephone: (303) 792-3111
With a copy to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: General Counsel
Facsimile: (303) 799-1644
Telephone: (303)792-3111
13.8 Survival of Provisions. Notwithstanding the expiration or earlier
termination of this Lease, the same shall continue in full force and effect as
to any provisions hereof which require observance or performance by Landlord or
Tenant subsequent to such expiration or termination.
13.9 Binding Effect. This Lease shall extend to and be binding upon the
successors and permitted assigns of the parties hereto.
13.10 Entire Agreement. This Lease constitutes the final and complete
expression of the parties' agreements with respect to the subject matter hereof,
and each party agrees that it has not relied upon or regarded as binding any
prior agreements, negotiations, representations, or understandings, whether oral
or written, except as expressly set forth herein.
-20-
<PAGE> 21
13.11 No Oral Modification or Amendment. No amendment or modification of
this Lease and no approvals, consents, or waivers by Landlord under this Lease,
shall be valid or binding unless in writing and executed by the party or parties
to be bound thereby.
13.12 Captions for Convenience. The headings and captions hereof are for
convenience only and shall not be considered in interpreting the provisions
hereof.
13.13 Time of the Essence. Time is of the essence of each and every
obligation to be performed under this Lease.
13.14 Applicable Law. This Lease shall be interpreted and enforced in
accordance with the laws of the State of Colorado.
13.15 Termination of Traveler's Lease. Landlord and Tenant each hereby
acknowledge and agree that, upon the full execution of this Lease, the
Traveler's Lease shall terminate.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed as of the day and year first above written.
LANDLORD:
JONES PANORAMA PROPERTIES, INC.,
a Colorado corporation
By: /s/ Timothy J. Burke
Its: Vice President
TENANT:
JONES INTERCABLE, INC., a Colorado
corporation
By: /s/ Elizabeth Steele
Its: Vice President
-21-
<PAGE> 22
EXHIBIT A
to
LEASE
[Legal Description of Leased Premises]
Lot 4,
PANORAMA OFFICE PARK,
County of Arapahoe,
State of Colorado,
A-1
<PAGE> 1
EXHIBIT 10.5.3
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("SECOND AMENDMENT") dated as of
November 30, 1994, is entered into by and among Jones Intercable, Inc., a
Colorado corporation ("BORROWER"), the lenders named on the signature pages of
this Second Amendment (herein referred to individually as a "LENDER" and
collectively as "LENDERS"), Barclays Bank PLC, CoreStates Bank, N.A. and The
Bank of Nova Scotia, as Lenders and as co-agents (in such capacity,
"CO-AGENTS"), and NationsBank of Texas, N.A., as a Lender and as managing agent
for itself and the other Lenders (in such capacity, "MANAGING AGENT").
R E C I T A L S:
A. Borrower, Lenders, Co-Agents and Managing Agent are parties to a certain
Credit Agreement (as amended, herein so called) dated as of December 8, 1992, as
amended by First Amendment and Waiver to Credit Agreement dated as of January
22, 1993. Capitalized terms in this Second Amendment which are not otherwise
defined in this Second Amendment shall have the meaning ascribed thereto in the
Credit Agreement. All references to "SECTIONS" herein are references to Sections
of the Credit Agreement.
B. Borrower has requested that, pursuant to SECTION 11.11, Lenders amend
the Credit Agreement to the extent specifically described herein.
NOW, THEREFORE, in consideration of the premises, and subject to the terms
and conditions herein set forth, the parties hereto agree as follows:
1. SECTION 1 of the Credit Agreement is hereby amended by adding new
definitions, as follows:
AVAILABLE COMMITMENT means $50,000,000 (subject to increase pursuant
to SECTION 2.4 of this Agreement), which amount, as of November 30, 1994,
is allocated in its entirety to, and available for borrowing under,
Facility A.
UNAVAILABLE COMMITMENT means $250,000,000, (subject to reduction
pursuant to SECTION 2.4 of this Agreement), $100,000,000 of which, as of
November 30, 1994, is allocated to Facility A, and $150,000,000 of which is
allocated to Facility B.
