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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from June 1,
1995 through December 31, 1995 Commission file number: 1-9953
JONES INTERCABLE, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-0613514
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(State of Organization) (IRS Employer
Identification No.)
P.O. Box 3309, Englewood,
Colorado 80155-3309 (303) 792-3111
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(Address of principal executive (Registrant's telephone no.
office and Zip Code) including area code)
Securities registered pursuant to Section 12(g) of the Act:
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Common Stock, $.01 par value
Class A Common Stock, $.01 par value
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
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Aggregate market value as of March 1, 1996 of the voting stock held by
non-affiliates:
Common Stock $29,799,088 Class A Common Stock $185,738,121
Shares outstanding of each of the registrant's classes of common stock as of
March 1, 1996:
Common Stock: 5,113,021 Class A Common Stock: 26,263,523
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.________________
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JONES INTERCABLE, INC.
TRANSITION REPORT ON FORM 10-K
FOR THE TRANSITION PERIOD JUNE 1, 1995 THROUGH DECEMBER 31, 1995
TABLE OF CONTENTS
<TABLE>
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Page No.
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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 9
Recent Acquisitions of Cable Television Systems 10
Proposed Acquisitions of Cable Television Systems 11
Recent and Proposed Dispositions of Cable Television Systems 12
Recent Exchange of Cable Television Systems 12
Proposed Exchange of Cable Television Systems 13
Refinancing of the Company's Credit Facility 14
Redemption by the Company of 7.5% Subordinated Convertible Debentures due 2007 14
Execution of Letter of Intent 14
Change of the Company's Fiscal Year 14
Increase in the Company's Authorized Class A Common Stock 14
Cable Television Franchises 15
Competition 15
Regulation and Legislation 19
Telecommunications Act of 1996 19
Cable Television Consumer Protection and Competition Act of 1992 21
Cable Communications Policy Act of 1984 25
Franchising 25
Ownership and Market Structure 25
Foreign Ownership Restriction 26
Program Origination and Exclusivity Obligations 27
Copyright Matters 27
</TABLE>
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<TABLE>
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State Regulation 28
Local Regulation 28
Technical and Reporting Requirements 28
Regulatory Fees and Other Matters 29
Miscellaneous Provisions 29
ITEM 2. PROPERTIES 30
Cable Television Systems Owned by the Company 30
ITEM 3. LEGAL PROCEEDINGS 34
Alexandria Litigation 34
Tampa Litigation 35
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 36
EXECUTIVE OFFICERS OF THE COMPANY 36
PART II 38
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 38
ITEM 6. SELECTED FINANCIAL DATA 40
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 41
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA 49
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE 81
PART IV 81
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K 81
</TABLE>
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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. See Item 1, The Company's Cable Television Business. The Company
also holds equity interests in a number of programming and other cable-related
subsidiaries. See Item 1, The Company's Other Businesses.
Jones International, Ltd. ("International") beneficially owns
approximately 48% 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, personally owns
approximately 9% of the Company's Common Stock and approximately 2% of the
Company's Class A Common Stock. Because of his 100% 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. As
of December 31, 1995, Bell Canada International Inc. ("BCI") owned 9,914,300
shares, or approximately 38%, of the Company's Class A Common Stock and,
through such ownership, BCI owned an approximate 30% economic interest in the
Company. In addition, BCI holds 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 a
majority of the members of the Board of Directors of the Company. In February
1996, BCI purchased 43,200 additional shares of the Company's Class A Common
Stock in the market, thereby raising BCI's aggregate ownership to 9,957,500
shares of the Company's Class A Common Stock, and BCI has informed the Company
that BCI intends to purchase additional shares of Class A Common Stock of the
Company in the market from time to time in the future.
At December 31, 1995, the Company had a total of approximately 3,686
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, including Jones Cable Holdings,
Inc. ("JCH"), a wholly owned subsidiary that owns a majority of the cable
television assets of the Company.
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 been constructed in suburban areas and larger
cities where signal interference problems or limited
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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 65%.
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 its cable plant.
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 and to deliver pay-per-view and other premium services.
The cable television industry is undergoing significant 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 evolving from a traditional coaxial
network delivering only video entertainment to a more sophisticated, digital
platform environment where cable systems may deliver 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:
<TABLE>
<CAPTION>
Approximate Percentage
Approximate Number of TV Households With
End of Year of Basic Subscribers(1) Basic Cable Service(2)
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<S> <C> <C>
1985 39,872,250 46%
1986 42,237,140 48%
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<TABLE>
<S> <C> <C>
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%
1995 62,231,730(3) 65%(3)
</TABLE>
(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 estimated TV households in 1995).
(3) As of July 1995.
SYSTEM OPERATIONS. The operation of cable television systems is
generally conducted pursuant to the terms of a franchise or similar license
granted by the local governing body for the area to be served or by a state
agency. 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 $5 to $15 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. 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
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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. These arrangements will have to be renewed by October 6, 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. The per service cost of 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 programming service on which the
advertisements appear, the volume of advertising and the time of the day at
which it is broadcast. Advertising, as well as fees generated by home shopping
and pay-per- view, represent additional sources of revenue for cable television
systems. These services are not regulated under the 1992 Cable Act.
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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. The Telecommunications Competition and
Deregulation Act of 1996 eliminates regulation of this service tier for small
cable operators and, in some circumstances, will reduce, and by 1999 eliminate,
rate regulation for cable programming service packages for all cable television
systems. See Item 1, Regulation and Legislation.
Cost-of-service showings justifying rates above benchmark levels were
filed for the following Company-owned systems: Alexandria, Virginia; Augusta,
Georgia; Charles County, Maryland; Dale City, Virginia; Jefferson County,
Colorado; Manassas, Virginia and Pima County, Arizona. 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 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:
Hilo, Hawaii; Kenosha, Wisconsin; Oxnard and Walnut Valley, California; and
Panama City Beach, Florida. The Company's Anne Arundel System is currently
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 operates cable television systems for itself and for its
managed limited partnerships. At December 31, 1995, the Company managed 54
cable television systems, 41 of which, operating in 19 states, were owned by
Company-managed partnerships and 13 of which, operating in 10 states, were
owned by the Company. The Company's existing managed partnerships own cable
television systems located in California, Colorado, Florida, 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, Georgia, Hawaii, Maryland, South Carolina, Virginia and
Wisconsin. In January 1996, the Company acquired another cable television
system in Virginia, and in February 1996, the Company acquired additional cable
television systems in Maryland and Virginia. See Item 1, Recent Acquisitions
of Cable Television Systems and Proposed Acquisitions of Cable Television
Systems.
At December 31, 1995, Company-owned systems served approximately
439,400 basic subscribers who subscribed to a total of approximately 367,600
pay units. And, at such date, systems held by Company-managed partnerships
served approximately 997,200 basic subscribers who
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subscribed to a total of approximately 716,000 pay units. (Each premium
service subscribed to equals one pay unit.) According to industry sources, as
of December 31, 1995, the Company ranked among the top 10 multiple system cable
television operators in the United States.
The Company historically 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. The
Company intends to liquidate its managed limited partnerships as opportunities
for sales of partnership cable television systems arise in the marketplace over
the next several years. See Item 1, Recent and Proposed Dispositions of Cable
Television Systems.
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.
The Company is implementing a balanced strategy of acquiring cable
television systems from Company-managed limited partnerships and from third
parties. See Item 1, Recent Acquisitions of Cable Television Systems and
Proposed Acquisitions of Cable Television Systems. 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, Recent and Proposed Dispositions
of Cable Television Systems, Recent Exchange of Cable Television Systems and
Proposed Exchange of Cable Television Systems. It is the Company's plan to
cluster its cable television properties, to the extent feasible, in geographic
areas. Clustering systems may enable the Company to obtain operating
efficiencies, and it should position the Company to capitalize on new revenue
and business opportunities as the telecommunications industry evolves. 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 institute new
services as they are developed and become economically viable.
Acquisitions of cable television systems, the development of new
services and capital expenditures for system extensions and upgrades are
subject to the availability of cash generated from operations, debt and/or
equity financing. The capital resources needed to accomplish these strategies
are expected to be provided by the sale of debt and/or equity securities
(subject to market conditions), borrowings under the Company's new $500 million
credit agreement and cash generated from the Company's operating activities.
In addition, the Company may explore other financing options such as private
equity capital and the disposition of non-strategic assets. There can be no
assurance that the capital resources necessary to accomplish the Company's
acquisition and development plans will be available on terms and conditions
acceptable to the Company, or at all. See Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations.
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Within the past several years, and at an increasing pace recently, the
cable television industry has seen much change. With recent alliances between
cable television companies and telephone, computer and software companies, the
Company believes that the nature of the cable television business is evolving
from a traditional coaxial network delivering only video entertainment to a
more sophisticated, digital platform environment where cable systems may be
capable of delivering 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 also directly affected by the entry into the marketplace
of local telephone companies that, as a result of the passage of recent
legislation, now have the ability to provide telephone and video services in
direct competition with the Company. See Item 1, Regulation and Legislation.
This direct competition with local telephone companies is an additional
consideration in the ongoing evaluation by the Company of its position in this
changing marketplace. The Company intends, where possible, to pursue these new
technological 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.
The Company is involved in analyzing and testing new technologies used
in the telecommunications area, including combined telephone and video services
to multiple dwelling units. The Company is utilizing the experience of BCI to
provide expertise in the telecommunications area. 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 may provide the Company with access to expertise
and experience that it would not otherwise have available.
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.
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Monthly service rates include fees for basic service, basic plus
service and premium services. At December 31, 1995, monthly basic service
rates ranged from $4.95 to $15.50 for residential subscribers, monthly basic
plus service rates ranged from $10.00 to $26.33 for residential subscribers,
and monthly premium services ranged from $1.13 to $14.95 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 $1.99 to $6.95 per movie and
individual special events for a set fee ranging from $4.95 to $54.95 per event.
Related charges may include a nonrecurring installation fee that ranges from
$1.99 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
year ended December 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 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
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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, 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.
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
The Company operates a number of non-cable television businesses
through 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 the Company, Jones Galactic
Radio, Inc., and an unaffiliated party that offers FM stereo audio service
programming to cable television system subscribers. The Company also has an
interest
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in the cable/telephony business in the United Kingdom through its approximate
10% equity ownership of Bell Cablemedia plc, the United Kingdom's third largest
cable communications operator. The Company also owns direct and indirect
minority interests in Mind Extension University and Jones Computer Network,
affiliated programming services. See Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operation.
RECENT ACQUISITIONS OF CABLE TELEVISION SYSTEMS
Augusta System. In October 1995, JCH purchased from Cable TV Fund
12-B, Ltd. ("Fund 12-B"), a Company-managed limited partnership, the cable
television system serving areas in and around Augusta, Georgia (the "Augusta
System") for a purchase price of $142,618,000, subject to normal closing
adjustments. The Company, as general partner of Fund 12-B, received a
distribution from Fund 12-B of $13,222,000 upon the closing of this
transaction. As result of such distribution, the net capital required to
purchase the Augusta System was $129,396,000, which was provided from cash on
hand. The Augusta System serves approximately 68,200 basic subscribers and
passes approximately 102,000 homes. The Augusta System is contiguous with the
cable television system already owned by the Company serving areas in and
around North Augusta, South Carolina (the "North Augusta System"), and since
closing they have been operated as one system. Together, the Augusta System
and the North Augusta System serve approximately 84,100 basic subscribers and
pass approximately 125,700 homes. Unless the context otherwise requires,
references hereinafter to the "Augusta System" refer to both the Augusta System
and the North Augusta System.
Dale City System. In November 1995, JCH, through its wholly-owned
subsidiary, Jones Communications of Virginia, Inc., purchased from an
unaffiliated company the cable television systems serving areas in and around
Dale City, Lake Ridge, Woodbridge, Fort Belvoir, Triangle, Dumfries, Quantico,
Accoquan and portions of Prince William County, all in the State of Virginia
(the "Dale City System") for $123,000,000, subject to normal closing
adjustments. Jones Financial Group, Ltd. ("Financial Group"), an affiliate of
the Company, was paid a fee of $1,328,400 upon closing of this transaction for
acting as the Company's financial advisor in connection with this transaction.
The fee paid to Financial Group and all other fees paid or payable to Financial
Group as hereinafter described, are based upon 90% of the estimated commercial
rate charged by unaffiliated brokers. The Dale City System serves
approximately 49,300 subscribers and passes approximately 65,100 homes.
Manassas System. In January 1996, JCH, through its wholly-owned
subsidiary, Jones Communications of Virginia, Inc., purchased from unaffiliated
companies the cable television systems serving areas in and around Manassas,
Manassas Park, Haymarket and portions of Prince William County, all in the
State of Virginia (the "Manassas System") for a purchase price of $71,100,000,
subject to normal closing adjustments. Financial Group was paid a fee of
$896,000 upon closing of this transaction for acting as the Company's financial
advisor in connection with this transaction. The Manassas System serves
approximately 26,500 basic subscribers and passes approximately 39,300 homes.
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Carmel System. In February 1996, JCH purchased from IDS/Jones Growth
Partners 87-A, Ltd., a Company-managed partnership, the cable television system
serving areas in and around Carmel, Indiana (the "Carmel System") for a
purchase price of $44,235,333, subject to normal closing adjustments. The
purchase price represented the average of three separate independent appraisals
of the fair market value of the Carmel System. The Carmel System serves
approximately 19,200 basic subscribers and passes approximately 24,400 homes.
Orangeburg System. In February 1996, JCH purchased from Jones Cable
Income Fund 1-B, Ltd., a Company-managed partnership, the cable television
system serving areas in and around Orangeburg, South Carolina (the "Orangeburg
System") for a purchase price of $18,347,667, subject to normal closing
adjustments. The purchase price represented the average of three separate
independent appraisals of the fair market value of the Orangeburg System. The
Orangeburg System serves approximately 12,500 basic subscribers and passes
approximately 16,530 homes.
Tampa System. In February 1996, JCH purchased from Cable TV Fund
12-BCD Venture, a venture comprised of three Company-managed partnerships, the
cable television system serving areas in and around Tampa, Florida (the "Tampa
System") for a purchase price of $110,395,667, subject to normal closing
adjustments. The purchase price represented the average of three separate
independent appraisals of the fair market value of the Tampa System. The
Tampa System serves approximately 65,000 basic subscribers and passes
approximately 128,500 homes.
The Company's purchase of the Carmel System, the Orangeburg System and
the Tampa System was funded by borrowings available under the Company's $500
million revolving credit facility. The Carmel System, the Orangeburg System
and the Tampa System have been subsequently transferred to TWEAN as discussed
below.
PROPOSED ACQUISITIONS OF CABLE TELEVISION SYSTEMS
Manitowoc System. JCH has agreed to purchase from Cable TV Joint Fund
11 (the "Venture"), a venture comprised of four Company-managed partnerships,
the cable television system serving the City of Manitowoc, Wisconsin (the
"Manitowoc System") for a purchase price of $15,735,667, subject to normal
closing adjustments. The Manitowoc System serves approximately 10,800 basic
subscribers and passes approximately 16,000 homes. JCH's acquisition of the
Manitowoc System is subject to a number of conditions that have not yet been
satisfied, including the approval of the holders of a majority of the limited
partnership interests of each of the four constituent partnerships of the
venture that owns the Manitowoc System and the approval of the City of
Manitowoc to the renewal and transfer of the franchise. The Company will
receive from the four partnerships that comprise the Venture general partner
distributions totaling approximately $3,900,000 upon the closing of the sale of
the Manitowoc System.
Lodi System. JCH has agreed to purchase from Jones Spacelink Income
Partners 87-1, L.P., a Company-managed partnership, the cable television
systems serving areas in and around Lodi, Ohio (the "Lodi System") for a
purchase price of $25,706,000, subject to normal closing adjustments. The Lodi
System serves approximately 15,100 basic subscribers and passes approximately
20,600 homes.
Ripon System. JCH has agreed to purchase from Jones Spacelink
Income/Growth Fund 1-A, Ltd., a Company-managed partnership, the cable
television system serving areas in and around Ripon, Wisconsin (the "Ripon
System") for a purchase price of $3,712,667, subject to normal closing
adjustments. The Ripon System serves approximately 2,450 basic subscribers and
passes approximately 2,500 homes.
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Lake Geneva System. JCH has agreed to purchase from Jones Spacelink
Income/Growth Fund 1-A, Ltd., a Company-managed partnership, the cable
television system serving areas in and around Lake Geneva, Wisconsin (the "Lake
Geneva System") for a purchase price of $6,345,667, subject to normal closing
adjustments. The Lake Geneva System serves approximately 3,600 basic
subscribers and passes approximately 5,400 homes.
The closings of these four acquisitions are expected to occur during
the first half of 1996, and such closings are not contingent upon the closing
of the Time Warner exchange discussed below.
RECENT AND PROPOSED DISPOSITIONS OF CABLE TELEVISION SYSTEMS
As described above, Company-managed partnerships recently have sold or
have agreed to sell the Augusta System, the Carmel System, the Orangeburg
System, the Tampa System, the Manitowoc System, the Lodi System, the Ripon
System and the Lake Geneva System to JCH. In addition, as described below, one
of the Company's managed partnerships has agreed to sell its cable television
system to an unaffiliated cable television system operator. The Company is
generally entitled to a general partner distribution from its managed
partnerships upon the sale of partnership-owned cable television systems
provided that the limited partners have received an amount equal to their
capital contributions plus, in most cases, a stated preferential return on
their investment. The Company received such a distribution on the sale of the
Augusta System and the Tampa System and will receive general partner
distributions upon the sale of the Lancaster System and the Manitowoc System.
The Company did not or will not receive general partner distributions on the
sales of the Carmel System, the Orangeburg System, the Lodi System, the Ripon
System or the Lake Geneva System.
Lancaster System. Cable TV Fund 11-B, Ltd. ("Fund 11-B"), a
Company-managed partnership that owns the cable television system serving areas
in and around Lancaster, New York (the "Lancaster System"), has entered into
an agreement to sell the Lancaster System to an unaffiliated party for a sales
price of approximately $84,000,000. The Company, as general partner of the
partnership, is entitled to receive a distribution of approximately $13,950,000
upon the closing of the sale of the Lancaster System, which is expected to
occur during the first half of 1996. In addition, The Jones Group, Ltd., a
wholly owned subsidiary of the Company, will receive a fee of $2,100,000 for
acting as the broker in this transaction.
RECENT EXCHANGE OF CABLE TELEVISION SYSTEMS
In August 1995, the Company entered into an asset exchange agreement
(the "TWEAN Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television operator. The Company subsequently assigned the TWEAN Exchange
Agreement to JCH. On February 29, 1996, JCH conveyed to TWEAN 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, JCH received
substantially all of the assets of cable television systems serving Andrews Air
Force Base, Capitol Heights, Cheltenham, District Heights, Fairmont Heights,
Forest Heights, Morningside, Seat Pleasant, Upper Marlboro and portions of
Prince Georges County, Maryland (the "Prince Georges County System") and a
portion of
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Fairfax County, Virginia (the "Reston System"). Taking into account the
aggregate purchase price paid by JCH for the Carmel System, the Orangeburg
System and the Tampa System, plus the $3,500,000 cash consideration paid by JCH
to TWEAN, the aggregate consideration paid for the Prince Georges County System
and the Reston System was approximately $176,468,000. The Prince Georges
County System and the Reston System serve approximately 85,000 subscribers.
The Company paid Financial Group a $1,668,000 fee upon the completion of the
exchange as compensation to it for acting as the Company's financial advisor.
The Prince Georges County System is contiguous to the Alexandria,
Virginia, Calvert County, Maryland and Charles County, Maryland cable
television systems, all of which are owned or managed by the Company. The
Reston System is approximately 12 miles from the Company's Alexandria,
Virginia system. The acquisition of the Prince Georges County System and the
Reston System, together with the acquisition of the Dale City System in
November 1995 and the Manassas System in January 1996 and the other cable
television systems already owned or managed by the Company in the area, have
brought the total number of basic subscribers owned or managed by the Company
in the Baltimore/Washington, D.C. metropolitan area to approximately 300,000
subscribers.
PROPOSED EXCHANGE OF CABLE TELEVISION SYSTEMS
In September 1995, the Company entered into an asset exchange
agreement (the "Time Warner Exchange Agreement") with Time Warner Entertainment
Company, L.P. ("Time Warner"), an unaffiliated cable television operator. The
Company has assigned the Time Warner Exchange Agreement to JCH. Pursuant to
the Time Warner Exchange Agreement, JCH will convey to Time Warner the
Manitowoc System, the Lodi System, the Ripon System and the Lake Geneva System,
all of which systems are currently owned by Company-managed partnerships but
are to be transferred to JCH prior to the exchange, and JCH will also convey to
Time Warner the cable television system serving areas in and around Hilo,
Hawaii (the "Hilo System") and the cable television system serving areas in and
around Kenosha, Wisconsin (the "Kenosha System"), both of which systems are
currently owned by the Company but are to be transferred to JCH prior to the
exchange. In return, JCH will receive from Time Warner the cable television
systems serving the communities in and around Savannah, Georgia (the "Savannah
System") and cash in the amount of $4,000,000 subject to normal closing
adjustments. Taking into account the aggregate purchase price to be paid by
the Company for the Lodi System, the Lake Geneva System, the Ripon System and
the Manitowoc System and the estimated valuation of the Hilo System and the
Kenosha System, less the $4,000,000 cash consideration to be paid by Time
Warner to JCH, the aggregate consideration to be paid for the Savannah System
is approximately $119,195,000. The Savannah System passes approximately
100,000 homes and serves approximately 63,000 subscribers.
The closing of the transactions contemplated by the Time Warner
Exchange Agreement is subject to customary closing conditions, including
obtaining necessary governmental and other third party consents. The parties
intend to complete the transactions during the first half of 1996, but there
can be no assurance that all conditions will be satisfied or waived by that
time. Either party may terminate the exchange if it is not completed on or
before September 30, 1996. The Company will pay Financial Group a $1,286,000
fee upon completion of the exchange as compensation to it for acting as the
Company's financial advisor.
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REFINANCING OF THE COMPANY'S CREDIT FACILITY
On October 31, 1995, the Company, through JCH, refinanced its bank
borrowing on terms and conditions that included, among other things, an
increase in its overall corporate (parent and subsidiary) borrowing capacity
from $300 million to $500 million, a decrease in borrowing costs and an
increase in financial flexibility. As required by the new credit facility, the
Company restructured by transferring a majority of the Company-owned cable
television systems to JCH, which is the borrower under this new credit
facility. The Company anticipates that the transfers required under this new
credit facility will be completed during the first quarter of 1996.
REDEMPTION BY THE COMPANY OF 7.5% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2007
On October 12, 1995, the Company redeemed the remaining outstanding
7.5% Convertible Subordinated Debentures (the "Debentures") due 2007, at a
price equal to 101.5% of the principal amount, plus accrued interest. The
total principal amount of Debentures was $43,100,000, $23,732,000, of which
were held by the Company and $19,368,000 of which were held by unaffiliated
investors. The Debentures were repurchased with cash on hand.
EXECUTION OF LETTER OF INTENT
On November 1, 1995, the Company entered into a letter of intent with
an unaffiliated party to set forth the preliminary understanding of the parties
as to their intent to enter into an asset purchase agreement whereby the
Company would agree to purchase a cable television system servicing subscribers
in portions of Anne Arundel County, Maryland for a purchase price of
$96,500,000 subject to certain closing adjustments. Execution of a definitive
asset purchase agreement and the closing of the transaction are subject to a
number of conditions, including clearance by various governmental agencies.
CHANGE OF THE COMPANY'S FISCAL YEAR
On September 12, 1995, the Company filed an application with the
Internal Revenue Service to change its fiscal year end from May 31 to December
31, and the Internal Revenue Service has approved the requested change in the
Company's fiscal year.
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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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. These franchises typically contain many conditions, such as time
limitations on commencement and completion of construction, conditions of
service, including the number of channels, types of programming and the
provision of free service to schools and certain other public institutions, and
the maintenance of insurance and indemnity bonds. The provisions of local
franchises are subject to federal regulation.
The Company holds approximately 70 franchises. These franchises
provide for the payment of fees to the issuing authorities and range from 3% to
5% of gross revenues. The 1984 Cable Act prohibits franchising authorities
from imposing annual franchise fees in excess of 5% of gross revenues and also
permits the cable television system operator to seek renegotiation and
modification of franchise requirements if warranted by changed circumstances.
The Company has never had a franchise revoked. The Company's
franchises initially had terms of approximately 10 to 15 years. The duration
of the Company's outstanding franchises presently varies from a period of
months to an indefinite period of time. The Company is currently negotiating
the renewal of six franchises that are either operating under extensions or
will expire prior to December 31, 1996. 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.
COMPETITION
Cable television systems currently experience competition from several
sources.
High-powered direct-to-home satellites have made possible the
wide-scale delivery of programming by several companies to individuals
throughout the United States using small roof-top or wall-mounted antennas.
Companies offering direct broadcast satellite ("DBS") services use video
compression technology to increase channel capacity of their systems and to
provide packages of movies, network and other program services which are
competitive to those of cable television systems. However, DBS cannot offer
its subscribers local video services or programming. Two companies offering
DBS services began operations in 1994 and together offer more than 150 channels
of service using video compression technology. Two other companies offering
DBS service recently began operations. In addition, a joint venture comprised
of MCI Telecommunications, Inc. and the News Corporation Limited won the rights
to provide a DBS service through a FCC spectrum auction. Other companies have
proposed providing similar DBS program packages. A medium-powered satellite
distribution also offers 100 channels of service. The FCC has initiated a new
interactive television service which will permit non-video transmission of
information between an individual's
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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 by the cable television
industry. Although the cable television industry does not generally provide
two-way interactive service from its subscribers' homes to cable television
offices, such services may be provided on a wider basis in the future. Not all
subscribers terminate cable television service upon acquiring a DBS system.
The Company has observed that a number of DBS subscribers also elect to
subscribe to cable television service in order to obtain the greatest variety
of programming on multiple television sets, including local video services or
programming not available through DBS service. The ability of DBS service
providers to compete successfully with the cable television industry will
depend on, among other factors, the availability of equipment at reasonable
prices.
Although the Company has not yet encountered competition from a
telephone company providing video services as a cable operator or video
dialtone provider, it is anticipated that the Company's cable television
systems will face such competition in the near future. Federal cross-ownership
restrictions have historically limited entry into the cable television business
by potentially strong competitors such as telephone companies. Legislation
recently enacted into law will result in the 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. Several telephone companies have begun seeking cable television
franchises from local governmental authorities as a consequence of litigation
that successfully challenged the constitutionality of the cable
television/telephone company cross-ownership restrictions. 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 to what
extent telephone companies will provide cable television services within
service areas in competition with Company owned or managed cable television
systems.
The Company is aware of the following imminent competition from
telephone companies: Ameritech, one of the seven regional Bell operating
companies, which provides telephone service in a multi-state region including
Illinois, has just obtained a franchise that will allow it to provide cable
television service in Naperville, Illinois, a community currently served by a
cable system owned by one of the Company's managed partnerships. Chesapeake
and Potomac Telephone Company of Virginia and Bell Atlantic Video Service
Company, both subsidiaries of Bell Atlantic, another of the regional Bell
operating companies, have announced their intention to build a cable television
system in Alexandria, Virginia in competition with a Company-owned cable
television system. Bell Atlantic is preparing for the construction and
operation of a cable telecommunications business in northern Virginia,
including the Alexandria metropolitan area. The FCC has granted GTE Virginia's
application for authority to construct, operate, own and maintain video
dialtone facilities in northern Virginia, including in the Dale City System's
service area. To date, GTE has not begun construction of a video distribution
system. 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
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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 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 Congress recently passed exempts
any facilities that do not use public rights of way (such as SMATVs serving
multiple buildings not under common ownership) from classification as a cable
system and 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, companies that install and operate private cable television
systems have been installing telephone systems as well as providing cable
television services in some areas in which the Company's cable television
systems provide cable television service to multi-unit dwellings and similar
complexes. In some cases, 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. In November 1995, the
Company launched in its Alexandria System a telephone service in selected
apartments and condominium units.
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. 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.
Cable television systems also may compete with wireless program
distribution services such as multichannel, multipoint distribution service
("MMDS") systems, commonly called wireless cable which are licensed to serve
specific areas. MMDS uses low-power microwave frequencies to transmit
television programming over-the-air to subscribers. MMDS systems have
generally focused on
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providing service to residents of rural areas that are not served by cable
television systems, but providers of programming via wireless cable systems
will generally have the potential to compete directly with cable television
systems in urban areas as well. Wireless cable systems are now in direct
competition with cable television systems in several areas of the country.
Telephone companies have recently invested in wireless systems located in
California and Maryland as well as other states. These wireless systems could
be used on an interim or permanent basis by telephone companies to provide
video services within their service areas in lieu of the video dialtone or
other wired delivery systems which have been proposed. 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, but 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.
A series of actions taken by the FCC, including reallocating certain
frequencies to the wireless services, are intended to facilitate the
development of wireless cable television systems as an alternative means of
distributing video programming. The FCC recently held auctions for spectrum
that will be used by wireless operators to provide additional channels of
programming over larger distances.
An emerging technology, Local Multipoint Distribution Services
("LMDS"), could also pose a significant threat to the cable television
industry, if and when it becomes established. LMDS, sometimes referred to as
cellular television, could have the capability of delivering approximately 50
channels, or if two systems were combined 100 channels, of video programming to
a subscriber's home, and this capacity could be increased by using video
compression technology. The potential impact, however, of LMDS is difficult to
assess due to the newness of the technology and the absence of any current
fully operational LMDS 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 is
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, and the FCC has
allocated spectrum to PCS licensees which is being awarded through an auction
process.
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
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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.
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.
REGULATION AND LEGISLATION
The cable industry is regulated under the Telecommunications
Act of 1996 (the "1996 Cable Act"), the Cable Television Consumer Protection
and Competition Act of 1992 (the "1992 Cable Act") and the Cable
Communications Policy Act of 1984 (the "1984 Cable Act") and the regulations
implementing these statutes. The Federal Communications Commission
(the "FCC") has promulgated regulations covering such areas as the
registration of cable television systems, cross-ownership between cable
television and other communications businesses, carriage of television
broadcast programming, consumer protection and customer service standards and
lockbox enforcement, origination cablecasting and sponsorship identification,
limitations on commercial advertising in children's programming, the
regulation of basic cable and cable programming service rates in areas where
cable television systems are not subject to effective competition, signal
leakage and frequency use, technical performance, maintenance of various
records, equal employment opportunity, and antenna structure notification,
marking and lighting. In addition, cable operators periodically are required
to file various informational reports with the FCC. The FCC has the authority
to enforce these regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of administrative
sanctions, such as the revocation of FCC licenses needed to operate certain
transmission facilities often used in connection with cable operations. State
or local franchising authorities, as applicable, also have the right to
enforce various regulations, impose fines or sanctions, issue orders or seek
revocation subject to the limitations imposed upon such franchising
authorities by federal, state and local laws and regulations. Several states
have assumed regulatory jurisdiction of the cable television industry, and it
is anticipated that other states will do so in the future. To the extent the
cable television industry begins providing telephone service, additional state
and federal regulations will be applied to the cable television industry.
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 cable television industry, and a description of state and local
laws with which the cable industry must comply.
TELECOMMUNICATIONS ACT OF 1996. The 1996 Cable Act, which became law
on February 8, 1996, substantially revised the Communications Act of 1934, as
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amended, including the 1984 Cable Act and 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Cable Act is intended,
in part, to promote substantial competition in the telephone local exchange and
in the delivery of video and other services. As a result of the 1996 Cable
Act, local telephone companies (also known as local exchange carriers or
"LECs") and other service providers are permitted to provide video programming,
and cable television operators are permitted entry into the telephone local
exchange market. The FCC is required to conduct rulemaking proceedings over
the next several months to implement various provisions of the 1996 Cable Act.
Among other provisions, the 1996 Cable Act modifies various rate
regulation provisions of the 1992 Cable Act. Generally, under the 1996 Cable
Act, cable programming service tier rates are deregulated on March 31, 1999.
Upon enactment, the cable programming service rates charged by "small" cable
operators are deregulated in systems serving 50,000 or fewer subscribers.
Subscribers are no longer permitted to file programming service complaints
with the FCC, and complaints may only be brought by a franchising authority
if, within 90 days after a rate increase becomes effective, it receives
subscriber complaints. The FCC is required to act on such complaints within
90 days. In addition to the existing definition of "effective competition," a
new effective competition test permits deregulation of both the basic and
programming service tier rates where a telephone company offers cable service
by any means other than direct-to-home satellite services, provided that such
service is comparable to the services provided by the unaffiliated cable
operator. The uniform rate provision of the 1992 Cable Act was amended to
exempt bulk discounts to multiple dwelling units so long as a cable operator
that is not subject to effective competition does not charge predatory prices
to a multiple dwelling unit.
The most far-reaching changes in the communications business will
result from the telephony provisions of the 1996 Cable Act. The statute
expressly preempts any legal barriers to competition in the local telephone
business that previously existed in state and local laws and regulations. Many
of these barriers had been lifted by state actions over the last few years, but
the 1996 Cable Act completed the task. The 1996 Cable Act also establishes new
requirements for maintaining and enhancing universal telephone service and new
obligations for telecommunications providers to maintain privacy of customer
information. The 1996 Cable Act establishes uniform requirements and standards
for entry, competitive carrier interconnection and unbundling of LEC monopoly
services. Depending on the degree and form of regulatory flexibility afforded
the LECs, the Company's ability to competitively offer telephone services may
be adversely affected. In addition, the Company's ability to effectively
compete and provide telephone services will depend upon the outcome of various
FCC rulemakings, including the proceeding dealing with interconnection
obligations of telecommunications carriers.
The 1996 Cable Act repealed the cable television/telephone
cross-ownership ban adopted in the 1984 Cable Act. The federal cross-ownership
ban was particularly important to the cable industry because telephone
companies already own certain facilities such as poles, ducts and associated
rights of way. While this ban had been overturned by several courts, formal
removal of the ban ended the last legal constraints on telephone company plans
to enter the cable market. Under the 1996 Cable Act, telephone companies in
their capacity as common carriers now may lease capacity to others to provide
cable television service. Telephone companies have the option of providing
video service as cable operators or through "open video systems" ("OVS"), a
regulatory regime that may provide
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more flexibility than traditional cable service. The 1996 Cable Act exempts
OVS operators from many of the regulatory obligations that currently apply to
cable operators, such as rate regulation and franchise fees, although other
requirements are still applicable. OVS operators, although not subject to
franchise fees as defined by the 1992 Cable Act, are subject to fees charged by
local franchising authorities or other governmental entities in lieu of
franchise fees. (Under certain circumstances, cable operators also will be
able to offer service through open video systems.) In addition, the 1996 Cable
Act eliminated the requirement that telephone companies file Section 214
applications with the FCC before providing video service. This limits the
opportunity of cable operators to mount challenges at the FCC regarding
telephone company entry into the video market. The 1996 Cable Act also
contains restrictions on buying out incumbent cable operators in a telephone
company's service area, especially in suburban and urban markets.
Other parts of the 1996 Cable Act also will affect cable operators.
Under the 1996 Cable Act, the FCC is required to revise the current pole
attachment rate formula. This revision will result in an increase in the rates
paid by entities, including cable operators, that provide telecommunication
services. The rates will be phased in after a five-year period. (Cable
operators that provide only cable services are unaffected.) Under the V-chip
provisions of the 1996 Cable Act, cable operators and other video providers are
required to pass along any program rating information that programmers include
in video signals. Cable operators also are subject to new scrambling
requirements for sexually explicit programming, and cable operators that
provide Internet access or other online services are subject to the new
indecency limitations for computer services. These provisions already have
been challenged, and the courts have preliminarily enjoined the enforcement of
these content-based provisions.
Under the 1996 Cable Act, a franchising authority may not require a
cable operator to provide telecommunications services or facilities, other than
an institutional network, as a condition to a grant, renewal or transfer of a
cable franchise, and franchising authorities are preempted from regulating
telecommunications services provided by cable operators and from requiring
cable operators to obtain a franchise to provide such services. The 1996 Cable
Act also repealed the 1992 Cable Act's anti-trafficking provision, which
generally required the holding of cable television systems for three years.
It is premature to predict the specific effects of the 1996 Cable Act
on the cable industry in general or the Company in particular. The FCC shortly
will be undertaking numerous rulemaking proceedings to interpret and implement
the 1996 Cable Act. It is not possible at this time to predict the outcome of
those proceedings or their effect on the Company.
CABLE TELEVISION CONSUMER PROTECTION AND COMPETITION ACT OF 1992. The
1992 Cable Act effected significant changes to the legislative and regulatory
environment in which the cable television industry operated. The 1992 Cable
Act generally mandated 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 systems 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, were again subjected to rate regulation of
basic cable services.
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The 1992 Cable Act also allowed 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. As discussed above, the 1996
Cable Act will over time again allow for rate deregulation of cable service
programming.
In 1993, the FCC adopted a benchmark regulatory scheme for the
regulation of basic and cable programming service rates. Rather than relying
on the benchmark scheme, however, 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 the benchmark levels generally reduced those rates to the
benchmark level, or by 10%, whichever was less, adjusted forward for inflation.
Operators who did not adjust 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 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 required 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
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
recently requested some of these "low price" systems to complete cost study
questionnaires. After review of these questionnaires, the FCC could decide to
permanently defer any further rate reductions, or require the additional 7%
rate roll back for some or all of these systems. The FCC has instituted a
streamlined upgrade methodology by which operators may recover the costs of
upgrading their plant.
The FCC also regulates 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. 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.
The FCC will permit cable operators to exercise their discretion in
setting rates for new product tiers so long as, among other conditions, the
channels that are subject to rate regulation are
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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 new product tiers.
In September 1995, the FCC authorized a new, alternative method of
implementing rate adjustments which will allow cable operators to increase
rates for programming annually on the basis of projected increases in external
costs (inflation, costs for programming, franchise-related obligations and
changes in the number of regulated channels) rather than on the basis of cost
increases incurred in a preceding quarter. Operators that elect not to recover
all of their accrued external costs and inflation pass-throughs each year may
recover them (with interest) in subsequent years.
In December 1995, the FCC adopted final cost-of-service rate
regulations requiring, among other things, cable operators to exclude 34% of
system acquisition costs related to intangible and tangible assets used to
provide regulated services. The FCC also reaffirmed the industry-wide 11.25%
after-tax rate of return on an operator's allowable rate base, but initiated a
further rulemaking in which it proposes to use an operator's actual debt, cost
and capital structure to determine an operator's cost of capital or rate of
return. After a rate has been set pursuant to a cost-of-service showing, rate
increases for regulated services are indexed for inflation, and operators are
permitted to increase rates in response to increases in costs beyond their
control, such as taxes and increased programming costs.
New a la carte services that are offered by cable operators in a
package will be subject to rate regulation by the FCC, although only if the FCC
deems it necessary to do so. The FCC has 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 United States Court of Appeals for the District of Columbia
recently upheld the FCC's rate regulations implemented pursuant to the 1992
Cable Act, but ruled that the FCC impermissibly failed to permit cable
operators to adjust rates for certain cost increases incurred during the period
between the 1992 Cable Act's passage and the initial date of rate regulation.
The FCC has not yet implemented the court's ruling.
The 1992 Cable Act encouraged competition by allowing municipalities,
which are otherwise legally qualified, to own and operate their own cable
systems without having to obtain a franchise by preventing 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 made several procedural changes to the process under
which a cable operator may seek to enforce renewal rights, which could make it
easier in some cases for a franchising authority to deny renewal. The 1992
Cable Act also precluded video programmers affiliated with cable companies from
favoring cable operators over competitors and required 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.
The 1992 Cable Act prohibits the common ownership of cable systems and
co-located MMDS or SMATV systems; however, the 1996 Cable Act repealed the ban
on cable MMDS cross-ownership where a cable system is subject to effective
competition.
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The 1992 Cable Act contained new signal carriage requirements. The
FCC adopted rules implementing the must-carry provisions for non-commercial
and commercial stations and retransmission consent for commercial stations in
March 1993. These rules allow commercial television broadcast stations that
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
and thus the Company will go through the process again in 1996. 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.