2. The definition of "APPLICABLE MARGIN" in SECTION 1 of the Credit
Agreement is hereby amended to read as follows:
APPLICABLE MARGIN means, at the time of any determination thereof, for
purposes of all Loans, the margin of interest over the Base Rate or the
LIBOR Rate or the CD Rate, as the case may be, which is applicable at the
time of any determination of interest rates under this Agreement, which
Applicable Margin shall be subject to adjustment
<PAGE> 2
(upwards or downwards, as appropriate) based on the ratio of Total Debt to
Annualized Operating Cash Flow (calculated on a consolidated basis for the
Companies), as follows:
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE APPLICABLE
RATIO OF TOTAL DEBT MARGIN FOR MARGIN FOR MARGIN FOR
TO ANNUALIZED BASE RATE LIBOR RATE CD RATE
OPERATING CASH FLOW LOANS LOANS LOANS
---------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Greater than or equal to 6.00 to 1 0.625 1.625 1.750
Greater than or equal to 5.50 to 1 but less than
6.00 to 1 0.375 1.375 1.500
Greater than or equal to 5.00 to 1 but less than
5.50 to 1 0.125 1.125 1.250
Greater than or equal to 4.50 to 1 but less than
5.00 to 1 0.000 1.000 1.125
Less than 4.50 to 1 0.000 0.750 0.875
</TABLE>
The ratio of Total Debt to Annualized Operating Cash Flow shall be determined
from the then most current of the quarterly or annual Financial Statements and
related Compliance Certificate delivered by Borrower pursuant to SECTIONS 7.3(A)
and 7.3(B) hereof. The adjustment, if any, to the Applicable Margin shall be
effective commencing on the fifth Business Day after the delivery of such
Financial Statements and related Compliance Certificate. If Borrower fails at
any time to timely furnish to Lenders the Financial Statements and related
Compliance Certificates as required to be delivered pursuant to SECTIONS 7.3(A)
and (B) hereof, and such failure shall not be remedied within five days, then
the margin applicable in the case of a ratio equal to or greater than 6.0 to 1
shall apply until such time as such Financial Statements and Compliance
Certificate are so delivered.
3. CLAUSES (III), (IV), and (V) of SECTION 2.1(A) of the Credit Agreement
are hereby amended to read as follows:
2
<PAGE> 3
(iii) on any date of determination, the Facility A Principal Debt
shall never exceed the lesser of (x) $150,000,000 (as such amount is
subject to reduction and cancellation in accordance with this Agreement),
or (y) the portion of the Available Commitment allocated to Facility A;
(iv) on any date of determination, the Facility A Principal Debt for any
Lender shall never exceed the lesser of (x) such Lender's Committed Sum for
Facility A, or (y) such Lender's Commitment Percentage of the portion of
the Available Commitment allocated to Facility A; and (v) on any date of
determination, the Facility A Principal Debt, when aggregated with the
Facility B Principal Debt, shall never exceed the lesser of (x) the Total
Commitment, or (y) the Available Commitment.
4. CLAUSES III, (IV), and (V) of SECTION 2.1(B) of the Credit Agreement are
hereby amended to read as follows:
(iii) on any date of determination, the Principal Debt under Facility
B shall never exceed the lesser of (x) $150,000,000 (as such amount is
subject to reduction and cancellation in accordance with this Agreement) or
(y) the portion of the Available Commitment allocated to Facility B; (iv)
on any date of determination, the Principal Debt owed to any Lender under
Facility B shall never exceed the lesser of (x) such Lender's Committed Sum
for Facility B, or (y) such Lender's Commitment Percentage of the portion
of the Available Commitment allocated to Facility B; and (v) on any date of
determination, the Facility B Principal Debt, when aggregated with the
Facility A Principal Debt, shall never exceed the lesser of (x) the Total
Commitment, or (y) the Available Commitment.
5. A new SECTION 2.4 is added to the Credit Agreement, and such Section
shall read as follows:
2.4 Increase in Available Commitment. Upon five Business Days prior
written notice to Managing Agent and payment of the fee described in
SECTION 4.7 and provided that no Default or Potential Default exists,
Borrower may increase the Available Commitment by an amount not less than
$25,000,000 or a greater integral multiple of $5,000,000, as Borrower shall
designate in such notice, which shall result in a corresponding decrease in
the Unavailable Commitment. Such notice shall direct Managing Agent to
allocate all or any portion of such increase in Available Commitment to
Facility A or Facility B, provided that, such allocation shall not cause
the Available Commitment allocated to Facility A or Facility B to exceed in
either case $150,000,000. Notice may be given and allocation may be made
under this SECTION 2.4 without penalty, but such action is subject to the
payment of the fee described in SECTION 4.7.
3
<PAGE> 4
6. There is hereby added at the end of SECTION 3.2(B) a new sentence as
follows:
In addition, if the Principal Debt ever exceeds the Available
Commitment then in effect, Borrower shall repay or prepay the Principal
Debt in an amount equal to such excess, together with all accrued and
unpaid interest on the principal amount so repaid or prepaid and any
Consequential Loss arising in connection therewith; provided, however,
Borrower may, at its option in accordance with SECTION 2.4 and subject to
the limitations and conditions set forth in such Section, increase the
Available Commitment.
7. SECTION 4.4 of the Credit Agreement is hereby amended in its entirety as
follows:
4.4 Facility A Commitment Fee. For the period from the date of this
Agreement to November 30, 1994, Borrower shall pay to Managing Agent, for
the Pro Rata account of Lenders, a commitment fee, payable as it accrues on
each February 28, May 31, August 31, and November 30 (commencing February
28, 1993), equal to 0.50% per annum, calculated from the date of this
Agreement on the amount by which (a) the aggregate Facility A Committed
Sums exceed (b) the average daily Facility A Principal Debt, in each case
during the three month period (or portion thereof commencing on the date of
this Agreement) preceding and including such due date.
8. SECTION 4.5 of the Credit Agreement is hereby amended in its entirety as
follows:
4.5 Facility B Commitment Fee. For the period from the date of this
Agreement to November 30, 1994, Borrower shall pay to Managing Agent for
the Pro Rata account of Lenders a commitment fee, payable as it accrues on
each February 28, May 31, August 31, and November 30 (commencing February
28, 1993), equal to (a) at any time prior to May 1, 1993, 0.25% per annum,
and (b) at any time thereafter, 0.50% per annum, in each case calculated
from the date of this Agreement on the amount by which (i) the aggregate
Facility B Committed Sums exceed (ii) the average daily Facility B
Principal Debt, in each case during the three month period (or portion
thereof commencing on the date of this Agreement) preceding and including
such due date.
9. A new SECTION 4.6 is added to the Credit Agreement, and such Section
shall read as follows:
4.6 Available and Unavailable Commitment Fee. For the period from and
after November 30, 1994, Borrower shall pay to Managing Agent for the Pro
Rata account of Lenders a commitment fee, payable as it accrues on each
February 28, May 31, August 31, and November 30 (commencing February 28,
1995), and on the Termination Date, equal to (a) 3/8 of 1% per annum
calculated on the amount by which (i) the average daily Available
Commitment exceeds (ii) the average daily Principal Debt,
4
<PAGE> 5
and (b) 3/16 of 1% per annum, calculated on the average daily amount of the
Unavailable Commitment, in each case during the three month period (or
portion thereof commencing on November 30, 1994) preceding and including
such due date.
10. A new Section 4.7 is added to the Credit Agreement, and such Section
shall read as follows:
4.7 Available Commitment Increase Fee. Concurrently with the giving of
notice under Section 2.4 of this Agreement and as a condition to the
effectiveness of any increase in the Available Commitment under such
Section, Borrower shall pay to Managing Agent, for the Pro Rata account of
Lenders, a fee equal to 3/16 of 1% per annum, calculated on the amount of
the increase in the Available Commitment pursuant to such notice for the
period from the last day of the most recently completed fiscal quarter of
Borrower to and including the date of such notice.
11. Section 7.27(a) of the Credit Agreement is hereby amended in its
entirety as follows:
(a) Borrower shall never permit the ratio of its Total Debt to its
Annualized Operating Cash Flow as of the last day of any fiscal quarter
ending during a period set forth below to be greater than the amount set
forth below opposite such period:
<TABLE>
<CAPTION>
PERIOD MAXIMUM RATIO PERMITTED
--------------------------------------------------------------- -----------------------
<S> <C>
Closing Date to and including November 30, 1993 6.75 to 1
December 1, 1993, to and including August 31, 1995 6.50 to 1
September 1, 1995 to and including February 29, 1996 6.00 to 1
March 1, 1996 to and including February 28, 1997 5.50 to 1
March 1, 1997 to and including February 28, 1998 5.00 to 1
March 1, 1998 and thereafter 4.50 to 1
</TABLE>
5
<PAGE> 6
12. In addition to the fees payable to Lenders, Co-Agents, and Managing
Agent pursuant to Section 4 of the Credit Agreement, on the effective date of
this Second Amendment, Borrower will pay to each Lender an amendment fee in an
amount equal to 1/8 of 1% of such Lender's Committed Sum as in effect on such
date (without regard to the amount of the Available Commitment).