In 1993, a federal district court upheld the constitutional validity
of the must-carry signal carriage requirements. This decision was vacated by
the United States Supreme Court in 1994 and remanded for further development of
a factual record. The Supreme Court's majority determined that the must-carry
rules were content neutral, but that it was not yet proven that the rules were
needed to preserve the economic health of the broadcasting industry. In 1995,
the federal district court again upheld the must-carry rules' validity. The
United States Supreme Court is currently reviewing this decision.
In 1993, a federal district court upheld provisions of the 1992 Cable
Act concerning rate regulation, retransmission consent, restrictions on
vertically integrated cable television operators and programmers, mandatory
carriage of programming on commercial leased channels and public, educational
and governmental access channels and the exemption for municipalities from
civil damage liability arising out of local regulation of cable services. The
1992 Cable Act's provisions providing for multiple ownership limits for cable
operators and advance notice of free previews for certain programming services
have been found unconstitutional, and these decisions have been appealed. The
FCC's regulations relating to the carriage of indecent programming, which were
recently upheld by the United States Court of Appeals for the District of
Columbia, have been appealed to the United States Supreme Court.
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. State or municipal authorities may enact laws or regulations
which impose stricter or different customer service standards than those set by
the FCC.
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CABLE COMMUNICATIONS POLICY ACT OF 1984. The 1984 Cable Act was the
first federal legislation to impose comprehensive and 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 a cable television operator to a
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. Many of the other provisions of the 1984 Cable Act have
been superseded by the 1992 Cable Act and the 1996 Cable Act.
FRANCHISING. 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 1984 Cable Act 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 proposal for future
service. A final decision of non-renewal by the franchising authority is
appealable in court.
The 1996 Cable Act preempts franchising authorities from regulating
telecommunications services provided by cable operators and from requiring
cable operators to obtain a franchise to provide such services. A franchising
authority may not require a cable operator to provide telecommunications
services or facilities, other than an institutional network, as a condition to
a grant, renewal or transfer of a cable franchise.
OWNERSHIP AND MARKET STRUCTURE. FCC rules 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
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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 1996 Cable Act
eliminated the statutory ban on the cross-ownership of a cable system and a
television station, and permits the FCC to amend or revise its own regulations
regarding the cross-ownership ban. The FCC recently lifted its ban on the
cross-ownership of cable television systems by broadcast networks and 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.
The 1996 Cable Act generally restricts common carriers from holding
greater than a 10% financial interest or any management interest in cable
operators that provide cable service within the carrier's telephone exchange
service area or from entering joint ventures or partnerships with cable
operators in the same market subject to four general exceptions, which include
population density and competitive market tests. The FCC may waive the buyout
restrictions if it determines that, because of the nature of the market served
by the cable system or the telephone exchange facilities, the cable operator or
LEC would be subject to undue economic distress by enforcement of the
restrictions; the system or LEC facilities would not be economically viable if
the provisions were enforced; the anticompetitive effects of the proposed
transaction clearly would be outweighed by the public interest in serving the
community; and the local franchising authority approves the waiver.
The FCC has imposed limits on the number of cable systems that a
single cable operator may own. In general, no cable operator may hold an
attributable interest in cable systems that 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 restrictions of the 1992 Cable Act unconstitutional.
FOREIGN OWNERSHIP RESTRICTION. The Communications Act restricts the
extent to which non-U.S. citizens may have ownership or control rights in
certain categories of licenses issued by the FCC. Licenses subject to these
restrictions (the "Restricted Licenses") include broadcast licenses, common
carrier radio licenses (such as common carrier point-to-point microwave
licenses), and commercial mobile radio service ("CMRS") licenses (such as
cellular telephone, paging and personal communications service ("PCS")
licenses). Section 310(b)(4) of the Communications Act provides that, absent a
specific public interest determination by the FCC, a corporation may not
control the licensee of any of these restricted licenses if non-U.S. citizens
hold more than 25% of the ownership or voting rights of the corporation.
(Different and more restrictive standards apply if non-U.S. entities hold
interests directly in the licensee of a Restrictive License.)
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Section 310(b)(4) precludes the Company from controlling any
Restricted Licenses unless the Company obtains a public interest determination
by the FCC that it may hold restricted licenses even though non-U.S.
participation in the Company, including levels of non-U.S. ownership and voting
rights, exceed the benchmarks under Section 310(b)(4). The FCC licenses
commonly employed in cable television operations do not fall within the
category of Restricted Licenses subject to the foreign ownership restrictions
in Section 310(b) of the Communications Act. The category of Restricted
Licenses, however, includes licenses commonly used in the provision of
conventional and mobile telephone service, such as common carrier
point-to-point microwave licenses, common carrier transmit satellite earth
station licenses, cellular telephone licenses and PCS licenses. Although
Section 310(b) restricts the control of Restricted Licenses by the Company due
to BCI's investment in the Company, the Company may acquire carriage services
from existing U.S. carriers holding these licenses to the extent that it finds
a need for these communications links in the conduct of its business.
In November 1995, the FCC issued its Report and Order in IB Docket No.
95-22, in which, among other things, the FCC adopted a new policy of
considering the competitive opportunities provided to U.S. carriers in foreign
markets as a basis for permitting corporations with foreign participation above
the benchmarks of Section 310(b)(4) to control Restricted Licenses other than
broadcast licenses. This policy may expand the opportunities for corporations
with foreign participation above the Section 310(b)(4) benchmarks to obtain FCC
approval allowing them to hold non-broadcast Restricted Licenses, provided that
the home country of the non-U.S. participants provides effective competitive
opportunities for U.S. carriers.
PROGRAM ORIGINATION AND EXCLUSIVITY OBLIGATIONS. Cable television
systems may originate programs and may present advertising subject to
compliance with the FCC's regulations governing 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 or Congress which will use arbitration panels to resolve royalty
distribution disputes.
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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.
Copyrighted music performed in programming supplied to cable
television systems by pay cable networks (such as HBO) and cable programming
networks (such as USA Network) has generally been licensed by the networks
through private agreements with the American Society of Composers and
Publishers ("ASCAP") and BMI, Inc. ("BMI"), the two major performing rights
organizations in the United States. ASCAP and BMI offer "through to the
viewer" licenses to the cable networks which cover the retransmission of the
cable networks' programming by cable television systems to their customers.
The cable industry has just concluded negotiations on licensing fees with BMI
for the use of music performed in programs locally originated by cable
television systems, although no actual agreements are in place; negotiations
with ASCAP are ongoing. ASCAP has filed an infringement suit against several
cable operators as representatives of cable systems using its music in the pay
programming and cable programming networks provided to 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.
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
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.
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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 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 increased from $0.37 per subscriber per year to $0.49.
Fees for other FCC licenses increased 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 PROVISIONS. 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. The 1996 Cable Act extends the regulation of rates,
terms and conditions of pole attachments to telecommunications service
providers and requires the FCC to prescribe regulations to govern the charges
for pole attachments used by telecommunications carriers to provide
telecommunications services when the parties fail to resolve the dispute over
such charges. The 1996 Cable Act, among other provisions, increases
significantly future pole attachment rates for cable systems which used pole
attachments in connection with the provision of telecommunications services as
a result of a new rate formula charged to telecommunication carriers for the
non-usable space of each pole. These rates are to be phased in after a
five-year period.
The 1996 Cable Act requires the FCC, in consultation with industry
standard-setting organizations, to adopt regulations which would encourage
commercial availability to consumers of all services offered by multichannel
video programming distributors. The regulations adopted may not prohibit
programming distributors from offering consumer equipment, so long as the cable
operator's rates for such equipment are not subsidized by charges for the
services offered. The rules also may not compromise the security of the
services offered, or the efforts of service providers from preventing theft of
service. The FCC may waive these rules so as not to hinder the development of
advanced services and equipment. The 1996 Cable Act requires the FCC to
examine the market for closed captioned programming and prescribe regulations
which ensure that video programming, with certain exceptions, is fully
accessible through closed captioning.
In December 1994, the FCC announced that its long-standing Emergency
Broadcast System rules were to be replaced. The new rules establish cable
television and technical standards to support
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a new Emergency Alert System. Cable operators must install and activate
equipment necessary for the new system by July 1, 1997.
The FCC has initiated a rulemaking to consider, among other issues,
whether to adopt uniform regulations governing telephone and cable inside
wiring. The regulations ultimately adopted by the FCC could affect the
Company's ownership interests and access to inside wiring used to provide
telephony and video programming services. In a related rulemaking proceeding,
the FCC will consider the appropriate treatment of cable inside wiring in
multiple dwelling unit buildings. The outcome of that rulemaking could affect
cable operators' access to inside wiring in MDUs.
ITEM 2. PROPERTIES
The Company leases a portion of its executive offices from Jones
Properties, Inc., a subsidiary of International. The offices consist of a
101,500 square foot office building located at 9697 East Mineral Avenue,
Englewood, Colorado. This building was completed in July 1985. The lease has
a 15-year term expiring in July 2000 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 49% of the building to International and
certain other affiliates on the same terms and conditions as the primary lease.
The Company leases from Jones Panorama Properties, Inc., a
wholly-owned subsidiary of the Company, 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
Panorama Falls Building contains additional executive offices of the Company.
The Company has subleased approximately 35% of the Panorama Falls Building to
International and others 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 and (ii) the number of basic subscribers and pay units
for the cable television systems owned 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
December 31, 1995, the Company-owned cable television systems passed
approximately 650,800 homes, representing an approximate 67% penetration rate.
Figures for numbers of subscribers and homes passed are compiled from the
Company's records and may be subject to adjustments.
30
<PAGE> 34
<TABLE>
<CAPTION>
ALEXANDRIA, VIRGINIA At 12/31/ At 5/31/
- -------------------- --------- --------------------------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Monthly basic plus service rate $23.33 $21.53 $21.53 $24.65
Basic subscribers 38,916 38,497 38,863 35,366
Pay units 32,510 32,590 32,524 29,797
<CAPTION>
ANNE ARUNDEL COUNTY, MARYLAND At 12/31/ At 5/31/
- ----------------------------- --------- --------------------------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Monthly basic plus service rate $22.85 $22.85 $21.95 $21.20
Basic subscribers 48,712 47,786 46,285 43,555
Pay units 43,895 42,590 41,682 38,004
<CAPTION>
At 12/31/1995
-------------
<S> <C>
AUGUSTA, GEORGIA *
- ----------------
Monthly basic plus service rate $23.98
Basic subscribers 84,146
Pay units 67,428
</TABLE>
* In December 1995, the Augusta System (acquired by the Company in
October 1995 from one of its managed limited partnerships) and the
North Augusta System were combined.
<TABLE>
<CAPTION>
AUGUSTA, GEORGIA At 5/31/
- ---------------- --------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $23.20 $23.20 $23.20
Basic subscribers 66,950 65,339 63,758
Pay units 55,320 52,776 52,226
<CAPTION>
At Acquisition
--------------
NORTH AUGUSTA, SOUTH CAROLINA At 5/31/ (12/15
- ----------------------------- --------------------- ------
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
</TABLE>
31
<PAGE> 35
<TABLE>
<CAPTION>
CHARLES COUNTY, MARYLAND At 12/31/ At 5/31/
- ------------------------ --------- --------------------------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Monthly basic plus service rate $26.33 $24.80 $24.80 $23.59
Basic subscribers 23,285 22,702 21,690 20,784
Pay units 35,589 34,186 32,578 31,460
<CAPTION>
DALE CITY, VIRGINIA At Acquisition
- ------------------- --------------
11/29/95
--------
<S> <C>
Monthly basic plus service rate $24.07
Basic subscribers 49,297
Pay units 44,935
<CAPTION>
HILO, HAWAII At 12/31/ At 5/31/
- ------------ --------- --------------------------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Monthly basic plus service rate $21.57 $21.57 $21.68 $21.45
Basic subscribers 17,289 17,140 16,696 15,924
Pay units 13,820 13,516 12,810 11,468
<CAPTION>
At 12/31/1995
-------------
<S> <C>
JEFFERSON COUNTY, COLORADO *
- --------------------------
Monthly basic plus service rate $23.06
Basic subscribers 26,954
Pay units 26,666
</TABLE>
* The Clear Creek County and Jefferson County Systems have been
combined.
<TABLE>
<CAPTION>
CLEAR CREEK, COLORADO At 5/31/
- --------------------- --------------------------------------
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
<CAPTION>
JEFFERSON COUNTY/
EVERGREEN, COLORADO At 5/31/
- ------------------- --------------------------------------
1995 1994 1993
---- ---- ----
<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
</TABLE>
32
<PAGE> 36
<TABLE>
<CAPTION>
KENOSHA, WISCONSIN At 12/31/ At 5/31/
- ------------------ --------- --------------------------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Monthly basic plus service rate $19.94 $19.94 $21.18 $22.95
Basic subscribers 28,131 27,056 25,047 23,188
Pay units 20,554 18,937 18,175 17,934
<CAPTION>
OXNARD, CALIFORNIA At 12/31/ At 5/31/
- ------------------ --------- --------------------------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Monthly basic plus service rate $19.15 $19.15 $20.00 $23.95
Basic subscribers 39,101 39,032 37,338 35,953
Pay units 26,751 25,952 23,851 22,237
<CAPTION>
PANAMA CITY BEACH, FLORIDA At 12/31/ At 5/31/
- -------------------------- --------- --------------------------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Monthly basic plus service rate $21.10 $21.10 $21.20 $21.20
Basic subscribers* 7,380 7,893 8,406 7,984
Pay units** 6,285 5,966 9,399 5,522
</TABLE>
* During 1995, the Panama City Beach System has lost subscribers to an
overbuilder. (See Item 1, Competition.)
** The number of pay units in the Panama City Beach System has
fluctuated 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.
<TABLE>
<CAPTION>
PIMA COUNTY, ARIZONA At 12/31/ At 5/31/
- -------------------- --------- --------------------------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Monthly basic plus service rate $24.00 $24.00 $22.50 $23.20
Basic subscribers 56,512 53,279 49,311 46,739
Pay units 35,532 35,084 32,442 30,529
<CAPTION>
WALNUT VALLEY, CALIFORNIA At 12/31/ At 5/31/
- ------------------------- --------- --------------------------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Monthly basic plus service rate $23.75 $22.06 $22.74 $23.75
Basic subscribers 18,944 18,669 17,790 17,193
Pay units 13,321 13,290 13,097 13,375
</TABLE>
33
<PAGE> 37
ITEM 3. LEGAL PROCEEDINGS
Alexandria Litigation
On February 22, 1994, the Company and The Jones Group, Ltd. (the
"Jones Group"), a subsidiary of the Company engaged in the cable television
system brokerage business, 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.
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 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. On October 4, 1995, the Court granted
the Company's motion for summary judgment on the common law fraud, conversion
and breach of fiduciary duty claims and also struck plaintiffs' demand for a
jury trial. As a result,
34
<PAGE> 38
there is only one remaining substantive claim (breach of contract); no claim
for punitive damages; and the trial will be to the Court commencing on April
29, 1996.
On October 25, 1995, plaintiffs and Jones Group filed, in the Colorado
action, a joint motion to stay the Colorado action until the resolution of the
Missouri action. The motion to stay is pending before the Colorado court.
The Company has conducted written discovery in the form of
interrogatories and requests for production of documents; has noticed the
depositions of plaintiffs and plaintiffs' expert and has retained an expert to
testify that the three appraisals were performed in accordance with standard
appraisal methodologies. Although plaintiffs have retained an "expert"
appraiser to testify that the value of the Alexandria System in November 1992
was $85 million, approximately $12 million more than the purchase price, the
Company believes both that the purchase price was fair and that the brokerage
commission was properly paid to Jones Group in accordance with the express
terms of the partnership agreement. Consequently, the Company intends to
defend the litigation at trial in April 1996.
Tampa Litigation
In August 1995, Cable TV Fund 12-BCD Venture (the "Venture"), a
Colorado joint venture in which Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C,
Ltd. and Cable TV Fund 12-D, Ltd., Colorado limited partnerships, are general
partners, entered into a purchase and sale agreement pursuant to which the
Venture agreed to sell its Tampa, Florida cable television system (the "Tampa
System") to the Company. The Company is the general partner of each of Cable
TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV Fund 12-D, Ltd. The
Company subsequently assigned its rights and obligations under the purchase
and sale agreement to JCH. JCH acquired the Tampa System on February 28,
1996, and the Tampa System, together with other systems owned by JCH, was
exchanged for systems owned by an unaffiliated cable television operator on
February 29, 1996. See Item 1, Recent Acquisitions of Cable Television
Systems and Recent Exchange of Cable Television Systems.
On September 20, 1995, a civil action entitled David Hirsch, on behalf
of himself and all others similarly situated, Plaintiff vs. Jones Intercable,
Inc., Defendant, was filed in the District Court, County of Arapahoe, State of
Colorado (Case No. 95-CV-1800). The plaintiff has brought the action as a
class action on behalf of himself and all other limited partners of Cable TV
Fund 12-D, Ltd. ("Fund 12-D") against the Company seeking to recover damages
caused by the Company's alleged breaches of its fiduciary duties to the limited
partners of Fund 12-D in connection with the sale of the Tampa System. On
January 25, 1996, the plaintiff filed an amended complaint and request for a
jury trial. On February 20, 1996, the Company filed a Motion to Dismiss the
Complaint on the ground that it fails to state a claim upon which relief can be
granted as a matter of law. The Company believes that it has meritorious
defenses, and the Company intends to defend this lawsuit vigorously.
On November 17, 1995, a civil action entitled Martin Ury, derivatively
on behalf of Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV
Fund 12-D, Ltd., Plaintiff vs. Jones Intercable, Inc., Defendant and Cable TV
Fund 12-BCD Venture, Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and
Cable TV Fund 12-D, Ltd., Nominal Defendants, was filed in the District Court,
35
<PAGE> 39
County of Arapahoe, State of Colorado (Case No. 95-CV-2212). The plaintiff, a
limited partner of Fund 12-D, has brought the action as a derivative action on
behalf of the three partnerships that comprise the Venture against the Company
seeking to recover damages caused by the Company's alleged breaches of its
fiduciary duties to the Venture and to the limited partners of the three
partnerships that comprise the Venture in connection with the sale of the
Tampa System and the subsequent exchange of the Tampa System with an
unaffiliated cable television operator in return for systems owned by that
operator. On February 1, 1996, the Company filed a Motion to Dismiss the
Complaint on the ground that it fails to state a claim upon which relief can be
granted as a matter of law. The Company believes that it has meritorious
defenses, and the Company intends to defend this lawsuit vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<S> <C> <C>
Glenn R. Jones 66 Chairman of the Board and
Chief Executive Officer
James B. O'Brien 46 President
Ruth E. Warren 46 Group Vice President/Operations
Kevin P. Coyle 44 Group Vice President/Finance
Christopher J. Bowick 40 Group Vice President/Technology
George H. Newton 61 Group Vice President/Telecommunications
Timothy J. Burke 45 Group Vice President/Taxation/Administration
Raymond L. Vigil 49 Group Vice President/Human Resources
Cynthia A. Winning 44 Group Vice President/Marketing
Elizabeth M. Steele 44 Vice President/General Counsel/Secretary
Larry W. Kaschinske 36 Controller
</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
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
36
<PAGE> 40
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.
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. 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 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. George H. Newton joined the Company in January 1996 as Group Vice
President/Telecommunications. Prior to joining the Company, Mr. Newton was
President of his
37
<PAGE> 41
own consulting business, Clear Solutions, and since 1994 Mr. Newton has served
as a Senior Advisor to Bell Canada International. From 1990 to 1993, Mr.
Newton served as the founding Chief Executive Officer and Managing Director of
Clear Communications, New Zealand, where he established an alternative
telephone company in New Zealand. From 1964 to 1990, Mr. Newton held a wide
variety of operational and business assignments with Bell Canada International.
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.
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:
Common Stock - JOIN
Class A Common Stock - JOINA
38
<PAGE> 42
The following table shows the high and low prices as quoted on the
NASDAQ/National Market System for each quarterly period of calendar years ended
December 31, 1995 and 1994 for each class of the Company's stock:
<TABLE>
<CAPTION>
Common Stock Class A Common Stock
------------ --------------------
Calendar Year Ended 12/31/95 High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter 17 1/2 11 7/8 17 1/2 12
Second Quarter 16 1/4 13 1/2 16 1/2 12 7/8
Third Quarter 16 1/4 14 5/8 15 1/2 13 3/8
Fourth Quarter 14 1/2 13 3/4 14 13 1/4
<CAPTION>
Common Stock Class A Common Stock
------------ --------------------
Calendar Year Ended 12/31/94 High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter 17 1/2 13 3/8 18 13 1/2
Second Quarter 14 3/4 10 3/4 14 3/4 11
Third Quarter 15 7/8 11 7/8 15 3/8 12
Fourth Quarter 15 1/2 11 3/8 15 1/8 11 3/8
</TABLE>
At December 31, 1995, the Common Stock and Class A Common Stock of the
Company were held of record by 793 and 1,524 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.
Certain of the Company's credit arrangements restrict the right of the Company
to declare and pay cash dividends without the consent of the holders of the
debt.
39
<PAGE> 43
Item 6. Selected Financial Data
The Company changed its fiscal year end from May 31 to December 31,
effective December 31, 1995. The following table sets forth selected financial
data regarding the Company's financial position and operating results restated
to reflect the change in fiscal year end. 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 $ 135,350 $ 103,335 $ 99,438 $ 82,033 $ 78,243
Management fees 21,462 17,952 17,255 16,820 15,709
Distributions from managed
partnerships - - - - 26,790
Non-cable Revenue 32,026 10,602 7,624 6,943 4,774
--------- --------- -------- -------- -------
TOTAL REVENUES 188,838 131,889 124,317 105,796 125,516
--------- --------- -------- -------- -------
COSTS AND EXPENSES:
Cable Television Expenses
Operating expenses 77,638 55,196 54,307 38,579 41,388
General and administrative 8,284 8,120 10,034 9,304 4,985
Non-cable operating, general and
administrative 32,382 11,810 7,989 6,793 5,747
Depreciation and amortization 55,805 45,585 43,328 39,597 40,541
--------- --------- -------- -------- -------
OPERATING INCOME $ 14,729 $ 11,178 $ 8,659 $ 11,523 $ 32,855
========= ========= ======== ======== =======
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY ITEMS $ (21,024) $ (8,691) $ (36,066) $ (26,308) $ 6,371
INCOME TAX BENEFIT
(PROVISION) - - - - -
--------- --------- -------- -------- -------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS (21,024) (8,691) (36,066) (26,308) 6,371
Extraordinary items-
Gain (loss) on early
extinguishment of debt (692) - (12,781) (11,409) 6,036
Cumulative effect of change
in accounting method-
Change in method of
accounting for income taxes - - - 3,862 -
--------- --------- -------- -------- -------
NET INCOME (LOSS) $ (21,716) $ (8,691) $ (48,847) $ (33,855) $ 12,407
========= ========= ======== ======== =======
PRIMARY EARNINGS (LOSS)
PER SHARE:
Income (loss) before
extraordinary items $ (.67) $ (.45) $ (2.16) $ (2.05) $ .53
Extraordinary items (.02) - (.76) (.88) .50
Accounting change - - - .30 -
--------- --------- -------- -------- -------
$ (.69) $ (.45) $ (2.92) $ (2.63) $ 1.03
========= ========= ======== ======== =======
WEIGHTED AVERAGE
SHARES OUTSTANDING:
Primary 31,270 19,517 16,728 12,849 12,010
========= ========= ======== ======== =======
TOTAL ASSETS $ 860,499 $ 608,289 $ 434,298 $ 434,670 $ 364,342
========= ========= ======== ======== =======
TOTAL DEBT $ 492,714 $ 281,578 $ 372,908 $ 382,245 $ 311,855
========= ========= ======== ======== =======
SHAREHOLDERS'
INVESTMENT $ 292,795 $ 271,284 $ 17,503 $ 13,996 $ 29,696
========= ========= ======== ======== =======
</TABLE>
40
<PAGE> 44
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Revenues
The Company derives its revenues from four primary sources: subscriber
fees from Company-owned cable television systems, management fees from revenues
earned by managed limited partnerships, fees and distributions payable upon the
sale of cable television properties owned by managed limited partnerships and
revenues from non-cable television subsidiaries. Total revenues for the year
ended December 31, 1995 totaled $188,838,000, an increase of $56,949,000, or
43%, over the total of $131,889,000 for the year ended December 31, 1994. This
increase reflects the Company's acquisition of the assets of Jones Spacelink,
Ltd. ("Spacelink") on December 20, 1994, the purchase of the cable television
system serving areas in and around Augusta, Georgia (the "Augusta System") on
October 20, 1995, the purchase of the cable television system serving areas in
and around Dale City, Virginia (the "Dale City System") on November 29, 1995
and were offset, in part, by the sale of the Company's Gaston County, North
Carolina cable television system (the "Gaston System") on July 22, 1994 (the
"Purchase and Sale Transactions"). Disregarding the effect of the Purchase and
Sale Transactions, total revenues would have increased $10,898,000, or 9%.
The Company's subscriber service fees increased $32,015,000, or 31%,
to $135,350,000 in 1995 from $103,335,000 in 1994. The effect of the Purchase
and Sale Transactions accounted for $22,865,000, or 71%, of this increase.
Disregarding the effect of the Purchase and Sale Transactions, subscriber
service fees would have increased $8,068,000, or 8%. This increase was due
primarily to an increase in the number of basic subscribers and basic service
rate adjustments in the cable television systems owned by the Company.
The Company receives management fees generally equal to 5% of the
gross operating revenues of its managed partnerships. Management fees totaled
$21,462,000 for 1995, an increase of $3,510,000, or 20%, over the total of
$17,952,000 reported in 1994. 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 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 basic service rate adjustments. Disregarding the
effect of the Spacelink transaction, management fees increased approximately
10%.
In its capacity as the general partner of its managed partnerships,
the Company also receives revenues in the form of distributions upon the sale
of cable television properties owned by such partnerships. No such revenues
were recognized during the years ended December 31, 1995, 1994 or 1993. The
general partner distribution received by the Company as a result of the sale of
the Augusta System by Fund 12-B in October 1995 was recorded as a reduction in
the basis of the assets of the Augusta System due to the Company's continuing
interest in the Augusta System.
The Company also operates certain non-cable subsidiaries. Such
subsidiaries include Jones Satellite Programming, Inc. ("JSP"), a distributor
of satellite programming to satellite dish owners; Jones 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 acquisition of
Spacelink's assets. Non-cable revenue totaled $32,026,000 in 1995, an increase
of $21,424,000, or 202%, over the $10,602,000 recorded in 1994. The
acquisition of Futurex and JSN accounted for 79% of this increase. The
remainder of this increase was due to an increase in the revenue of JSP.
41
<PAGE> 45
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 $22,442,000, or 41%, to $77,638,000
in 1995 compared to $55,196,000 in 1994. The Purchase and Sale Transactions
accounted for $13,954,000, or 62%, of this increase. Disregarding the effect
of the Purchase and Sale Transactions, cable operating expense would have
increased $6,406,000, or 12%. This increase was due primarily to increases in
premium and satellite programming costs.
Cable general and administrative expense increased $164,000, or 2%, to
$8,284,000 in 1995 from $8,120,000 in 1994. Disregarding the effect of the
Purchase and Sale Transactions, cable general and administrative expenses
decreased $718,000, or 9%. This decrease was due primarily to the fact that
the Company paid no transponder fees to Jones Earth Segment, Inc. in 1995. The
remainder of the decrease is due to a reduction in general and administrative
expense.
Non-cable operating, general and administrative expense increased
$20,572,000, or 174%, to $32,382,000 in 1995 from $11,810,000 in 1994. The
acquisition of Futurex and JSN accounted for this increase.
Depreciation and amortization expense increased $10,220,000, or 22%,
to $55,805,000 in 1995 from $45,585,000 in 1994. The effect of the Purchase
and Sale Transactions, as well as capital additions in 1995, were responsible
for this increase.
Operating Income
Operating income increased $3,551,000, or 32%, to $14,729,000 in 1995
from $11,178,000 in 1994, due to the factors discussed above.
The cable television industry generally measures the performance of a
cable television system in terms of cash flow or operating income before
depreciation and amortization. The value of a cable television system is often
determined using multiples of cash flow. This measure is not intended to be a
substitute or improvement upon the items disclosed on the financial statements,
rather it is included because it is an industry standard. Operating income
before depreciation and amortization increased $13,771,000, or 24%, to
$70,534,000 in 1995 from $56,763,000 in 1994. Disregarding the effect of the
Purchase and Sale Transactions, operating income before depreciation and
amortization would have increased $5,218,000, or 10%.
Other Income (Expense)
Interest expense increased $12,669,000, or 34%, to $49,552,000 in 1995
from $36,883,000 in 1994. This increase was due primarily to interest on the
$200 million of Senior Notes sold in March 1995 which was offset, in part, by a
decrease in interest expense on the Company's credit facility due to lower
outstanding balances.
42
<PAGE> 46
In 1995, the Company recorded net equity in the losses of affiliates
totaling $58,000 compared to $3,707,000 in 1994. The Company recognized equity
in the losses of its managed partnerships, Mind Extension University, IDS/Jones
Joint Venture Partners and Jones Customer Service Management, LLC. Such losses
were offset, in part, by equity in the net income of Jones Intercable
Investors, L.P. and Jones Global Group, Inc. ("JGG"). JGG, an affiliate of
which the Company owns a 38% interest, recognized gains on the sale of certain
of JGG's Bell Cablemedia ADSs.
Interest income increased $8,497,000, or 144%, to $14,383,000 in 1995
from $5,886,000 in 1994. This increase was due to the increase in the
Company's cash on hand during the year, prior to the acquisition of the Augusta
System and the Dale City System, from the Bell Canada International Inc.
investment in December 1994 and the sale of $200 million of Senior Notes in
March 1995.
The Company recorded a gain of $15,496,000 in July 1994 on the sale of
its Gaston System. No similar gain was recognized during 1995.
The Company recognized a loss of $692,000 in 1995 related to the
redemption of its 7.5% Convertible Subordinated Debentures. No similar loss
was recognized in 1994.
Net loss increased $13,025,000, or 150%, to $21,716,000 in 1995 from
$8,691,000 in 1994. This increase was primarily due to the gain recognized in
1994 on the sale of the Gaston System.
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 general partner distributions from its
managed partnerships and/or gains on the sale of Company-owned systems in the
future, such losses may be reduced or eliminated; however, there is no
assurance as to the timing or recognition of these distributions or sales.
Year Ended December 31, 1994 Compared to Year Ended December 31, 1993
Revenues
Total revenues for the year ended December 31, 1994 increased
$7,572,000, or 6%, to $131,889,000 in 1994 from $124,317,000 in 1993. An
increase in the revenues of JSP accounted for approximately 39% of this
increase. Increases in the number of basic subscribers and advertising revenue
accounted for 41% of this increase. The net effect of the purchase of the
North Augusta System and the sales of the Gaston System and the Company's cable
television system serving areas around San Diego, California (the "San Diego
System") accounted for approximately 11% of this increase. The increase in
revenue would have been greater but for the effect of the reduction in basic
rates due to rate regulations issued by the FCC in implementing the 1992 Cable
Act.
In 1994, the Company's subscriber service fees increased $3,897,000,
or 4%, from $99,438,000 in 1993 to $103,335,000 in 1994. The net effect of the
purchase of the North Augusta System and the sale of the Gaston System and the
San Diego System accounted for 21% of this increase. The remainder of this
increase was due to increases in subscribers and advertising sales revenue.
Management fees increased approximately 4%, from $17,255,000 in 1993
to $17,952,000 in 1994. Partnership revenues increased as a result of
increases in the number of basic subscribers in partnership systems 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 by the Company's managed partnerships due to the FCC's basic rate
regulations.
43
<PAGE> 47
Non-cable revenue increased $2,978,000, or 39%, from $7,624,000 in
1993 to $10,602,000 in 1994. This increase was due to an increase in the
revenues of JSP.
Costs and Expenses
For the year ended December 31, 1994, cable operating expenses
increased $889,000, or 2%, from $54,307,000 in 1993 to $55,196,000 in 1994.
This increase was due primarily to increases in satellite programming fees and
premium service programming fees.
For the year ended December 31, 1994, cable general and administrative
expense decreased $1,914,000, or 19%, from $10,034,000 in 1993 to $8,120,000 in
1994. This decrease was due to a decrease in transponder fees paid to Jones
Earth Segment, Inc. In addition, the Company recognized non-cash compensation
expense related to the grant of certain stock options in 1993. No such expense
was recognized in 1994.
For the year ended December 31, 1994, non-cable operating, general and
administrative expenses increased $3,821,000, or 48%, from $7,989,000 in 1993
to $11,810,000 in 1994. This increase was due to increases in the expenses of
JSP, which consist primarily of programming costs.
Depreciation and amortization expense increased $2,257,000, or 5%, for
the year ended December 31, 1994 totaling $45,585,000 in 1994 and $43,328,000
in 1993. This increase was due to the purchase of the North Augusta System and
to capital additions in 1994.
Operating Income
Operating income increased $2,519,000, or 29%, to $11,178,000 in 1994
from $8,659,000 in 1993. This increase was due primarily to the decrease in
general and administrative expenses.
Operating income before depreciation and amortization increased
$4,776,000, or 9%, to $56,763,000 in 1994 from $51,987,000 in 1993.
Disregarding the net effect of the purchase of the North Augusta System and the
sale of the Gaston System and the San Diego System, operating income before
depreciation and amortization increased 8%.
Other Income (Expense)
Interest expense decreased $3,897,000, or 10%, to $36,883,000 in 1994
from $40,780,000 in 1993. This decrease was due primarily 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 decreased $110,000, or 3%,
from $3,817,000 in 1993 to $3,707,000 in 1994.
Interest income increased $1,967,000, or 50%, for the year ended
December 31, 1994 from $3,919,000 in 1993 to $5,886,000 in 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.
The Company recognized a $15,496,000 gain on the sale of its Gaston
System in 1994. In 1993, the Company recognized a $3,231,000 loss on the sale
of its San Diego System.
44
<PAGE> 48
In 1993, the Company recognized a loss on the early extinguishment of
debt totaling $12,781,000. No similar loss was recognized in 1994.
For the year ended December 31, 1994, net loss decreased $40,156,000,
from $48,847,000 in 1993 to $8,691,000 in 1994. This decrease was due
primarily to the effect of the gain on the Gaston System, the loss of the San
Diego System and the loss on early extinguishment of debt.
Regulatory Matters
As a result of rate orders issued by the FCC, cost-of-service showings
have been filed for the following Company-owned cable television systems:
Jefferson County, Colorado; Charles County, Maryland; Dale City, Virginia;
Manassas, Virginia; Pima County, Arizona; Alexandria, Virginia; and Augusta,
Georgia. 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.
On January 31, 1996, Congress passed the Telecommunications
Competition and Deregulation Act of 1996 (the "1996 Act") which substantially
revised the federal laws regulating the Company's cable television business.
The President signed the 1996 Act into law on February 8, 1996. Among other
things, the 1996 Act promotes increased competition from the delivery of video,
data and other services by local telephone companies (also known as local
exchange carriers or "LECs") and others, permits cable television operators to
provide local voice and data communications services and deregulates the
customer programming service rates of smaller operations upon enactment and
other operators in 1999. The 1996 Act allows telephone companies to provide
cable television services within their telephone service areas operating as
conventional cable systems, or "open video systems" that afford access to other
video providers. Telephone companies offering stand-alone cable television
service or cable television service in connection with an open video system
could provide substantial competition to the Company's owned and managed
systems. The 1996 Act also permits entities to provide local
telecommunications services in competition with the LECs. The 1996 Act
establishes local exchange competition as a national policy by preempting laws
that prohibit competition in the local exchange and establishes uniform
requirements and standards for entry, competitive carrier interconnection and
unbundling of LEC monopoly services. One premise of the 1996 Act is that
additional regulatory flexibility for LECs is necessary to allow them to
respond to competition. Depending on the degree and form of regulatory
flexibility afforded the LECs, the Company's ability to compete to provide
telephony services may be adversely affected.
FINANCIAL CONDITION
The Company historically 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. The
Company intends to liquidate its Company-managed limited partnerships as
opportunities for sales of partnership cable television systems arise in the
marketplace over the next several years.
The Company is implementing a balanced strategy of acquiring cable
television systems from Company-managed limited partnerships and from third
parties. 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. It is the
Company's plan to cluster its cable television properties, to the extent
feasible, in geographic areas. Clustering systems may enable the Company to
obtain operating efficiencies, and it should position the Company to capitalize
on new revenue and business opportunities as the telecommunications industry
evolves. The Company also intends to maintain and enhance the value of its
current cable television systems through capital
45
<PAGE> 49
expenditures. Such expenditures will include, among others, cable television
plant extensions and the upgrade and rebuild of certain systems. The Company
also intends to institute new services as they are developed and become
economically viable.
Acquisitions of cable television systems, the development of new
services and capital expenditures for system extensions and upgrades 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 sale of debt and/or equity securities (subject
to market conditions), borrowings under the Company's $500 million revolving
credit facility and cash generated from the Company's operating activities. In
addition, the Company may explore other financing options such as private
equity capital and/or the sale of non-strategic assets. There can be no
assurance that the capital resources necessary to accomplish the Company's
acquisition and development plans will be available on terms and conditions
acceptable to the Company, or at all.
In conjunction with the Company's acquisition strategy, the Company
purchased the cable television systems serving areas in and around Augusta,
Georgia (the "Augusta System") in October 1995, Dale City, Virginia (the "Dale
City System") in November 1995 and Manassas, Virginia (the "Manassas System")
in January 1996. These transactions are described in detail in Note 2 of the
Notes to Consolidated Financial Statements.
The $129,396,000 of capital required to purchase the Augusta System,
which represents the purchase price of $142,618,000 less the Company's general
partner distribution of approximately $13,222,000, was provided by cash on
hand. The $123,000,000 of capital required to purchase the Dale City System
was provided by cash on hand and $30,000,000 of borrowings available under the
Company's credit facility. The $71,000,000 of capital required to purchase the
Manassas System was provided by borrowings available under the Company's
revolving credit facility.
On February 28, 1996, the Company purchased the cable television
systems serving areas in and around Tampa, Florida (the "Tampa System"), areas
in and around Carmel, Indiana (the "Carmel System") and areas in and around
Orangeburg, South Carolina (the "Orangeburg System") from certain of its
limited partnerships. The $172,979,000 of capital required to purchase such
systems was provided by borrowings available under the Company's revolving
credit facility. On February 29, 1996, the Company transferred the Tampa
System, the Carmel System and the Orangeburg System to an unaffiliated party in
exchange for the cable television systems serving portions of Prince Georges
County, Maryland (the "Prince Georges County System") and portions of Fairfax
County, Virginia (the "Reston System").
The above transactions increased the Company's basic subscriber base
by approximately 229,000 basic subscribers to approximately 547,000 basic
subscribers. In addition, these transactions are part of the Company's
strategy to cluster its cable systems. The Augusta System is contiguous to the
Company's cable television system serving areas in and around North Augusta,
South Carolina (the "North Augusta System"). The Dale City System, the
Manassas System, the Prince Georges County System and the Reston System are
near other Company owned and managed systems in the Washington/Baltimore area.
The Company has entered into agreements with certain of its managed
partnerships to purchase the cable television systems serving Manitowoc,
Wisconsin (the "Manitowoc System"), Lodi, Ohio (the "Lodi System"), Lake
Geneva, Wisconsin (the "Lake Geneva System") and Ripon, Wisconsin (the "Ripon
System"). Such transactions are expected to close in the first half of 1996.
In addition, the Company has entered into an agreement to acquire the
cable television system serving Savannah, Georgia (the "Savannah System").
This transaction is also part of the Company's strategy to cluster its cable
systems since the Savannah System is in relatively close proximity to the
Company's Augusta System. This transaction is expected to close in the first
half of 1996. To acquire the Savannah System, the Company will transfer the
Manitowoc System, the Lodi System, the Ripon System
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<PAGE> 50
and the Lake Geneva System, together with the Company-owned cable television
systems serving Kenosha, Wisconsin and Hilo, Hawaii, to an unaffiliated party
in exchange for the Savannah System. The Savannah System serves approximately
63,000 subscribers.