13. The amendments to the Credit Agreement set forth in this Second
Amendment shall become effective as of the date hereof when the Managing Agent,
on behalf of the Lenders, shall have received (i) counterparts hereof executed
by Borrower, the Cable Subsidiaries and the Management Subsidiary and the
Lenders (or copies of such executed counterparts by facsimile), and (ii) payment
of the amendment fees payable to Lenders as described in Paragraph 12 hereof.
14. Except as specifically provided herein, all terms, provisions and
conditions of the Credit Agreement, the other Loan Papers and all documents
executed in connection therewith shall continue in full force and effect and
shall remain enforceable and binding in accordance with their respective terms.
On and after the date of this Second Amendment, any reference to the Credit
Agreement shall be deemed to be a reference to the Credit Agreement as amended
by this Second Amendment.
15. As a material inducement to Managing Agent and Lenders to execute and
deliver this Second Amendment, Borrower hereby represents and warrants that: (a)
all of the representations and warranties set forth or referred to in the Credit
Agreement and the other Loan Papers are true and correct on the date hereof in
all respects, as though made on the date hereof; and (b) except as set forth
herein, no Default or Potential Default exists on the date hereof.
16. This Second Amendment may be executed in any number of identical
counterparts and by different parties hereto in separate counterparts, each of
which counterparts when so executed and delivered shall for all purposes be
deemed an original and all of which constitute, collectively, one agreement, but
in making proof of this Second Amendment, it shall not be necessary to produce
or account for more than one such counterpart.
17. THIS SECOND AMENDMENT AND THE OTHER LOAN PAPERS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
18. This Second Amendment is one of the "Loan Documents" referred to in the
Credit Agreement, and the provisions relating to Loan Documents set forth in the
Credit Agreement are incorporated herein by reference the same as if set forth
herein verbatim.
6
<PAGE> 7
19. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.]
7
<PAGE> 8
EXECUTED to be effective as of the day and year first mentioned.
JONES INTERCABLE, INC.,
as Borrower
By /s/ J. ROY POTTLE
(Name) J. Roy Pottle
(Title) Treasurer
NATIONSBANK OF TEXAS, N.A.,
as Managing Agent and a Lender
By /s/ DOUGLAS E. ROPER
(Name) Douglas E. Roper
(Title) Senior Vice President
BARCLAYS BANK PLC,
as Co-Agent and a Lender
By /s/ ANDREW M. WYNN
(Name) Andrew M. Wynn
(Title) Director
By /s/ CRAIG J. LEWIS
(Name) Craig J. Lewis
(Title) Associate
8
<PAGE> 9
CORESTATES BANK, N.A.,
as Co-Agent and a Lender
By /s/ PHILIP D. HARRISON
(Name) Philip D. Harrison
(Title) Commercial Officer
THE BANK OF NOVA SCOTIA,
as Co-Agent and a Lender
By /s/ [Illegible]
(Name) [Illegible]
(Title)
MELLON BANK, N.A.,
as a Lender
By /s/ MARIBETH DONNELLY
(Name) Maribeth Donnelly
(Title) Vice President
SOCIETE GENERALE,
as a Lender
By /s/ MARK VIGIL
(Name) Mark Vigil
(Title) Vice President
9
<PAGE> 10
PNC BANK, NATIONAL ASSOCIATION
(SUCCESSOR BY MERGER TO
PROVIDENT NATIONAL BANK),
as a Lender
By /s/ THOMAS P. CARDEN
(Name) Thomas P. Carden
(Title) Vice President
NATIONAL WESTMINSTER BANK USA,
as a Lender
By /s/ ROSELYN REID
(Name) Roselyn Reid
(Title) Vice President
BANQUE PARIBAS,
as a Lender
By /s/ JOHN G. ACKER
(Name) John G. Acker
(Title) Group Vice President
By /s/ JOHN N. CATE
(Name) John N. Cate
(Title) Group Vice President
ROYAL BANK OF CANADA,
as a Lender
By /s/ MARK D. THORSHEIM
(Name) Mark D. Thorsheim
(Title) Manager
10
<PAGE> 11
CREDIT LYONNAIS,
as a Lender
By /s/ BRUCE M. YEAGER
(Name) Bruce M. Yeager
(Title) Authorized Signature
FIRST NATIONAL BANK OF MARYLAND,
as a Lender
By /s/ JOHN L. BRUSH III
(Name) John L. Brush III
(Title) Vice President
MERIDIAN BANK,
as a Lender
By /s/ JEFFREY E. HAUSER
(Name) Jeffrey E. Hauser
(Title) A.V.P.
THE SUMITOMO BANK, LTD.,
CHICAGO BRANCH,
as a Lender
By /s/ TAKAYA IIDA
(Name) Takaya Iida
(Title) Joint General Manager
11
<PAGE> 12
ACKNOWLEDGMENT
As an inducement to Managing Agent and Lenders to execute and deliver this
Second Amendment to Credit Agreement (the "SECOND AMENDMENT"), the undersigned
hereby consent to the foregoing, and agree that the execution and delivery of
the Second Amendment shall in no way release, diminish, impair, reduce, or
otherwise affect the respective obligations and liabilities of each of the
undersigned under its Guaranty and/or Subsidiary Security Agreement, each dated
December 8, 1992, and each executed by the undersigned in favor of Managing
Agent, Co-Agents and Lenders, which Guaranty and Subsidiary Security Agreement
shall continue in full force and effect. This consent and agreement shall be
binding upon the undersigned, and the successors and assigns of each, and shall
inure to the benefit of Managing Agent, Co-Agents and Lenders, and their
respective successors and assigns.
EXECUTED to be effective as of November 30, 1994, with the knowledge and
intent that Managing Agent, Co-Agents and Lenders relied or shall rely on same
in entering into the Second Amendment.
Evergreen Intercable, Inc.
Jones Intercable of San Diego, Inc.
Jones Tri-City Intercable, Inc.
Jones Intercable of Alexandria, Inc.
Jones Cable Corporation
By /s/ KEVIN P. COYLE
(Name) Kevin P. Coyle
(Title) Treasurer
12
<PAGE> 1
EXHIBIT 10.5.4
THIRD AMENDMENT AND WAIVER TO CREDIT AGREEMENT
THIS THIRD AMENDMENT AND WAIVER TO CREDIT AGREEMENT ("THIRD AMENDMENT")
dated as of December 19, 1994, is entered into by and among Jones Intercable,
Inc., a Colorado corporation ("BORROWER"), the lenders named on the signature
pages of this Third Amendment (herein referred to individually as a "LENDER" and
collectively as "LENDERS"), Barclays Bank PLC, CoreStates Bank, N.A. and The
Bank of Nova Scotia, as Lenders and as co-agents (in such capacity,
"CO-AGENTS"), and NationsBank of Texas, N.A., as a Lender and as managing agent
for itself and the other Lenders (in such capacity, "MANAGING AGENT").
RECITALS:
A. Borrower, Lenders, Co-Agents and Managing Agent are parties to a certain
Credit Agreement (as amended, herein so called) dated as of December 8, 1992, as
amended by First Amendment and Waiver to Credit Agreement dated as of January
22, 1993, and as further amended by Second Amendment to Credit Agreement dated
as of November 30, 1994. Capitalized terms in this Third Amendment which are not
otherwise defined in this Third Amendment shall have the meaning ascribed
thereto in the Credit Agreement. All references to "Sections" herein are
references to Sections of the Credit Agreement.
B. Borrower has entered into an Exchange Agreement and Plan of
Reorganization and Liquidation dated as of May 31, 1994, as amended by that
certain Amendment to Exchange Agreement and Plan of Reorganization and
Liquidation dated as of October 20, 1994 (as amended, the "SPACELINK
AGREEMENT"), with Jones Spacelink, Ltd. ("SPACELINK"), whereby Borrower has
agreed to acquire substantially all of the assets and assume all of the
liabilities of Spacelink in exchange for Borrower's issuance to Spacelink of
3,900,000 shares of Borrower's Class A Common Stock.
C. Borrower has entered into an Stock Purchase Agreement dated as of May
31, 1994, as amended by that certain Amendment No. 1 to Stock Purchase Agreement
dated as of October 20, 1994 (as amended, the "BCI STOCK PURCHASE AGREEMENT"),
with Bell Canada International Inc. ("BCI"), whereby (i) Borrower has agreed to
issue up to 7,414,300 shares of its Class A Stock in exchange for the payment by
BCI of $27.50 per share and (ii) BCI has agreed to invest in the future up to an
additional $141,106,750 for shares of Class A Stock of Borrower to maintain its
30% ownership interest in Borrower in the event of future equity offerings by
Borrower.
D. Borrower has requested that, pursuant to SECTION 11.11, Lenders amend
the Credit Agreement to the extent specifically described herein.
NOW, THEREFORE, in consideration of the premises, and subject to the terms
and conditions herein set forth, the parties hereto agree as follows:
<PAGE> 2
1. Lenders hereby consent to Borrower entering into the Spacelink Agreement
upon the terms stated herein and hereby waive any violations of SECTIONS 7.15
(Transactions with Affiliates) and 7.22 (Loans, Advances, and Investments) that
may occur by reason thereof.