From time to time, the Company makes loans to its managed
partnerships, although it is not required to do so. As of December 31, 1995,
the Company had advanced funds to various managed partnerships and other
affiliates of the Company totaling approximately $14,311,000, a decrease of
approximately $13,712,000 over the amount advanced at December 31, 1994. Of
the total balance of $14,311,000, an advance to Cable TV Fund 15-A Ltd. ("Fund
15-A"), one of the Company's managed partnerships, accounted for approximately
$4,815,000, or 34%. The Company advanced funds to Fund 15-A primarily to fund
that partnership's capital expenditures. It is anticipated that Fund 15-A will
repay this advance over time with cash generated from operations and borrowings
available under its credit facility. In addition, an advance to Cable TV Fund
12-BCD Venture (the "Venture") accounted for approximately $4,113,000, or 29%,
of the outstanding balance. The Venture renogotiated its credit agreements and
repaid the advance in February 1996. The remainder of the advances represent
funds for capital expansion and improvements of properties owned by 22
partnerships where additional credit sources were not then available to the
partnerships. None of these advances are individually significant. These
advances reduce the Company's available cash and its liquidity. The Company
anticipates the repayment of these advances over time. The Company does not
anticipate significant increases in the amount advanced to its managed
partnerships during 1996. These advances bear interest at rates equal to the
Company's weighted average cost of borrowing.
The Company purchased property, plant and equipment totaling
approximately $63,216,000 during the year ended December 31, 1995. Such
expenditures were principally the result of the following: (a) the upgrade and
rebuild of the cable plant in the Alexandria, Virginia and North Augusta, South
Carolina 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, for 1996 are approximately $78,000,000.
Funding for such expenditures is expected to be provided by cash generated from
operations and borrowings available under the Company's credit facility, as
discussed below.
On October 12, 1995, the Company redeemed the remaining outstanding
7.5% Convertible Subordinated Debentures (the "Debentures") due 2007, at a
price equal to 101.5% of the principal amount, plus accrued interest. The
total principal amount of the debentures was $43,100,000, of which $23,732,000
were held by the Company and $19,368,000 were held by unaffiliated investors.
The Debentures were redeemed with cash on hand. The Company recognized a loss
of $692,000 related to the redemption.
Sources of Funds
The Company's cash balance at December 31, 1995, was $2,314,000. The
decrease in such balance from December 31, 1994 reflects the cash used for the
acquisitions of the Augusta System and the Dale City System.
On October 31, 1995, the Company, through Jones Cable Holdings, Inc.
("JCH"), a new wholly owned subsidiary, entered into a $500,000,000 reducing
revolving credit facility with a group of commercial banks. The new credit
facility provides for the transfer of a majority of the Company's cable
television properties to JCH, which is the borrower under the new credit
facility. The entire $500,000,000 commitment is available through March 31,
1999, at which time the commitment will be reduced quarterly with a final
maturity of December 31, 2004. As of December 31, 1995, $30,000,000 was
outstanding under this agreement. Interest on outstanding obligations ranges
from Base Rate to Base Rate plus 1/8% or LIBOR plus 5/8% to LIBOR plus 1 1/8%
based on certain leverage covenants. In addition, a commitment fee of 3/16% to
3/8% on the unused commitment is also required. The effective
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<PAGE> 51
interest rate on amounts outstanding at December 31, 1995 was 6.56%. Upon the
completion of the acquisition of the Manassas System, the Prince Georges County
System and the Reston System in the first quarter of 1996, the balance
outstanding on this credit facility was approximately $285,000,000.
On October 6, 1995, Cable TV Fund 11-B, Ltd. ("Fund 11-B"), one of the
Company's managed limited partnerships, entered into an agreement to sell the
cable television systems serving areas in and around Lancaster, New York to an
unaffiliated third party for $84,000,000. Upon closing of this transaction,
Fund 11-B will repay its indebtedness, a brokerage fee and a sales tax
liability, and Fund 11-B then will distribute the remaining proceeds to its
partners. The Company, as general partner of Fund 11-B, expects to receive a
distribution of approximately $13,950,000 related to this transaction. In
addition, The Jones Group, Ltd., a wholly-owned subsidiary of the Company, will
receive a fee of $2,100,000 for acting as the broker in this transaction. The
closing of this transaction is expected to occur in the first half of calendar
1996.
The Company has an effective registration statement relating to the
sale of $600 million of senior debt securities, senior subordinated debt
securities, subordinated debt securities and Class A Common Stock. The Company
may, from time to time, issue securities not to exceed $600 million pursuant to
this registration statement. Proceeds would be used for general corporate
purposes, which may include acquisitions of cable television systems from
managed partnerships and/or from unaffiliated parties, refinancings of
indebtedness, working capital, capital expenditures, and repurchases and
redemptions of securities.
The Company has sufficient sources of capital available, consisting of
cash generated from operations and available borrowings from its credit
facility, to complete the above described acquisitions and meet its operational
needs.
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<PAGE> 52
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants 50
Consolidated Balance Sheets 51
Consolidated Statements of Operations 53
Consolidated Statements of Shareholders' Investment 54
Consolidated Statements of Cash Flows 55
Notes to Consolidated Financial Statements 56
</TABLE>
49
<PAGE> 53
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 December 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 December 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 December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
Denver, Colorado,
March 1, 1996 ARTHUR ANDERSEN LLP
50
<PAGE> 54
<TABLE>
<CAPTION>
CONSOLIDATED
BALANCE SHEETS Jones Intercable, Inc.
As of December 31, 1995 and 1994 and Subsidiaries
- -------------------------------------------------------------------------------------------------------------------
ASSETS 1995 1994
(Stated in Thousands)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 2,314 $ 78,646
RESTRICTED CASH 9,770 1,196
RECEIVABLES:
Trade receivables, net of allowance for
doubtful accounts of $1,056,000 in 1995
and $1,008,000 in 1994 19,332 11,783
Affiliated entities 14,311 28,023
Other 2,442 957
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 475,436 333,666
Less - Accumulated depreciation (171,948) (144,043)
-------- ---------
303,488 189,623
Franchise costs, net of accumulated
amortization of $118,601,000 in 1995
and $100,056,000 in 1994 186,096 81,204
Cost in excess of interests in net assets
purchased, net of accumulated
amortization of $8,654,000 in 1995
and $7,249,000 in 1994 66,562 62,237
Noncompete agreement, net of accumulated
amortization of $1,360,000 in 1995
and $1,217,000 in 1994 2,097 428
Subscriber lists, net of accumulated
amortization of $42,882,000 in 1995
and $37,236,000 in 1994 55,058 16,260
Investments in affiliates and domestic cable
television partnerships 45,745 41,056
Investment in Bell Cablemedia plc 99,613 56,893
-------- ---------
TOTAL INVESTMENT IN CABLE TELEVISION PROPERTIES 758,659 447,701
-------- ---------
DEFERRED TAX ASSET, net of valuation
allowance of $70,748,000 in 1995 and
$63,636,000 in 1994 3,862 3,862
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 49,809 36,121
-------- ---------
TOTAL ASSETS $ 860,499 $ 608,289
======== =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
51
<PAGE> 55
<TABLE>
<CAPTION>
CONSOLIDATED
BALANCE SHEETS Jones Intercable, Inc.
As of December 31, 1995 and 1994 and Subsidiaries
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT 1995 1994
(Stated in Thousands)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES:
Accounts payable and accrued liabilities $ 69,411 $ 49,324
Subscriber prepayments and deposits 5,579 6,103
Subordinated debentures and other debt 462,714 281,578
Credit facility 30,000 -
---------- -----------
TOTAL LIABILITIES 567,704 337,005
---------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 2, 4 and 11)
SHAREHOLDERS' INVESTMENT:
Class A Common Stock, $.01 par value, 60,000,000
shares authorized; 26,212,055 and 26,131,388
shares issued at December 31, 1995
and 1994, respectively 262 261
Common Stock, $.01 par value, 5,550,000 shares
authorized; 5,113,021 shares issued at December 31, 1995
and 1994 51 51
Additional paid-in capital 394,875 394,153
Unrealized holding gain on marketable securities 42,504 -
Accumulated deficit (144,897) (123,181)
---------- -----------
TOTAL SHAREHOLDERS' INVESTMENT 292,795 271,284
---------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $ 860,499 $ 608,289
========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
52
<PAGE> 56
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS Jones Intercable, Inc.
For the years ended December 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 $ 135,350 $ 103,335 $ 99,438
Management fees 21,462 17,952 17,255
Non-cable Revenue 32,026 10,602 7,624
-------- --------- --------
TOTAL REVENUES 188,838 131,889 124,317
COSTS AND EXPENSES:
Cable Television Expenses
Operating expenses 77,638 55,196 54,307
General and administrative expenses (including
approximately $2,717,000, $2,994,000 and $3,849,000
of related party expenses during the years ended
December 31, 1995, 1994 and 1993, respectively) 8,284 8,120 10,034
Non-cable operating, general and administrative 32,382 11,810 7,989
Depreciation and amortization 55,805 45,585 43,328
-------- --------- --------
OPERATING INCOME 14,729 11,178 8,659
OTHER INCOME (EXPENSE):
Interest expense (49,552) (36,883) (40,780)
Equity in losses of affiliated entities (58) (3,707) (3,817)
Interest income 14,383 5,886 3,919
Gain (loss) on sale of assets - 15,496 (3,231)
Other, net (526) (661) (816)
-------- --------- --------
LOSS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (21,024) (8,691) (36,066)
Income tax provision - - -
-------- --------- --------
LOSS BEFORE EXTRAORDINARY ITEM (21,024) (8,691) (36,066)
EXTRAORDINARY ITEM:
Loss on early extinguishment of debt,
net of related income taxes (692) - (12,781)
-------- --------- --------
NET LOSS $ (21,716) $ (8,691) $ (48,847)
======== ========= ========
PRIMARY LOSS PER SHARE:
Loss before extraordinary item $ (.67) $ (.45) $ (2.16)
Extraordinary item (.02) - (.76)
-------- --------- --------
$ (.69) $ (.45) $ (2.92)
======== ========= ========
WEIGHTED AVERAGE NUMBER OF CLASS A COMMON
AND COMMON SHARES OUTSTANDING 31,270 19,517 16,728
======== ========= ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
53
<PAGE> 57
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' INVESTMENT Jones Intercable, Inc.
For the years ended December 31, 1993, 1994 and 1995 and Subsidiaries
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized
Holding
Class A Common Stock Common Stock Additional Gain on
---------------------- -------------------- Paid-In Marketable Accumulated
Shares Amount Shares Amount Capital Securities Deficit
(Stated in Thousands)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, December 31, 1992 8,834 $ 88 4,913 $ 49 $ 67,343 $ - $ (53,482)
Proceeds from stock options
exercised 46 1 - - 305 - -
Sale of Class A Common
Stock 3,449 34 - - 48,582 - -
Class A Common Stock
issued upon conversion of
Subordinated Debentures 6 - - - 100 - -
Class A Stock Option Grants - - - - 4,080 - -
Purchase of Company Stock
from Jones Spacelink, Ltd. (60) (1) - - (413) - (336)
Net loss - - - - - - (48,847)
--------- -------- -------- -------- --------- --------- --------
BALANCES, December 31, 1993 12,275 122 4,913 49 119,997 - (102,665)
Proceeds from stock options
exercised 42 1 200 2 1,460 - -
Class A Stock Option Grants - - - - 261 - -
Spacelink Acquisition 3,900 39 - - 16,241 - (11,825)
Sale of Class A Common Stock
to Bell Canada International Inc. 9,914 99 - - 256,194 - -
Net loss - - - - - - (8,691)
--------- -------- -------- -------- --------- --------- --------
BALANCES, December 31, 1994 26,131 261 5,113 51 394,153 - (123,181)
Proceeds from stock options
exercised 81 1 - - 461 - -
Class A Common Stock Grants - - - - 261 - -
Unrealized holding gain on
marketable securities - - - - - 42,504 -
Net loss - - - - - - (21,716)
--------- -------- -------- -------- --------- --------- --------
BALANCES, December 31, 1995 26,212 $ 262 5,113 $ 51 $ 394,875 $ 42,504 $ (144,897)
========= ======== ======== ======== ========= ========= ========
</TABLE>
The accompanying notes to consolidated financial statements are
an integral part of these statements.
54
<PAGE> 58
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF
CASH FLOWS Jones Intercable, Inc.
For the years ended December 31, 1995, 1994 and 1993 and Subsidiaries
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
(Stated in Thousands)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (21,716) $ (8,691) $ (48,847)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Extraordinary loss on early extinguishment
of debentures, net of related income taxes 692 - 12,781
Class A Common Stock option expense 261 261 -
Loss (gain) on sale of assets - (15,496) 3,231
Depreciation and amortization 55,805 45,585 43,328
Equity in losses of affiliated entities 58 3,707 3,817
Increase in restricted cash (8,574) (1,196) -
Increase in trade receivables (7,549) (2,193) (1,154)
Increase in other receivables, deposits,
prepaid expenses and other assets (14,526) (827) (12,865)
Increase in accounts payable, accrued
liabilities and subscriber prepayments and deposits 19,040 7,597 4,910
--------- -------- --------
Net cash provided by operating activities 23,491 28,747 5,201
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of cable television systems (253,724) - (26,455)
Sale of cable television systems - 35,587 15,258
Purchase of property and equipment (63,216) (28,801) (20,155)
Investment in cable television partnerships and affiliates (4,200) (34,846) (16,918)
Acquisition Costs - (5,438) -
Other, net (304) 997 -
--------- -------- --------
Net cash used in investing activities (321,444) (32,501) (48,270)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 30,000 84,000 192,000
Repayment of debt - (251,000) (164,000)
BCI Investment - 258,893 -
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 462 1,463 53,004
Decrease (increase) in accounts receivable from affiliated entities 13,712 (9,680) (1,218)
Purchase of Company stock - - (748)
Redemption of debentures (19,368) - (138,000)
Proceeds from debenture offerings, net - - 98,115
Other, net 315 670 761
--------- -------- --------
Net cash provided by financing activities 221,621 81,746 39,914
--------- -------- --------
Increase (decrease) In Cash and Cash Equivalents (76,332) 77,992 (3,155)
Cash and Cash Equivalents, beginning of year 78,646 654 3,809
--------- -------- --------
Cash and Cash Equivalents, end of year $ 2,314 $ 78,646 $ 654
========= ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
55
<PAGE> 59
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1995, 1994 and 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Jones Intercable, Inc. was formed in 1970 to own, operate and manage
cable television systems. Jones Intercable, Inc. and its subsidiaries are
referred to herein as the "Company." As of December 31, 1995, through a total
of 54 owned and managed cable television systems, the Company served
approximately 1.4 million subscribers in the United States. 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
Spacelink shareholders exercising dissenters' rights) in exchange for 3,900,000
shares of the Company's Class A Common Stock. Glenn R. Jones, Chairman and
Chief Executive Officer of the Company, controls the election of a majority of
the Company's Board of Directors, through his ownership of a majority of the
Company's outstanding Common Stock.
In May 1994, the Company and Bell Canada International Inc. ("BCI")
entered into an agreement whereby BCI agreed to acquire an approximate 30%
economic interest in the Company through the purchase of approximately 38% of
the 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 March
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 December 1994, resulting
in BCI owning an approximate 30% economic interest in the Company for a total
consideration of approximately $258,900,000. BCI also has a contractual
commitment to invest up to an additional $141,100,000 to maintain its 30%
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 $141,100,000 commitment.
On December 20, 1994, Jones International, Ltd. ("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 a majority of the Company's
Board of Directors.
Effective Registration Statement
The Company has an effective registration statement relating to the
sale of $600 million of senior debt securities, senior subordinated debt
securities, subordinated debt securities and Class A Common Stock. The
Company, from time to time, may issue securities not to exceed $600 million
pursuant to this
56
<PAGE> 60
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
registration statement. Proceeds would be used for general corporate purposes,
which may include the acquisition of cable television systems from managed
partnerships and/or from unaffiliated parties, refinancings of indebtedness,
working capital, capital expenditures, and repurchases and redemptions of
securities.
Summary of Significant Accounting Policies
Basis of Presentation
The Company has changed its fiscal year end from May 31 to December
31, effective December 31, 1995. Accordingly, the accompanying financial
statements have been restated to present the Company's financial position as of
December 31, 1995 and 1994 and its results of operations, changes in
shareholders' investments and cash flows for each of the three years in the
period ended December 31, 1995.
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, including Jones Cable Holdings, Inc.
("JCH"), a wholly owned subsidiary formed in October 1995 that owns a majority
of the cable television assets currently held by the Company. The Company's
investments in affiliates and domestic cable television partnerships (Note 4)
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>
December 31,
-------------------------------------------------
1995 1994 1993
-------------------------------------------------
<S> <C> <C> <C>
(Stated in Thousands)
Income taxes $ - $ - $ -
======== ======== ========
Interest $ 43,079 $ 36,904 $ 39,751
======== ======== ========
</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
57
<PAGE> 61
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
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 4, on April 11, 1995, the Company
converted its $20,000,000 in advances to the Mind Extension University, Inc.
("ME/U") into Class A Common Shares of Jones Education Networks, Inc. ("JEN").
During 1995 and 1994, the Company recorded $261,000 and $261,000, respectively
of Additional Paid-in Capital related to Class A Common Stock option grants as
discussed in Note 9.
Restricted Cash
Restricted cash consists of $3,413,000 relating to a non-qualified
deferred compensation plan in which certain employees of the Company
participate and $6,357,000 pledged to commercial banks for letters of credit.
In February 1996, $4,600,000 of the cash pledged for letters of credit was
released by the banks.
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.
58
<PAGE> 62
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
Investment in Equity Securities
The 6,225,796 American Depository Shares ("ADSs") of Bell Cablemedia
plc held by the Company are now considered available for sale because of an
effective shelf registration statement that is available to the Company. In
accordance with Statement of Financial Accounting Standards No. 115 "Accounting
for Certain Investments in Debt and Equity Securities," the ADSs are reflected
at their quoted fair market value with the unrealized holding gain reflected as
a separate component of shareholders' investment.
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.
Distributions from Managed Partnerships
Distributions earned by the Company as general partner of its managed
partnerships related to cable television properties sold by such partnerships
to unaffiliated parties are recorded as revenues when received. Distributions
earned by the Company as general partner of its managed partnerships related to
cable television properties sold by such partnerships to the Company are
treated as a reduction of the purchase prices of the cable television systems
purchased. Distributions earned by the Company as general partner of its
managed partnerships related to cable television properties sold by such
partnerships to entities in which the Company has a continuing equity interest
are deferred and recognized as revenue in future periods.
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
Shares held in treasury have been retired and classified as authorized
but unissued shares in accordance with the Colorado Business Corporation Act.
2. ACQUISITIONS, EXCHANGES AND SALES
Acquisitions by the Company
On October 20, 1995, the Company purchased the cable television system
serving areas in and around Augusta, Georgia (the "Augusta System") from Cable
TV Fund 12-B, Ltd. ("Fund 12-B"), one of the Company's managed limited
partnerships. The purchase price was $142,618,000, 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. The
Company, as general partner of Fund 12-
59
<PAGE> 63
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
B, received a distribution from Fund 12-B of $13,222,000 upon the closing of
this transaction. Such distribution reduced the Company's basis in the assets
of the Augusta System. The Augusta System passes approximately 102,000 homes
and serves approximately 68,200 basic subscribers. Funding for this
transaction was provided by cash on hand.
On November 29, 1995, the Company purchased the cable television
system serving Dale City, Lake Ridge, Woodbridge, Fort Bevoir, Triangle,
Dumfries, Quantico, Accoquan and portions of Prince William County, all in the
state of Virginia (the "Dale City System") from an unaffiliated party. The
purchase price was $123,000,000, subject to normal closing adjustments. The
purchase was funded by cash on hand and borrowings available under the
Company's credit facility. The Company paid Jones Financial Group, Ltd.
("Financial Group"), a subsidiary of Jones International, Ltd., a fee of
$1,328,400 for acting as the Company's financial advisor in connection with
this transaction. All fees paid to Financial Group by the Company are based
upon 90% of the estimated commercial rate charged by unaffiliated brokers. The
Dale City System passes approximately 65,100 homes and serves approximately
49,300 basic subscribers.
On January 10, 1996, the Company purchased the cable television
systems serving Manassas, Manassas Park, Haymarket and portions of
unincorporated Prince William County, all in the State of Virginia (the
"Manassas System") from an unaffiliated party. The purchase price of the
Manassas System was $71,000,000, subject to normal closing adjustments. The
purchase was funded by borrowings available under the Company's credit
facility. The Company paid Financial Group a fee of $896,000 for acting as the
Company's financial advisor in connection with this transaction. All fees paid
to Financial Group by the Company are based upon 90% of the estimated
commercial rate charged by unaffiliated brokers. The Manassas System passes
approximately 39,300 homes and serves approximately 26,500 basic subscribers.
On August 11, 1995, the Company entered into a purchase and sale
agreement with IDS/Jones Growth Partners 87-A, Ltd., one of the Company's
managed partnerships, to acquire from such partnership the cable television
system serving areas in and around Carmel, Indiana (the "Carmel System"). The
purchase price was $44,235,333, which was 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 19,200
basic subscribers. Closing of this transaction was completed February 28,
1996. The purchase of the Carmel System was funded by borrowings available
under the Company's revolving credit facility.
On August 11, 1995, the Company entered into a purchase and sale
agreement with Jones Cable Income Fund 1-B, Ltd., one of the Company's managed
partnerships, to acquire from such partnership the cable television system
serving areas in and around Orangeburg, South Carolina (the "Orangeburg
System"). The purchase price was $18,347,667, which was 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 12,500 basic subscribers. Closing of this transaction was
completed February 28, 1996. The purchase of the Orangeburg System was funded
by borrowings available under the Company's revolving credit facility.
On August 11, 1995, the Company entered into a purchase and sale
agreement with the Cable TV Fund 12-BCD Venture (the "Venture"), a joint
venture of three of the Company's managed partnerships,
60
<PAGE> 64
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
to acquire from the Venture the cable television system serving areas in and
around Tampa, Florida (the "Tampa System"). The purchase price was
$110,395,667, which was the average of three separate independent appraisals of
the fair market value of the Tampa System. The Tampa System passes
approximately 128,500 homes and serves approximately 65,000 basic subscribers.
Closing of this transaction was completed February 28, 1996. The purchase of
the Tampa System was funded by borrowings available under the Company's
revolving credit facility.
Exchange by the Company
On August 11, 1995, the Company entered into an asset exchange
agreement (the "TWEAN Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television system operator. Pursuant to the TWEAN Exchange Agreement, on
February 29, 1996, the Company conveyed to TWEAN 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 received from
TWEAN the cable television systems serving Andrews Air Force Base, Capitol
Heights, Cheltenham, District Heights, Fairmount Heights, Forest Heights,
Morningside, Seat Pleasant, Upper Marlboro, and portions of Prince Georges
County, all in Maryland (the "Prince Georges County System"), and portions of
Fairfax County, Virginia (the "Reston System"). These systems serve
approximately 85,000 subscribers. This transaction was considered a
non-monetary exchange of similar productive assets for accounting purposes and
the Prince Georges County System and the Reston System were recorded at the
historical cost of the assets given up plus the $3,500,000 cash consideration.
The Company paid Financial Group a $1,668,000 fee upon the completion of the
TWEAN Exchange Agreement as compensation to it for acting as the Company's
financial advisor. All fees paid to Financial Group by the Company are based
upon 90% of the estimated commercial rate charged by unaffiliated brokers.
The pro forma effect of the above-described acquisitions and exchange
on the Company's results of operations for the year ended December 31, 1995,
assuming the transactions occurred January 1, 1995, are presented in the
following unaudited tabulation. The Company expects operating income before
depreciation and amortization to increase approximately $40,230,000 as a result
of these transactions, but depreciation and amortization charges will cause
operating income to decrease and net loss to increase.
<TABLE>
<CAPTION>
For the year ended December 31, 1995:
-------------------------------------
As Reported Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $ 188,838 $ 98,703 $ 287,541
============= ============ =============
Operating Income $ 14,729 $ (8,260) $ 6,469
============= ============ =============
Net Loss $ (21,716) $ (38,859) $ (60,575)
============= ============ =============
Loss Per Share $ (.69) $ (1.94)
============= =============
</TABLE>
61
<PAGE> 65
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
The pro forma effect of the above-described acquisitions and exchange
and the acquisition of the assets of Jones Spacelink, Ltd. in December 1994 on
the Company's results of operations for the year ended December 31, 1994,
assuming the transactions occurred January 1, 1994, are presented in the
following unaudited tabulation:
<TABLE>
<CAPTION>
For the year ended December 31, 1994:
-------------------------------------
As Reported Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $ 131,889 $ 133,958 $ 265,847
============= ============ =============
Operating Income $ 11,178 $ (15,504) $ (4,326)
============= ============ =============
Net Loss $ (8,691) $ (54,632) $ (63,323)
============= ============ =============
Loss Per Share $ (.45) $ (3.24)
============= =============
</TABLE>
Prior Year Acquisition
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 Company paid The Jones Group, Ltd. $680,000 for
brokerage services related to this acquisition. At that time, the Company
owned only 20% of The Jones Group, Ltd. 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.
Proposed Acquisitions by the Company
On September 5, 1995, the Company entered into an asset purchase
agreement with Cable TV Joint Fund 11, a joint venture (the "Venture") among
Cable TV Fund 11-A, Ltd., Cable TV Fund 11-B, Ltd., Cable TV Fund 11-C, Ltd.
and Cable TV Fund 11-D, Ltd., Colorado limited partnerships managed by the
Company, to acquire from the Venture the cable television system serving the
City of Manitowoc, Wisconsin (the "Manitowoc System"). The purchase price is
$15,735,667, which is the average of three separate independent appraisals of
the fair market value of the Manitowoc System. The closing of this transaction
is contingent upon the City of Manitowoc's approval of the renewal and
transfer of the City of Manitowoc cable television franchise and the approval
of the transaction by a majority of the limited partners of each of the four
partnerships that form the Venture. The Company, as general partner of the
partnerships that form the Venture, will receive a distribution of
approximately $3,900,000 upon the closing of this transaction. The Manitowoc
System passes approximately 16,000 homes and serves approximately 10,800 basic
subscribers.
On September 5, 1995, the Company entered into an asset purchase
agreement with Jones Spacelink Income Partners 87- 1, L.P., a Colorado limited
partnership managed by the Company, to acquire from that partnership the cable
television systems serving the communities of Lodi, Burbank, Lafayette
Township, New London, Bailey Lakes, Savannah Shreve, Jeromesville, West
Lafayette, Loudonville, Perrysville, Creston, Gloria Glens, Sterling, Seville,
Westfield Center, Chippewa, Lake
62
<PAGE> 66
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
Area, Rittman, West Salem, Bloomville, Spencer, Polk and Congress, all in the
State of Ohio (the "Lodi System"). The purchase price is $25,706,000, which is
the average of three separate independent appraisals of the fair market value
of the Lodi System. The Lodi System passes approximately 20,600 homes and
serves approximately 15,100 basic subscribers.
On September 5, 1995, the Company entered into an asset purchase
agreement with Jones Spacelink Income/Growth Fund 1-A, Ltd., a Colorado limited
partnership managed by the Company, to acquire from that partnership the cable
television system serving the areas in and around Ripon, Wisconsin (the "Ripon
System"). The purchase price is $3,712,667, which is the average of three
separate independent appraisals of the fair market value of the Ripon System.
The Ripon System passes approximately 2,500 homes and serves approximately
2,450 basic subscribers.
On September 5, 1995, the Company entered into a second asset purchase
agreement with Jones Spacelink Income/Growth Fund 1-A, Ltd. to acquire from
that partnership the cable television system serving the areas in and around
Lake Geneva, Wisconsin (the "Lake Geneva System"). The purchase price is
$6,345,667, which is the average of three separate independent appraisals of
the fair market value of the Lake Geneva System. The Lake Geneva System passes
approximately 5,400 homes and serves approximately 3,600 basic subscribers.
Funding for these acquisitions is expected to be provided by
borrowings available under the Company's revolving credit facility. The
closings of the Company's acquisitions of the Manitowoc System, the Lodi
System, the Ripon System and the Lake Geneva System are not contingent upon the
closing of the Time Warner exchange.
Proposed Exchange by the Company
On September 1, 1995, the Company entered into an asset exchange
agreement (the "Time Warner Exchange Agreement") with Time Warner Entertainment
Company, L.P. ("Time Warner"), an unaffiliated party. Pursuant to the Time
Warner Exchange Agreement, the Company will convey to Time Warner the cable
television system serving Hilo, Hawaii (the "Hilo System") and the cable
television system serving Kenosha, Wisconsin (the "Kenosha System") as well as
the Manitowoc System, the Lodi System, the Ripon System and the Lake Geneva
System. The Hilo System and the Kenosha System serve approximately 17,000 and
27,000 basic subscribers, respectively, and pass approximately 23,000 and
39,000 homes, respectively. In return, the Company will receive from Time
Warner the cable television systems serving the communities in and around
Savannah, Georgia (the "Savannah System") and cash in the amount of $4,000,000,
subject to normal closing adjustments. Taking into account the aggregate
purchase price to be paid by the Company for the Lodi System, the Lake Geneva
System, the Ripon System and the Manitowoc System and the estimated valuation
of the Hilo System and the Kenosha System, less the $4,000,000 cash purchase
price to be paid by Time Warner to the Company, the aggregate consideration to
be paid for the Savannah System is approximately $119,195,000. The Savannah
System passes approximately 100,000 homes and serves approximately 63,000
subscribers. This transaction will be considered a non-monetary exchange of
similar productive assets for accounting purposes and the Savannah System will
be recorded at the historic costs of the assets given up less the $4,000,000
cash consideration.
63
<PAGE> 67
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
The closing of the transaction contemplated by the Time Warner
Exchange Agreement is subject to customary closing conditions, including
obtaining necessary governmental and other third party consents. The parties
intend to complete the transactions during the first half of 1996, but there
can be no assurance that all conditions will be satisfied or waived by that
time. Either party may terminate the Time Warner Exchange Agreement if the
transactions are not completed on or before September 30, 1996. The Company
will pay Financial Group a $1,286,000 fee upon the completion of the Time
Warner Exchange Agreement as compensation to it for acting as the Company's
financial advisor. All fees paid to Financial Group by the Company are based
upon 90% of the estimated commercial rate charged by unaffiliated brokers.
Sales by the Company
During 1993, the Company sold the cable television system serving a
portion of San Diego County, California for $15,258,000. Brokerage fees
totaling approximately $381,000, or 2 1/2% of the sales prices, were paid to
The Jones Group, Ltd., which at the time was owned 20% by the Company. The
Company recognized a loss relating to this transaction of $3,231,000 during
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
July 1994. The Company paid The Jones Group, Ltd., which at the time was owned
20% by the Company, $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 of $15,496,400 related to this transaction.
Proposed Sale by Managed Partnership
On October 6, 1995, Cable TV Fund 11-B, Ltd. ("Fund 11-B"), one of the
Company's managed partnerships, entered into an agreement to sell the cable
television systems serving areas in and around Lancaster, New York to an
unaffiliated third party for $84,000,000. Upon closing of this transaction,
Fund 11-B will repay its indebtedness, a brokerage fee and a sales tax
liability, and Fund 11-B then will distribute the remaining proceeds to its
partners. The Company, as general partner of Fund 11-B, expects to receive a
distribution of approximately $13,950,000 related to this transaction. In
addition, The Jones Group, Ltd., which became a wholly owned subsidiary of the
Company on December 20, 1994, will receive a fee of $2,100,000 for acting as
the broker in this transaction. The closing of this transaction is expected to
occur in the first half of 1996.
3. TRANSACTIONS WITH RELATED PARTIES
The Company and the limited partnerships for which the Company is
general partner (Note 5) have had, and will continue to have, certain
transactions with International and its other subsidiaries. Principal
recurring transactions are as follows:
64
<PAGE> 68
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
Costs Shared by the Company and Managed Partnerships
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 December 31, 1995, 1994 and 1993 totaled $6,439,000, $5,361,000 and
$4,175,000, 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, expiring July 2000, 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 49% 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
December 31, 1995, 1994 and 1993 were $1,645,000, $1,762,000 and $1,735,000,
respectively.
Upon the closing of the BCI investment in December 1994, the Company
entered into a Secondment Agreement with BCI. Pursuant to the Secondment
Agreement, BCI provided nine secondees during 1995. These secondees worked for
the Company and its managed partnerships. The Company reimbursed BCI for the
full employment costs of such individuals. The Company reimbursed BCI $823,000
during the year ended December 31, 1995. No such reimbursements were made
during 1994 or 1993.
The Company paid approximately 25%, 21% and 21% of the above-described
data processing, rental and secondment expenses during the years ended December
31, 1995, 1994 and 1993, respectively. The remainder of the expenses were
allocated to and paid by the Company's managed limited partnerships.
Costs Borne and Payments Received by the Company
In 1992, 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 leased by
Space Segment. Under the license agreement, as amended, which expired December
31, 1994, the Company, Jones Infomercial Networks, Inc. and Jones Computer
Network, Ltd. ("JCN"), both affiliates of International, had a license to use
the transponder for their respective purposes. The Company recognized
$1,172,000 and $2,400,000 of rental expense related to this lease agreement
during the years ended December 31, 1994 and 1993, respectively. Because the
license has expired, no expense related to this lease agreement was recognized
during the year ended December 31, 1995.
Product Information Network, Inc. ("PIN") is an affiliate of
International that provides a satellite programming service. PIN shows product
infomercials 24 hours a day, seven days a week. A portion of the revenues
generated by PIN are paid to the cable television systems that carry PIN's
programming. Most of the Company's owned cable television systems carry PIN
for all or part of each day. Aggregate payments received by the Company from
PIN relating to the Company's owned cable television systems
65
<PAGE> 69
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
totaled approximately $300,000 and $103,000 for the years ended December 31,
1995 and 1994, respectively. No such payments were made for the year ended
December 31, 1993.
The Company has incurred approximately $2,717,000, $2,994,000 and
$3,849,000 of related party expenses in connection with the related party
transactions shared with managed partnerships and the related party costs borne
solely by the Company, which have been charged to operating, general and
administrative expenses during the years ended December 31, 1995, 1994 and
1993, respectively.
Effective upon the closing of the BCI investment in December 1994, the
Company entered into a Supply and Services Agreement with BCI. Pursuant to the
Supply and Services Agreement, BCI provides 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 to BCI under the
Supply and Services Agreement during the year ended December 31, 1995 totaled
$2,000,000. No payments were made during the years ended December 31, 1994 and
1993.
Financial Group, which is owned by International and Glenn R. Jones,
performs services for the Company as its agent in connection with negotiations
regarding various financial arrangements of the Company. The Company has
entered into a Financial Services Agreement with Financial Group pursuant to
which Financial Group has agreed 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
services. 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. The Company paid fees
totaling $1,328,400 in 1995 related to the purchase of the Dale City System.
In December 1994, the Company paid fees of $2,000,000 to Financial Group for
its services to the Company in connection with the BCI investments in the
Company (see Note 1). In addition, the Company paid an advisory fee of
L.414,854 (approximately $632,600) to Financial Group in 1994 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 4).
During 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%.
For information about additional transactions between the Company and
related parties, see Note 4 below.
4. INVESTMENTS IN CABLE TELEVISION PARTNERSHIPS AND JOINT VENTURES
Jones Global Group, Inc.
The Company owns a 38% interest in Jones Global Group, Inc. ("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
66
<PAGE> 70
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
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. In July 1994, Jones Global Group sold 1,100,000 ADSs. Jones
Global Group paid an advisory fee of L.251,812 (approximately $384,000) to
Financial Group for its services to Jones Global Group in connection with the
aforementioned United Kingdom transactions. In 1995, Jones Global Group sold
an additional 444,200 ADSs. The Company accounts for Jones Global Group using
the equity method of accounting and accordingly has recorded its share of gain
relating to the sale of ADSs by Jones Global Group.
Bell Cablemedia plc
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 in exchange for
6,035,648 ADSs representing 30,178,240 Ordinary Shares of Bell Cablemedia. As
a result of this transaction, the Company no longer owns 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 subsequently were transferred
to the Company in repayment of advances made to finance such affilates' 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 paid an advisory fee of L.414,854 (approximately $632,600) to Financial
Group in 1994 for its services to the Company in connection with the
aforementioned United Kingdom and Spain transactions. The 6,225,796 ADSs of
Bell Cablemedia plc held by the Company are now considered available for sale
because of an effective shelf registration statement that is available to the
Company. In accordance with Statement of Financial Accounting Standards No.
115 "Accounting for Certain Investments in Debt and Equity Securities," the
ADSs are reflected at their estimated fair market value with the unrealized
holding gain reflected as a separate component of shareholders' investment.
Mind Extension University, Inc.
During 1992, 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 for $3,135,000. Payments
made to ME/U by the Company for programming provided to the Company's owned
cable television systems for the years ended December 31, 1995, 1994 and 1993
totaled approximately $196,000, $116,000 and $90,000, respectively. At
December 31, 1995, the Company's net investment in ME/U was $2,419,977.
Jones Education Networks, Inc.
In 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
67
<PAGE> 71
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
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, for an approximate 17% equity 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. ("JCN"). Payments made to JCN by the
Company for programming provided to the Company's owned cable television
systems for the years ended December 31, 1995 and 1994 totaled approximately
$488,000 and $68,000, respectively. No such payments were made for the year
ended December 31, 1993.
Jones Intercable Investors, L.P.
The Company is the general partner of Jones Intercable Investors,
L.P., a Colorado limited partnership, which was formed on September 18, 1986,
and the Company owns a 1% general partner interest. In a series of
transactions, the Company purchased limited partnership units, giving the
Company an approximate 19% limited partner interest in Jones Intercable
Investors, L.P. The Company's net investment in this partnership totaled
approximately $3,982,000 at December 31, 1995. Based upon the quoted market
price of $12.38 per unit at December 31, 1995, the quoted market value of this
investment was approximately $19,709,000. The Company has accounted for this
investment using the equity method of accounting.
Jones Cyber Solutions, Ltd.
The Company and Jones Cyber Solutions, Ltd. ("JCS"), an indirect
subsidiary of International, have formed a venture, known as Jones Customer
Service Management, L.L.C., for the purpose of developing a subscriber billing
and management system. As of December 31, 1995, the Company had invested
$5,200,000 in the venture. JCS is performing the basic system development work
for the venture and is being paid periodically on a time and materials basis,
plus 10% of the amount charged, for its own service. Upon the completion of
the billing and management system software, the Company and JCS will have
license rights to use such system in perpetuity. The venture will also perform
additional services to the Company in the implementation of the new subscriber
billing and management system. The venture intends to subcontract such
maintenance and conversion services to JCS on the basis of time and materials
plus 10% of the amount of the JCS services. The venture will grant to JCS the
exclusive right to distribute the system to third parties for a period of five
years for a commission on the license fees to be earned by the venture from
such licensing.
5. 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 also purchased limited partner
interests in certain of the partnerships and generally participates with
respect to such interests on the same basis as other limited partners.
68
<PAGE> 72
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
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.
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 4) 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% to
the limited partners and 1% to the general partner. The
69
<PAGE> 73
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
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% to 40% 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.
The Company recognized distributions from managed partnerships
totaling $13,222,000 for the year ended December 31, 1995. No such
distributions were recognized during 1994 or 1993. The $13,222,000
distribution received during 1995 from Cable TV Fund 12-B, Ltd. upon the sale
to the Company of the cable television system serving the area in and around
Augusta, Georgia was recorded as a reduction in the Company's basis in the
assets of the Augusta System.
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
(including secondees of BCI), 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 the Company's
general and administrative expenses by approximately $31,987,000, $32,645,000
and $30,196,000 for the years ended December 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 December 31, 1995
was 10.51%. Interest charged to the limited partnerships for the years ended
December 31, 1995, 1994 and 1993 was $2,592,000, $4,250,000 and $1,814,000,
respectively.
70
<PAGE> 74
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
Certain condensed financial information regarding managed
partnerships, on a combined basis, is as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------
1995 1994 1993
--------------------------------------------------
(Stated in Thousands)
<S> <C> <C> <C>
Total assets $ 806,319 $ 923,117 $ 986,560
Debt 676,760 688,393 668,015
Amounts due general partner 14,969 25,735 20,631
Partners' Capital (Net of
accumulated deficit) 99,505 174,001 262,230
Revenues 427,877 397,318 385,990
Depreciation and amortization 151,236 153,520 157,643
Operating loss (16,438) (34,565) (32,987)
Net income (loss) 20,964 (80,988) (73,655)
</TABLE>
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 income (loss) for all managed
limited partnerships for the year ended December 31, 1995 included gains on
sales and liquidations recognized by certain partnerships which totaled
approximately $91,693,000. No such gains were recognized during the years
ended December 31, 1994 or 1993.