2. SECTION 1 of the Credit Agreement is hereby amended by adding new
definitions, as follows:
BCI means Bell Canada International Inc.
BCI AGREEMENTS means (a) the Supply and Services Agreement between
Borrower and BCI, whereby (i) BCI will provide Borrower with access to the
expert advice of personnel from BCI and BCI's Affiliates, (ii) Borrower
will give BCI and its Affiliates the first opportunity to supply services,
compatible network equipment and systems to Borrower on competitive terms
and conditions, and (iii) Borrower will pay to BCI an annual fee of
$2,000,000, and (b) the Second Agreement between Borrower and BCI, whereby
(i) BCI will provide to Borrower certain personnel and (ii) Borrower will
pay certain employment costs incurred by BCI in connection with such
personnel.
3. The definition of "PARTNERSHIP" in SECTION 1 of the Credit Agreement is
hereby amended to read as follows:
PARTNERSHIP means any domestic cable partnership in which Borrower,
any Subsidiary of Borrower or any Affiliate of Borrower is the general or
managing partner and any joint venture of which any such partnership or
Borrower is a general or managing partner.
4. SUBSECTION (a) OF SECTION 7.13 of the Credit Agreement is amended to
read as follows:
(a) Debt existing on the Closing Date and described on Schedule
7.13(a), and Debt existing on December 19, 1994, and described on
Supplemental Schedule 7.13(a).
5. SUBSECTION (a) OF SECTION 7.14 of the Credit Agreement is amended to
read as follows:
(a) The existing Liens described on SCHEDULE 7.14 hereto and Liens
existing on December 19, 1994, and described on Supplemental Schedule 7.14,
together with renewals and extensions of any of the foregoing but not
increases in the principal debt secured thereby.
6. SUBSECTION (a) OF SECTION 7.14 of the Credit Agreement is amended to
read as follows:
2
<PAGE> 3
(a) loans and investments existing on the Closing Date and listed on
SCHEDULE 7.22 hereto and loans and investments existing on December 19,
1994, and listed on Supplemental Schedule 7.22 (including any extensions or
renewals of any of the foregoing);
7. SECTION 7.15 of the Credit Agreement is amended so that the word "and,"
which follows the semi-colon in SUBPARAGRAPH (b) is deleted, the period at the
end of SUBPARAGRAPH (c) is deleted and replaced by a semi-colon, followed by the
word "and," and a new SUBPARAGRAPH (d) is added, which Subparagraph shall read
as follows:
(d) The BCI Agreements and any transactions between Borrower and BCI
or an Affiliate of BCI contemplated therein.
8. Pursuant to the Spacelink Agreement, Jones Spacelink of Hawaii, Inc.
("HAWAII") will become a Cable Subsidiary, and Jones Spacelink Funds, Inc. and
Jones Spacelink Cable Corporation will become Management Subsidiaries
(collectively, the "SPACELINK SUBSIDIARIES"). Lenders hereby waive the
provisions of SECTION 7.17 that require that (a) within 10 days after the
Spacelink Subsidiaries become Subsidiaries, Borrower deliver stock certificates
to Managing Agent, to be held pursuant to the Pledge Agreement, evidencing
Borrower's ownership interest in the Spacelink Subsidiaries and (b) Borrower
cause the Spacelink Subsidiaries to execute and deliver Security Agreements (and
in the case of Hawaii, a Guaranty) to Managing Agent, in each case within 10
days after becoming a Cable Subsidiary or Management Subsidiary, as applicable,
and hereby extend the time for execution and delivery of items set forth in
ITEMS (a) and (b) above to a date no later than 60 days after the Third
Amendment Effective Date. In addition, Borrower agrees to cause the Spacelink
Subsidiaries to execute and deliver such other assignments, certificates,
supplemental documents and financing statements and do all other acts or things
as Managing Agent may reasonably request in order to more fully create, evidence
and perfect the Liens on the assets of the Spacelink Subsidiaries of a type
described in the Subsidiary Security Agreement.
9. The Schedules to the Credit Agreement are hereby amended and
supplemented as set forth on the attached Schedules.
10. This Third Amendment to Credit Agreement shall become effective as of
the date on which (the "THIRD AMENDMENT EFFECTIVE DATE") the Managing Agent, on
behalf of the Lenders, shall have received the following:
(a) Executed counterparts of this Third Amendment from the Borrower,
the Cable Subsidiaries, the Management Subsidiary and Determining Lenders
(or copies of such executed counterparts by facsimile).