6. NOTES RECEIVABLE
On December 19, 1994, Spacelink received a promissory note from Jones
Earth Segment, Inc.("Earth Segment"), then an affiliate of Spacelink, in
conjunction with the transfer of Earth Segment to International. The Company
acquired this note as part of the acquisition of Spacelink's assets. 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.
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
relating to this tax sharing agreement. The balance of this receivable at
December 31, 1995 was $1,834,000.
71
<PAGE> 75
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
7. DEBT
Debt consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------
1995 1994
---------- ----------
(Stated in Thousands)
<S> <C> <C>
LENDING INSTITUTIONS:
Credit facility $ 30,000 $ -
SENIOR NOTES:
Senior Notes due March 15, 2002, interest payable
semi-annually at 9 5/8% 200,000 -
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 10.5%, 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%, redeemed October 12, 1995 - 19,368
OTHER:
Capitalized equipment lease
obligations due in installments through 1998 and other debt 2,714 2,210
---------- ----------
Total debt $ 492,714 $ 281,578
========== ==========
</TABLE>
On October 31, 1995, the Company, through JCH, entered into a
$500,000,000 reducing revolving credit facility with a group of commercial
banks. The new credit facility provides for the transfer of a majority of the
Company's cable television properties to JCH, which is the borrower under the
credit facility. The entire $500,000,000 commitment is available through March
31, 1999, at which time the commitment will be reduced quarterly with a final
maturity of December 31, 2004. As of December 1995, $30,000,000 was
outstanding under this agreement. Interest on outstanding obligations ranges
from Base Rate to Base Rate plus 1/8% or LIBOR plus 5/8% to LIBOR plus 1 1/8%
based on certain financial covenants. In addition, a commitment fee of 3/16%
to 3/8% on the unused commitment is also required. The effective interest rate
on amounts outstanding at December 31, 1995 was 6.56%.
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
72
<PAGE> 76
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
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.
The 11.5% Senior Subordinated Debentures due 2004 described above
provide for annual sinking fund payments of $50,000,000 commencing July 15,
2002 which are calculated to retire 62 1/2% of the issue prior to maturity
after consideration of the debt redemptions. There are no sinking fund
requirements related to the 10.5% Senior Subordinated Debentures due March 1,
2008.
On October 12, 1995, the Company redeemed the remaining outstanding
7.5% Convertible Subordinated Debentures (the "Convertible Debentures") due
2007, at a price equal to 101.5% of the principal amount, plus accrued
interest. The total principal amount of the Convertible Debentures was
$43,100,000, of which $23,732,000 were held by the Company and $19,368,000 were
held by unaffiliated investors. The Convertible Debentures were redeemed with
cash on hand. The Company recognized a loss of $692,000 relating to this
redemption.
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. Certain of the Company's credit arrangements
restrict the right of the Company to declare and pay cash dividends without the
consent of the holders of the debt.
At December 31, 1995, the carrying amount of the Company's long-term
debt was $492,714,000 and the estimated fair value was $536,814,000. The fair
value of the Company's long-term debt is estimated based on the quoted market
prices for the same issues. There are not significant debt maturities in the
five years ended December 31, 2000.
8. INCOME TAXES
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 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.
73
<PAGE> 77
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
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:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1995 1994 1993
--------------------------------------------------
(Stated in Thousands)
<S> <C> <C> <C>
Computed "expected" tax (benefit) expense $ (7,358) $ (3,042) $ (12,623)
State and local taxes, net of federal income
tax benefit (619) (194) (1,150)
Dividends excluded for income tax purposes (73) (118) (21)
Intangibles not deductible for tax purposes 500 971 243
Tax credits - - 591
Other 261 98 17
---------- ---------- -----------
Total income tax (benefit) provision from operations (7,289) (2,285) (12,943)
Tax effect of extraordinary operations (265) - (4,889)
Valuation Allowance 7,554 2,285 17,832
---------- ---------- -----------
Total income tax benefit $ - $ - $ -
========== ========== ===========
</TABLE>
The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1995 and 1994 are presented below:
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------
1995 1994
------------ ------------
(Stated in Thousands)
<S> <C> <C>
Deferred Tax Assets:
Net operating loss carryforwards $ 58,411 $ 53,226
Investment tax credit carryforwards 1,076 1,076
Alternative minimum tax credit carryforwards 1,116 1,116
Investment in affiliates and domestic television
partnerships 9,661 10,093
Future deductible amounts associated with other
assets and liabilities 2,330 1,987
---------- ----------
Total gross deferred tax assets 72,594 67,498
Valuation allowance on deferred tax assets (29,253) (43,509)
Deferred tax liabilities
Property and equipment, due to differences
in depreciation methods for financial statement
and tax purposes (24,608) (21,596)
Investment in Bell Cablemedia plc (14,871) 1,469
---------- ----------
Net deferred tax asset $ 3,862 $ 3,862
========== ==========
</TABLE>
74
<PAGE> 78
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
At December 31, 1995, the Company had net operating loss carryforwards
for income tax purposes aggregating approximately $75,371,000 for alternative
minimum tax ("AMT") and $152,709,000 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,
4,025,000 in 2010 and $8,330,000 in 2011. The Company also had investment tax
credit carryforwards of $1,076,000 expiring in 1998 through 2005.
The Company entered into transactions during the current year which
resulted in a change in greater than 50% of the ownership interests of the
Company shares. Tax statutes limit the utilization of existing tax NOLs when
this occurs to a specified amount each year plus the amount of existing
built-in gain in corporate assets at the ownership change. Management believes
that the application of the limitation will not likely cause taxable income to
occur in a future period due to unavailability of limited NOLs.
Management believes that sufficient taxable income will be incurred
during the loss carryforward period to utilize approximately $81,961,000 of the
$152,709,000 of regular tax loss carryforwards at December 31, 1995.
Therefore, a valuation allowance has been established for approximately
$70,748,000 of net operating losses and for all investment tax credits and
alternative minimum tax credit carryforwards.
9. STOCK OPTIONS
In 1984, the shareholders of the Company approved the adoption of a
nonqualified stock option plan (the "1984 Plan") to provide for the grant of
stock options to key contributors to the Company. As of December 31, 1995,
options to purchase 708,396 shares had been granted under the 1984 Plan, of
which 411,131 shares were exercised and options to purchase 216,005 shares had
been terminated or forfeited upon resignation of the holders. No additional
options will be granted pursuant to the 1984 Plan.
The Company's 1992 stock option plan (the "1992 Plan") was approved by
the Company's shareholders in August 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 tenth 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.
In 1994 and 1995, the Company recognized approximately $261,000 and $261,000,
respectively, of non-cash compensation expense related to stock options granted
on November 9, 1993 under the 1992 Plan. As of December 31, 1995, options to
purchase 1,445,039 shares of Class A Common Stock had been granted, of which
options to purchase 10,367 shares had been exercised and 34,078 shares had been
terminated or forfeited upon resignation of the holders. As of December 31,
1995, all 200,000 of the Common Stock options authorized by the 1992 Plan had
been granted and exercised.
75
<PAGE> 79
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
Information concerning Class A Common Stock options is as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------------
1995 1994 1993
----------------------------------------------------------
<S> <C> <C> <C>
Available for grant 396,108 1,166,768 1,148,541
Outstanding 1,482,394 792,401 852,628
Price range, per share $ 5.625-13.81 $ 5.625-13.81 $ 5.625-13.81
Exercisable 412,095 266,123 120,150
Price range, per share $ 5.625-13.81 $ 5.625-13.81 $ 5.625-6.1875
Granted during period 786,511 - 610,928
Terminated during period 15,851 18,227 -
Exercised during period 80,667 42,000 45,425
Price range, per share $ 5.625-13.81 $ 5.625 $ 5.625
</TABLE>
10. 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.
76
<PAGE> 80
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
11. 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 December 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 $ 1,242 $ 1,700 $ 334 $ 3,276
1997 1,242 1,276 287 2,805
1998 1,242 1,119 124 2,485
1999 1,242 814 71 2,127
2000 725 660 29 1,414
Thereafter - 1,201 - 1,201
-------- -------- -------- --------
Total commitments $ 5,693 $ 6,770 $ 845 $ 13,308
======== ======== ======== ========
</TABLE>
Rent paid during the years ended December 31, 1995, 1994 and 1993,
totaled $3,698,000, $3,062,000 and $2,925,000, respectively.
Certain amounts included in lease commitments will be allocated to
managed limited partnerships using the method discussed in Note 5.
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.
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 been specified.
77
<PAGE> 81
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
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
reasserted their right to a jury trial. On October 4, 1995, the court granted
the Company's motion for summary judgment on the common law fraud, conversion
and breach of fiduciary duty claims and also struct plaintiffs' demand for a
jury trial. As a result, there is only one remaining substantive claim (breach
of contract); no claim for punitive damages; and the trial will be to the Court
commencing on April 29, 1996.
On October 25, 1995, plaintiffs and Jones Group filed, in the Colorado
action, a joint motion to stay the Colorado action until the resolution of the
Missouri action. The motion to stay is pending before the Colorado court.
The Company has conducted written discovery in the form of
interrogatories and requests for production of documents; has noticed the
depositions of plaintiffs and plaintiffs' expert and has retained an expert to
testify that the three appraisals were performed in accordance with standard
appraisal methodologies. Although plaintiffs have retained an "expert"
appraiser to testify that the value of the Alexandria System in November 1992
was $85 million, approximately $12 million more than the purchase price, the
Company believes both that the purchase price was fair and that the brokerage
commission was properly paid to Jones Grouip in accordance with the express
terms of the partnership agreement. Consequently, the Company intends to
defend the litigation at trial in April 1996.
In August 1995, Cable TV Fund 12-BCD Venture (the "Venture"), a
Colorado joint venture in which Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C,
Ltd. and Cable TV Fund 12-D, Ltd., Colorado limited partnerships, are general
partners, entered into a purchase and sale agreement pursuant to which the
Venture agreed to sell the Tampa, Florida cable television system (the "Tampa
System") to the Company. The Company is the general partner of each of Cable
TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV Fund 12-D, Ltd.
Closing of the purchase of the Tampa System by the Company occurred on February
28, 1996. After closing, the Company exchanged the Tampa System with an
unaffiliated cable television operator in return for systems owned by that
operator.
On September 20, 1995, a civil action entitled David Hirsch, on behalf
of himself and all others similarly situated, Plaintiff vs. Jones Intercable,
Inc., Defendant, was filed in the District Court, County of Arapahoe, State of
Colorado (Case No. 95-CV-1800). The plaintiff has brought the action as a
class action on behalf of himself and all other limited partners of Cable TV
Fund 12-D, Ltd. against the
78
<PAGE> 82
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 1995, 1994 and 1993
Company seeking to recover damages caused by the Company's alleged breaches of
its fiduciary duties to the limited partners of Cable TV Fund 12-D, Ltd. in
connection with the sale to the Company of the Tampa System. On January 25,
1996, the Plaintiff filed an amended complaint and request for a jury trial.
The Company believes that it has meritorious defenses, and the Company intends
to defend this lawsuit vigorously.
On November 17, 1995, a civil action entitled Martin Ury, derivatively
on behalf of Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV
Fund 12-D, Ltd., Plaintiff vs. Jones Intercable, Inc., Defendant and Cable TV
Fund 12-BCD Venture, Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and
Cable TV Fund 12-D, Ltd., Nominal Defendants, was filed in the District Court,
County of Arapahoe, State of Colorado (Case No. 95-CV-2212). The plaintiff, a
limited partner of Cable TV Fund 12-D, Ltd., has brought the action as a
derivative action on behalf of the three partnerships that comprise the Venture
against the Company seeking to recover damages caused by the Company's alleged
breaches of its fiduciary duties to the Venture and to the limited partners of
the three partnerships that comprise the Venture in connection with the sale to
the Company of the Tampa System and the subsequent exchange of the Tampa System
with an unaffiliated cable television operator in return for systems owned by
that operator. On February 1, 1996, the Company filed a Motion to Dismiss the
Complaint on the ground that it fails to state a claim upon which relief can be
granted as a matter of law. The Company believes that it has meritorious
defenses, and the Company intends to defend this lawsuit vigorously.
In addition to the above matters, the Company is involved in certain
other litigation in its normal course of business. The Company is also
negotiating the renewal of certain franchise agreements with franchising
authorities. 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.
12. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1995 and 1994,
consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------------
1995 1994
---- ----
<S> <C> <C>
Cable distribution systems $ 358,242 $ 249,130
Buildings 13,721 7,055
Land 3,665 2,212
Equipment and tools 12,277 9,273
Premium service equipment 33,481 27,717
Earth receive stations 3,450 3,667
Vehicles 3,125 1,873
Leasehold improvements and office furniture 20,049 15,480
Construction work in progress 4,029 583
Other 23,397 16,676
----------- -----------
475,436 333,666
Accumulated depreciation (171,948) (144,043)
----------- -----------
$ 303,488 $ 189,623
=========== ===========
</TABLE>
79
<PAGE> 83
JONES INTERCABLE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
For the years ended December 31, 1995, 1994 and 1993
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
1995
------------------------------------------------------------
Three Months Ended
------------------------------------------------------------
March 31 June 30 September 30 December 31
---------- ------------- ------------ -----------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
Revenues $ 43,891 $ 43,816 $ 44,736 $ 56,395
Depreciation and
amortization 12,014 12,811 12,796 18,184
Operating income 3,859 3,310 4,469 3,091
Net loss (3,855) (6,195) (4,449) (7,217)
Net loss per share $ (.12) $ (.20) $ (.14) $ (.23)
</TABLE>
<TABLE>
<CAPTION>
1994
------------------------------------------------------------
Three Months Ended
------------------------------------------------------------
March 31 June 30 September 30 December 31
---------- ------------- ------------ -----------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
Revenues $ 32,495 $ 32,908 $ 32,616 $ 33,870
Depreciation and
amortization 10,682 12,248 10,525 12,130
Operating income 3,608 2,232 3,365 1,973
Net income (loss) (6,361) (7,137) 10,585 (5,778)
Net income (loss) per share $ (.35) $ (.36) $ .53 $ (.27)
</TABLE>
80
<PAGE> 84
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
The information required by Part III (Items 10, 11, 12 and 13) of Form
10-K is incorporated by reference from the Company's definitive proxy statement
to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934,
as amended, not later than April 29, 1996. The information regarding executive
officers required by Item 401 of Regulation S-K of the Form 10-K may be found
under the caption "Executive Officers of the Company" at the end of Part I of
this Form 10-K.
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS.
(A)(2) SCHEDULES.
(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)
81
<PAGE> 85
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. (25)
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.
(25)
2.9 Purchase and Sale Agreement dated as of August 11,
1995 between IDS/Jones Growth Partners 87-A, Ltd. and
the Company. (25)
2.10 Purchase and Sale Agreement dated as of August 11,
1995 between Jones Cable Income Fund 1-B, Ltd. and
the Company. (25)
2.11 Purchase and Sale Agreement dated as of August 11,
1995 between Cable TV Fund 12-BCD Venture and the
Company. (25)
2.12 Asset Exchange Agreement dated as of August 11, 1995
between Time Warner Entertainment-Advance/Newhouse
Partnership and the Company. (25)
2.13 Asset Purchase Agreement dated September 5, 1995
between Cable TV Joint Fund 11 and the Company
relating to the Manitowoc System. (26)
2.14 Asset Purchase Agreement dated September 5, 1995,
between Jones Spacelink Income Partners 87-1, L.P.
and the Company relating to the Lodi System. (26)
2.15 Asset Purchase Agreement dated September 5, 1995,
between Jones Spacelink Income/Growth Fund 1-A, Ltd.
and the Company relating to the Ripon System. (26)
2.16 Asset Purchase Agreement dated September 5, 1995,
between Jones Spacelink Income/Growth Fund 1-A, Ltd.
and the Company relating to the Lake Geneva System.
(26)
2.17 Asset Exchange Agreement dated September 1, 1995,
between the Company and Time Warner Entertainment
Company, L.P. (26)
82
<PAGE> 86
2.18 Assignment and Assumption Agreement dated as of
September 15, 1995 between the Company and Jones
Cable Holdings, Inc.
2.19 Purchase and Sale Agreement dated as of October 18,
1995 between the Company and Jones Cable Holdings,
Inc.
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. (25)
3.3 Bylaws of the Company. (25)
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)
4.6 Indenture dated March 23, 1995 with respect to the
Senior Notes, between the Company and U.S. Trust
Company of California, N.A. (31)
4.7 First Supplemental Indenture dated as of March 23,
1995 with respect to $200,000,000 aggregate principal
amount of the Company's 9 5/8% Senior Notes due 2002,
between the Company and the Trustee. (31)
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)
83
<PAGE> 87
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)
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. (25)
10.1.7 Affiliate Agreement dated August 1, 1994 between the
Company and Jones Infomercial Networks, Inc. (25)
10.1.8 Services Agreement between the Company and Jones
Interactive, Inc. (25)
10.1.9 Indemnification Agreement dated March 14, 1994, among
the Company, Howard O. Thrall and George J.
Feltovich. (21)
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. (25)
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)
84
<PAGE> 88
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)
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. (25)
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. (25)
10.5.5 Credit Agreement among Jones Cable Holdings, Inc. and
NationsBank of Texas, N.A. and The Bank of Nova
Scotia, as lenders and as managing agents and various
other lenders.
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)
85
<PAGE> 89
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 Diamond Bar, California. (17)
10.6.7 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Oxnard, California. (2)
10.6.8 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Port Hueneme, California. (3)
10.6.9 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Naval Construction Battalion Center, Port Hueneme,
California. (2)
10.6.10 Modification of franchise agreement dated June 23,
1993 for the Naval Construction Battalion Center,
Port Hueneme, California. (3)
10.6.11 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
County of Ventura, California. (3)
10.6.12 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Arapahoe County, Colorado. (2)
10.6.13 Copy of a franchise and related documents thereto
granting a cable television system franchise for
certain portions of Jefferson County, Colorado. (2)
10.6.14 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Morrison, Colorado. (3)
10.6.15 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Clear Creek County, Colorado. (32)
10.1.16 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Empire, Colorado. (32)
86
<PAGE> 90
10.1.17 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Georgetown, Colorado. (32)
10.1.18 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Idaho Springs, Colorado. (33)
10.1.19 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Municipality of Silver Plume, Colorado. (32)
10.1.20 Copy of a franchise and related documents thereto
granting a cable television system franchise for Bay
County, Florida. (33)
10.1.21 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Panama City Beach, Florida. (33)
10.1.22 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
District of Hamakua, Hawaii. (34)
10.1.23 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Districts of South Hilo and Puna, Hawaii. (34) and
(32)
10.6.24 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Aiken County, South Carolina. (21)
10.6.25 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Dearing, Georgia. (21)
10.6.26 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Edgefield County, South Carolina. (21)
10.6.27 Copy of a franchise and related documents thereto
granting a cable television system franchise for
McDuffie County, Georgia. (21)
10.6.28 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of North Augusta, South Carolina. (21)
87
<PAGE> 91
10.6.29 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Thomson, Georgia. (21)
10.6.30 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Trenton, South Carolina. (21)
10.1.31 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Augusta, Georgia (Fund 12-B). (27)
10.1.32 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Blythe, Georgia (Fund 12-B). (28)
10.1.33 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
County of Burke, Georgia (Fund 12-B). (29)
10.1.34 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Unincorporated Area of Columbia County, Georgia (Fund
12- B). (30)
10.1.35 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Hephzibah, Georgia (Fund 12-B). (27)
10.1.36 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Unincorporated Area of Richmond County, Georgia (Fund
12- B). 27)
10.6.37 Copy of a franchise and related documents thereto
granting a cable television system franchise for Anne
Arundel County, Maryland. (2)
10.6.38 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Elizabeth Landing, Maryland. (2)
10.6.39 Copy of a franchise and related documents thereto
granting a cable television system franchise for Ft.
George G. Meade, Maryland. (17)
10.6.40 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Indian Head, Maryland. (3)
88
<PAGE> 92
10.6.41 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)
10.6.42 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of La Plata, Maryland. (2)
10.6.43 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Cherryville, North Carolina. (2)
10.6.44 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Cleveland County, North Carolina. (2)
10.6.45 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Cramerton, North Carolina. (3)
10.6.46 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Gastonia, North Carolina. (2)
10.6.47 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)
10.6.48 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Kings Mountain, North Carolina. (2)
10.6.49 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Lowell, North Carolina. (2)
10.6.50 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of McAdenville, North Carolina. (3)
10.6.51 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Ranlo, North Carolina. (3)
89
<PAGE> 93
10.6.52 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Stanley, North Carolina. (3)
10.6.53 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Clover, South Carolina. (3)
10.6.54 Copy of a franchise and related documents thereto
granting a cable television system franchise for York
County, South Carolina. (3)
10.6.55 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Alexandria, Virginia. (24)
10.6.56 Copy of a franchise and related documents thereto
granting a cable television system franchise for Fort
Myer, Virginia. (18)
10.6.57 Amendment dated April 6, 1990, of franchise granting
a cable television system franchise for Fort Myer,
Virginia. (20)
10.6.58 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Dumfries, Virginia.
10.6.59 Copy of a franchise and related documents thereto
granting a cable television system franchise for Fort
Belvoir, Virginia.
10.6.60 Copy of a franchise and related documents thereto
granting a cable television system franchise for Lake
Ridge Parks & Recreation Association, Lake Ridge,
Virginia.
10.6.61 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Prince William County, Virginia.
10.6.62 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Quantico, Virginia.
10.6.63 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
United States Marine Corps Base, Quantico, Virginia.
10.6.64 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Haymarket, Virginia.
10.6.65 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Manassas, Virginia.
90
<PAGE> 94
10.6.66 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Manassas Park, Virginia.
10.6.67 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Prince William County, Virginia.
10.6.68 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Kenosha, the Town of Somers and the Village
of Pleasant Prairie, Wisconsin. (35)
10.6.69 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Kenosha, Wisconsin. (32)
10.6.70 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Village of Pleasant Prairie, Wisconsin. (32)
10.6.71 Copy of a franchise and related documents thereto
granting a cable television system franchise for Town
of Somers, Wisconsin. (32)
21 List of Subsidiaries of the Company.
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.
91
<PAGE> 95
(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.
(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.
92
<PAGE> 96
(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.
(25) Incorporated by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended May 31,
1995.
(26) Incorporated by reference from the Company's Current
Report on form 8-K dated September 8, 1995.
(27) Incorporated by reference from Cable TV Fund 12-B,
Ltd.'s Report on Form 10-K for the fiscal year ended
December 31, 1985 (Commission File Nos. 0-13193,
0-13807, 0- 13964 and 0-14206).
(28) Incorporated by reference from Cable TV Fund 12-B,
Ltd.'s Report on Form 10-K for the fiscal year ended
December 31, 1987 (Commission File Nos. 0-13193,
0-13807, 0- 13964 and 0-14206).
(29) Incorporated by reference from Cable TV Fund 12-B,
Ltd.'s Report on Form 10-K for the fiscal year ended
December 31, 1990 (Commission File Nos. 0-13193,
0-13807, 0- 13964 and 0-14206).
(30) Incorporated by reference from Cable TV Fund 12-B,
Ltd.'s Report on Form 10-K for the fiscal year ended
December 31, 1992 (Commission File Nos. 0-13193,
0-13807, 0- 13964 and 0-14206).
(31) Incorporated by reference from the Company's Current
Report on form 8-K dated March 23, 1995.
(32) Incorporated by reference from the Jones Spacelink,
Ltd. Annual Report on Form 10-K for the fiscal year
ended May 31, 1993 (Commission File No. 0-8947).
(33) Incorporated by reference from the Jones Spacelink,
Ltd. Annual Report on Form 10-K for the fiscal year
ended May 31, 1987.
93
<PAGE> 97
(34) Incorporated by reference from the Jones Spacelink,
Ltd. Annual Report on Form 10-K for the fiscal year
ended May 31, 1988.
(35) Incorporated by reference from the Jones Spacelink,
Ltd. Annual Report on Form 10-K for the fiscal year
ended May 31, 1985.
(b) Reports on Form 8-K
Current Report on Form 8-K dated October 10, 1995,
describing the David Hirsch civil action regarding
the sale of the Tampa System.
Current Report on Form 8-K dated Noember 1, 1995,
describing the acquisition by Jones Cable Holdings,
Inc. of the Augusta System.
Current Report on Form 8-K dated November 10, 1995,
describing the execution of a letter of intent to
acquire a cable television system serving subscribers
in Anne Arundel County, Maryland.
Current Report on Form 8-K dated December 4, 1995,
describing the Martin Ury civil action regarding the
sale of the Tampa System.
Current Report on Form 8-K dated December 4, 1995
describing the acquisition by Jones Communications of
Virginia, Inc. of the Dale City System.
94
<PAGE> 98
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.
<TABLE>
<S> <C>
JONES INTERCABLE, INC.
By: /s/ Glenn R. Jones
-----------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 12, 1996 Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
By: /s/ Glenn R. Jones
-----------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 12, 1996 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
-----------------------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 12, 1996 (Principal Financial Officer)
By: /s/ Larry W. Kaschinske
-----------------------------------
Larry W. Kaschinske
Controller
Dated: March 12, 1996 (Principal Accounting Officer)
</TABLE>
95
<PAGE> 99
<TABLE>
<S> <C>
By: /s/ James B. O'Brien
-----------------------------------
James B. O'Brien
Dated: March 12, 1996 President and Director
By: /s/ Raymond L. Vigil
-----------------------------------
Raymond L. Vigil
Dated: March 12, 1996 Group Vice President and Director
By: /s/ Derek H. Burney
-----------------------------------
Derek H. Burney
Dated: March 12, 1996 Director
By: /s/ William E. Frenzel
-----------------------------------
William E. Frenzel
Dated: March 12, 1996 Director
By: /s/ Donald L. Jacobs
-----------------------------------
Donald L. Jacobs
Dated: March 12, 1996 Director
By: /s/ James J. Krejci
-----------------------------------
James J. Krejci
Dated: March 12, 1996 Director
By: /s/ Christine Jones-Marocco
-----------------------------------
Christine Jones-Marocco
Dated: March 12, 1996 Director
By: /s/ John A. MacDonald
-----------------------------------
John A. MacDonald
Dated: March 12, 1996 Director
By:
-----------------------------------
Daniel E. Somers
Dated: Director
</TABLE>
96
<PAGE> 100
<TABLE>
<S> <C>
By: /s/ Howard O. Thrall
-----------------------------------
Howard O. Thrall
Dated: March 12, 1996 Director
By: /s/ Robert B. Zoellick
-----------------------------------
Robert B. Zoellick
Dated: March 12, 1996 Director
By: /s/ David K. Zonker
-----------------------------------
David K. Zonker
Dated: March 12, 1996 Director
</TABLE>
97
<PAGE> 101
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
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)
<PAGE> 102
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. (25)
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.
(25)
2.9 Purchase and Sale Agreement dated as of August 11,
1995 between IDS/Jones Growth Partners 87-A, Ltd. and
the Company. (25)
2.10 Purchase and Sale Agreement dated as of August 11,
1995 between Jones Cable Income Fund 1-B, Ltd. and
the Company. (25)
2.11 Purchase and Sale Agreement dated as of August 11,
1995 between Cable TV Fund 12-BCD Venture and the
Company. (25)
2.12 Asset Exchange Agreement dated as of August 11, 1995
between Time Warner Entertainment-Advance/Newhouse
Partnership and the Company. (25)
2.13 Asset Purchase Agreement dated September 5, 1995
between Cable TV Joint Fund 11 and the Company
relating to the Manitowoc System. (26)
2.14 Asset Purchase Agreement dated September 5, 1995,
between Jones Spacelink Income Partners 87-1, L.P.
and the Company relating to the Lodi System. (26)
2.15 Asset Purchase Agreement dated September 5, 1995,
between Jones Spacelink Income/Growth Fund 1-A, Ltd.
and the Company relating to the Ripon System. (26)
2.16 Asset Purchase Agreement dated September 5, 1995,
between Jones Spacelink Income/Growth Fund 1-A, Ltd.
and the Company relating to the Lake Geneva System.
(26)
2.17 Asset Exchange Agreement dated September 1, 1995,
between the Company and Time Warner Entertainment
Company, L.P. (26)
<PAGE> 103
2.18 Assignment and Assumption Agreement dated as of
September 15, 1995 between the Company and Jones
Cable Holdings, Inc.
2.19 Purchase and Sale Agreement dated as of October 18,
1995 between the Company and Jones Cable Holdings,
Inc.
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. (25)
3.3 Bylaws of the Company. (25)
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)
4.6 Indenture dated March 23, 1995 with respect to the
Senior Notes, between the Company and U.S. Trust
Company of California, N.A. (31)
4.7 First Supplemental Indenture dated as of March 23,
1995 with respect to $200,000,000 aggregate principal
amount of the Company's 9 5/8% Senior Notes due 2002,
between the Company and the Trustee. (31)
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)
<PAGE> 104
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)
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. (25)
10.1.7 Affiliate Agreement dated August 1, 1994 between the
Company and Jones Infomercial Networks, Inc. (25)
10.1.8 Services Agreement between the Company and Jones
Interactive, Inc. (25)
10.1.9 Indemnification Agreement dated March 14, 1994, among
the Company, Howard O. Thrall and George J.
Feltovich. (21)
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. (25)
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)
<PAGE> 105
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)
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. (25)
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. (25)
10.5.5 Credit Agreement among Jones Cable Holdings, Inc. and
NationsBank of Texas, N.A. and The Bank of Nova
Scotia, as lenders and as managing agents and various
other lenders.
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)
<PAGE> 106
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 Diamond Bar, California. (17)
10.6.7 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Oxnard, California. (2)
10.6.8 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Port Hueneme, California. (3)
10.6.9 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Naval Construction Battalion Center, Port Hueneme,
California. (2)
10.6.10 Modification of franchise agreement dated June 23,
1993 for the Naval Construction Battalion Center,
Port Hueneme, California. (3)
10.6.11 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
County of Ventura, California. (3)
10.6.12 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Arapahoe County, Colorado. (2)
10.6.13 Copy of a franchise and related documents thereto
granting a cable television system franchise for
certain portions of Jefferson County, Colorado. (2)
10.6.14 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Morrison, Colorado. (3)
10.6.15 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Clear Creek County, Colorado. (32)
10.1.16 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Empire, Colorado. (32)
<PAGE> 107
10.1.17 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Georgetown, Colorado. (32)
10.1.18 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Idaho Springs, Colorado. (33)
10.1.19 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Municipality of Silver Plume, Colorado. (32)
10.1.20 Copy of a franchise and related documents thereto
granting a cable television system franchise for Bay
County, Florida. (33)
10.1.21 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Panama City Beach, Florida. (33)
10.1.22 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
District of Hamakua, Hawaii. (34)
10.1.23 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Districts of South Hilo and Puna, Hawaii. (34) and
(32)
10.6.24 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Aiken County, South Carolina. (21)
10.6.25 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Dearing, Georgia. (21)
10.6.26 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Edgefield County, South Carolina. (21)
10.6.27 Copy of a franchise and related documents thereto
granting a cable television system franchise for
McDuffie County, Georgia. (21)
10.6.28 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of North Augusta, South Carolina. (21)
<PAGE> 108
10.6.29 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Thomson, Georgia. (21)
10.6.30 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Trenton, South Carolina. (21)
10.1.31 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Augusta, Georgia (Fund 12-B). (27)
10.1.32 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Blythe, Georgia (Fund 12-B). (28)
10.1.33 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
County of Burke, Georgia (Fund 12-B). (29)
10.1.34 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Unincorporated Area of Columbia County, Georgia (Fund
12- B). (30)
10.1.35 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Hephzibah, Georgia (Fund 12-B). (27)
10.1.36 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Unincorporated Area of Richmond County, Georgia (Fund
12- B). 27)
10.6.37 Copy of a franchise and related documents thereto
granting a cable television system franchise for Anne
Arundel County, Maryland. (2)
10.6.38 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Elizabeth Landing, Maryland. (2)
10.6.39 Copy of a franchise and related documents thereto
granting a cable television system franchise for Ft.
George G. Meade, Maryland. (17)
10.6.40 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Indian Head, Maryland. (3)
<PAGE> 109
10.6.41 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)
10.6.42 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of La Plata, Maryland. (2)
10.6.43 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Cherryville, North Carolina. (2)
10.6.44 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Cleveland County, North Carolina. (2)
10.6.45 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Cramerton, North Carolina. (3)
10.6.46 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Gastonia, North Carolina. (2)
10.6.47 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)
10.6.48 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Kings Mountain, North Carolina. (2)
10.6.49 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Lowell, North Carolina. (2)
10.6.50 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of McAdenville, North Carolina. (3)
10.6.51 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Ranlo, North Carolina. (3)
<PAGE> 110
10.6.52 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Stanley, North Carolina. (3)
10.6.53 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Clover, South Carolina. (3)
10.6.54 Copy of a franchise and related documents thereto
granting a cable television system franchise for York
County, South Carolina. (3)
10.6.55 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Alexandria, Virginia. (24)
10.6.56 Copy of a franchise and related documents thereto
granting a cable television system franchise for Fort
Myer, Virginia. (18)
10.6.57 Amendment dated April 6, 1990, of franchise granting
a cable television system franchise for Fort Myer,
Virginia. (20)
10.6.58 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Dumfries, Virginia.
10.6.59 Copy of a franchise and related documents thereto
granting a cable television system franchise for Fort
Belvoir, Virginia.
10.6.60 Copy of a franchise and related documents thereto
granting a cable television system franchise for Lake
Ridge Parks & Recreation Association, Lake Ridge,
Virginia.
10.6.61 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Prince William County, Virginia.
10.6.62 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Quantico, Virginia.
10.6.63 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
United States Marine Corps Base, Quantico, Virginia.
10.6.64 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Town of Haymarket, Virginia.
10.6.65 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Manassas, Virginia.
<PAGE> 111
10.6.66 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Manassas Park, Virginia.
10.6.67 Copy of a franchise and related documents thereto
granting a cable television system franchise for
Prince William County, Virginia.
10.6.68 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Kenosha, the Town of Somers and the Village
of Pleasant Prairie, Wisconsin. (35)
10.6.69 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
City of Kenosha, Wisconsin. (32)
10.6.70 Copy of a franchise and related documents thereto
granting a cable television system franchise for the
Village of Pleasant Prairie, Wisconsin. (32)
10.6.71 Copy of a franchise and related documents thereto
granting a cable television system franchise for Town
of Somers, Wisconsin. (32)
21 List of Subsidiaries of the Company.
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.
<PAGE> 112
(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.
(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.
<PAGE> 113
(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.
(25) Incorporated by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended May 31,
1995.
(26) Incorporated by reference from the Company's Current
Report on form 8-K dated September 8, 1995.
(27) Incorporated by reference from Cable TV Fund 12-B,
Ltd.'s Report on Form 10-K for the fiscal year ended
December 31, 1985 (Commission File Nos. 0-13193,
0-13807, 0- 13964 and 0-14206).
(28) Incorporated by reference from Cable TV Fund 12-B,
Ltd.'s Report on Form 10-K for the fiscal year ended
December 31, 1987 (Commission File Nos. 0-13193,
0-13807, 0- 13964 and 0-14206).
(29) Incorporated by reference from Cable TV Fund 12-B,
Ltd.'s Report on Form 10-K for the fiscal year ended
December 31, 1990 (Commission File Nos. 0-13193,
0-13807, 0- 13964 and 0-14206).
(30) Incorporated by reference from Cable TV Fund 12-B,
Ltd.'s Report on Form 10-K for the fiscal year ended
December 31, 1992 (Commission File Nos. 0-13193,
0-13807, 0- 13964 and 0-14206).
(31) Incorporated by reference from the Company's Current
Report on form 8-K dated March 23, 1995.
(32) Incorporated by reference from the Jones Spacelink,
Ltd. Annual Report on Form 10-K for the fiscal year
ended May 31, 1993 (Commission File No. 0-8947).
(33) Incorporated by reference from the Jones Spacelink,
Ltd. Annual Report on Form 10-K for the fiscal year
ended May 31, 1987.
<PAGE> 114
(34) Incorporated by reference from the Jones Spacelink,
Ltd. Annual Report on Form 10-K for the fiscal year
ended May 31, 1988.
(35) Incorporated by reference from the Jones Spacelink,
Ltd. Annual Report on Form 10-K for the fiscal year
ended May 31, 1985.
<PAGE> 1
EXHIBIT 2.18
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement"), dated as of
September 15, 1995, is made and entered into by and between Jones Intercable,
Inc., a Colorado corporation ("JIC"), and Jones Cable Holdings, Inc., a Colorado
corporation ("JCH").
RECITALS
A. JCH is a wholly-owned subsidiary of JIC and was formed to be the
principal legal entity within JIC to own and operate cable television systems in
the United States. In furtherance of this purpose, JIC intends to convey to JCH
certain cable television systems that it owns, as well as the stock of the JIC
subsidiaries which own cable television systems.
B. JIC is party to: (i) that certain Purchase and Sale Agreement, dated as
of August 11, 1995 (the "Tampa Purchase Agreement"), with Cable TV Fund 12-BCD
Venture ("12-BCD"), pursuant to which JIC agreed to purchase from 12-BCD the
assets of the cable television system operating in Tampa, Florida; (ii) that
certain Purchase and Sale Agreement, dated as of August 11, 1995 (the
"Orangeburg Purchase Agreement"), with Jones Cable Income Fund 1-B, Ltd. ("Fund
1-B"), pursuant to which JIC agreed to purchase from Fund 1-B the assets of the
cable television system operating in and around Orangeburg, South Carolina;
(iii) that certain Purchase and Sale Agreement, dated as of August 11, 1995 (the
"Carmel Purchase Agreement"), with IDS/Jones Growth Partners 87-A, Ltd.
("87-A"), pursuant to which JIC agreed to purchase from 87-A the assets of the
cable television systems operating in and around Carmel, Indiana; (iv) that
certain Purchase and Sale Agreement, dated as of September 5, 1995 (the "Ripon
Purchase Agreement"), with Jones Spacelink Income/Growth Fund 1-A, Ltd. ("Fund
1-A"), pursuant to which JIC agreed to purchase from Fund 1-A the assets of the
cable television system operating in and around Ripon, Wisconsin; (v) that
certain Purchase and Sale Agreement, dated as of September 5, 1995 (the
"Manitowoc Purchase Agreement"), with Cable TV Joint Fund 11 ("Fund 11"),
pursuant to which JIC agreed to purchase from Fund 11 the assets of the cable
television system operating in Manitowoc, Wisconsin; (vi) that certain Purchase
and Sale Agreement, dated as of September 5, 1995 (the "Lake Geneva Purchase
Agreement"), with Jones Spacelink Income/Growth Fund 1-A, Ltd. ("Fund 1-A"),
pursuant to which JIC agreed to purchase from Fund 1-A the assets of the cable
television system operating in and around Lake Geneva, Wisconsin; (vii) that
certain Purchase and Sale Agreement, dated as of September 5, 1995 (the "Lodi
Purchase Agreement"), with Jones Spacelink Income Partners 87-1, L.P. ("87-1"),
pursuant to which JIC agreed to
<PAGE> 2
purchase from 87-1 the assets of the cable television systems operating in and
around Lodi, Ohio; (viii) that certain Asset Exchange Agreement, dated as of
August 11, 1995 (the "TWEAN Exchange Agreement"), with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), pursuant to which JIC has
agreed to convey to TWEAN substantially all of the assets relating to the cable
television systems operating in and around Tampa, Florida, Orangeburg, South
Carolina, and Carmel, Indiana, and $3.5 million in cash, and TWEAN agreed to
convey to JIC substantially all of the assets relating to the cable television
systems operating in and around Prince George's County, Maryland and Fairfax
County (Reston), Virginia; and (ix) that certain Asset Exchange Agreement, dated
as of September 1, 1995 (the "TWE Exchange Agreement"), with Time Warner
Entertainment Company, L.P. ("TWE"), pursuant to which JIC agreed to convey to
TWE substantially all of the assets relating to the cable systems operating in
and around Hilo, Hawaii, Lodi, Ohio, Manitowoc, Wisconsin, Lake Geneva,
Wisconsin, Kenosha, Wisconsin and Ripon, Wisconsin, and TWE agreed to convey to
JIC substantially all of the assets of the cable television systems operating in
and around Savannah, Georgia, and $4 million in cash.