3
<PAGE> 4
(b) A copy of the executed Spacelink Agreement, together with all
material amendments thereto, certified as correct and complete by an
officer of Borrower.
(c) A copy of the executed BCI Stock Purchase Agreement, together with
all material amendments thereto, certified as correct and complete by an
officer of Borrower.
(d) Evidence satisfactory to Managing Agent of the closing of the
transactions contemplated by the Spacelink Agreement upon the terms of such
agreement.
(e) Evidence satisfactory to Managing Agent of the closing of the
transactions contemplated by the BCI Stock Purchase Agreement upon the
terms of such agreement.
(f) Evidence satisfactory to Managing Agent of the repayment in full
of all principal debt and other amounts payable under (i) the Revolving
Credit Agreement dated as of April 13, 1993, as amended, among Spacelink,
the lenders referred to therein, Royal Bank of Canada and Banque Paribas,
as Co-Agents, and Mellon Bank, N.A., as Agent and (ii) the Term Loan
Agreement dated as of April 13, 1993, as amended, between Spacelink and
Mellon Bank, N.A., and the cancellation of all commitments under such
facilities.
11. As a material inducement to Managing Agent and Lenders to execute and
deliver this Third Amendment, Borrower hereby represents and warrants that, as
of the Third Amendment Effective Date and after giving effect to the
transactions contemplated by the Spacelink Agreement and the BCI Agreement: (a)
all of the representations and warranties set forth or referred to in the Credit
Agreement and the other Loan Papers are true and correct on the date hereof in
all respects, as though made on the date hereof; and (b) except as set forth
herein, no Default or Potential Default exists on the date hereof.
12. Except as specifically provided herein, all terms, provisions and
conditions of the Credit Agreement, the other Loan Papers and all documents
executed in connection therewith shall continue in full force and effect and
shall remain enforceable and binding in accordance with their respective terms.
On and after the Third Amendment Effective Date, any reference to the Credit
Agreement shall be deemed to be a reference to the Credit Agreement as amended
by this Third Amendment.
13. This Third Amendment may be executed in any number of identical
counterparts and by different parties hereto in separate counterparts, each of
which counterparts when so executed and delivered shall for all purposes be
deemed an original and all of which constitute, collectively, one agreement, but
in making proof of this Third Amendment, it shall not be necessary to produce or
account for more than one such counterpart.
4
<PAGE> 5
14. THIS THIRD AMENDMENT AND THE OTHER LOAN PAPERS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
15. This Third Amendment is one of the "Loan Documents" referred to in the
Credit Agreement, and the provisions relating to Loan Documents set forth in the
Credit Agreement are incorporated herein by reference the same as if set forth
herein verbatim. Any failure by Borrower to fully perform and comply with the
provisions of this Third Amendment shall constitute a Default under the Credit
Agreement.
16. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.]
5
<PAGE> 6
EXECUTED to be effective as of the day and year first mentioned.
JONES INTERCABLE, INC.,
as Borrower
By /s/ J. ROY POTTLE
(Name) J. Roy Pottle
(Title) Treasurer
NATIONSBANK OF TEXAS, N.A.,
as Managing Agent and a Lender
By /s/ DOUGLAS E. ROPER
(Name) Douglas E. Roper
(Title) Senior Vice
President
BARCLAYS BANK PLC,
as Co-Agent and a Lender
By /s/ ANDREW M. WYNN
(Name) Andrew M. Wynn
(Title) Director
By /s/ CRAIG J. LEWIS
(Name) Craig J. Lewis
(Title) Associate
6
<PAGE> 7
CORESTATES BANK, N.A.,
as Co-Agent and a Lender
By /s/ PHILIP D. HARRISON
(Name) Philip D. Harrison
(Title) Commercial Officer
THE BANK OF NOVA SCOTIA,
as Co-Agent and a Lender
By /s/ [Illegible]
(Name) [Illegible]
(Title)
MELLON BANK, N.A.,
as a Lender