C. JIC wishes to assign its rights and obligations under the Tampa Purchase
Agreement, Orangeburg Purchase Agreement, Carmel Purchase Agreement, Ripon
Purchase Agreement, Manitowoc Purchase Agreement, Lake Geneva Purchase
Agreement, Lodi Purchase Agreement, TWEAN Exchange Agreement and TWE Exchange
Agreement (collectively, the "JIC Agreements") to JCH, and JCH is willing to
accept such assignment and assume such obligations.
AGREEMENTS
In consideration of the mutual promises and covenants hereinafter set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, JIC and JCH hereby agree as follows:
1. Assignment and Assumption. Subject to the terms and conditions of this
Agreement: (a) JIC hereby assigns, conveys and transfers to JCH all of its
right, title and interest under the JIC Agreements, and (b) JCH hereby assumes
and shall pay, discharge and perform all of the obligations and duties of JIC
under the JIC Agreements.
2. Further Assurances. JIC and JCH shall execute and deliver such further
instruments as may be reasonably necessary to carry out the terms of this
Agreement.
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<PAGE> 3
3. Governing Law. The validity, performance and enforcement of this
Agreement shall be governed by the internal laws of the State of Colorado,
without giving effect to the principles of conflicts of law of such State.
JONES INTERCABLE, INC.
By: Ruth E. Warren
------------------------------------
Title: Group Vice President/Operations
---------------------------------
JONES CABLE HOLDINGS, INC.
By: Robert S. Zinn
------------------------------------
Title: Acting Vice President
---------------------------------
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<PAGE> 1
EXHIBIT 2.19
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of the 18th day of
October, 1995, by and between JONES INTERCABLE, INC., a Colorado corporation
("Seller"), and JONES CABLE HOLDINGS, INC., a Colorado corporation ("Buyer").
RECITALS
A. Seller owns and operates (i) a cable television system in and
around the Towns of Marana and Oro Valley, Arizona and Pima County, Arizona
(the "Pima System"); (ii) a cable television system in and around Anne Arundel
County, Maryland and Fort George M. Meade, Maryland (the "Anne Arundel
System"); (iii) a cable television system in and around the Towns of Indian
Head and La Plata, Maryland, Indian Head Naval Ordnance Station and Charles and
St. Mary's Counties, Maryland (the "Charles County System"); (iv) a cable
television system in and around the Towns of Empire, Georgetown and
Silverplume, Colorado, the City of Idaho Springs, Colorado and unincorporated
Clear Creek County, Colorado (the "Clear Creek System"); and (v) a cable
television system in and around the Town of Dearing, Georgia, the City of
Thomson, Georgia, McDuffie County, Georgia, the Town of Trenton, South
Carolina, the City of North Augusta, South Carolina, and Edgefield and Aiken
Counties, South Carolina (the "North Augusta System"); and
B. Seller owns 100% of the outstanding stock of (i) Evergreen
Intercable, Inc. ("Evergreen"), which owns and operates a cable television
system in and around certain portions of Jefferson County, Colorado (the
"Evergreen System"), (ii) Jones Tri-City Intercable, Inc. ("Tri-City"), which
owns and operates a cable television system in and around certain portions of
Jefferson County, Colorado, Arapahoe County, Colorado and the Town of Morrison,
Colorado (the "Tri-City System"); and (iii) Jones Intercable of Alexandria,
Inc. ("Jones of Alexandria"), which owns and operates a cable television system
in and around the City of Alexandria, Virginia and Fort Myer, Virginia (the
"Alexandria System"); and
C. Seller is party to that certain Asset Purchase Agreement dated
as of February 22, 1995, as amended (the "Augusta Purchase Agreement") with
Cable TV Fund 12-B, Ltd. ("Fund 12-B"), by which Seller has agreed to purchase
from Fund 12-B the cable television system owned by Fund 12-B in and around
<PAGE> 2
the Cities of Augusta, Blythe and Hephzibah, Georgia and the Counties of Burke,
Columbia and Richmond, Georgia (the "Augusta System"); and
D. Seller desires to sell to Buyer, and Buyer desires to purchase
(i) from Seller, (a) the Pima System and the North Augusta System, (b) the
stock of Jones of Alexandria (the "Alexandria Stock"), (c) Seller's rights and
obligations under the Augusta Purchase Agreement, and (d) certain cash of
Seller and (ii) from Evergreen and Tri-City (together, the "Cable
Subsidiaries"), respectively, the Evergreen System and the Tri-City System
(together, the "Subsidiary Systems"), which Subsidiary Systems (and the Clear
Creek System) will be purchased by a subsidiary of Seller (the "Colorado
Subsidiary"). In addition, Seller desires to transfer the Anne Arundel System
and the Charles County System (together, the "Maryland Systems") to its
wholly-owned subsidiary, Jones Communications of Maryland, Inc. ("JCM") in
exchange for the issuance by JCM of 100% of its stock (the "JCM Stock") to
Seller, and Seller desires to subsequently sell to Buyer, and Buyer desires to
purchase from Seller, the JCM Stock.
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 (or, with respect to the Subsidiary
Systems, cause the Cable Subsidiaries to) sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall (or with respect to the Subsidiary Systems
and the Clear Creek System, cause the Colorado Subsidiary to) purchase from
Seller (or, with respect to the Subsidiary Systems, from the Cable
Subsidiaries):
(a) On the Augusta Closing Date (as defined in Paragraph
13 hereof), (i) all of Seller's rights and obligations under the Augusta
Purchase Agreement (the "Augusta Purchase Rights") and (ii) cash in an amount
equal to the sum of (A) One Million and no/100's Dollars ($1,000,000.00) plus
(B) the purchase price due to Fund 12-B pursuant to the Augusta Purchase
Agreement for the sale by Fund 12-B of the System, as adjusted as required by
the Augusta Purchase Agreement (which amount, prior to such adjustments being
made, is
-2-
<PAGE> 3
One Hundred Forty-Two Million Six Hundred Eighteen Thousand and no/100's
Dollars ($142,618,000.00)).
(b) On the Second Closing Date (as defined in Paragraph
13 hereof), all of Seller's interest in (i) the Pima System, the North Augusta
System and the Clear Creek System (collectively, the "Owned Systems") and the
Cable Assets (as defined in Paragraph 2 hereof), (ii) the Alexandria Stock,
(iii) the JCM Stock (provided, that prior to the transfer of the JCM Stock to
Buyer, Seller shall have transferred the Maryland Systems to JCM in exchange
for the issuance to Seller by JCM of such stock) and (iv) cash in an amount
equal to $250,000,000.00 (which amount shall be deemed to include the purchase
deposits made in escrow by Seller in favor of (A) Benchmark/Manassas Cable Fund
Limited Partnership ("Benchmark") pursuant to that certain Asset Purchase
Agreement dated as of May 31, 1995 between Seller and Benchmark, as assigned by
Seller to Jones of Alexandria pursuant to that certain Assignment and
Assumption Agreement dated as of September 1, 1995 between Seller and Jones of
Alexandria (the "Benchmark Purchase Agreement") and (B) Cablevision of Manassas
Park, Inc. ("CMP") pursuant to that certain Asset Purchase Agreement dated as
of May 31, 1995 between Seller and CMP, as assigned by Seller to Jones of
Alexandria pursuant to that certain Assignment and Assumption Agreement dated
as of September 1, 1995 (the "CMP Purchase Agreement"); and the purchase
deposit made in escrow by Jones of Alexandria in favor of Columbia Associates,
L.P. ("Columbia") pursuant to that certain Asset Purchase Agreement dated as of
June 30, 1995 between Jones of Alexandria and Columbia (the "Columbia Purchase
Agreement" and, with the CMP Purchase Agreement and the Benchmark Purchase
Agreement, the "New Virginia System Purchase Agreements")) less the amount of
cash delivered to Buyer on the Augusta Closing Date.
All of the assets described above in this Paragraph 1 shall be
transferred and sold free and clear of all security interests, liens, pledges,
charges and encumbrances (other than (w) 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; (x) zoning laws and
ordinances and similar legal requirements; (y) rights reserved to any
governmental authority to regulate the affected Assets; and (z) as to real
property interests, any easements, rights-of-way, servitudes, permits,
restrictions and minor imperfections or irregularities in title which are
reflected in the public records and which do not
-3-
<PAGE> 4
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 (collectively, the "Permitted Liens").
2. Assets Conveyed. The assets to be conveyed to Buyer and, as
applicable, the Colorado Subsidiary, hereunder (the "Assets") shall consist of:
(a) With respect to the Owned Systems, all of the assets and
properties of Seller and the Cable Subsidiaries, whether real, personal,
tangible or intangible, of whatever description and wherever located, now owned
or used by Seller or the Cable Subsidiaries solely in connection with Seller's
or the Cable Subsidiaries' ownership or operation of the Owned Systems, except
those items excluded pursuant to Paragraph 3 hereof, but including all
additions made between the date hereof and the Closing Date, to the end that
all of Seller's and the Cable Subsidiaries' assets owned on the Closing Date
which are used or owned solely in connection with Seller's or the Cable
Subsidiaries' ownership or operation of the Owned Systems shall be sold and
transferred to Buyer. Such assets (collectively, the "Cable Assets") shall
include, without limitation:
(i) all of Seller's and the Cable Subsidiaries' 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 or the Cable Subsidiaries solely in
connection with Seller's or the Cable Subsidiaries' ownership or operation of
the Owned Systems;
(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 or the Cable
Subsidiaries and suppliers and customers, which are owned or used by Seller or
the Cable Subsidiaries solely in connection with Seller's or the Cable
Subsidiaries' ownership and operation of the Owned Systems;
-4-
<PAGE> 5
(iii) the real property owned and used solely in connection
with the Owned Systems;
(iv) all accounts receivable of Seller and the Cable
Subsidiaries arising in connection with the Owned Systems;
(v) all engineering records, files, data, drawings,
blueprints, schematics, maps, reports, lists and plans and processes owned or
developed by or for Seller or the Cable Subsidiaries and intended for use
solely in connection with the Owned Systems;
(vi) all promotional graphics, original art work, mats,
plates, negatives and other advertising or related materials developed by or
for Seller or the Cable Subsidiaries and intended for use solely in connection
with the Owned Systems; and
(vii) all of Seller's and the Cable Subsidiaries'
correspondence files, lists, records and reports concerning customers and
prospective customers of the Owned Systems, concerning television stations
whose transmissions are or may be carried as a part of the Owned Systems and
concerning all dealings with Federal, state, and local regulatory agencies
relating to the ownership or operation of the Owned Systems, including all
reports filed by or on behalf of Seller or the Cable Subsidiaries with the
Federal Communications Commission (the "FCC") in connection with the Owned
Systems and any Statements of Account of the System filed by or on behalf of
Seller or the Cable Subsidiaries with the United States Copyright Office in
connection with the Owned Systems; provided however, that Seller and the Cable
Subsidiaries shall not transfer to Buyer the licenses and agreements identified
on Exhibit A attached hereto (the "Additional Agreements") until Seller or the
Cable Subsidiaries have obtained the approval of the parties granting the
Additional Agreements to such transfer, whereupon such Additional Agreements
shall be deemed to be included in the assets to be transferred to Buyer
pursuant to this Agreement.
(b) The Alexandria Stock, which shall consist of 1000 shares of
the Common Stock of Jones of Alexandria.
(c) The JCM Stock, which shall consist of 1000 shares of the
Common Stock of JCM.
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<PAGE> 6
(d) The Augusta Purchase Rights.
(e) Cash in the amount of Two Hundred Fifty Million and no/100's
($250,000,000.00), (which includes the deposits made by Seller and Jones of
Alexandria pursuant to the New Virginia Systems Purchase Agreements), which
shall be conveyed to Buyer as described in Paragraphs 1, 4 and 13 hereof.
3. Excluded Assets. The following properties and assets
relating to the Owned Systems and their business operations shall be retained
by Seller and, as applicable, the Cable Subsidiaries, and shall not be sold,
assigned or transferred to Buyer:
(a) 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 which are attributable to the Assets,
including without limitation, fees paid to the United States Copyright Office;
and
(b) assets which would otherwise be deemed Assets, but which have
been disposed of in the normal course of business or with the written consent
of Buyer between the date hereof and the Closing Date.
4. Purchase Price. Subject to the adjustments to be made in
accordance with Paragraph 5 hereof, the total purchase price for the Assets
shall be Five Hundred Twenty-Three Million Four Hundred Five Thousand Six
Hundred Twelve and no/100's ($523,405,612.00) (the "Purchase Price"), which
shall be payable by Buyer to Seller as follows:
(a) At the Augusta Closing (as defined in Paragraph 13 below),
Buyer shall deliver to Seller a promissory note substantially in the form
attached hereto as Exhibit B (the "Augusta Note"), the principal amount of
which shall be equal to the amount of cash which has been delivered to Buyer by
Seller at the Augusta Closing; to wit, the sum of (i) One Million and no/100's
Dollars ($1,000,000.00) and (ii) the purchase price due to Fund 12-B pursuant
to the Augusta Purchase Agreement for the acquisition of the Augusta System, as
such amount is adjusted as required by the Augusta Purchase Agreement.
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<PAGE> 7
(b) At the Second Closing (as defined in Paragraph 13 below),
Buyer shall deliver to Seller a promissory note in the form attached hereto as
Exhibit B (the "Second Note"), the principal amount of which shall be equal to
(i) the Purchase Price, subject to the adjustments made in accordance with
Paragraph 5 below, less (ii) the amount of the Augusta Note.
5. 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 (5:01 p.m., Mountain
Time) on the Second Closing Date.
(a) Rent, pole rents, franchise fees, taxes, power and utility
fees and deposits, insurance premiums, licenses, customer prepayments and
deposits attributable to the Owned Systems, and other prepayments and amounts
due which are attributable to the Owned Systems shall be prorated and debited
or credited to Seller or Buyer, as applicable. For purposes of adjustments
made under this Paragraph 5(a), the subscriber accounts receivable of the Owned
Systems which are due and payable for and with respect to the month in which
the Closing takes place shall be prorated as of the Closing Date.
(b) The Purchase Price shall be reduced by any accounts payable,
accrued expenses and vehicle lease obligations for which Seller or the Cable
Subsidiaries would otherwise be liable hereunder in connection with the Owned
Systems, but for which the obligation for payment is assumed by Buyer.
(c) Seller and Buyer shall jointly determine the adjustments
required by this Paragraph 5 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.
6. Assumption of Liabilities. Buyer shall assume and discharge
all debts, liabilities and obligations of Seller (and shall cause the Colorado
Subsidiary to assume and discharge all debts, liabilities and obligations of
the Cable Subsidiaries) arising with respect to periods subsequent to (a) the
Augusta Closing Date insofar as such debts, liabilities and obligations of
Seller arise under the Augusta Purchase Agreement and (b) the Second Closing
Date under
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<PAGE> 8
any franchise, license, permit, lease, instrument or agreement transferred to
Buyer hereunder and, with respect to periods prior to and including the Second
Closing Date, shall assume and discharge all obligations of Seller with respect
to the Owned Systems to the extent that the Purchase Price has been reduced
pursuant to Paragraph 5(b) hereof to reflect, as applicable, Buyer's and the
Colorado Subsidiary's assumption of such obligations; provided, however, that
Buyer and the Colorado Subsidiary, as applicable, shall not assume the
Additional Agreements until Seller has obtained the approval of the parties
granting the Additional Agreements to Seller's or the Cable Subsidiaries'
transfer of the Additional Agreements to Buyer or the Colorado Subsidiary, as
applicable, whereupon the Additional Agreements shall be deemed to be included
in the assets to be assumed by Buyer or the Colorado Subsidiary, as applicable,
hereunder. Buyer shall indemnify and hold harmless Seller from and against any
and all damages, costs, claims and expenses (the "Indemnifiable Claims")
arising by reason of the ownership, operation or control of the Assets after
the Second Closing Date; provided, however, that Buyer shall not indemnify and
hold harmless Seller from any Indemnifiable Claims arising under Additional
Agreements as a result of actions relating to any period before Seller has
obtained the approval of the parties granting the Additional Agreements to
Seller's transfer of the Additional Agreements to Buyer. Anything herein to
the contrary notwithstanding, there is hereby excluded from the assumed
obligations, and Seller and the Cable Subsidiaries, as applicable, shall retain
and discharge, and indemnify and hold Buyer and the Colorado Subsidiary, as
applicable, harmless from and against, any and all Indemnifiable Claims to the
extent they arise (a) out of any debt, liability or obligation arising with
respect to periods prior to the Second Closing Date for which no reduction of
the Purchase Price has been made pursuant to Paragraph 5(b) hereof, (b) out of
any debt, liability or obligation arising under the Additional Agreements
arising as a result of actions relating to any period before Seller has
obtained the approval of the parties granting the Additional Agreements to
Seller's or the Cable Subsidiaries' transfer of the Additional Agreements to
Buyer, and (c) any debt, liability or obligation of Seller or the Cable
Subsidiaries not expressly assumed hereunder, whenever arising.
7. Seller's Representations. Seller hereby represents and
warrants to Buyer that:
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<PAGE> 9
(a) Each of Seller and the Cable Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Colorado. Seller and the Cable Subsidiaries each have all requisite
corporate 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; provided, however, that the
approval of the Board of Directors of Seller of the execution, delivery and
performance of this Agreement has not been obtained as of the date hereof, but
Seller will use its best efforts to obtain such approval, which must be
received prior to the Augusta Closing Date. This Agreement is a valid and
binding obligation of Seller, enforceable against it 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.
(c) Subject to the receipt of any required consents, Seller and
the Cable Subsidiaries each have full legal power, right and authority to sell
and convey to Buyer and the Colorado Subsidiary, as applicable, legal and
beneficial title to the Assets, and Seller's and the Cable Subsidiaries' sale
to Buyer and the Colorado Subsidiary, as applicable, shall transfer good and
marketable title thereto, free and clear of all security interests, liens,
pledges, charges and encumbrances of every kind, other than Permitted Liens.
(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 or the Assets 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.
(e) The Alexandria Stock and the JCM Stock has been duly and
validly authorized, and is issued and outstanding, fully paid and
nonassessable. There
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<PAGE> 10
are no outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, conversion rights or other agreements or arrangements of any
character or nature whatever (other than the rights granted to Buyer hereunder)
under which Seller is or may be obligated to issue any shares of capital stock
of Jones of Alexandria or JCM or warrants or options to purchase any shares of
capital stock of Jones of Alexandria or JCM.
(f) Litigation. 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 the Cable Subsidiaries 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.
8. Buyer's Representations. Buyer hereby represents and warrants
to Seller that:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado. Buyer has all requisite
corporate 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
Buyer for the execution and delivery of this Agreement. The execution and
delivery of this Agreement by Buyer has been duly and validly authorized and
approved by all necessary action of Buyer; provided, however, that the approval
of the Board of Directors of Buyer of the execution, delivery and performance
of this Agreement has not been obtained as of the date hereof, but Buyer will
use its best efforts to obtain such approval, which must be received prior to
the Augusta Closing Date. This Agreement is a valid and binding obligation of
Buyer, enforceable against it 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.
(c) The execution, delivery and performance of this Agreement by
Buyer will not violate any provision of law and will not, with or without the
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<PAGE> 11
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 Buyer is a party or by which
Buyer is bound.
(d) 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.
9. Conditions Precedent to Buyer's Obligations - Augusta
Transaction. The obligations of Buyer under this Agreement with respect to the
purchase and sale of the Augusta Purchase Rights shall be subject to the
fulfillment on or prior to the Augusta 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 Augusta 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 Augusta Closing Date.
Seller shall have furnished Buyer with an executed certificate of an authorized
officer of Seller dated as of the Closing, certifying to the fulfillment of the
foregoing conditions.
(b) Seller shall have delivered to Buyer evidence of the approval
by the Board of Directors of Seller of the execution, delivery and performance
of this Agreement.
(c) 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 any of the
Augusta System.
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<PAGE> 12
10. Conditions Precedent to Seller's Obligations - Augusta
Transaction. The obligations of Seller under this Agreement with respect to
the Augusta Purchase Rights shall be subject to the fulfillment on or prior to
the Augusta Closing Date of each of the following conditions:
(a) All of the representations and warranties by Buyer contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date. Buyer 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 Augusta Closing Date. Buyer shall
have furnished Seller with an executed certificate of an authorized officer of
Buyer dated as of the Augusta Closing Date, certifying to the fulfillment of
the foregoing conditions.
(b) Buyer shall have delivered to Seller evidence of the approval
by the Board of Directors of Buyer of the execution, delivery and performance
of this Agreement.
(c) 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 any of the Augusta
System.
11. Conditions Precedent to Buyer's Obligations - Second
Transaction. The obligations of Buyer under this Agreement with respect to the
purchase and sale of the Assets other than the Augusta Purchase Rights 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 Second 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 Second Closing Date.
Seller shall have furnished Buyer with an executed certificate of an authorized
officer of Seller dated as of the Second Closing Date, certifying to the
fulfillment of the foregoing conditions.
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<PAGE> 13
(b) Seller shall have delivered to Buyer such instruments,
consents and approvals of third parties as are necessary to transfer the Assets
(other than the Augusta Purchase Rights) to Buyer (and, with respect to the
Subsidiary Systems and the Clear Creek System, to the Colorado Subsidiary)
pursuant to this Agreement, including, without limitation, evidence of the
approval by the Board of Directors of Seller of the execution, delivery and
performance of this Agreement.
(c) 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 or the Colorado Subsidiary's, as applicable, ownership or
operation of any portion of the any of the Assets.
12. Conditions Precedent to Seller's Obligations - Second
Transaction. The obligations of Seller under this Agreement with respect to
the purchase and sale of the Assets other than the Augusta Purchase Rights
shall be subject to the fulfillment on or prior to the Second Closing Date of
each of the following conditions:
(a) All of the representations and warranties by Buyer contained
in this Agreement shall be true and correct in all material respects at and as
of the Second Closing Date. Buyer 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 Second Closing Date. Buyer
shall have furnished Seller with an executed certificate of an authorized
officer of Buyer dated as of the Second Closing Date, certifying to the
fulfillment of the foregoing conditions.
(b) Buyer shall have delivered to Seller evidence of the approval
by the Board of Directors of Buyer of the execution, delivery and performance
of this Agreement.
(c) 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)
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<PAGE> 14
would prohibit Buyer's or the Colorado Subsidiary's, as applicable, ownership
or operation of any portion of the any of the Assets.
13. Closing. Two closings shall be held hereunder as follows:
(a) The closing of the purchase and sale of the Augusta Purchase
Rights (the "Augusta Closing") shall be held in the office of Seller, 9697 E.
Mineral Avenue, Englewood, Colorado 80112, on such date as the parties shall
mutually agree (the "Augusta Closing Date").
(i) At the Augusta Closing, Seller shall deliver to
Buyer:
(A) An executed form of an Assignment and
Assumption Agreement acceptable to Seller and
Buyer covering the assignment by Seller to
Buyer and the assumption by Buyer of the
Augusta Purchase Rights (the "Augusta
Assignment and Assumption Agreement");
(B) The certificate described in Paragraph 9(a);
(C) The cash described in Paragraph 4(a); and
(D) Such other documents and instruments as shall
be necessary to effect the intent of this
Agreement with respect to the Augusta
Purchase Rights and consummate the
transactions contemplated by this Agreement
with respect to the Augusta Purchase Rights
(collectively, the "Additional Augusta
Closing Documentation").
(ii) At the Augusta Closing, Buyer shall delivery to
Seller:
(A) The executed Assignment and Assumption
Agreement;
(B) The certificate described in Paragraph 10(a);
(C) The Augusta Note; and
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<PAGE> 15
(D) The Additional Augusta Closing Documentation.
(b) The closing of the purchase and sale of the Assets other than
the Augusta Purchase Rights (the "Second Closing") shall be held in the offices
of Seller, 9697 E. Mineral Avenue, Englewood, Colorado 80112, on such date as
the parties shall agree (the "Second Closing Date").
(i) At the Second Closing, Seller shall deliver to Buyer:
(A) An executed Assignment and Assumption
Agreement acceptable to Seller and Buyer
covering the assignment by Seller and the
assumption by Buyer of all intangible assets
included in the Assets other than the Augusta
Purchase Rights (the "Second Assignment and
Assumption Agreement");
(B) The certificate described in Paragraph 11(a);
(C) The cash described in Paragraph 4(b);
(D) The stock certificates evidencing all of the
Alexandria Stock and the JCM Stock, with any
necessary stock powers attached; and
(E) All such other documents and instruments as
shall be necessary to effect the intent of
this Agreement with respect to the Assets
(other than the Augusta Purchase Rights) and
consummate the transactions contemplated by
this Agreement (other than the transfer by
Seller and assumption by Buyer of the Augusta
Purchase Rights), including without
limitation, any necessary deeds, bills of
sale and certificates of title (collectively,
the "Additional Second Closing
Documentation").
(ii) At the Second Closing, Buyer shall deliver to Seller:
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<PAGE> 16
(A) The executed Assignment and Assumption
Agreement;
(B) The certificate described in Paragraph 12(a);
(C) The Second Note; and
(D) The Additional Second Closing Documentation.
14. 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 14.
15. 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, any direct
or indirect subsidiary of Buyer, any public limited partnership or partnerships
of which Buyer or any affiliate of Buyer is a general partner or any joint
venture or general partnership of which Buyer, or any affiliate of Buyer, or
any of such public limited partnership or partnerships is a constituent
partner, or 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, (or, if applicable, shall cause the Cable Subsidiaries, to
) make, execute and deliver to Buyer or the Colorado Subsidiary, as applicable,
such additional assignments, bills of sale, deeds and other instruments of
transfer, as may be necessary or proper to transfer to Buyer or the Colorado
Subsidiary, as
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<PAGE> 17
applicable, all of Seller's and the Cable Subsidiaries' 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.
IN WITNESS WHEREOF the parties have executed this Agreement as of the
day and year first above written.
SELLER:
------
JONES INTERCABLE, INC.,
a Colorado corporation
By: /s/ Kevin P. Coyle
--------------------------------
Title: Group Vice President/Finance
BUYER:
-----
JONES CABLE HOLDINGS, INC.,
a Colorado corporation
By: /s/ J. Roy Pottle
--------------------------------
Title: Treasurer
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<PAGE> 18
EXHIBIT A
(Attached to and made a part of that certain
Purchase and Sale Agreement dated as of
October 18, 1995 by and between
Jones Intercable, Inc. and
Jones Cable Holdings, Inc.)
Assets Not Transferred at Closing
(to be transferred automatically
upon receipt of third party consents)
PIMA COUNTY SYSTEM
1. Town of Marana, Arizona franchise (consent required to transfer
franchise from JIC to JCH)
2. Town of Oro Valley, Arizona franchise (consent required to transfer
franchise from JIC to JCH)
3. Pima County, Arizona franchise (consent required to transfer franchise
from JIC to JCH)
4. Commercial Lease dated February 3, 1987, with 4-D Properties (consent
required to transfer from JIC to JCH)
5. Pima County Headend Lease dated September 9, 1988, with Carlyle Real
Estate Limited Partnership-XIII (consent required to transfer from JIC
to JCH)
6. Pima County Headend Lease dated June 22, 1988, with Riverbend Estates
Homeowners ASsociation (consent required to transfer from JIC to JCH)
7. Standard Industrial Lease - Net, dated April 15, 1991, with Martin and
Donnabeth Lippman, successors in interest to James M. and Patsy I.
Chamberlain (consent required to transfer from JIC to JCH)
8. License Agreement for Attachment on Tucson Electric Power Company
Poles and Anchors in the County of Pima, dated January 1, 1988, with
Tucson Electric Power Company to serve Pima County, Arizona (consent
required to transfer from JIC to JCH).
<PAGE> 19
9. License Agreement for Attachment on Tucson Electric Power Company
Poles and Anchors in the Town of Marana, dated January 1, 1988, with
Tucson Electric Power Company to serve the Town of Marana, Arizona
(consent required to transfer from JIC to JCH).
10. License Agreement for Attachment on Tucson Electric Power Company
Poles and Anchors in the Town of Oro Valley, dated January 1, 1988,
with Tucson Electric Power Company to serve the Town of Oro Valley,
Arizona (consent required to transfer from JIC to JCH).
11. License Agreement for Attachment on Trico Electric Cooperative, Inc.
Poles, dated November 22, 1988, with Trico Electric Cooperative, Inc.
to serve Pima County, Arizona (consent required to transfer from JIC
to JCH).
12. General License Agreement for Pole Attachments and/or Conduit
Occupancy dated February 22, 1922, with U S WEST Communications, Inc.
(formerly The Mountain States Telephone and Telegraph Company) to
serve Pima County, Arizona (consent required to transfer from JIC to
JCH).
13. Business Radio License WT-744-2653 (FCC filing required to transfer
license from JIC to JCH)
14. CARS License WHZ-572 (FCC filing required to transfer license from JIC
to JCH)
15. Earth Station License E880935 (FCC filing required to transfer
license from JIC to JCH)
16. Microwave License WNTB-819 (FCC filing required to transfer license
from JIC to JCH)
17. Microwave License WNTB-820 (FCC filing required to transfer license
from JIC to JCH)
CLEAR CREEK COUNTY SYSTEM
1. City of Idaho Springs, Colorado franchise (consent required to
transfer franchise from JIC to JCC)
2. Clear Creek County, Colorado franchise (consent required to transfer
franchise from JIC to JCC)
3. 0Lease Agreement dated September 1, 1993, with James Maxwell, Sr.
requires written notice to be given in the event of an assignment
<PAGE> 20
4. License for Pole Usage, as amended, dated February 23, 1995, with
Public Service Company of Colorado to provide cable television service
to the area in and around Empire, Colorado (consent required to
transfer from JIC to JCC).
5. License for Pole Usage, as amended, dated February 23, 1995, between
Public Service Company of Colorado and Colorado Intercable, Inc.to
provide cable television service to the area in and around Georgetown,
Colorado (consent required to transfer from JIC to JCC).
6. License for Pole Usage, as amended, dated February 23, 1995, with
Public Service Company of Colorado to provide cable television service
to the area in and around Idaho Springs, Colorado (consent required to
transfer from JIC to JCC).
7. Earth Station License E 8928 (FCC filing required to transfer license
from JIC to JCC)
8. Earth Station License E930372 (FCC filing required to transfer license
from JIC to JCC)
JEFFERSON COUNTY SYSTEM (EVERGREEN)
1. Jefferson County, Colorado franchise (Evergreen) (consent required to
transfer franchise from Evergreen to JCC)
2. Cable TV License for Pole Usage Document No. 12142 (Evergreen) dated
March 16, 1993, with Public Service Company of Colorado to serve the
area of Evergreen, Colorado (consent is required to transfer from
Evergreen to JCC)
3. Earth Station License KR-95 (Evergreen) (FCC filing required to
transfer license from Evergreen to JCC)
JEFFERSON COUNTY SYSTEM (TRI-CITY)
1. Jefferson County, Colorado franchise (Tri-City) (consent is required
to transfer franchise from Tri-City to JCC)
2. Arapahoe County, Colorado franchise (consent is required to transfer
franchise from Tri-City to JCC)
<PAGE> 21
3. Agreement for Joint Use of Electric System Poles for Cable Television
Attachments dated May 1, 1987, with The Intermountain Rural Electric
Association (Willow Springs, Willowbrook, Dakotah at Willow Springs);
(consent is required to transfer from Tri-City to JCH).
6. Cable TV License for Pole Usage Document No. 37827 dated September 19,
1994, with Public Service Company of Colorado (consent is required to
transfer from Tri-City to JCC and to grant a security interest).
7. Business Radio License WNQV-232 (FCC filing required to transfer
license from Tri-City to JCC)
8. Business Radio License WQP 395 (FCC filing required to transfer
license from Tri-City to JCC)
9. Earth Station License E3092 (FCC filing required to transfer license
from Tri-City to JCC)
10. Earth Station License E5292 (FCC filing required to transfer license
from Tri-City to JCC)
ALEXANDRIA, VIRGINIA SYSTEM
1. Business Radio License WNVX 206 (stock transfer will require consent
of FCC, and name change will require an FCC filing)
NORTH AUGUSTA SYSTEM
1. City of North Augusta, South Carolina franchise (consent is required
to transfer franchise from JIC to JCH).
2. Agreement for Joint Use of Electric System Poles for Television
Antenna Service Attachments dated October 1, 1984, as amended, with
Aiken Electric Cooperative, Inc. to serve North Augusta and
Clearwater, South Carolina (consent is required to transfer from JIC
to JCH).
3. Pole Attachment Agreement - Community Antenna Television (CATV) dated
January 8, 1991, as amended, with Georgia Power Company to serve the
City of Thomson, Georgia (consent is required to transfer from JIC to
JCH).
<PAGE> 22
4. License Agreement for Pole Attachments and/or Conduit Occupancy dated
March 16, 1994, with BellSouth Telecommunications, Inc. d/b/a Southern
Bell Telephone and Telegraph Company to serve the corporate limits of
North Augusta, plus unincorporated areas of Aiken County, South
Carolina (consent is required to transfer from JIC to JCH).
5. License Agreement for Pole Attachments and/or Conduit Occupancy in
Georgia dated October 1, 1984, as amended, with Southern Bell
Telephone and Telegraph Company to serve the City of Thomson plus
unincorporated McDuffie County, Georgia (consent is required to
transfer from JIC to JCH).
6. Master Agreement for Attachments of Cables, Amplifiers and Associated
Equipment for the Distribution of Television Signals dated November
10, 1994, with South Carolina Electric & Gas Company to serve
unincorporated areas of Aiken and Edgefield Counties, and the City of
North Augusta and Town of Trenton, South Carolina; Facilities Transfer
Agreement dated November 10, 1994, with South Carolina Electric & Gas
Company (consent is required to transfer from JIC to JCH).
7. Wireline Crossing Agreement dated March 20, 1989, as amended, with CSX
Transportation, Inc. for crossings at or near Dearing, McDuffie
County, Georgia (consent is required to transfer from JIC to JCH).
8. Agreement dated February 6, 1995, with Norfolk Southern Railway
Company for aerial wireline crossings at or near Trenton, South
Carolina (consent is required to transfer from JIC to JCH).
CHARLES COUNTY, MARYLAND SYSTEM
1. Indian Head Naval Ordnance Station franchise (consent is required to
transfer franchise from JIC to JCM).
2. CATV License Agreement for Pole Attachments and/or Conduit Occupancy
in the State of Maryland (Agreement No. 73233) dated August 1, 1993,
with The Chesapeake and Potomac Telephone Company of Maryland (consent
is required to transfer from JIC to JCM).
3. Utility Pole, Underground Duct Rental and Real Estate Agreement (No.
N6247788RP00015) dated December 8, 1987, as amended, with the United
States Department of Navy, Naval Ordnance Station, Indian Head,
Maryland (consent is required to transfer from JIC to JCM).
<PAGE> 23
4. Agreement for Joint Use of Poles for Television Antenna Service
Attachments dated April 1, 1990, with Southern Maryland Electric
Cooperative, Inc. to serve a certain area of Charles County, Maryland
(consent is required to transfer from JIC to JCM).
5. License Agreement For Wire, Pipe and Cable Transverse Crossings and
Longitudinal Occupations No. C2025 dated April 19, 1982, as amended,
with Consolidated Rail Corporation for Valuation Station 1512+74+-,
located 2217 feet east of MP 29 at a point 2.42 miles east of the
Station of Waldorf, Charles County, Maryland (consent is required to
transfer from JIC to JCM).
6. License Agreement For Wire, Pipe and Cable Transverse Crossings and
Longitudinal Occupations No. C2026 dated April 20, 1982, as amended,
with Consolidated Rail Corporation for a location 298 feet east of MP
31 at a point .07 of a mile east of the Station of Waldorf, Charles
County, Maryland (consent is required to transfer from JIC to JCM).
7. License Agreement For Wire, Pipe and Cable Transverse Crossings and
Longitudinal Occupations No. C2524 dated February 25, 1986, as
amended, with Consolidated Rail Corporation for a location at
Valuation Station 1829+95+-, 2223 feet north of MP 35 at a point .53
of a mile south of the Station of Indian Head Junction, Charles
County, Maryland (consent is required to transfer from JIC to JCM).
8. Wire Line License Agreement No. C2066 dated May 26, 1982, as amended,
with Consolidated Rail Corporation for a location at Valuation Station
2049+82+-, located 1363 feet north of MP 39 and .06 of a mile south of
the station at La Plata, Charles County, Maryland (consent is required
to transfer from JIC to JCM).
9. License for Nonfederal Use of Real Property No. N6247791RP00005 dated
November 8, 1990, with the United States Department of the Navy, Naval
Ordnance Station, Indian Head, Maryland (consent is required to
transfer from JIC to JCM).
10. Business Radio (SMRS) license WNMO677 (FCC filing required to transfer
license from JIC to JCM)
11. CARS license WLY-453 (FCC filing required to transfer license from JIC
to JCM).
12. Earth Station license E6748 (FCC filing required to transfer license
from JIC to JCM).
<PAGE> 24
13. Earth Station license E950383 (FCC filing required to transfer license
from JIC to JCM).
ANNE ARUNDEL, MARYLAND SYSTEM
1. County of Anne Arundel, Maryland franchise (consent is required to
transfer franchise from JIC to JCM).
2. County of Anne Arundel, Maryland (Heritage Harbour) franchise (consent
is required to transfer franchise from JIC to JCM).
3. County of Anne Arundel, Maryland (North Anne Arundel County) franchise
(consent is required to transfer franchise from JIC to JCM).
4. Fort George G. Meade, Maryland franchise (consent is required to
transfer franchise from JIC to JCM).
5. Pole/Trench License Agreement dated May 19, 1987, as amended, with
Baltimore Gas and Electric Company (consent is required to transfer
from JIC to JCM).
6. Pole/Trench License Agreement dated March 7, 1986, as amended, with
Baltimore Gas and Electric Company to serve Heritage Harbour (consent
is required to transfer from JIC to JCM).
7. CATV License Agreement for Pole Attachments and/or Conduit Occupancy
in the State of Maryland (Agreement #73234) dated August 1, 1993, with
The Chesapeake and Potomac Telephone Company of Maryland (consent is
required to transfer from JIC to JCM).
8. Duct Lease Agreement dated October 6, 1988, with Baltimore Gas and
Electric Company for Marley Station Road and State Route 10 (consent
is required to transfer from JIC to JCM).
9. Duct Lease Agreement dated July 7, 1989, with Baltimore Gas and
Electric Company for East Frontage Road and Benfield Blvd. (consent is
required to transfer from JIC to JCM).
10. License Agreement No. 19-04-423 dated March 23, 1994, with National
Railroad Passenger Corporation (d/b/a Amtrak) for a crossing at
Milepost 113+3512, at or near Odenton Station, Anne Arundel County,
Maryland (consent is required to transfer from JIC to JCM).
<PAGE> 25
11. License Agreement for Wire, Pipe and Cable Transverse Crossings and
Longitudinal Occupations dated December 7, 1983, as amended, with
Consolidated Rail Corporation for a crossing at Valuation Station
9+10+- located 904 feet west of point of switch 0+06+-, at a point in
the vicinity of the Station of Odenton, Anne Arundel County, Maryland
(consent is required to transfer from JIC to JCM).
12. Business Radio license KNBF768 (FCC filing required to transfer
license from JIC to JCM).
13. Business Radio license WPHX754 (FCC filing required to transfer
license from JIC to JCM).
14. Earth Station license WX24 (FCC filing required to transfer license
from JIC to JCM).
<PAGE> 26
EXHIBIT B
(Attached to and made a part of that certain
Purchase and Sale Agreement dated as of
October 18, 1995 by and between
Jones Intercable, Inc. and
Jones Cable Holdings, Inc.)
Form of Note
THE INDEBTEDNESS OR OTHER OBLIGATIONS EVIDENCED BY THIS INTERCOMPANY
NOTE ARE SUBORDINATED TO THE PRIOR PAYMENT IN FULL OF THE OBLIGATIONS
(AS DEFINED IN THE INTERCOMPANY SUBORDINATED DEBT AGREEMENT
HEREINAFTER REFERRED TO) PURSUANT TO, AND TO THE EXTENT PROVIDED IN,
THE INTERCOMPANY SUBORDINATED DEBT AGREEMENT TO BE ENTERED INTO BY
JONES INTERCABLE, INC. AND JONES CABLE HOLDINGS, INC. IN FAVOR OF THE
HOLDERS (AS DEFINED IN SUCH INTERCOMPANY SUBORDINATED DEBT AGREEMENT),
THE PROVISIONS OF WHICH ARE INCORPORATED HEREIN AND BY THIS REFERENCE
MADE A PART HEREOF.
Variable Interest Rate Note _____________, 1995 ($______________)
Jones Cable Holdings, Inc., a Colorado corporation (the
"Maker"), for value received hereby promises to pay on _____________, 2005 (the
"Maturity Date") to the order of Jones Intercable, Inc. (the "Payee") at 9697
East Mineral Avenue, Englewood, Colorado 80112, in lawful money of the United
States of America in immediately available funds, at such location in the
United States of America as the Payee shall from time to time designate, the
lessor of (a) ___________ and No/100th Dollars ($_________) and (b) the unpaid
principal amount of all loans made hereunder by the Payee to the Maker.
The Maker promises also to pay interest on the unpaid
principal amount hereof in like money at said location from the date hereof
until paid, at a rate per annum equal to the Payee's weighted average interest
rate applicable from time to time with respect to the Payee's indebtedness.
Subject to the provisions of the Intercompany Subordinated Debt Agreement,
interest shall be paid as follows: On March 1 and September 1 of each year,
the Maker shall pay to the Payee all or a portion of the interest due hereunder
in an amount equal to (i) the amount required to be paid by the Payee in
respect of interest payments on the 9 5/8% Senior Notes due 2000 and the 10
1/2% Senior Subordinated Debentures Due 2008 less (ii) amount otherwise
available to the Payee for the payment of such obligations. Subject to the
provisions of the Intercompany Subordinated Debt Agreement, on January 1 and
July 1 of each year, the Maker shall pay to the Payee all or a portion of the
interest due hereunder in an
<PAGE> 27
amount equal to (i) the amount required to be paid by the Payee in respect of
interest payments 11 1/2% Senior Subordinated Debentures Due 2004 less (ii)
amount otherwise available to the Payee for the payment of such obligations.
Any interest not paid pursuant to the above provisions or otherwise shall be
paid on the Maturity Date. Notwithstanding anything to the contrary contained
herein, the Maker shall not be required to make any payment of interest
hereunder if such payment would result in a violations of or cause a Default or
Event of Default under the hereinafter defined Credit Agreement. The principal
of this Intercompany Subordinated Note may be prepaid from time to time without
premium or penalty.
This Intercompany Subordinated Note is an "Intercompany
Subordinated Note" contemplated by and as such term is defined in the Credit
Agreement to be entered into among the Maker, as borrower, the Restricted
Subsidiaries of the Maker from time to time parties thereto, the several
lenders from time to time parties thereto (the "Lenders"), the Managing Agents,
the Syndication Agent and the Documentation Agent named therein and NationsBank
of Texas, N.A., as administrative agent thereunder, as the same may be amended,
supplemented or otherwise modified from time to time (the "Credit Agreement").
This Intercompany Subordinated Note shall become immediately
due and payable (the "Payee Acceleration") at such time as the Lenders have
declared the indebtedness of the Maker under the Credit Agreement to be due and
payable thereunder prior to its stated maturity (the "Credit Agreement
Acceleration"); provided, however, if the Lenders under the Credit Agreement
rescind the Credit Agreement Acceleration or otherwise reinstate the Credit
Agreement, then the Payee agrees that the Payee Acceleration shall be
automatically rescinded and this Intercompany Subordinated Note shall be
automatically reinstated.
The Payee is authorized to endorse on a schedule to be annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date and amount of each loan made by
the Payee to the Maker hereunder. Each such endorsement shall constitute prima
facie evidence of the accuracy of the information endorsed. The failure to
make any such endorsement or any error or any error in any such endorsement
shall not affect the obligations of the Maker in respect of any such loan.
All payments under this Intercompany Note shall be made
without offset, counterclaim or deduction of any kind.
The Maker hereby waives presentment, demand, protest or notice
of any kind in connection with this Intercompany Note.
So long as the Obligations (as defined in the Credit
Agreement) remain outstanding, the Payee shall not transfer or assign this
Intercompany Note other than to the Administrative Agent (as defined in the
Credit Agreement) for the benefit of the
<PAGE> 28
Lenders to secure the payment of the Obligations or transferees of such
holders, without the prior written consent of the Lenders.
THE INTERCOMPANY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF COLORADO.
IN WITNESS WHEREOF, the Maker has caused this Intercompany
Note to be duly executed as of the above written date.
JONES CABLE HOLDINGS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
By its execution hereinbelow, the Payee consents and agrees to be bound by the
provisions of this Intercompany Note applicable to it.
JONES INTERCABLE, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 1
EXHIBIT 10.5.5
CREDIT AGREEMENT
AMONG
JONES CABLE, HOLDINGS, INC.,
AS THE BORROWER
THE RESTRICTED SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTIES HERETO
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO
NATIONSBANK OF TEXAS, N.A. AND
THE BANK OF NOVA SCOTIA,
AS THE MANAGING AGENTS,
THE BANK OF NOVA SCOTIA,
AS THE SYNDICATION AGENT,
AND
NATIONSBANK OF TEXAS, N.A.,
AS THE ADMINISTRATIVE AGENT AND
THE DOCUMENTATION AGENT
DATED AS OF OCTOBER 31, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. DEFINITIONS................................................................. 1
1.1 Defined Terms............................................................. 1
1.2 Other Definitional Provisions............................................. 20
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS............................................. 21
2.1 Commitments............................................................... 21
2.2 Notes..................................................................... 21
2.3 Procedure for Borrowing................................................... 21
2.4 Unavailable Commitment.................................................... 22
2.5 Repayment of Loans........................................................ 22
SECTION 3. LETTERS OF CREDIT........................................................... 23
3.1 L/C Commitment............................................................ 23
3.2 Procedure for Issuance of Letters of Credit............................... 23
3.3 Fees, Commissions and Other Charges....................................... 24
3.4 L/C Participations........................................................ 24
3.5 Reimbursement Obligation of the Borrower.................................. 25
3.6 Obligations Absolute...................................................... 26
3.7 Letter of Credit Payments................................................. 26
3.8 Application............................................................... 27
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT................
27
4.1 Interest Rates and Payment Dates.......................................... 27
4.2 Optional and Mandatory Commitment Reductions and Prepayments.............. 27
4.3 Commitment Fees, etc...................................................... 29
4.4 Computation of Interest and Fees.......................................... 30
4.5 Conversion and Continuation Options....................................... 30
4.6 Minimum Amounts of Tranches............................................... 31
4.7 Inability to Determine Interest Rate...................................... 31
4.8 Pro Rata Treatment and Payments........................................... 32
4.9 Requirements of Law....................................................... 32
4.10 Taxes..................................................................... 34
4.11 Indemnity................................................................. 36
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
4.12 Change of Lending Office.................................................. 36
SECTION 5. REPRESENTATIONS AND WARRANTIES.............................................. 36
5.1 Financial Condition....................................................... 36
5.2 No Change................................................................. 37
5.3 Existence; Compliance with Law............................................ 37
5.4 Power; Authorization; Enforceable Obligations............................. 37
5.5 No Legal Bar.............................................................. 38
5.6 No Material Litigation.................................................... 38
5.7 No Default................................................................ 39
5.8 Ownership of Property; Intellectual Property.............................. 39
5.9 No Burdensome Restrictions................................................ 39
5.10 Taxes..................................................................... 39
5.11 Federal Regulations....................................................... 40
5.12 ERISA..................................................................... 40
5.13 Investment Company Act; Other Regulations................................. 40
5.14 Subsidiaries.............................................................. 40
5.15 Insurance................................................................. 41
5.16 Certain Cable Television Matters.......................................... 41
5.17 Environmental Matters..................................................... 41
5.18 Accuracy of Information................................................... 43
5.19 Security Documents........................................................ 43
5.20 Solvency.................................................................. 44
5.21 Indebtedness.............................................................. 44
5.22 Labor Matters............................................................. 44
5.23 Prior Names............................................................... 44
5.24 Franchises................................................................ 44
5.25 Chief Executive Office; Chief Place of Business........................... 45
5.26 Full Disclosure........................................................... 45
5.27 Intercompany Subordinated Debt............................................ 45
SECTION 6. CONDITIONS PRECEDENT........................................................ 45
6.1 Conditions to Initial Extensions of Credit................................ 45
6.2 Conditions to Each Extension of Credit.................................... 48
SECTION 7. AFFIRMATIVE COVENANTS....................................................... 49
7.1 Financial Statements...................................................... 49
7.2 Certificates; Other Information........................................... 50
7.3 Payment of Obligations.................................................... 50
7.4 Conduct of Business and Maintenance of Existence, etc..................... 51
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
7.5 Maintenance of Property; Insurance........................................ 51
7.6 Inspection of Property; Books and Records; Discussions.................... 51
7.7 Notices................................................................... 52
7.8 Environmental Laws........................................................ 52
7.9 Collateral................................................................ 53
SECTION 8. NEGATIVE COVENANTS.......................................................... 54
8.1 Financial Condition Covenants............................................. 55
8.2 Limitation on Indebtedness................................................ 55
8.3 Limitation on Liens....................................................... 56
8.4 Limitation on Fundamental Changes......................................... 57
8.5 Limitation on Sale of Assets.............................................. 57
8.6 Restricted/Unrestricted Designation of Subsidiaries....................... 58
8.7 Limitation on Restricted Payments; Other Payment Limitations.............. 59
8.8 Limitation on Acquisitions................................................ 60
8.9 Investments, Loans, Etc................................................... 60
8.10 Limitation on Transactions with Affiliates................................ 61
8.11 Certain Intercompany Matters.............................................. 61
8.12 Limitation on Restrictions on Subsidiary Distributions.................... 61
8.13 Limitation on Lines of Business........................................... 61
8.14 No Negative Pledge........................................................ 61
8.15 Tax Sharing Agreement..................................................... 62
SECTION 9. EVENTS OF DEFAULT........................................................... 62
SECTION 10. THE ADMINISTRATIVE AGENT................................................... 65
10.1 Appointment............................................................... 65
10.2 Delegation of Duties...................................................... 65
10.3 Exculpatory Provisions.................................................... 66
10.4 Reliance by the Administrative Agent...................................... 66
10.5 Notice of Default......................................................... 66
10.6 Non-Reliance on the Administrative Agent and the Other Lenders............ 67
10.7 Indemnification........................................................... 67
10.8 The Administrative Agent in Its Individual Capacity....................... 68
10.9 Successor Administrative Agent............................................ 68
10.10 Managing Agents and Co-Agents............................................. 69
SECTION 11. NEW RESTRICTED SUBSIDIARIES................................................ 69
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 12. MISCELLANEOUS.............................................................. 69
12.1 Amendments and Waivers.................................................... 69
12.2 Notices................................................................... 70
12.3 No Waiver; Cumulative Remedies............................................ 71
12.4 Survival of Representations and Warranties................................ 71
12.5 Payment of Expenses and Taxes............................................. 71
12.6 Successors and Assigns; Participations and Assignments.................... 72
12.7 Adjustments; Set-off...................................................... 75
12.8 Counterparts; When Effective.............................................. 76
12.9 Severability.............................................................. 76
12.10 Integration............................................................... 76
12.11 GOVERNING LAW............................................................. 76
12.12 SUBMISSION TO JURISDICTION; WAIVERS....................................... 77
12.13 Acknowledgements.......................................................... 78
12.14 WAIVERS OF JURY TRIAL..................................................... 78
12.15 Confidentiality........................................................... 78
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
SCHEDULES
---------
<S> <C>
Schedule 1.1 Commitments and Addresses of the Lenders
Schedule 5.1 Financial Disclosure
Schedule 5.4 Required Consents and Authorizations
Schedule 5.6 Litigation Disclosure
Schedule 5.8(a) Real Property and Personal Property Locations
Schedule 5.14 Subsidiaries and Designation
Schedule 5.24 Franchise Agreements
Schedule 5.25 Chief Executive Office/Chief Places of Business
Schedule 6.1(f) Stock Ownership of the Borrower and the Restricted Subsidiaries
Schedule 6.1(o) Exceptions to Asset Transfer
Schedule 7.9(a) Excluded Collateral
Schedule 8.3(c) Existing Liens
Schedule 8.10 Existing Affiliated Transactions
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C>
A Form of Assignment and Acceptance
B Form of Compliance Certificate
C Form of Intercompany Subordinated Debt Agreement
D Negative Pledge Agreement
E Form of Intercompany Subordinated Note
F Form of Pledge Agreement(s)
G Form of Security Agreement
H Form of Note
I-1 Form of Notice of Borrowing
I-2 Form of Notice of Conversion/Continuation
J Form of Closing Certificate
K Form of Legal Opinion of Davis, Graham & Stubbs, counsel to the Borrower
L Form of Legal Opinion of the General Counsel or the acting General Counsel of the
Parent
M Form of FCC Opinion
N Form of Alternative Note
</TABLE>
-v-
<PAGE> 7
THIS CREDIT AGREEMENT is entered into as of October 31, 1995, among JONES
CABLE HOLDINGS, INC., a Colorado corporation (the "Borrower"), the Restricted
Subsidiaries (hereinafter defined) of the Borrower from time to time parties to
this Agreement, the several banks and other financial institutions from time to
time parties to this Agreement (the "Lenders"), NATIONSBANK OF TEXAS, N.A. and
THE BANK OF NOVA SCOTIA, as the Managing Agents (in such capacity, the "Managing
Agents"), THE BANK OF NOVA SCOTIA, as the Syndication Agent (in such capacity,
the "Syndication Agent"), and NATIONSBANK OF TEXAS, N.A., as the Documentation
Agent (in such capacity, the "Documentation Agent") and as the Administrative
Agent for the Lenders hereunder.
WITNESSETH:
WHEREAS, Jones Intercable, Inc., a Colorado corporation (the "Parent") and
owner of 100% of the Capital Stock of the Borrower has transferred or will (a)
transfer to the Borrower (i) 100% of the Capital Stock of Jones Communications
of Virginia, Inc. (formerly known as Jones of Alexandria, Inc.) and Jones
Communications of Maryland, Inc.; (ii) the Cable Systems serving North Augusta,
South Carolina, Augusta, Georgia, Pima County, Arizona; and (iii) $250,000,000
in cash; (b) cause Evergreen Intercable, Inc. and Jones Tri-City Intercable,
Inc. (both Subsidiaries of the Parent) to transfer to Jones Communications of
Colorado, Inc. ("JCC"), a Wholly Owned Subsidiary of the Borrower, the Cable
Systems serving Evergreen, Colorado and Jefferson County, Colorado and; (c)
transfer to JCC the Cable System serving Clear Creek County, Colorado
(collectively, the "Asset Transfer"), all in consideration of the Borrower's
execution and delivery to the Parent of an Intercompany Subordinated Note
(hereinafter defined); and
WHEREAS, the Borrower has requested the Lenders to furnish the extensions
of credit provided for herein, which shall be used by the Borrower (a) to
finance permitted acquisitions, (b) for capital expenditures to expand and
upgrade Cable Systems of the Borrower and the Restricted Subsidiaries, (c) to
make dividends or distributions permitted under this Agreement, and (d) for
general corporate purposes;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof:
1
<PAGE> 8
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its prime rate
in effect at its principal office in Dallas, Texas (the Prime Rate not
being intended to be the lowest rate of interest charged by the
Administrative Agent in connection with extensions of credit to debtors);
and "Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. Any change in the ABR due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Administrative Agent": NationsBank, together with its affiliates, as
the agent for the Lenders under this Agreement and the other Loan
Documents.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if
such Person (acting alone or with a group of Persons acting in concert)
possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether
through ownership of voting securities, by contract or otherwise.
"Aggregate Outstandings of Credit": as to any Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all Loans
made by such Lender then outstanding and (b) such Lender's Specified
Percentage of the L/C Obligations then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Alternative Note": as defined in Section 12.6(d).
"Alternative Noteholder": as defined in Section 12.6(e).
"Annualized Operating Cash Flow": for the most recently ended fiscal
quarter, an amount equal to Operating Cash Flow for such period multiplied
by four.
2
<PAGE> 9
"Applicable Margin": at the time of any determination thereof, for
purposes of all Loans, the margin of interest over the ABR or the
Eurodollar Rate, as the case may be, which is applicable at the time of any
determination of interest rates under this Agreement, which Applicable
Margin shall be subject to adjustment (upwards or downwards, as
appropriate) based on the Leverage Ratio, as follows:
<TABLE>
<CAPTION>
APPLICABLE
MARGIN APPLICABLE MARGIN
FOR FOR EURODOLLAR
LEVERAGE RATIO ABR LOANS RATE LOANS
----------------------------------------------------- --------- -----------------
<S> <C> <C>
Greater than 5.00 to 1................................. 0.125% 1.125%
Greater than or equal to 4.50 to 1
but less than or equal to 5.00 to 1.................. 0.000% 0.875%
Less than 4.50 to 1.................................... 0.000% 0.625%
</TABLE>
For the purposes of this definition, the Applicable Margin shall be
determined as at the end of each of the first three quarterly periods of
each fiscal year of the Borrower and as at the end of each fiscal year of
the Borrower, based on the relevant financial statements delivered pursuant
to Section 7.1(a) or (b) and the Compliance Certificate delivered pursuant
to Section 7.2(b); changes in the Applicable Margin shall become effective
on the date which is the earlier of (i) two Business Days after the date
the Administrative Agent receives such financial statements and the
corresponding Compliance Certificate and (ii) the 60th day after the end of
each of the first three quarterly periods of each fiscal year or the 120th
day after the end of each fiscal year, as the case may be, and shall remain
in effect until the next change to be effected pursuant to this definition;
provided, that (a) until the first such financial statements and Compliance
Certificate are delivered after the date hereof, the Applicable Margin
shall be determined by reference to the Leverage Ratio set forth in the
Closing Certificate delivered to the Administrative Agent pursuant to
Section 6.1(b) and (b) if any financial statements or the Compliance
Certificate referred to above are not delivered within the time periods
specified above, then, for the period from and including the date on which
such financial statements and Compliance Certificate are required to be
delivered to but not including the date on which such financial statements
and Compliance Certificate are delivered, then the Applicable Margin as at
the end of the fiscal period that would have been covered thereby shall be
deemed to be the Applicable Margin which would be applicable when the
Leverage Ratio is greater than 5.00 to 1.00.
"Application": an application, in form and substance consistent with
this Agreement and mutually satisfactory to the Borrower and the Issuing
Lender, requesting the Issuing Lender to open a Letter of Credit.
"Asset Transfer": as defined in the recitals hereto.
"Assignee": as defined in Section 12.6(c).
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<PAGE> 10
"Assignment and Acceptance": an Assignment and Acceptance
substantially in the form of Exhibit A.
"Authorizations": all filings, recordings and registrations with, and
all validations or exemptions, approvals, orders, authorizations, consents,
Licenses, certificates and permits from, the FCC, applicable public
utilities and other Governmental Authorities, including, without
limitation, Franchises, FCC Licenses and Pole Agreements.
"Available Commitment": at any time, as to any Lender, an aggregate
amount, not to exceed at any one time outstanding, equal to such Lender's
Commitment, minus, the product of (i) the Unavailable Commitment,
multiplied by, (ii) such Lender's Specified Percentage.
"BCI": Bell Canada International Inc.
"Board": the Board of Governors of the Federal Reserve System or any
successor.
"Borrower": as defined in the preamble hereto.
"Borrowing Date": any Business Day specified in a notice pursuant to
Section 2.3 as a date on which the Borrower requests the Lenders to make
Loans hereunder.
"Business": as defined in Section 5.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York or Dallas, Texas are
authorized or required by law to close.
"Cable Systems": all cable television facilities and distribution
systems that are operated and maintained by the Borrower or a Restricted
Subsidiary pursuant to the terms of the related licenses, franchises and
permits issued under federal, state or municipal laws from time to time in
effect, which authorize a person to receive or distribute, or both, by
cable, optical, antennae, microwave, satellite or otherwise, audio, video,
digital, other broadcast signals or information or telecommunications and
visual signals within a defined geographical area for the purpose of
providing entertainment or other services, together with all the property,
tangible and intangible, owned or used in connection with the services
provided pursuant to said licenses, franchises and permits, and each other
cable television facility from time to time operated by the Borrower and
the Restricted Subsidiaries. A Cable System means one of such Cable
Systems.
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<PAGE> 11
"Capital Lease Obligations": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all classes of partnership interests (including, without
limitation, general, limited and preference units) in a partnership, any
and all equivalent ownership interests in a Person (other than a
corporation or partnership), and any and all warrants or options to
purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit
and eurodollar time deposits with maturities of one year or less from the
date of acquisition and overnight bank deposits of any Lender or of any
commercial bank having capital and surplus in excess of $500,000,000, (c)
repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not
more than 30 days, with respect to securities issued or fully guaranteed or
insured by the United States Government, (d) commercial paper of a domestic
issuer rated at least A-1 by Standard and Poor's Ratings Group ("S&P") or
P-1 by Moody's Investors Service, Inc. ("Moody's"), (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, or
by any political subdivision or taxing authority of any such state,
commonwealth or territory, the securities of which state, commonwealth,
territory, political subdivision, taxing authority (as the case may be) are
rated at least A by S&P or A-2 by Moody's, or (f) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (e) of this definition.
"Change of Control": shall be deemed to have occurred at such time as
any of the following occur:
(a) if Glenn R. Jones and/or BCI shall no longer have the power to
elect a majority of the board of directors of the Parent or to direct or
cause the direction of the management and policies of the Parent through
the ownership of voting securities; or
(b) (i) if Glenn R. Jones and/or BCI shall no longer have the
power, directly or indirectly, to elect a majority of the board of the
Borrower or to direct or cause the direction of the management and
policies of the Borrower or (ii) the Parent shall create, incur, assume
or suffer to exist any Lien on any Capital Stock of the Borrower.
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<PAGE> 12
"Closing Certificate": as defined in Section 6.1(b).
"Co-Agents": CoreStates Bank, N.A., PNC Bank, National Association,
Royal Bank of Canada, Credit Lyonnais Cayman Island Branch and Societe
Generale.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Borrower and all Capital Stock of the
Restricted Subsidiaries, now owned or hereinafter acquired, upon which a
Lien is purported to be created by any Security Document.
"Commitment": as to any Lender, its obligation, if any, to make Loans
to, and/or issue or participate in Letters of Credit issued on behalf of,
the Borrower in an aggregate amount not to exceed at any one time
outstanding the amount set forth opposite such Lender's name in Schedule
1.1 under the heading "Commitment" or, in the case of any Lender that is an
Assignee, the amount of the assigning Lender's Commitment assigned to such
Assignee pursuant to Section 12.6(c) and set forth in the applicable
Assignment and Acceptance (in each case, as the same may be increased,
reduced or otherwise adjusted from time to time as provided herein).
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414(b) or (c) of the
Code.
"Compliance Certificate": a certificate of a Responsible Officer of
the Borrower, substantially in the form of Exhibit B.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default": any of the events specified in Section 9, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Designation Notice": as defined in Section 2.4.
"Disposition": as defined in Section 8.5.
"Documentation Agent": as defined in the preamble hereto.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
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<PAGE> 13
"Effective Date": as defined in Section 12.8.
"Environmental Laws": any and all Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees,
requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
rate at which NationsBank is offered Dollar deposits at or about 10:00
A.M., Dallas, Texas time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of its Eurodollar Loans
are then being conducted for delivery on the first day of such Interest
Period for the number of days comprised therein and in an amount comparable
to the amount of its Eurodollar Loan to be outstanding during such Interest
Period.
"Eurodollar Loans": Loans, the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------------
1.00 -- Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 9, provided
that any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.
"Excluded Collateral": as defined in Section 7.9(a).
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<PAGE> 14
"Existing Credit Agreement": the $300,000,000 Credit Agreement dated
as of December 8, 1992 among the Parent, as the borrower, and NationsBank,
as managing agent, Barclays Bank PLC, Corestates Bank, N.A., and The Bank
of Nova Scotia, as co-agents and the lenders named therein, as amended
through the date hereof.
"Facility": the Commitments and the extensions of credit made
thereunder.
"FCC": the Federal Communications Commission and any successor
thereto.
"FCC License": any community antenna relay service, broadcast
auxiliary license, earth station registration, business radio, microwave or
special safety radio service license issued by the FCC pursuant to the
Communications Act of 1934, as amended.
"Franchise": any franchise, permit, wire agreement or easement,
License or other Authorization granted by any Governmental Authority,
including all laws, regulations and ordinances relating thereto, for the
construction, operation and maintenance of a Cable System or satellite
master antenna television system and the reception and transmission of
signals by microwave, and shall include, without limitation, all FCC
Licenses and all certificates of compliance and cable television
registration statements which are required to be issued by or filed with
the FCC.
"Franchise Agreement": any ordinance, agreement, contract or other
document stating the terms and conditions of any Franchise, including,
without limitation, all exhibits and schedules thereto, all amendments
thereof and consents, waivers and extensions issued thereunder, any
documents incorporated therein by reference and the application from which
such Franchise was granted.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1)
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<PAGE> 15
for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor,
(iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable principal amount
of the primary obligation in respect of which such Guarantee Obligation is
made and (b) the maximum principal amount for which such guaranteeing
person may be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
principal amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be the principal amount of such guaranteeing person's
reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith. For the purposes of Section 8.2, Guarantee
Obligations by the Borrower or any of the Restricted Subsidiaries in
respect of Indebtedness of the Borrower or any of the Restricted
Subsidiaries shall be calculated without duplication of any other
Indebtedness. It is understood that obligations pursuant to indemnities
which (a) are granted in the ordinary course of business, are related to
officer or director liability for officers and directors of the Borrower or
the Restricted Subsidiaries, or made in connection with asset Dispositions
and (b) do not cover Indebtedness of the types described in clauses (a)
through (d) of the definition thereof shall not constitute "Guarantee
Obligations" for the purposes of this Agreement.
"Indebtedness": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or which is evidenced by a note, bond,
debenture or similar instrument, (b) all indebtedness of such Person for
the deferred purchase price of property or services (other than current
trade liabilities incurred in the ordinary course of business and payable
in accordance with customary practices), (c) all Capital Lease Obligations
of such Person, (d) all obligations of such Person in respect of the
principal amount of acceptances or letters of credit issued or created for
the account of such Person, (e) all Guarantee Obligations of such Person
and (f) all liabilities of the type described in clauses (a) through (e)
above secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment
thereof; provided that the amount of any nonrecourse Indebtedness of such
Person shall be not more than an amount equal to the fair market value of
the property subject to such Lien, as determined by the Borrower in good
faith. The Indebtedness of any Person shall include the Indebtedness of any
partnership in which such Person is a general partner, other than to the
extent that the instrument or agreement evidencing such Indebtedness
expressly limits the liability of such Person in respect thereof.
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<PAGE> 16
"Information": written information, including, without limitation,
certificates, reports, statements (other than financial statements,
budgets, projections and similar financial data) and documents.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercompany Subordinated Debt": any Indebtedness of the Borrower
related to or resulting from any loan or advance from, or any non-equity
investment in the Borrower by, or any management or similar fees payable by
the Borrower to, or any other obligation of the Borrower to pay to, BCI or
an Affiliate of the Borrower (excluding a Restricted Subsidiary), and all
such present and future Indebtedness of the Borrower owing to, or
non-equity investment in the Borrower by, or management or similar fees
payable by the Borrower to, or any other obligation of the Borrower to pay
to, BCI or an Affiliate of the Borrower (excluding a Restricted Subsidiary)
now or hereafter existing (whether created directly or acquired by
assignment or otherwise), fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several, whether evidenced in writing or not,
and interest, premiums and fees, if any, thereon and other amounts payable
in respect thereof, and all rights and remedies of such obligees with
respect thereto. Notwithstanding the foregoing, Intercompany Subordinated
Debt shall not include (a) payments under the agreements described in
Schedule 8.10(c), or (b) payments relating to any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate of
the Borrower (other than a Restricted Subsidiary) which is (i) entered into
in the ordinary course of the Borrower's business, (ii) the terms of which
are fair and reasonable and in the best interests of the Borrower and (iii)
which is approved by the Board of Directors of the Borrower.
"Intercompany Subordinated Debt Agreement": the agreement executed and
delivered pursuant to Section 6.1 (a) by and among the Parent, the Borrower
and any other Affiliate of the Borrower who becomes a party thereto
pursuant to the terms thereof, substantially in the form of Exhibit C.
"Intercompany Subordinated Note": a note substantially in the form of
Exhibit E, evidencing Intercompany Subordinated Debt.
"Interest Expense": for any fiscal quarter or fiscal year of the
Borrower, as applicable, the aggregate of all letter of credit fees,
commitment fees and interest accrued or paid by the Borrower or any of the
Restricted Subsidiaries, during such period in respect of Total Debt, all
as determined on a consolidated basis in accordance with GAAP.
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<PAGE> 17
"Interest Payment Date": (a) as to any ABR Loan, (i) the last Business
Day of each March, June, September and December prior to the Termination
Date and (ii) the Termination Date, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest
Period and (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day which is three months or a whole multiple
thereof, after the first day of such Interest Period and the last day of
such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or conversion
date, as the case may be, with respect to such Eurodollar Loan and
ending one, two, three or six months thereafter (or, to the extent
available from all Lenders, nine or twelve months thereafter), as
selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, given with respect thereto;
and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three or six months thereafter (or, to the extent available
from all Lenders, nine or twelve months thereafter), as selected by the
Borrower by irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest
Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event
such Interest Period shall end on the immediately preceding Business
Day;
(ii) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date; and
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"Interest Rate Hedge Agreement": any interest rate protection
agreement, interest rate futures contract, interest rate option, interest
rate cap or other interest rate hedge arrangement, to or under which the
Borrower or any Restricted Subsidiary is a party or a beneficiary.
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<PAGE> 18
"Investments": as defined in Section 8.9.
"Issuing Lender": NationsBank, provided that, in the event that
NationsBank shall be replaced as the Administrative Agent pursuant to
Section 10.9, (i) no Letter of Credit shall be issued by NationsBank on or
after the date of such replacement and (ii) the replacement Administrative
Agent shall be an Issuing Lender from and after the date of such
replacement.
"L/C Fee Payment Date": the last Business Day of each March, June,
September and December.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of all unpaid Reimbursement
Obligations.
"Lenders": as defined in the preamble hereto.
"Letters of Credit": as defined in Section 3.1(a).
"Leverage Ratio": as of the last day of the most recently ended fiscal
quarter, the ratio of (i) Total Debt as of such day to (ii) Annualized
Operating Cash Flow based on such fiscal quarter.
"License": as to any Person, any license, permit, certificate of need,
authorization, certification, accreditation, franchise, approval, or grant
of rights by any Governmental Authority or other Person necessary or
appropriate for such Person to own, maintain, or operate its business or
property, including FCC Licenses.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any
of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Applications, the Intercompany
Subordinated Notes, the Intercompany Subordinated Debt Agreement, any
Notes, the Negative Pledge, any Interest Rate Hedge Agreements with any of
the Lenders and the Security Documents.
"Loan Parties": the collective reference to the Borrower and the
Restricted Subsidiaries.
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<PAGE> 19
"Majority Lenders": at any time when no Loans or Letters of Credit are
outstanding, the Lenders having Commitments equal to or more than 51% of
the Total Commitment, and at any time when Loans or Letters of Credit are
outstanding, the Lenders with outstanding Loans and participations in L/C
Obligations having an unpaid principal balance and face amount,
respectively, equal to or more than 51% of all Loans and L/C Obligations
outstanding, excluding from such calculation the Lenders which have failed
or refused to fund a Loan or their respective portion of an unpaid
Reimbursement Obligation.
"Managing Agents": as defined in the preamble hereto.
"Managing Agents Fee Letter": the letter agreement, dated August 29,
1995, among the Borrower, NationsBank and Scotiabank.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations or condition (financial or otherwise) of the
Borrower or any of the Restricted Subsidiaries, (b) the ability of any Loan
Party to perform its obligations under the Loan Documents or (c) the rights
or remedies of the Administrative Agent or the Lenders under this Agreement
or any of the other Loan Documents.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Maximum Permitted Indebtedness": shall mean, at the date of
determination, an amount equal to the product of (i) Annualized Operating
Cash Flow based on the preceding fiscal quarter and (ii) the Leverage Ratio
permitted pursuant to Section 8.1(a) on the date of determination.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NationsBank": NationsBank of Texas, N.A.
"NationsBank Fee Letter": the letter agreement, dated August 29, 1995,
between the Borrower and NationsBank.
"Negative Pledge": the Negative Pledge Agreement to be executed and
delivered by the Parent, substantially in the form of Exhibit D hereto, as
the same may be amended, supplemented or otherwise modified from time to
time, whereby the Parent agrees not to create, incur, assume or suffer to
exist any Lien upon the Capital Stock of the Borrower or any Intercompany
Subordinated Note from the Borrower in favor of the Parent.
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<PAGE> 20
"Net Unrestricted Designated Subsidiaries Three Month Cash Flow":
shall mean, for any period, the excess, if any, of (i) the Three Month Cash
Flow attributable to all Restricted Subsidiaries which have been designated
during such period as Unrestricted Subsidiaries pursuant to Section 8.6,
including, if applicable, the Three Month Cash Flow attributable to any
Restricted Subsidiary which is then being designated as an Unrestricted
Subsidiary pursuant to Section 8.6 (calculated at the time of each such
designation), over (ii) the Three Month Cash Flow attributed to all
Unrestricted Subsidiaries which have been designated during such period as
the Restricted Subsidiaries pursuant to Section 8.6, including, if
applicable, the Three Month Cash Flow attributable to any Unrestricted
Subsidiary which is then being designated as a Restricted Subsidiary
pursuant to Section 8.6 (calculated at the time of each such designation).
"Non-Excluded Taxes": as defined in Section 4.10(a).
"Non-U.S Lender": as defined in Section 4.10(b).
"Notes": as defined in Section 2.2.
"Notice of Borrowing": as defined in Section 2.3.
"Notice of Conversion/Continuation": as defined in Section 4.5.
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any Loan Party, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and Reimbursement Obligations and all other
obligations and liabilities of any Loan Party to the Administrative Agent
or to any Lender (or, in the case of any Interest Rate Protection
Agreement, any affiliate of any Lender), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Interest
Rate Protection Agreement entered into with any Lender (or any affiliate of
any Lender) or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all reasonable fees, charges and disbursements of
counsel to the Administrative Agent or to any Lender that are required to
be paid by any Loan Party pursuant hereto) or otherwise.
"Operating Cash Flow": for any period the total revenues (excluding
the gain on the sale of any assets to the extent included therein) of the
Borrower and the Restricted Subsidiaries, less the sum of (a) operating
expenses of the Borrower and the Restricted Subsidiaries for such period,
and (b) general and administrative expenses of the Borrower
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<PAGE> 21
and the Restricted Subsidiaries for such period, in each case determined
and consolidated in accordance with GAAP and calculated after giving effect
to acquisitions, exchanges and dispositions of assets of the Borrower and
any of the Restricted Subsidiaries (and designations of the Restricted
Subsidiaries and the Unrestricted Subsidiaries) during such period as if
such transactions had occurred on the first day of such period; provided,
that for purposes of determining Operating Cash Flow for any such period
during which (a) the Borrower or any of the Restricted Subsidiaries
acquired or disposed of any assets, or (b) any Restricted Subsidiaries were
designated Unrestricted Subsidiaries or Unrestricted Subsidiaries were
designated Restricted Subsidiaries, then such Operating Cash Flow shall be
increased (in the case of asset acquisitions or the designation of a
Unrestricted Subsidiary as a Restricted Subsidiary) or reduced (in the case
of asset dispositions or the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary), by the Operating Cash Flow that would have been
contributed by such assets or Restricted Subsidiary or Unrestricted
Subsidiary, as the case may be during such period, determined on a pro
forma basis in a manner reasonably satisfactory to the Managing Agents, as
though the Borrower or the relevant Restricted Subsidiary acquired or
disposed of such assets or the designations of the Restricted Subsidiaries
or the Unrestricted Subsidiaries took place, on the first day of such
period.
"Parent": as defined in the preamble hereto.
"Participant": as defined in Section 12.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Perfection Certificate": as defined in Section 6.1(p).
"Permitted Line of Business": as defined in Section 8.13.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) a "contributing sponsor" as
defined in Section 4001(a)(13) of ERISA or a member of such contributing
sponsor's "control group" as defined in Section 4001(a)(14) of ERISA.
"Pledge Agreements": the Pledge Agreement(s) to be executed and
delivered by the Borrower and the Restricted Subsidiaries, substantially in
the form of Exhibit F hereto, as the same may be amended, supplemented or
otherwise modified from time to time.
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"Pledged Subsidiary": any Restricted Subsidiary of the Borrower.
"Pole Agreement": any pole attachment agreement or underground conduit
use agreement entered into in connection with the operation of any Cable
System.
"Prime Rate": as defined in the definition of "ABR".
"Pro Forma Debt Service": on any date of determination, without
duplication, for the succeeding twelve-month period from the end of the
most recently ended fiscal quarter, the sum of (a) all Interest Expense
scheduled to be paid on Total Debt during such twelve-month period
(including without limitation any amounts scheduled to be paid pursuant to
any Interest Rate Hedge Agreement), plus (b) all rentals (other than
insurance premiums and property taxes) scheduled to be paid under Capital
Lease Obligations during such twelve-month period, plus (c) required
principal payments on Total Debt and/or payments associated with reductions
in the Total Commitment for such twelve-month period; provided that, for
purposes of this definition, the rates of interest payable during any
period on Total Debt (x) bearing interest at a variable rate or at
different fixed rates or (y) on which interest does not become payable
until a specified date after the end of such quarter shall, in each case,
be the interest rates per annum payable on such Total Debt as of the date
for which such calculation is made.
"Properties": as defined in Section 5.17(a).
"Quarterly Percentage Reduction": as defined in Section 4.2(c).
"Redesignation Notice": as defined in Section 2.4.
"Register": as defined in Section 12.6(g).
"Reimbursement Obligations": the obligations of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. sec. 2615.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental
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Authority (including any Authorization), in each case applicable to or
binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer, the president, the
chief financial officer or the treasurer of the relevant Loan Party.
"Restricted Payments": as defined in Section 8.7.
"Restricted Subsidiary": (a) each of the Subsidiaries designated as
such on Schedule 5.14 attached hereto and (b) any other Subsidiary of the
Borrower or another Restricted Subsidiary organized under the laws of any
state of the United States or the District of Columbia which has been
designated as a Restricted Subsidiary in accordance with Section 8.6,
unless and until designated as an Unrestricted Subsidiary pursuant to
Section 8.6; provided that not less than one hundred percent (100%) of the
voting control thereof and not less than one hundred percent (100%) of the
overall economic equity therein, at the time of which any determination is
being made, is owned, directly or indirectly, beneficially and of record by
the Borrower.
"Scotiabank": The Bank of Nova Scotia.
"Security Agreement": the Security Agreement to be executed and
delivered by the Borrower, substantially in the form of Exhibit G hereto,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Security Documents": the collective reference to the Pledge
Agreements, the Security Agreement and any other security documents
hereafter delivered to the Administrative Agent granting a Lien on any
asset or assets of any Person to secure the obligations and liabilities of
the Borrower hereunder and under any of the other Loan Documents or to
secure any guarantee of any such obligations and liabilities.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "fair value" or "present fair
saleable value" of the assets of such Person will, as of such date, exceed
the amount of all "liabilities of such Person, contingent or otherwise", as
of such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the fair value or present fair saleable value of
the assets of such Person will, as of such date, be greater than the amount
that will be required to pay the liability of such Person on its debts as
such debts become absolute and matured, (c) such Person will not have, as
of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition,
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(i) "debt" means liability on a "claim", (ii) "claim" means any (x) right
to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured or (y) right to an equitable remedy
for breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured or unmatured, disputed, undisputed, secured or
unsecured and (iii) unliquidated, contingent, disputed and unmatured claims
shall be valued at the amount that can be reasonably expected to be actual
and matured.