By /s/ MICHAEL P. HRYCENKO
(Name) Michael P. Hrycenko
(Title) Assistant Vice
President
SOCIETE GENERALE,
as a Lender
By /s/ MARK VIGIL
(Name) Mark Vigil
(Title) Vice President
7
<PAGE> 8
PNC BANK, NATIONAL ASSOCIATION
(SUCCESSOR BY MERGER TO
PROVIDENT NATIONAL BANK),
as a Lender
By /s/ THOMAS P. CARDEN
(Name) Thomas P. Carden
(Title) Vice President
NATIONAL WESTMINSTER BANK USA,
as a Lender
By /s/ ROSELYN REID
(Name) Roselyn Reid
(Title) Vice President
BANQUE PARIBAS,
as a Lender
By /s/ J. CATE
(Name) J. Cate
(Title) Assistant Vice
President
By /s/ THOMAS G. BRANDT
(Name) Thomas G. Brandt
(Title) Assistant Vice President
ROYAL BANK OF CANADA,
as a Lender
By /s/ MARK D. THORSHEIM
(Name) Mark D. Thorsheim
(Title) Manager
8
<PAGE> 9
CREDIT LYONNAIS, CAYMAN ISLAND
BRANCH,
as a Lender
By /s/ JAMES E. MORRIS
(Name) James E. Morris
(Title) Authorized Signature
FIRST NATIONAL BANK OF MARYLAND,
as a Lender
By /s/ JOHN L. BRUCH III
(Name) John L. Bruch III
(Title) Vice President
MERIDIAN BANK,
as a Lender
By /s/ JEFFREY E. HAUSER
(Name) Jeffrey E. Hauser
(Title) Assistant Vice President
THE SUMITOMO BANK, LTD.,
CHICAGO BRANCH,
as a Lender
By /s/ TAKAYA IIDA
(Name) Takaya Iida
(Title) Joint General Manager
9
<PAGE> 10
ACKNOWLEDGMENT
As an inducement to Managing Agent and Lenders to execute and deliver this
Third Amendment and Waiver to Credit Agreement (the "THIRD AMENDMENT"), the
undersigned hereby consent to the foregoing, and agree that the execution and
delivery of the Third Amendment shall in no way release, diminish, impair,
reduce, or otherwise affect the respective obligations and liabilities of each
of the undersigned under its Guaranty and/or Subsidiary Security Agreement, each
dated December 8, 1992, and each executed by the undersigned in favor of
Managing Agent, Co-Agents and Lenders, which Guaranty and Subsidiary Security
Agreement shall continue in full force and effect. This consent and agreement
shall be binding upon the undersigned, and the successors and assigns of each,
and shall inure to the benefit of Managing Agent, Co-Agents and Lenders, and
their respective successors and assigns.
EXECUTED to be effective as of December 19, 1994, with the knowledge and
intent that Managing Agent, Co-Agents and Lenders relied or shall rely on same
in entering into the Third Amendment.
Evergreen Intercable, Inc.
Jones Intercable of San Diego, Inc.
Jones Tri-City Intercable, Inc.
Jones Intercable of Alexandria, Inc.
Jones Cable Corporation
By /s/ KEVIN P. COYLE
(Name) Kevin P. Coyle
(Title) Treasurer
10
<PAGE> 1
EXHIBIT 21
JONES INTERCABLE, INC.
LIST OF SUBSIDIARIES
Cable Alp, Inc.
Evergreen Intercable, Inc.
International Aviation, Ltd.
Jones British Acquisition, Inc.
Jones Cable Corporation
Jones Futurex, Inc.
Jones Cyber Solutions, Ltd.
Jones Galactic Radio, Inc.
Jones Galactic Radio Partners, Inc.
Jones Intercable Funds, Inc.
Jones Intercable of Alexandria, Inc.
Jones Intercable of Ft. Myers, Inc.
Jones Intercable of Hawaii, Inc.
Jones Intercable of Leeds, Inc.
Jones Intercable of San Diego, Inc.
Jones Intercable of South Hertfordshire, Inc.
Jones of Wisconsin, Inc.
Jones Panorma Properties, Inc.
Jones Programming Services, Inc.
Jones Satellite Networks, Inc.
Jones Satellite Programming, Inc.
Jones Spacelink Acquisition Corporation
Jones Spacelink Cable Corporation
Jones Spacelink Management, Inc.
Jones Spacelink Opportunities, Inc.
Jones Spacelink Spanish Investments, Inc.
Jones Tri-City Intercable, Inc.
Jones U.K. Holdings, Inc.
Saturn Cable T.V., Inc.
The Jones Group, Ltd.
The Mind Extension Regional Network, Inc.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report included in this Form 10-K into the
Company's previously filed Registration Statements on Form S-8, File Nos.
33-3087, 33-25577, 33-54596, and 33-52813; on Form S-3, File Nos. 33-41392,
33-45161, 33-47030, 33-64602, and 33-64604; and on Form S-4, File No. 33-54527.
Denver, Colorado,
August 11, 1995 ARTHUR ANDERSEN LLP
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