"Specified Percentage": at any time, as to any Lender, the percentage
of the Total Commitment then constituted by such Lender's Commitment.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors (or Persons holding equivalent
positions) of such corporation, partnership or other entity are at the time
owned, or the management and policies of which are otherwise ultimately
controlled, directly or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Syndication Agent": as defined in the preamble hereto.
"Tax Sharing Agreement": that certain Jones Intercable, Inc. and its
Qualifying Subsidiaries Income Tax Sharing Agreement, dated as of October
31, 1995, among the Parent and certain of its Subsidiaries, including
without limitation the Borrower.
"Termination Date": the earlier of (i) December 31, 2004, (ii) the
date the Lenders' Commitments to lend under this Agreement are otherwise
cancelled or terminated and (iii) the date any Note shall become due and
payable, whether at stated maturity, by acceleration or otherwise.
"Three Month Cash Flow": for a Person or group of Persons or the
assets of any Person as the context requires that portion of Operating Cash
Flow derived from or produced by such Person, Persons or assets for the
three-month period ending on the last day of the month immediately
preceding the date of designation, transfer, sale or exchange of such
Person, Persons or assets or, in the case of the Borrower and the
Restricted Subsidiaries, immediately prior to the date of determination
thereof.
"Total Available Commitment": the sum of the Available Commitments of
all the Lenders.
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"Total Commitment": the sum of the Commitments (in each case, as the
same may be increased, reduced or otherwise adjusted from time to time as
provided herein) not to exceed $500,000,000.
"Total Debt": for the Borrower and the Restricted Subsidiaries as of
any date, without duplication, the sum of (a) Indebtedness outstanding on
such date excluding any Intercompany Subordinated Debt, (b) Capital Lease
Obligations outstanding on such date and (c) Guarantee Obligations,
determined on a consolidated basis in accordance with GAAP.
"Total Extensions of Credit": at any time, the sum of the Aggregate
Outstandings of Credit of each Lender at such time.
"Tranche": the collective reference to Eurodollar Loans made by the
Lenders, the then current Interest Periods of which begin on the same date
and end on the same later date (whether or not such Loans shall originally
have been made on the same day).
"Transferee": as defined in Section 12.6(i).
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"Unavailable Commitment": as defined in Section 2.4.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Unrestricted Subsidiary": (a) any Subsidiary that is not designated
as a Restricted Subsidiary or that is designated as an Unrestricted
Subsidiary in accordance with the terms hereof and (b) any Subsidiary of
such designated Subsidiary, provided, that (i) at no time shall any
creditor of any such Subsidiary have any claim (whether pursuant to a
Guarantee Obligation or otherwise) against the Borrower or any of its other
Subsidiaries (other than another Unrestricted Subsidiary) in respect of any
Indebtedness or other obligation of any such Subsidiary; (ii) neither the
Borrower nor any of its Subsidiaries (other than another Unrestricted
Subsidiary) shall become a general partner of any such Subsidiary; (iii) no
default with respect to any Indebtedness of any such Subsidiary (including
any right which the holders thereof may have to take enforcement action
against any such Subsidiary) shall permit (upon notice, lapse of time or
both) any holder of any Indebtedness of the Borrower or its other
Subsidiaries (other than another Unrestricted Subsidiary) to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity; (iv) no such
Subsidiary shall own any Capital Stock of, or own or hold any Lien on any
property of, the Borrower or any other Subsidiary of the Borrower (other
than another Unrestricted Subsidiary); (v) no Investments may be made in
any such
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Subsidiary by the Borrower or any of its Subsidiaries (other than another
Unrestricted Subsidiary); and (vi) at the time of such designation, no
Default or Event of Default shall have occurred and be continuing or would
result therefrom. It is understood that the Unrestricted Subsidiaries shall
be disregarded for the purposes of any calculation pursuant to this
Agreement relating to financial matters with respect to the Borrower.
"Unrestricted Subsidiary Designation": as defined in Section 8.6.
"Wholly Owned Subsidiary": as to any Person, any other Person at least
100% of the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly or indirectly through one
or more other Wholly Owned Subsidiaries.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any other Loan Document or any certificate or other document made or delivered
pursuant hereto or thereto.
(b) Unless otherwise specified herein, all accounting terms used herein
(and in any other Loan Document and any certificate or other document made or
delivered pursuant hereto or thereto) shall be interpreted, all accounting
determinations shall be made, and all financial statements required to be
delivered hereunder shall be prepared, in accordance with GAAP as in effect from
time to time; provided, however, that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in Section 8
to eliminate the effect of any change in GAAP on the operation of such covenant
(or if the Administrative Agent notifies the Borrower that the Majority Lenders
wish to amend Section 8 for such purpose), then compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Borrower and the
Majority Lenders.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
(e) References in this Agreement or any other Loan Document to knowledge by
the Borrower or any Restricted Subsidiary of events or circumstances shall be
deemed to refer to events or circumstances of which any Responsible Officer has
actual knowledge or reasonably should have knowledge.
(f) References in this Agreement or any other Loan Document to financial
statements shall be deemed to include all related schedules and notes thereto.
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SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. (a) Subject to and in reliance upon the terms, conditions,
representations and warranties contained in the Loan Documents, each Lender
severally agrees to make revolving credit Loans to the Borrower from time to
time until the Termination Date, provided that in no event shall the Aggregate
Outstandings of Credit of any Lender at any time exceed such Lender's Available
Commitment. Until the Termination Date, the Borrower may use the Available
Commitments by borrowing, prepaying the Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Loans may from time to time be (i) Eurodollar Loans, (ii) ABR Loans
or (iii) a combination thereof, as determined by the Borrower and notified to
the Administrative Agent in accordance with Sections 2.3 and 4.5, provided that
no Loan shall be made as a Eurodollar Loan after the day that is one month prior
to the Termination Date.
2.2 Notes. In order to evidence the Loans, the Borrower will execute and
deliver to each Lender a promissory note substantially in the form of Exhibit H,
with appropriate insertions as to payee, date and principal amount (each, as
amended, supplemented, replaced or otherwise modified from time to time, a
"Note"), payable to the order of each Lender and in a principal amount equal to
each such Lender's Commitment. Each Note shall (x) be dated the Effective Date
or the date of any reissuance of such Note, (y) be stated to mature on the
Termination Date and (z) provide for the payment of interest in accordance with
Section 4.1.
2.3 Procedure for Borrowing. Subject to the terms and conditions contained
in the Loan Documents, the Borrower may borrow under the Available Commitments,
prior to the Termination Date, on any Business Day by delivery to the
Administrative Agent of an irrevocable notice substantially in the form of
Exhibit I-1 (a "Notice of Borrowing"). A Notice of Borrowing must be received by
the Administrative Agent prior to 11:00 A.M., Dallas, Texas time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Loans are to be initially Eurodollar Loans, or (b) on the requested
Borrowing Date. A Notice of Borrowing shall specify (i) the amount to be
borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to
be of Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the respective
amounts of each Tranche and the respective lengths of the initial Interest
Periods therefor. Each borrowing under the Total Available Commitment shall be
in an amount equal to (x) in the case of ABR Loans, $5,000,000 or a whole
multiple of $1,000,000 in excess thereof (or, if the then Total Available
Commitment is less than $5,000,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess
thereof. Upon receipt of any such Notice of Borrowing from the Borrower, the
Administrative Agent shall promptly notify each Lender thereof. Each such Lender
will make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in Section 12.2 prior to 1:00 P.M., Dallas, Texas
time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to
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the Borrower by the Administrative Agent crediting the account of the Borrower
as so directed by the Borrower in a Notice of Borrowing with the aggregate of
the amounts made available to the Administrative Agent by the Lenders and in
like funds as received by the Administrative Agent.
2.4 Unavailable Commitment. On the Effective Date, the Borrower may give
the Administrative Agent notice designating (a "Designation Notice") up to a
maximum principal amount of $200,000,000 of the Total Commitment, in increments
of $25,000,000, as being unavailable for borrowing (the total of all such
designated amounts at any time being herein referred to as the "Unavailable
Commitment"). In no event may the Borrower designate an amount as unavailable
for borrowing after the Effective Date or if, after giving effect to the
applicable Designation Notice, the Aggregate Outstandings of Credit of all the
Lenders would exceed the Total Available Commitment. At any time until the date
which is the second anniversary of the Effective Date, the Borrower may
redesignate all or any portion of the Unavailable Commitment as available for
borrowing or the issuance of Letters of Credit by giving the Administrative
Agent notice (a "Redesignation Notice") specifying the amount, in increments of
$25,000,000, of the Unavailable Commitment which shall again be available for
borrowing. The amount so specified in the Redesignation Notice shall be
available for borrowing on the date which is three Business Days after the
Administrative Agent's receipt of such Redesignation Notice; provided, however,
that for purposes of Section 4.3 such Redesignation Notice shall be deemed to be
effective as of the date which is 90 days prior to the date of such
Redesignation Notice. Notwithstanding anything to the contrary contained herein,
on the date which is the second anniversary of the Effective Date the amounts,
if any, remaining designated as the Unavailable Commitment shall be deemed to be
available for borrowing or the issuance of Letters of Credit on such date
subject to the terms and conditions of this Agreement.
2.5 Repayment of Loans. (a) The Borrower hereby unconditionally promises to
pay to the Administrative Agent for the account of each Lender, (i) the then
unpaid principal amount of each Loan of such Lender, on the Termination Date (or
such earlier date on which the Loans become due and payable pursuant to Section
9) and (ii) the amounts specified in Section 4.2, on the dates specified in
Section 4.2. The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 4.1.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
Section 12.6(g), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period, if any, applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower
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to each Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 12.6(g) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, Issuing
Lender, in reliance on the agreements of the other Lenders set forth in Section
3.4(a), agrees to issue letters of credit ("Letters of Credit") for the account
of the Borrower on any Business Day in such form as may be approved from time to
time by such Issuing Lender; provided that Issuing Lender shall not issue any
Letter of Credit if, after giving effect to such issuance, either (i) the L/C
Obligations would exceed the lesser of (x) $30,000,000 or (y) the Total
Available Commitment or (ii) the Aggregate Outstandings of Credit of all the
Lenders would exceed the Total Available Commitment. Each Letter of Credit shall
(i) be denominated in Dollars and shall be either (x) a standby letter of credit
issued for the account of the Borrower, which finances the working capital and
business needs of the Borrower and/or the Subsidiaries of the Borrower,
including, without limitation, good faith deposits in connection with permitted
acquisitions by the Borrower and/or the Subsidiaries of the Borrower, or (y) a
commercial letter of credit issued for the account of the Borrower in respect of
the purchase of goods or services by the Borrower and/or any of the Subsidiaries
of the Borrower and (ii) expire no later than the earlier of (x) the Termination
Date and (y) the date which is 12 months after its date of issuance.
(b) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of Texas.
(c) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any other Lender to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit. The Borrower may from time
to time request that the Issuing Lender issue a Letter of Credit by delivering
to the Issuing Lender, at its address for notices specified herein, an
Application therefor, completed to the reasonable satisfaction of the Issuing
Lender, and such other certificates, documents and other papers and information
as the Issuing Lender may reasonably request. Upon receipt of any Application,
the Issuing Lender will process such Application and the certificates, documents
and other papers and information delivered to it in connection therewith in
accordance with its customary procedures and
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shall promptly issue the Letter of Credit requested thereby (but in no event
shall the Issuing Lender be required to issue any Letter of Credit earlier than
three Business Days after its receipt of the Application therefor and all such
other certificates, documents and other papers and information relating thereto)
by issuing the original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to the Borrower promptly
following the issuance thereof.
3.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay to the
Administrative Agent, for the account of each Lender, a letter of credit fee
with respect to each Letter of Credit, computed for the period from and
including the date of issuance of such Letter of Credit to the date such Letter
of Credit is no longer outstanding, computed at a percentage rate per annum
equal to the Applicable Margin from time to time applicable to Loans bearing
interest at the Eurodollar Rate, calculated on the basis of a 360-day year, of
the aggregate average daily amount available to be drawn under such Letter of
Credit for the period as to which payment of such fee is made, payable on each
L/C Fee Payment Date to occur while such Letter of Credit remains outstanding
and on the date such Letter of Credit expires, is cancelled or is drawn upon.
Such fee shall be nonrefundable.
(b) In addition to the foregoing fees, the Borrower shall pay to the
Issuing Lender the fees set forth in the NationsBank Fee Letter.
(c) The Administrative Agent shall, promptly following its receipt thereof,
distribute to each Lender all fees received by the Administrative Agent for each
such Lender's account pursuant to this Section.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to grant
and hereby grants to each Lender, and, to induce the Issuing Lender to issue
Letters of Credit hereunder, each Lender irrevocably agrees to accept and
purchase and hereby accepts and purchases from the Issuing Lender, on the terms
and conditions hereinafter stated, for such Lender's own account and risk an
undivided interest equal to such Lender's Specified Percentage in the Issuing
Lender's obligations and rights under each Letter of Credit issued by the
Issuing Lender and the amount of each draft paid by the Issuing Lender
thereunder. Each Lender unconditionally and irrevocably agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit issued by the Issuing
Lender for which the Issuing Lender is not reimbursed in full by the Borrower in
accordance with Section 3.5(a), such Lender shall pay to the Issuing Lender upon
demand at the Issuing Lender's address for notices specified herein an amount
equal to such Lender's Specified Percentage of the amount of such draft, or any
part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any Lender to the Issuing Lender
pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment
made by the Issuing Lender under any Letter of Credit is paid to the Issuing
Lender within three Business Days after the date such payment is due, such
Lender shall pay to the Issuing Lender on demand an amount equal to the product
of (i) such amount, times (ii) the daily average Federal Funds Effective
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Rate during the period from and including the date such payment is required to
the date on which such payment is immediately available to the Issuing Lender,
times (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any Lender pursuant to Section 3.4(a) is not in fact made
available to the Issuing Lender by such Lender within three Business Days after
the date such payment is due, the Issuing Lender shall be entitled to recover
from such Lender, on demand, such amount with interest thereon calculated from
such due date at a rate per annum equal to the ABR plus the Applicable Margin. A
certificate of the Issuing Lender submitted to any Lender with respect to any
amounts owing under this Section shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any Lender its pro rata share of such
payment in accordance with Section 3.4(a), the Issuing Lender receives any
payment related to such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of Collateral applied thereto by the Issuing
Lender), or any payment of interest on account thereof, the Issuing Lender will,
if such payment is received prior to 1:00 p.m., Dallas, Texas time, on a
Business Day, distribute to such Lender its pro rata share thereof on the same
Business Day or if received later than 1:00 p.m. on the next succeeding Business
Day; provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such
Lender shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
(d) Notwithstanding anything to the contrary in this Agreement, each
Lender's obligation to make the Loans referred to in Section 3.5(b) and to
purchase and fund participating interests pursuant to Section 3.4(a) shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any setoff, counterclaim, recoupment, defense
or other right which such Lender or the Borrower may have against the Issuing
Lender, the Borrower or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default or an Event of Default or the failure to
satisfy any of the other conditions specified in Section 6; (iii) any adverse
change in the condition (financial or otherwise) of any Loan Party; (iv) any
breach of this Agreement or any other Loan Document by any Loan Party or any
Lender; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
3.5 Reimbursement Obligation of the Borrower. (a) The Borrower agrees to
reimburse the Issuing Lender (it being understood that such reimbursement shall
be effected by means of a borrowing of Loans unless the Managing Agents shall
determine in their sole discretion that such Loans may not be made for such
purpose as a result of a Default or Event of Default pursuant to Section 9(f)),
upon receipt of notice from the Issuing Lender of the date and amount of a draft
presented under any Letter of Credit and paid by the Issuing Lender, for the
amount of (i) such draft so paid and (ii) any taxes, fees, charges or other
costs or expenses incurred by the Issuing Lender in connection with such
payment. Each such payment shall be made to the Issuing Lender, at its address
for notices specified herein in Dollars and in immediately available funds, on
the date
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on which the Borrower receives such notice, if received prior to 11:00 A.M.,
Dallas, Texas time, on a Business Day and otherwise on the next succeeding
Business Day,
(b) Interest shall be payable on any and all amounts remaining unpaid by
the Borrower under this Section 3.5, (i) from the date the draft presented under
the affected Letter of Credit is paid to the date on which the Borrower is
required to pay such amounts pursuant to paragraph (a) above at a rate per annum
equal to the ABR plus the Applicable Margin and (ii) thereafter until payment in
full at the rate which would be payable on any Loans which were then overdue.
Except as otherwise specified in Section 3.5(a), each drawing under any Letter
of Credit shall constitute a request by the Borrower to the Administrative Agent
for a borrowing of Loans that are ABR Loans pursuant to Section 2.3 in the
amount of such drawing. The Borrowing Date with respect to such borrowing shall
be the date of payment of such drawing and the proceeds of such Loans shall be
applied by the Administrative Agent to reimburse the Issuing Lender for the
amounts paid under such Letter of Credit.
3.6 Obligations Absolute. Subject to the penultimate sentence of this
Section 3.6, the Borrower's obligations under this Section 3 shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which the Borrower may have or have
had against the Issuing Lender, any Lender or any beneficiary of a Letter of
Credit. The Borrower also agrees with the Issuing Lender that the Issuing Lender
and the Lenders shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 3.5(a) shall not be affected by, among other things,
(i) the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or (ii) any dispute between or among the Borrower and any beneficiary of
any Letter of Credit or any other party to which such Letter of Credit may be
transferred or (iii) any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
and the Lenders shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by such Person's gross negligence or willful misconduct. The
Borrower agrees that any action taken or omitted by the Issuing Lender under or
in connection with any Letter of Credit or the related drafts or documents, if
done in the absence of gross negligence or willful misconduct and in accordance
with the standards of care specified in the Uniform Commercial Code of the State
of Texas, shall be binding on the Borrower and shall not result in any liability
of either the Issuing Lender or any Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower and the Lenders of the date and amount thereof. Subject to Section 3.6,
the responsibility of the Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment appear on their face to be
in conformity with such Letter of Credit.
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<PAGE> 33
3.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Agreement, the provisions of this Agreement shall apply.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO
LOANS AND LETTERS OF CREDIT
4.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin in effect for such day.
(b) Each ABR Loan shall bear interest for each day that it is outstanding
at a rate per annum equal to the ABR for such day plus the Applicable Margin in
effect for such day.
(c) (i) After the occurrence and during the continuance of an Event of
Default, all Loans and Reimbursement Obligations shall bear interest at a rate
per annum which is equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section 4.1 plus 2% or (y) in the case of Reimbursement Obligations, at a rate
per annum equal to the ABR plus the Applicable Margin plus 2% and (ii) if all or
a portion of any interest payable on any Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to ABR plus the Applicable
Margin plus 2%, in each case, with respect to clauses (i) and (ii) above, from
the date of such non-payment until such amount is paid in full (as well after as
before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.
4.2 Optional and Mandatory Commitment Reductions and Prepayments. (a) The
Borrower may at any time and from time to time prepay the Loans, in whole or in
part, without premium or penalty (it being understood that amounts payable
pursuant to Section 4.11 do not constitute premium or penalty), upon at least
three Business Days' irrevocable notice to the Administrative Agent (in the case
of Eurodollar Loans) or at least one Business Day's irrevocable notice to the
Administrative Agent (in the case of ABR Loans), specifying the date and amount
of prepayment and whether the prepayment is of Eurodollar Loans, ABR Loans or a
combination thereof, and, in each case if a combination thereof, the principal
amount allocable to each. Upon the receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein, together with (if a Eurodollar Loan is prepaid other than at
the end of the Interest Period applicable thereto) any amounts payable pursuant
to Section 4.11. Partial prepayments of
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<PAGE> 34
Loans shall be in an aggregate principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof.
(b) The Borrower shall have the right, upon not less than three Business
Days' notice to the Administrative Agent (which will promptly notify the Lenders
thereof), to terminate the Total Commitment or, from time to time, to reduce the
amount of the Total Commitment; provided that (i) any such reduction of the
Total Commitment shall first be applied as a reduction in the Unavailable
Commitment until the same is eliminated and then as a reduction in the Total
Available Commitment; and (ii) no such termination or reduction of the Total
Commitment shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the sum of the
Aggregate Outstanding Extensions of Credit of all the Lenders would exceed the
aggregate Total Available Commitment then in effect. Any such reduction shall be
in a minimum amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof and shall reduce permanently the Total Commitment then in effect.
(c) On the last Business Day of each March, June, September and December,
commencing March 31, 1999, through the Termination Date, the Total Commitment
shall automatically and permanently be reduced by the percentage (the "Quarterly
Percentage Reduction") of the original Total Commitment, as set forth below.
Notwithstanding anything contained in this Agreement to the contrary, on the
Termination Date the Total Commitment shall automatically reduce to zero.
<TABLE>
<CAPTION>
QUARTERLY TOTAL PERCENTAGE
CALENDAR PERCENTAGE REDUCTION FOR THE
YEAR REDUCTION CALENDAR YEAR
- -------- ---------- -----------------
<S> <C> <C>
1999.......................................................... 1.875% 7.50%
2000.......................................................... 3.750% 15.00%
2001.......................................................... 4.375% 17.50%
2002.......................................................... 5.000% 20.00%
2003.......................................................... 5.000% 20.00%
2004.......................................................... 5.000% 20.00%
</TABLE>
(d) If at any time the sum of the Aggregate Outstanding Extensions of
Credit of all the Lenders exceeds the Total Available Commitment then in effect,
the Borrower shall, without notice or demand, immediately repay the Loans in an
aggregate principal amount equal to such excess, together with interest accrued
to the date of such payment or repayment and any amounts payable under Section
4.11. To the extent that, after giving effect to any prepayment of the Loans
required by the preceding sentence, the sum of the Aggregate Outstanding
Extensions of Credit of
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<PAGE> 35
all the Lenders still exceeds the Total Available Commitment then in effect, the
Borrower shall, without notice or demand, immediately cash collateralize the
then outstanding L/C Obligations in an amount equal to such excess upon terms
reasonably satisfactory to the Administrative Agent.
(e) In the case of any reduction of the Total Commitment the Borrower
shall, if applicable, comply with the requirements of Section 4.2(d). Each
repayment of the Loans under this Section 4.2 shall be accompanied by accrued
interest to the date of such repayment on the amount repaid. Any amounts
deposited in any cash collateral account established pursuant to this Section
4.2 shall be invested in Cash Equivalents having a one-day maturity or such
other Cash Equivalents as shall be acceptable to the Administrative Agent and
the Borrower.
4.3 Commitment Fees. etc. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender, a commitment fee, on the
average daily amount of the unutilized Available Commitment and on the
Unavailable Commitment computed at a rate per annum based on the Leverage Ratio
in effect for the fiscal quarter preceding the payment date, determined as
follows:
<TABLE>
<CAPTION>
LEVERAGE AVAILABLE UNAVAILABLE
RATIO COMMITMENT COMMITMENT
- ----------- ---------- ----------
<S> <C> <C>
>5.00:1.00........................................................ 0.375% 0.1875%
<5.00:1.00........................................................ 0.250% 0.1875%
</TABLE>
For purposes of calculating the commitment fee due hereunder, the Leverage Ratio
shall be determined as at the end of each of the first three quarterly periods
of each fiscal year of the Borrower and as at the end of each fiscal year of the
Borrower, based on the relevant financial statements delivered pursuant to
Section 7. 1 (a) or (b) and the Compliance Certificate delivered pursuant to
Section 7.2(b); changes in the Leverage Ratio shall become effective on the date
which is the earlier of (i) two Business Days after the date the Administrative
Agent receives such financial statements and the corresponding Compliance
Certificate and (ii) the 60th day after the end of each of the first three
quarterly periods of each fiscal year or the 120th day after the end of each
fiscal year, as the case may be, and shall remain in effect until the next
change to be effected pursuant to this Section 4.3; provided, that (a) until the
first such financial statements and Compliance Certificate are delivered after
the date hereof, the Applicable Margin shall be determined by reference to the
Leverage Ratio set forth in the Closing Certificate delivered to the
Administrative Agent pursuant to Section 6.1(b), and (b) if any financial
statements or the Compliance Certificate referred to above are not delivered
within the time periods specified above, then, for the period from and including
the date on which such financial statements and Compliance Certificate are
required to be delivered until the date on which such financial statements and
Compliance Certificate are delivered, then the Leverage Ratio as at the end of
the fiscal period that would have been covered thereby shall be deemed to be
greater than 5.00 to 1.00.
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<PAGE> 36
Such commitment fee shall be payable quarterly in arrears on the last Business
Day of each March, June, September and December and on the date on which all of
the Commitments shall have terminated.
(b) The Borrower shall pay (without duplication of any fee payable under
Section 4.3(a)) to the Managing Agents, for their respective accounts, the fees
in the amounts and on the dates agreed to in the Managing Agents Fee Letter.
4.4 Computation of Interest and Fees. (a) Interest based on the Eurodollar
Rate and fees shall be calculated on the basis of a 360-day year for the actual
days elapsed; and interest based on the ABR shall be calculated on the basis of
a 365- (or 366-, as the case may be) day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower; deliver to the
Borrower a statement showing in reasonable detail the calculations used by the
Administrative Agent in determining any interest rate pursuant to Section 4.1
(a).
4.5 Conversion and Continuation Options. (a) The Borrower may elect from
time to time to convert Eurodollar Loans to ABR Loans by giving the
Administrative Agent an irrevocable notice substantially in the form of Exhibit
I-2 (a "Notice of Conversion/Continuation"), at least one Business Day prior to
such election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans or to
continue Eurodollar Loans as Eurodollar Loans by giving the Administrative Agent
a Notice of Conversion/Continuation at least three Business Days prior to such
election. Any such Notice of Conversion/Continuation to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods therefor.
Upon receipt of any such Notice of Conversion/Continuation the Administrative
Agent shall promptly notify each Lender thereof. All or any part of outstanding
Eurodollar Loans and ABR Loans may be converted as provided herein, provided
that (i) no Loan may be converted into a Eurodollar Loan when any Event of
Default has occurred and is continuing and (ii) no Loan may be converted into a
Eurodollar Loan if the Interest Period selected therefor would expire after the
Termination Date.
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<PAGE> 37
(b) Any Eurodollar Loans may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, of the length of the next
Interest Period to be applicable to such Loans, determined in accordance with
the applicable provisions of the term "Interest Period" set forth in Section
1.1, provided that no Eurodollar Loan may be continued as such (i) when any
Event of Default has occurred and is continuing or (ii) after the date that is
one month prior to the Termination Date, and provided, further, that if the
Borrower shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the preceding
proviso such Loans shall be automatically converted to ABR Loans on the last day
of such then expiring Interest Period. Upon receipt of any such notice of
continuation pursuant to this Section 4.5(b), the Administrative Agent shall
promptly notify each Lender thereof.
4.6 Minimum Amounts of Tranches. All borrowings, conversions, continuations
and payments of Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of the Eurodollar Loans
comprising each Tranche shall be equal to $5,000,000 or a whole multiple of $
1,000,000 in excess thereof. In no event shall there be more than six Tranches
outstanding at any time.
4.7 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period; or
(b) the Administrative Agent shall have received notice from the
Majority Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give facsimile notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as ABR Loans, (y) any Loans that were to have been converted on
the first day of such Interest Period to Eurodollar Loans shall be continued as
ABR Loans and (z) any outstanding Eurodollar Loans shall be converted, on the
first day of such Interest Period, to ABR Loans. Until such notice has been
withdrawn by the Administrative Agent or the Majority Lenders, as the case may
be, no further Eurodollar Loans shall be made or continued as such, nor shall
the Borrower have the right to convert Loans to Eurodollar Loans.
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<PAGE> 38
4.8 Pro Rata Treatment and Payments. (a) Each borrowing of Loans hereunder
shall be made, each payment by the Borrower on account of any commitment fee
hereunder shall be allocated by the Administrative Agent, and any reduction of
the Total Commitment shall be allocated by the Administrative Agent, pro rata
according to the respective Specified Percentages of the Lenders. Each payment
(including each prepayment) by the Borrower on account of principal of and
interest on, or commitment fees related to, the Loans or Reimbursement
Obligations shall be allocated by the Administrative Agent pro rata according to
the respective Specified Percentages of such Loans and Reimbursement Obligations
then held by the Lenders. All payments (including prepayments) to be made by the
Borrower hereunder and under any Notes, whether on account of principal,
interest, fees, Reimbursement Obligations or otherwise, shall be made without
set-off or counterclaim and shall be made prior to 1:00 P.M., Dallas, Texas
time, on the due date thereof to the Administrative Agent, for the account of
the Lenders, at the Administrative Agent's office specified in Section 12.2, in
Dollars and in immediately available funds. Payments received by the
Administrative Agent after such time shall be deemed to have been received on
the next Business Day. If any payment hereunder becomes due and payable on a day
other than a Business Day, the maturity of such payment shall be extended to the
next succeeding Business Day, (and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension) unless, with respect to payments of Eurodollar Loans only, the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day.
(b) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the Administrative Agent submitted to any Lender with respect
to any amounts owing under this Section 4.8 shall be conclusive in the absence
of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall notify the Borrower of
the failure of such Lender to make such amount available to the Administrative
Agent and the Administrative Agent shall also be entitled to recover, on demand
from the Borrower, such amount with interest thereon at a rate per annum equal
to the ABR plus the Applicable Margin in effect on the Borrowing Date.
4.9 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
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<PAGE> 39
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 4.10, net income taxes
and franchise taxes (imposed in lieu of net income taxes));
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined in good faith that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount reasonably deemed by
such Lender to be material, then from time to time, the Borrower shall promptly
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts pursuant
to this Section 4.9, it shall promptly deliver a certificate to the Borrower
(with a copy to the Administrative Agent), setting forth in reasonable detail an
explanation of the basis for requesting such compensation. Such certificate as
to any additional amounts payable pursuant to this Section 4.9 submitted by such
Lender to the Borrower (with a copy to the Administrative Agent) shall be
conclusive in the absence of manifest error. The Borrower shall pay each Lender
the amount shown as due on any such certificate delivered by it within 15 days
after the Borrower's receipt thereof. The agreements in this Section 4.9 shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
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<PAGE> 40
4.10 Taxes. (a) All payments made by the Borrower under this Agreement and
any Notes shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding (i) net income taxes; (ii) franchise and doing business
taxes imposed on the Administrative Agent or any Lender as a result of a present
or former connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any Note); (iii) any Taxes, levies, imposts,
deductions, charges or withholdings that are in effect and that would apply to a
payment to such Lender as of the Effective Date; and (iv) if any Person acquires
any interest in this Agreement or any Note pursuant to the provisions hereof,
including without limitation a participation (whether or not by operation of
law), or a foreign Lender changes the office in which the Loan is made,
accounted for or booked (any such Person or such foreign Lender in that event
being referred to as a "Tax Transferee"), any Taxes, levies, imposts,
deductions, charges or withholdings to the extent that they are in effect and
would apply to a payment to such Tax Transferee as of the date of the
acquisition of such interest or change in office, as the case may be. If any
such non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder or under any Note,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Non-U.S. Lender if such Lender fails to
comply with the requirements of paragraph (b) of this Section. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If, when the Borrower is required by this Section 4.10(a) to pay any
Non-Excluded Taxes, the Borrower fails to pay such NonExcluded Taxes when due to
the appropriate taxing authority or fails to remit to the Administrative Agent
the required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure.
(b) Each Lender (or Transferee) that is not a citizen or resident of the
United States of America, a corporation, partnership or other entity created or
organized in or under the laws of the United States of America, or any estate or
trust that is subject to federal income taxation regardless of the source of its
income (a "Non-U.S. Lender" ) shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from which
the related participation shall have been purchased) two copies of either U.S.
Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S.
Lender claiming exemption from U.S. federal
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<PAGE> 41
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions thereof
or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, an
annual certificate representing that such Non-U.S. Lender (i) is not a "bank"
for purposes of Section 881(c) of the Code (and is not subject to regulatory or
other legal requirements as a bank in any jurisdiction, and has not been treated
as a bank in any filing with or submission made to any Governmental Authority or
rating agency), (ii) is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and (iii) is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, U.S. federal withholding tax on all
payments by the Borrower under this Agreement and the other Loan Documents,
along with such other additional forms as the Borrower, the Administrative Agent
(or, in the case of a Participant, the Lender from which the related
participation shall have been purchased) may reasonably request to establish the
availability of such exemption. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement (or, in the
case of any Participant, on or before the date such Participant purchases the
related participation). In addition, each Non-U.S. Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of Section 4.10, a Non-U.S. Lender shall not
be required to deliver any form pursuant to this Section 4.10(b) that such
Non-U.S. Lender is not legally able to deliver, it being understood and agreed
that, in the event that a Non-U.S. Lender fails to deliver any forms otherwise
required to be delivered pursuant to this Section 4.10(b), or notifies the
Borrower that any previously delivered certificate is no longer in force, the
Borrower shall withhold such amounts as the Borrower shall reasonably determine
are required by law and shall not be required to make any additional payment
with respect thereto to the Non-U.S. Lender, unless such failure to deliver or
notify is a result of change in law subsequent to the date hereof.
(c) If a Lender (or Transferee) or the Administrative Agent shall become
aware that it is entitled to receive a refund in respect of Non-Excluded Taxes
paid by the Borrower, or as to which it has been indemnified by the Borrower,
which refund in the good faith judgment of such Lender (or Transferee) is
allocable to such payment made pursuant to this Section 4.10, it shall promptly
notify the Borrower of the availability of such refund and shall, within 30 days
after receipt of a request by the Borrower, apply for such refund. If any Lender
(or Transferee) or the Administrative Agent receives a refund in respect of any
Non-Excluded Taxes paid by the Borrower, or as to which it has been indemnified
by the Borrower, which refund in the good faith judgment of such Lender (or
Transferee) is allocable to such payment made pursuant to this Section 4.10, it
shall promptly notify the Borrower of such refund and shall, within 15 days
after receipt, repay such refund to the Borrower. The agreements in this Section
4.10 shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
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4.11 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of Eurodollar
Loans after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to, but not
including, the last day of such Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Bank on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank Eurodollar market. This covenant shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
4.12 Change of Lending Office. Each Lender agrees that if it makes any
demand for payment under Section 4.9 or 4.10(a), it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Borrower to make payments
under Section 4.9 or 4.10(a) or would eliminate or reduce the effect of any
adoption or change described in Section 4.9.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and to issue Letters of Credit, the Borrower and
the Restricted Subsidiaries hereby represent and warrant to the Administrative
Agent and each Lender that:
5.1 Financial Condition. (a) The consolidated balance sheet of the Parent
and its consolidated Subsidiaries as at May 31, 1995 and the related
consolidated statements of income and of cash flows for the fiscal year ended on
such date, reported on by Arthur Andersen L.L.P., copies of which have
heretofore been furnished to each Lender, present fairly in all material
respects the consolidated financial condition of the Parent and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants and as disclosed
therein). Neither the Parent, the Borrower nor any of their consolidated
Subsidiaries had, as of May 31, 1995, any material Guarantee Obligation,
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contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the foregoing statements or in the schedules or notes thereto. Except as set
forth on Schedule 5.1, during the period from May 31, 1995 to and including the
date hereof there has been no sale, transfer or other disposition by the Parent
or any of its consolidated Subsidiaries of any material part of its business,
assets or property and no purchase or other acquisition of any business, assets
or property (including any Capital Stock of any other Person) material in
relation to the consolidated financial condition of the Parent and its
consolidated Subsidiaries at May 31, 1995, other than the Asset Transfer.
(b) The financial statements of the Borrower and the Restricted
Subsidiaries and other information most recently delivered under Sections 7.1(a)
and (b) were prepared in accordance with GAAP and present fairly the
consolidated financial condition, results of operations, and cash flows of the
Borrower and the Restricted Subsidiaries as of, and for the portion of the
fiscal year ending on the date or dates thereof (subject in the case of interim
statements only to normal year-end audit adjustments). There were no material
liabilities, direct or indirect, fixed or contingent, of the Borrower or the
Restricted Subsidiaries as of the date or dates of such financial statements
which are not reflected therein or in the notes thereto. Except for transactions
directly related to, or specifically contemplated by, the Loan Documents, there
have been no changes in the consolidated financial condition of the Borrower or
the Restricted Subsidiaries from that shown in such financial statements after
such date which could reasonably be expected to have a Material Adverse Effect,
nor has the Borrower or any Restricted Subsidiary incurred any liability
(including, without limitation, any liability under any Environmental Law),
direct or indirect, fixed or contingent, after such date which could reasonably
be expected to have a Material Adverse Effect.
5.2 No Change. Since the Effective Date there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect.
5.3 Existence; Compliance with Law. The Borrower and each of its
Subsidiaries (a) is duly organized, validly existing and, where applicable, in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate or partnership power and authority, and the legal right, to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified
and, where applicable, in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect,
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.
5.4 Power; Authorization; Enforceable Obligations. Each Loan Party and the
Parent have the power and authority, and the legal right, to make, deliver and
perform each of the Loan Documents to which it is a party and, in the case of
the Borrower, to consummate the Asset Transfer and borrow hereunder, and has
taken all necessary corporate or partnership action to
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authorize the consummation of the Asset Transfer and the execution, delivery and
performance of each of the Loan Documents to which it is a party and, in the
case of the Borrower, to authorize the borrowings on the terms and conditions of
this Agreement. Prior to March 31, 1996, except as set forth on Schedule 5.4, no
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person (including any
partner or shareholder of any Loan Party or any Affiliate of any Loan Party) is
required to be obtained or made by any Loan Party, the Parent or any Subsidiary
of any Loan Party in connection with the Asset Transfer other than (a) the
filings referred to in Section 6.1(k), and (b) such as have been obtained or
made and are in full force and effect; provided, that with respect to third
party approvals necessary for the Asset Transfer, Schedule 5.4 lists only the
material third party approvals required. On and after March 31, 1996, no consent
or authorization of, filing with, notice to or other act by or in respect of,
any Governmental Authority or any other Person (including any partner or
shareholder of any Loan Party or any Affiliate of any Loan Party) is required to
be obtained or made by any Loan Party, the Parent or any Subsidiary of any Loan
Party in connection with the Asset Transfer other than (a) the filings referred
to in Section 6.1(k), and (b) such as have been obtained or made and are in full
force and effect. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person
(including any partner or shareholder of the Parent, any Loan Party or any
Affiliate of the Parent or any Loan Party) is required to be obtained or made by
the Parent or any Loan Party or any Subsidiary of any Loan Party in connection
with the borrowings hereunder or with the execution, delivery, performance,
validity or enforceability of the Loan Documents other than (a) the filings
referred to in Section 6.1(k), and (b) such as have been obtained or made and
are in full force and effect. Each Loan Document to which the Parent and each
Loan Party is a party has been duly executed and delivered on behalf of the
Parent and each such Loan Party. Each Loan Document constitutes a legal, valid
and binding obligation of the Parent, to the extent the Parent is a party
thereto, and each Loan Party party thereto enforceable against the Parent and
each such Loan Party in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent transfer or conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
5.5 No Legal Bar. The Asset Transfer, the execution, delivery and
performance of the Loan Documents, the borrowings hereunder and the use of the
proceeds thereof will not (a) violate, result in a default under or conflict
with any Requirement of Law or any material Contractual Obligation, in any
material respect, of the Parent, the Borrower or of any of the Restricted
Subsidiaries or (b) violate any provision of the charter or bylaws of the
Parent, the Borrower or the Restricted Subsidiaries and will not result in a
default under, or result in or require the creation or imposition of any Lien on
any of their respective properties or revenues pursuant to any such Requirement
of Law or Contractual Obligation (other than pursuant to the Security
Documents).
5.6 No Material Litigation. Except as set forth on Schedule 5.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of the Restricted Subsidiaries or
against any of its or their respective properties or revenues (a) with respect
to any of
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the Loan Documents, the Asset Transfer or any of the transactions contemplated
hereby or thereby, or (b) which could reasonably be expected to have a Material
Adverse Effect. No attachment, prejudgment or judgment Lien encumbers any asset
of the Borrower or any of the Restricted Subsidiaries other than in respect of
(i) claims as to which payment in full above any applicable customary deductible
is covered by insurance or a bond or (ii) other claims aggregating not more than
$10,000,000. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Borrower, threatened by or against the Parent with respect to the Asset Transfer
or any of the Loan Documents to which the Parent is a party.
5.7 No Default. Neither the Parent, the Borrower nor any of the Restricted
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
5.8 Ownership of Property; Intellectual Property. (a) Each of the Borrower
and the Restricted Subsidiaries has good record and indefeasible title in fee
simple to, or a valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, all its other material property, and
none of such property is subject to any Lien except as permitted by Section 8.3.
Schedule 5.8(a) (as supplemented from time to time) accurately describes the
location of all real property owned or leased by the Borrower and all tangible
personal property associated with Cable Systems owned by the Borrower.
(b) The Borrower and the Restricted Subsidiaries have the right to use all
trademarks, tradenames, copyrights, technology, know-how or processes
("Intellectual Property") that are necessary for the conduct of the business of
the Borrower or any of the Restricted Subsidiaries.
5.9 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Parent, the Borrower or any of their respective Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
5.10 Taxes. (a)(i) Each of the Borrower and its Subsidiaries has filed or
caused to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable by it on
said returns and all other material taxes, fees or other charges (collectively,
the "Specified Taxes") imposed on it or any of its property by any Governmental
Authority due and payable by it and (ii) to the knowledge of the Borrower, no
material claim is being asserted with respect to any Specified Tax, other than,
in each case with respect to this clause (a), Specified Taxes the amount or
validity of which are currently being contested in good faith by appropriate
proceedings diligently pursued and with respect to which reserves in conformity
with GAAP have been provided on the books of the Borrower or the relevant
Subsidiary, as the case may be, and (b) no tax Lien has been filed with respect
to any Specified Tax.
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5.11 Federal Regulations. No part of the proceeds of any Loans will be used
for "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulation G or Regulation U of the Board as
now and from time to time hereafter in effect. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-I referred to in said Regulation G or
Regulation U, as the case may be.
5.12 ERISA. Except as, in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect: (a) neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code; (b) no termination of a Single Employer Plan
has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period; (c) the present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits; (d) neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan, and neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made; and (e) no such Multiemployer Plan is in
Reorganization or Insolvent.
5.13 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Federal or State statute or regulation
(other than Regulation X of the Board) which limits its ability to incur
Indebtedness under this Agreement or the other Loan Documents.
5.14 Subsidiaries. Except for changes otherwise permitted by this
Agreement, Schedule 5.14 sets forth a true and complete list of each of the
Borrower's Subsidiaries and accurately designates as of the date hereof whether
each such Subsidiary is a Restricted Subsidiary or an Unrestricted Subsidiary
for purposes of this Agreement. The outstanding shares of Capital Stock of each
Restricted Subsidiary have been duly authorized and validly issued and are fully
paid and non-assessable, and, except as otherwise indicated on Schedule 5.14 or
otherwise permitted by this Agreement, all of the outstanding shares of each
class of the Capital Stock of each Restricted Subsidiary are owned, directly or
indirectly, beneficially and of record, by the Borrower, free and clear of all
Liens.
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5.15 Insurance. Each Loan Party maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
covering its properties and businesses against such casualties and contingencies
and of such types and in such amounts (and with co-insurance and deductibles) as
is customary in the case of same or similar businesses.
5.16 Certain Cable Television Matters. Except as could not reasonably be
expected to result in a Material Adverse Effect:
(a) the Borrower and the Restricted Subsidiaries possess all
Authorizations necessary to own, operate and construct the Cable Systems or
otherwise for the operations of their businesses and are not in violation
thereof. All such Authorizations are in full force and effect and no event
has occurred that permits, or after notice or lapse of time could permit,
the revocation, termination or material and adverse modification of any
such Authorization;
(b) neither the Borrower nor any of the Restricted Subsidiaries is in
violation of any duty or obligation required by the Communications Act of
1934, as amended, or any FCC rule or regulation applicable to the operation
of any portion of any of the Cable Systems;
(c) there is not pending or, to the best knowledge of the Borrower,
threatened, any action by the FCC to revoke, cancel, suspend or refuse to
renew any FCC License held by the Borrower or any of the Restricted
Subsidiaries. There is not pending or, to the best knowledge of the
Borrower, threatened, any action by the FCC to modify adversely, revoke,
cancel, suspend or refuse to renew any other Authorization; and
(d) there is not issued or outstanding or, to the best knowledge of
the Borrower, threatened, any notice of any hearing, violation or complaint
against the Borrower or any of the Restricted Subsidiaries with respect to
the operation of any portion of the Cable Systems and the Borrower has no
knowledge that any Person intends to contest renewal of any Authorization.
5.17 Environmental Matters. Except as could not reasonably be expected to
result in a Material Adverse Effect:
(a) the facilities and properties owned by the Borrower or any of its
Subsidiaries (the "Owned Properties") do not contain, and, to the knowledge
of the Borrower to the extent not owned, leased or operated during the past
five years, have not contained during the past five years, any Materials of
Environmental Concern in amounts or concentrations which constitute or
constituted a violation of, or could reasonably be expected to give rise to
liability under, any Environmental Law;
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(b) the facilities and properties leased or operated by the Borrower
or any of its Subsidiaries, but not owned by them (the "Leased and Operated
Properties"), to the knowledge of the Borrower, do not contain and have not
contained during the past five years, any Materials of Environmental
Concern in amounts or concentrations which constitute or constituted a
violation of, or could reasonably be expected to give rise to liability
under, any Environmental Law;
(c) the Owned Properties and all operations at the Owned Properties
are in compliance, and, to the knowledge of the Borrower to the extent not
owned, leased or operated during the past five years, have in the last five
years been in compliance, with all applicable Environmental Laws, and there
is no contamination at, under or about the Owned Properties or violation of
any Environmental Law with respect to the Owned Properties or the business
operated by the Borrower or any of its Subsidiaries (the "Business") which
could interfere with the continued operation of the Owned Properties or
impair the fair saleable value thereof;
(d) to the knowledge of the Borrower, the Leased and Operated
Properties and all operations at the Leased and Operated Properties are in
compliance, and, in the last five years been in compliance, with all
applicable Environmental Laws, and to the knowledge of the Borrower there
is no contamination at, under or about the Leased and Operated Properties
or violation of any Environmental Law with respect to the Leased and
Operated Properties or the Business operated by the Borrower or any of its
Subsidiaries which could interfere with the continued operation of the
Leased and Operated Properties or impair the fair saleable value thereof;
(e) neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Owned Properties or the Leased
and Operated Properties (together, the "Properties") or the Business, nor
does the Borrower have any knowledge that any such notice will be received
or is being threatened;
(f) the Borrower has not transported or disposed of Materials of
Environmental Concern nor, to the Borrower's knowledge, have Materials of
Environmental Concern been transported or disposed of from the Properties
in violation of, or in a manner or to a location which could reasonably be
expected to give rise to liability to the Borrower or any Restricted
Subsidiary under, any Environmental Law, nor has the Borrower generated any
Materials of Environmental Concern nor, to the Borrower's knowledge, have
Materials of Environmental Concerns been generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that could reasonably be expected to give rise to liability to the
Borrower or any Restricted Subsidiary under, any applicable Environmental
Law;
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(g) no judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be
named as a party with respect to the Properties or the Business, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any applicable Environmental Law with respect to the
Properties or the Business; and
(h) the Borrower has not released, nor, to the Borrower's knowledge,
has there been any release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could reasonably be expected to give rise to
liability under Environmental Laws.
5.18 Accuracy of Information. (a) All Information made available to the
Administrative Agent or any Lender by the Borrower pursuant to this Agreement or
any other Loan Document did not, as of the date such Information was made
available, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which such statements
were made.
(b) All pro forma financial information and projections made available to
the Administrative Agent or any Lender by the Borrower pursuant to this
Agreement or any other Loan Document have been prepared and furnished to the
Administrative Agent or such Lender in good faith and were based on estimates
and assumptions that were believed by the management of the Borrower to be
reasonable in light of the then current and foreseeable business conditions of
the Borrower and the Subsidiaries. The Administrative Agent and the Lenders
recognize that such pro forma financial information and projections and the
estimates and assumptions on which they are based may or may not prove to be
correct.
5.19 Security Documents. The Security Documents are effective to create in
favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable security interest in the Collateral described therein and
proceeds thereof and, after satisfaction of the conditions specified in Section
6.1(j) and the making of the filings referred to in Section 6.1(k), the Security
Documents shall constitute a fully perfected first priority Lien on, and
security interest in, all right, title and interest of, the Borrower and the
Restricted Subsidiaries in such Collateral and the proceeds thereof (subject to
Section 9-306 of the Uniform Commercial Code), as security for the Obligations,
in each case prior and superior in right to any other Person.
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5.20 Solvency. As of the date on which this representation and warranty is
made or deemed made, each Loan Party is Solvent, both before and after giving
effect to the transactions contemplated hereby consummated on such date and to
the incurrence of all Indebtedness and other obligations incurred on such date
in connection herewith and therewith.
5.21 Indebtedness. No Loan Party is an obligor on any Indebtedness except
as permitted under Section 8.2.
5.22 Labor Matters. There are no actual or overtly threatened strikes,
labor disputes, slow downs, walkouts, or other concerted interruptions of
operations by the employees of any Loan Party which could reasonably be expected
to have a Material Adverse Effect. Hours worked by and payment made to employees
of the Loan Parties have not been in violation of the Fair Labor Standards Act
or any other applicable law dealing with such matters, other than any such
violations, individually or collectively, which could reasonably be expected to
have a Material Adverse Effect. All payments due from any Loan Party on account
of employee health and welfare insurance have been paid or accrued as a
liability on its books, other than any such nonpayments which could not,
individually or collectively, reasonably be expected to have a Material Adverse
Effect.
5.23 Prior Names. Neither the Borrower nor any Restricted Subsidiary has
used or transacted business under any other corporate or trade name in the
five-year period preceding the Effective Date, other than Jones Communications
of Virginia, Inc. (formerly known as Jones of Alexandria, Inc.).
5.24 Franchises. Schedule 5.24, as supplemented to reflect any renewals and
extensions of Franchise Agreements and to reflect any acquisition, lists all
Franchise Agreements of the Borrower and the Restricted Subsidiaries relating to
the Cable Systems owned by the Borrower and the Restricted Subsidiaries. The
Parent and all the Loan Parties have taken all action required by applicable
Governmental Authorities to lawfully transfer or grant the Franchise Agreements
to the Loan Parties other than as described on Schedule 5.4. To the knowledge of
the Borrower, all Franchise Agreements of the Loan Parties were lawfully
transferred or granted to the Borrower or a Restricted Subsidiary pursuant to
the rules and regulations of applicable Governmental Authorities. The Franchise
Agreements authorize the Borrower or a Restricted Subsidiary as indicated on
Schedule 5.24 (as supplemented to reflect any renewals and extensions of
Franchise Agreements and to reflect any acquisition) to operate one or more
Cable Systems until the respective expiration dates listed on Schedule 5.24 or,
will authorize the Borrower or a Restricted Subsidiary as indicated on Schedule
5.24 (as supplemented to reflect any renewals and extensions of Franchise
Agreements and to reflect any acquisition), and no other further approval,
filing or other action of any Governmental Authority is or will be necessary or
advisable as of the Effective Date or, with respect to the Cable Systems
acquired after the date hereof, as of the date of acquisition, in order to
permit the Borrower's or such Restricted Subsidiaries' operation of the Cable
Systems in accordance with the terms thereof. Schedule 5.24 (as supplemented
from time to time) correctly identifies the franchisee and accurately describes
the franchise area, the exclusive or nonexclusive
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nature of each such Franchise Agreement and all limitations contained in the
Franchise Agreement or related statutes on the assignment, sale or encumbering
of the Franchise Agreement or the related Cable System's assets. The Borrower or
the Restricted Subsidiary that is the franchisee is in compliance in all
material respects with all material terms and conditions of all Franchise
Agreements relating to the Cable Systems owned by it, and on and after the date
of acquisition of any Cable System will be in compliance in all material
respects with all material terms and conditions of all Franchise Agreements
relating to such Cable Systems so acquired and no event has occurred or exists
which permits, or, after the giving of notice, or the lapse of time or both
would permit, the revocation or termination of any Franchise Agreement.
5.25 Chief Executive Office, Chief Place of Business. Schedule 5.25 (as
supplemented from time to time) accurately sets forth the location of the chief
executive office and chief place of business (as such terms are used in the
Uniform Commercial Code of each state whose law would purport to govern the
attachment and perfection of the security interests granted by the Security
Documents) of the Borrower and each Restricted Subsidiary.
5.26 Full Disclosure. There is no material fact or condition relating to
the Loan Documents or the financial condition, business, or property of any Loan
Party which could reasonably be expected to have a Material Adverse Effect and
which has not been disclosed, in writing, to the Managing Agents and the
Lenders.
5.27 Intercompany Subordinated Debt. As of the date hereof, there is no
Intercompany Subordinated Debt other than the Indebtedness evidenced by the
Intercompany Subordinated Notes from the Borrower to the Parent, a copy of which
has been delivered to the Administrative Agent pursuant to Section 6. 1 (a).
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Extensions of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, immediately prior to or concurrently with the
making of such extension of credit of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, duly executed and delivered by the Borrower and each of the
Restricted Subsidiaries; (ii) the Pledge Agreements, duly executed and
delivered by the Borrower and each of the Restricted Subsidiaries; (iii)
the Security Agreement, duly executed and delivered by the Borrower; (iv)
the Negative Pledge duly executed and delivered by the Parent; (v) a copy
of the Intercompany Subordinated Notes duly executed and delivered by the
Borrower and the Parent and (vi) a copy of the Intercompany Subordinated
Debt Agreement duly executed and delivered by the Borrower and the Parent.
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(b) Closing Certificate. The Administrative Agent shall have received
a certificate (the "Closing Certificate") of each Loan Party, dated the
date hereof, substantially in the form of Exhibit J, with appropriate
insertions and attachments, in each case reasonably satisfactory in form
and substance to the Administrative Agent, executed by a Responsible
Officer and the Secretary or any Assistant Secretary of the appropriate
Loan Party.
(c) Fees. The Administrative Agent and the Managing Agents shall have
received all fees and expenses required to be paid on or before the date
hereof referred to in Section 4.3(b) and the Co-Agents shall have received
all fees required to be paid on or before the date hereof pursuant to that
certain letter agreement from the Borrower to all of the Co-Agents, dated
October 30, 1995.
(d) Legal Opinions . The Administrative Agent shall have received,
with a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Davis, Graham & Stubbs,
counsel to the Parent, substantially in the form of Exhibit K;
(ii) the executed legal opinion of the General Counsel or the
acting General Counsel of the Parent, substantially in the form of
Exhibit L; and
(iii) the executed legal opinion of Dow, Lohnes and Albertson,
substantially in the form of Exhibit M.
(e) Financial Statements. The Lenders shall have received audited
consolidated financial statements of the Parent for the 1995 fiscal year,
which financial statements shall have been prepared in accordance with GAAP
and shall be accompanied by an unqualified report thereon prepared by
Arthur Andersen L.L.P.
(f) Satisfactory Organizational and Capital Structure. The stock
ownership of the Borrower and each of the Restricted Subsidiaries shall be
consistent with the structure described in Schedule 6.1(f). The Existing
Credit Agreement shall have been terminated and all liens created in
connection therewith shall have been assigned to the Administrative Agent
and/or amended in a manner satisfactory to the Administrative Agent to the
extent that the assets covered thereby are to constitute Collateral under
this Agreement and otherwise such liens shall be terminated and all
Indebtedness outstanding thereunder shall be paid in full concurrently with
the making of the initial Loans hereunder. All necessary intercreditor
arrangements, including those relating to the Intercompany Subordinated
Note from the Borrower to the Parent, shall be satisfactory to the Lenders
and the Borrower.
(g) Governmental and Third Party Approvals. Prior to March 31, 1996,
except as set forth on Schedule 5.4, all governmental approvals and
material third party approvals necessary in connection with the Asset
Transfer shall have been obtained and be in full force
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and effect. On and after March 31, 1996, all governmental approvals and
material third party approvals necessary in connection with the Asset
Transfer shall have been obtained and be in full force and effect. All
governmental approvals and material third party approvals necessary in
connection with the financing contemplated hereby shall have been obtained
and be in full force and effect.
(h) No Material Adverse Information. The Lenders shall not have become
aware of any previously undisclosed materially adverse information with
respect to (i) the ability of the Loan Parties to perform their respective
obligations under the Loan Documents in any material respect or (ii) the
rights and remedies of the Lenders.
(i) No Material Default Under Other Agreements. There shall exist no
material event of default (or condition which would constitute such an
event of default with the giving of notice or the passage of time) under
any agreements relating to Capital Stock or any material financing
agreements, lease agreements or other material Contractual Obligation of
the Parent, the Borrower or any of the Restricted Subsidiaries.
(j) Pledged Stock, Stock Powers. The Administrative Agent shall have
received the certificates representing the shares of Capital Stock pledged
pursuant to each Pledge Agreement, together with, an undated stock power
for each such certificate executed in blank by a duly authorized officer of
the Borrower and each of the Restricted Subsidiaries.
(k) Actions to Perfect Liens. All filing documents, necessary or, in
the opinion of the Administrative Agent, desirable to perfect the Liens
created by the Pledge Agreements and the Security Agreement shall have been
executed by the Borrower and each of the Restricted Subsidiaries. All
Collateral shall be free and clear of other Liens except for (i) Liens
permitted by Section 8.3 and (ii) other Liens approved by the Lenders.
(l) Material Adverse Change. There shall exist no material adverse
change in the financial condition, business operations or properties of the
Parent or its Subsidiaries since May 31, 1995.
(m) Additional Document. All other documentation, including, without
limitation, any tax sharing agreement, employment agreement, management
compensation arrangement or other financing arrangement of the Borrower or
any of the Restricted Subsidiaries shall be reasonably satisfactory in form
and substance to the Lenders.
(n) Lien Searches. The Administrative Agent shall have received the
results of a recent search by a Person satisfactory to the Administrative
Agent, of the Uniform Commercial Code, judgment and tax lien filings which
may have been filed with respect to personal property of the Borrower in
each of the jurisdictions where such personal property is located or in
which financing statements will be filed to perfect the security interests
granted pursuant to the Pledge Agreements, and such search shall reveal no
Liens relating
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<PAGE> 54
to the personal property of the Borrower or the Restricted Subsidiaries or
to the Collateral except for Liens which will be terminated on or before
the Effective Date, Liens referred to in Section 6.1(k) and other Liens
approved by the Lenders.
(o) The Asset Transfer. The Asset Transfer shall have been consummated
except as set forth on Schedule 61(o).
(p) Perfection Certificate. The Administrative Agent shall have
received a certificate, in form and substance satisfactory to the
Administrative Agent, dated on or before the Effective Date, duly executed
and delivered by the Borrower (the "Perfection Certificate").
(q) Insurance. The Administrative Agent shall have received
certificates of insurance naming the Administrative Agent as loss payee for
the benefit of the Lenders and as additional insured for the benefit of the
Lenders, as required by Section 7.5(b).
(r) Tax Sharing Agreement. The Tax Sharing Agreement between the
Parent and the Borrower shall be in form and substance satisfactory to the
Managing Agents.
6.2 Conditions to Each Extension of Credit. The obligation or agreement of
each Lender to make any Loan or to issue any Letter of Credit requested to be
made or issued by it on any date (including, without limitation, its initial
extension of credit) is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loans or the issuing of such Letters of
Credit, of the following conditions precedent:
(a) Initial Conditions Satisfied. Each of the conditions precedent set
forth in Section 6.1 (other than subsection (1) thereof) shall have been
satisfied and shall continue to be satisfied on the date of such Loans.
(b) No Material Litigation. Except as disclosed on Schedule 5.6, no
litigation, inquiry, injunction or restraining order shall be pending,
entered or threatened in writing which could reasonably be expected to have
a Material Adverse Effect.
(c) No Material Adverse. There shall not have occurred any change,
development or event which could reasonably be expected to have a Material
Adverse Effect.
(d) Representations and Warranties. Each of the representations and
warranties made by any Loan Party or the Parent in or pursuant to the Loan
Documents to which it is a party shall be true and correct in all material
respects on and as of such date as if made on and as of such date, after
giving effect to the Loans requested to be made or the Letters of Credit to
be issued on such date and the proposed use of the proceeds thereof.
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(e) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or will occur after giving effect to the
extension of credit requested to be made on such date and the proposed use
of the proceeds thereof.
(f) Notice of Borrowing; Application. The Borrower shall have
submitted a Notice of Borrowing in accordance with Section 2.3 and
certifying to the matters set forth in Section 6.2(a) through and including
(e) and/or an Application in accordance with Section 3.2.
(g) Pro Forma Covenant Compliance. Prior to the earlier to occur of
(i) the date the Asset Transfer has been fully consummated and all
governmental approvals and material third party approvals necessary in
connection with the Asset Transfer shall have been obtained and are in full
force and effect and (ii) March 31, 1996, the Managing Agents shall have
received reasonably satisfactory calculations evidencing the Borrower's pro
forma compliance with Sections 8.1 (a), (b) and (c), both before and after
giving effect to the requested borrowing.
Each borrowing by or issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the applicable conditions contained in
this Section 6.2 have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower and each of the Restricted Subsidiaries hereby agree that, so
long as any Commitment remains in effect, any Loan or Letter of Credit shall be
outstanding or any other Obligation is due and payable to any Lender or the
Administrative Agent hereunder or under any other Loan Document, the Borrower
and each of the Restricted Subsidiaries shall:
7.1 Financial Statements. Furnish to the Administrative Agent for
subsequent distribution to each Lender:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and the Restricted Subsidiaries as at the end of such
year and the related consolidated statements of income and shareholders'
capital (deficit) and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Arthur Andersen
L.L.P. or other independent certified public accountants of nationally
recognized standing; and
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(b) as soon as available, but in any event not later than 60 days
after the end of each of the first three fiscal quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated balance sheet of
the Borrower and the Restricted Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
7.2 Certificates; Other Information. Furnish to the Administrative Agent
for subsequent distribution to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 7.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 7.1(a) or (b), a Compliance Certificate executed by
a Responsible Officer of the Borrower and each of the Restricted
Subsidiaries;
(c) without duplication of the financial statements delivered pursuant
to Section 7.1, within five days after the same are sent, copies of all
financial statements and reports which the Borrower sends to the holders of
any class of its debt securities, and within five days after the same are
filed, copies of all financial statements and reports which the Borrower
may make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority; and
(d) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or the relevant Restricted Subsidiary, as the case may
be.
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7.4 Conduct of Business and Maintenance of Existence, etc. (a) Continue to
engage in business of the same general type as now conducted by it, except as
otherwise permitted by Section 8.13, and preserve, renew and keep in full force
and effect its organizational existence and take all reasonable action to
maintain all material rights, privileges and franchises necessary in the normal
conduct of its business except as otherwise permitted pursuant to Section 8.4.
(b) Comply with all Contractual Obligations and applicable Requirements of
Law, except to the extent that failure to comply therewith could not be
reasonably expected to have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. (a) Keep all material property
useful and necessary in its business in good working order and condition
(ordinary wear and tear excepted) consistent with customary practices in the
cable industry; maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish to the
Administrative Agent certificates of insurance from time to time received by it
for each such policy of insurance evidencing the Borrower's compliance with
Section 7.5(b).
(b) The Borrower shall cause (i) the Administrative Agent to be named, in a
manner reasonably satisfactory to the Administrative Agent, (a) as lender loss
payee for the benefit of the Lenders under all policies of casualty insurance
maintained by the Borrower and (b) as an additional insured for the benefit of
the Lenders on all policies of liability insurance maintained by the Borrower;
and (ii) all insurance policies to contain a provision that the policy may not
be canceled, terminated or modified without thirty (30) days' prior written
notice to the Administrative Agent.
7.6 Inspection of Property; Books and Records; Discussions. Keep and
maintain a system of accounting established and administered in accordance with
sound business practices and keep and maintain proper books of record and
accounts; and permit representatives of any Lender to visit and inspect any of
its properties and examine and make abstracts from any of its books and records
during normal business hours and as often as may reasonably be requested and
upon reasonable notice and to discuss the business, operations, properties and
financial and other condition of the Borrower and the Restricted Subsidiaries
with officers and employees of the Borrower and the Restricted Subsidiaries and
with their independent certified public accountants; provided that
representatives of the Borrower designated by a Responsible Officer may be
present at any such meeting with such accountants.
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7.7 Notices. Promptly after the Borrower obtains knowledge thereof, give
notice to the Administrative Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Parent, the Borrower or any of the Restricted
Subsidiaries or (ii) litigation, investigation or proceeding which may
exist at any time between the Parent, the Borrower or any of the Restricted
Subsidiaries and any Governmental Authority, which in either case could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of the
Restricted Subsidiaries (i) which could reasonably be expected to result in
an adverse judgment of $10,000,000 or more and not covered by insurance or
(ii) in which injunctive or similar relief is sought which in the case of
this clause (ii) could reasonably be expected to materially interfere with
the ordinary conduct of business of the Borrower or the Restricted
Subsidiaries;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows thereof: (i) the occurrence of any
Reportable Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC or a
Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower
or any Commonly Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the terminating, Reorganization or Insolvency of,
any Plan; and
(e) any development or event which could reasonably be expected to
have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action is proposed to be taken with respect thereto.
7.8 Environmental Laws. (a) Comply with, and use reasonable efforts to
require compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and maintain, and use reasonable
efforts to require that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws except, in each case, to the
extent that failure to do so could not be reasonably expected to have a Material
Adverse Effect.
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(b) Comply with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the same
are being contested in good faith by appropriate proceedings diligently
pursued.
7.9 Collateral. (a) To secure full and complete payment and performance of
the Obligations, the Borrower shall grant and convey to and create in favor of,
the Administrative Agent for the ratable benefit of the Lenders a continuing
first priority perfected Lien and security interest in, to and on all of the
assets of the Borrower (except to the extent prohibited by law) including but
not limited to the following:
(i) all of the Borrower's present and future assets, including,
without limitation, its equipment, inventory, accounts receivable,
instruments, general intangibles, intellectual property and real estate;
and
(ii) all of the Capital Stock of each direct or indirect Restricted
Subsidiary of the Borrower and any other direct or indirect Restricted
Subsidiary of the Borrower, now owned or hereafter acquired and/or
designated by the Borrower,
and the Restricted Subsidiaries shall grant and convey to and create in favor
of, the Administrative Agent for the ratable benefit of the Lenders a continuing
first priority perfected Lien and security interest in, to and on all of the
Capital Stock of each Restricted Subsidiary owned by a Restricted Subsidiary,
now owned or hereafter acquired. Notwithstanding anything to the contrary
contained herein, the Borrower shall not be required to grant to the
Administrative Agent a security interest in any general intangibles or other
rights arising under contracts of the Borrower which are listed and described on
Schedule 7.9(a) (the "Excluded Collateral") until such time as any required
consents with respect thereto have been obtained; provided, however, that the
Borrower shall grant to the Administrative Agent for the ratable benefit of the
Lenders a continuing first priority perfected Lien and security interest in and
to all proceeds (cash or otherwise) of such Excluded Collateral. The Borrower
agrees to use its commercially reasonable efforts to obtain all necessary
consents for the grant of a security interest in the Excluded Collateral to the
Administrative Agent for the ratable benefit of the Lenders.
(b) With respect to any new Restricted Subsidiary created, acquired or
designated after the date hereof, the Borrower or a Restricted Subsidiary, as
applicable, shall promptly (i) execute and deliver to the Administrative Agent
such amendments to the Pledge Agreements as the Administrative Agent or the
Majority Lenders deem necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such Restricted Subsidiary, (ii) in
the case of any such Restricted Subsidiary, deliver to the Administrative Agent
the certificates representing the Capital Stock of such Restricted Subsidiary,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Borrower or a Restricted Subsidiary, as applicable,
(iii) take such other actions as shall be necessary or advisable to grant to the
Administrative Agent for the benefit of the Lenders a perfected first priority
security interest in such Capital Stock, including, without
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limitation, the filing of such Uniform Commercial Code financing statements as
may be requested by the Administrative Agent, and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in the preceding clauses (i), (ii) and (iii),
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(c) With respect to any newly acquired assets or transfers of assets to the
Borrower, promptly after acquiring or receiving any such asset, execute and
deliver or cause to be delivered to the Administrative Agent in a form
reasonably acceptable to the Administrative Agent (i) one or more mortgages
and/or security agreements which grant to the Administrative Agent a first
priority perfected security interest in such assets (subject to any Liens
permitted by Section 8.3) and (ii) such additional agreements and other
documents as the Administrative Agent reasonably deems necessary to establish a
valid, enforceable and perfected first priority security interest in such assets
(subject to any Liens permitted by Section 8.3).
(d) Upon request of the Administrative Agent, promptly execute and deliver
or cause to be executed and delivered to the Administrative Agent in a form
reasonably acceptable to the Administrative Agent (i) one or more mortgages,
pledge agreements and/or security agreements which grant to the Administrative
Agent a first priority perfected security interest (subject to any Liens
permitted by Section 8.3) in such property of the Borrower (including Capital
Stock of direct or indirect Restricted Subsidiaries) as shall be specified by
the Administrative Agent and (ii) such additional agreements and other documents
as the Administrative Agent reasonably deems necessary to establish a valid,
enforceable and perfected first priority security interest in such property or
Capital Stock.
7.10 Use of Proceeds. The Borrower shall use the proceeds of the Loans and
the Letters of Credit only for (a) financing permitted acquisitions, (b) capital
expenditures to expand and upgrade Cable Systems of the Borrower and the
Restricted Subsidiaries, (c) dividends or distributions permitted under this
Agreement, and (d) general corporate purposes.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any Commitment remains in
effect, any Loan or Letter of Credit is outstanding, or any other Obligation is
due and payable to any Lender or the Administrative Agent hereunder or under any
other Loan Document, the Borrower shall not, and the Borrower shall not permit
any of the Restricted Subsidiaries to, directly or indirectly:
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8.1 Financial Condition Covenants.
(a) Leverage Ratio. Permit the Leverage Ratio at any time during any
period set forth below to be greater than the ratio set forth opposite such
period below:
<TABLE>
<CAPTION>
PERIOD RATIO
---------------------------------------------------------------- -------------
<S> <C>
Effective Date through and including 6/30/99 5.50 to 1.00
7/01/99 through and including 6/30/2000 5.00 to 1.00
7/01/2000 and thereafter 4.50 to 1.00
</TABLE>
(b) Interest Coverage Ratio. Permit the ratio of Operating Cash Flow
for any fiscal quarter of the Borrower ending during any period set forth
below to Interest Expense for such fiscal quarter to be less than the ratio
set forth opposite such period below:
<TABLE>
<CAPTION>
PERIOD RATIO
----------------------------------------------------------------- ------------
<S> <C>
Effective Date through 6/30/99 1.50 to 1.0
7/l/99 and thereafter 2.00 to 1.0
</TABLE>
(c) Pro Forma Debt Service Ratio. Permit, at any time, the ratio of
Annualized Operating Cash Flow based on the most recently ended fiscal
quarter to Pro Forma Debt Service to be less than 1.1 to 1.0.
8.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness of the Borrower or any Restricted Subsidiary of the Borrower,
except:
(a) Indebtedness under this Agreement other than Letters of Credit
issued for the account of the Borrower but are for the benefit of or
support the obligations of any Person other than the Borrower or a
Restricted Subsidiary;
(b) Indebtedness of the Restricted Subsidiaries resulting from any
loan or advance from the Borrower and Intercompany Subordinated Debt,
provided that the Intercompany Subordinated Debt is unsecured and
subordinated pursuant to the terms and conditions of the Intercompany
Subordinated Debt Agreement.
(c) [INTENTIONALLY DELETED]
(d) Interest Rate Hedge Agreements entered into with the Lenders or
any of them for the purpose of hedging against interest rate fluctuations
with respect to variable rate Indebtedness of the Borrower or any of the
Restricted Subsidiaries; and
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(e) Indebtedness of the Borrower and/or any Restricted Subsidiary not
otherwise permitted by this Section 8.2, provided that immediately prior to
and after giving effect to the creation, incurrence or assumption of such
Indebtedness (i) the aggregate outstanding principal amount of all such
other Indebtedness of the Borrower and the Restricted Subsidiaries, on a
combined basis plus (without duplication) the aggregate amount of all
Indebtedness secured by Liens permitted under subsection (e) of Section 8.3
shall not at any time exceed 5% of Maximum Permitted Indebtedness and (ii)
no Default exists and would then be continuing.
8.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes, assessments or governmental charges arising in
the ordinary course of business which are not yet due and payable or which
are being contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of the
Borrower or the Restricted Subsidiary, as the case may be, in conformity
with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not yet due and payable;
(c) Liens in existence on the date hereof listed on Schedule 8.3(c),
securing Indebtedness permitted by Section 8.2(c), provided that (x) no
such Lien is spread to cover any additional property and (y) the amount of
Indebtedness secured thereby is not increased;
(d) Liens created pursuant to the Security Documents;
(e) other Liens securing Indebtedness of the Borrower or any
Restricted Subsidiary, provided that immediately prior to and after giving
effect to the creation of any such Liens (i) the aggregate amount of
Indebtedness secured by Liens permitted under this subsection (e) plus
(without duplication) the aggregate amount of all Indebtedness of the
Borrower and the Restricted Subsidiaries permitted under Section 8.2(e)
shall not at any time exceed 5% of Maximum Permitted Indebtedness and (ii)
no Default or Event of Default exists and would then be continuing;
(f) encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property, none of which impair in any
material respect the use of such property by the Person in question in the
operation of its business, and none of which is violated by existing or
proposed structures or land use; and
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(g) any attachment, prejudgment or judgment Lien in existence less
than sixty consecutive calendar days after the entry thereof, or with
respect to which execution has been stayed, or with respect to which
payment in full above any applicable customary deductible is covered by
insurance or a bond.
8.4 Limitation on Fundamental Changes. Enter into any merger, consolidation
or amalgamation with any Person, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets to any Person, or make any material change in its present method of
conducting business, except:
(a) a Restricted Subsidiary may merge into or be acquired by the
Borrower if the Borrower is the survivor thereof;
(b) a Restricted Subsidiary may merge into or be acquired by another
Restricted Subsidiary; and
(c) the Borrower or any Restricted Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets in a transaction
permitted under Section 8.5.
8.5 Limitation on Sale of Assets. Convey, sell, lease, assign, exchange,
transfer or otherwise dispose of (a "Disposition") any of its property, business
or assets (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired to any Person or, in the case of any
Restricted Subsidiary, issue or sell any shares of or other interests in such
Restricted Subsidiary's Capital Stock to any Person other than the Borrower,
except:
(a) the Disposition of property in the ordinary course of business
(which shall not be construed to include the Disposition of any License,
Franchise or Cable System);
(b) Dispositions of property between the Borrower and the Restricted
Subsidiaries or between the Restricted Subsidiaries provided that in the
case of the Borrower, such Disposition is less than substantially all of
its assets;
(c) the Borrower may designate any Restricted Subsidiary as an
Unrestricted Subsidiary in accordance with Section 8.6 and may make
Restricted Payments in accordance with Section 8.7; and
(d) other Dispositions, provided that in the case of the Borrower,
such Disposition is less than substantially all of its assets and in the
case of the Borrower or any Restricted Subsidiary, as the case may be, all
of the following conditions are satisfied: (i) the Borrower or such
Restricted Subsidiary receives consideration that represents the fair
market value of such assets at the time of such Disposition, (ii) any such
Disposition shall be on a nonrecourse basis (except that the Borrower or
such Restricted Subsidiary may make
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commercially reasonable representations, warranties and indemnities with
respect to such properties or assets that are normal and customary in the
cable television business ("Permitted Sale Representations"), (iii) no
Default or Event of Default shall have occurred and be continuing either
before or after the consummation of such transaction and (iv) either (1)
the Leverage Ratio is less than or equal to 3.75 to 1.00 after giving
effect to such Disposition or (2) if the Leverage Ratio is greater than
3.75 to 1.00 after giving effect to such Disposition then the Borrower and
the Restricted Subsidiaries may make other Dispositions so long as after
giving effect to such proposed Disposition (x) the sum, without
duplication, of (A) the Net Unrestricted Designated Subsidiaries Three
Month Cash Flow for the prior twelve month period (or shorter period
commencing on the Effective Date) ending on the date of such proposed
transaction, (B) the Three Month Cash Flow attributable to the assets to be
sold, leased, transferred, assigned or otherwise disposed of and (C) the
Three Month Cash Flow attributable to all assets sold, leased, transferred,
assigned or otherwise disposed of during the prior twelve month period (or
shorter period commencing on the Effective Date) ending on the date of such
proposed transaction shall not exceed 15% of the Three Month Cash Flow of
the Borrower and the Restricted Subsidiaries, and (y) the sum, without
duplication of (A) the Net Unrestricted Designated Subsidiaries Three Month
Cash Flow for the five-year period (or shorter period commencing on the
Effective Date) ending on the date of such proposed transaction, (B) the
Three Month Cash Flow attributable to the assets to be sold, leased,
transferred, assigned or otherwise disposed of and (C) the Three Month Cash
Flow attributable to all assets sold, leased, transferred, assigned or
disposed of during the five-year period (or shorter period commencing on
the Effective Date) ending on the date of such proposed transaction shall
not exceed 30% of the Three Month Cash Flow of the Borrower and the
Restricted Subsidiaries. Notwithstanding anything to the contrary contained
in the foregoing, if the Leverage Ratio is less than or equal to 3.75 to
1.00 for a period of twelve consecutive months all prior Dispositions and
Unrestricted Subsidiary Designations shall be excluded from subsequent
determinations pertaining to the foregoing clause (y).
Upon request by and at the expense of the Borrower, the Administrative Agent
shall release any Liens arising under the Security Documents with respect to any
Collateral which (i) is permitted to be disposed of pursuant to Section 8.5(a),
(ii) consists of the Capital Stock of a Restricted Subsidiary which is
designated as an Unrestricted Subsidiary pursuant to Section 8.6, or (iii) is
sold or otherwise disposed of in compliance with the terms of Section 8.5(d).
8.6 Restricted/Unrestricted Designation of Subsidiaries. Be permitted to
designate a Restricted Subsidiary as an Unrestricted Subsidiary or an
Unrestricted Subsidiary as a Restricted Subsidiary unless (a) the Borrower
delivers to the Administrative Agent and the Lenders a written notice, not later
than ten (10) days prior to such designation, certifying that all conditions set
forth in this Section 8.6 are satisfied as of the proposed effective date of
such designation, which certification shall state the proposed effective date of
such designation and shall be signed by a Responsible Officer of the Borrower;
(b) no Default or Event of Default shall exist immediately before or after the
effective date of such designation; (c) after giving effect to such designation,
there
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shall not be any material and adverse effect on the Borrower and the Restricted
Subsidiaries on a consolidated basis with respect to the prospects for the
future generation of Operating Cash Flow, the general mix of assets or the
condition, quality and development level of technical equipment, and such
designation shall not render the Borrower and the Restricted Subsidiaries on a
consolidated basis insolvent or generally unable to pay its or their respective
debts as they become due; (d) in the case of the designation of an Unrestricted
Subsidiary as a Restricted Subsidiary, such notice shall also serve as the
certification of the Borrower that, with respect to such Restricted Subsidiary,
the representations and warranties contained herein are true and correct on and
as of the effective date of such designation; and (e) in the case of the
designation of any Restricted Subsidiary as an Unrestricted Subsidiary (an
"Unrestricted Subsidiary Designation"), either (1) the Leverage Ratio is less
than or equal to 3.75 to 1.00 after giving effect to such Unrestricted
Subsidiary Designation or (2) if the Leverage Ratio is greater than 3.75 to 1.00
after giving effect to such Unrestricted Subsidiary Designation, then the
Borrower may make an Unrestricted Subsidiary Designation so long as after giving
effect to such Unrestricted Subsidiary Designation the following additional
conditions are satisfied as of the effective date of such proposed designation:
(i) the sum, without duplication, of (x) the Net Unrestricted Designated
Subsidiaries Three Month Cash Flow for the prior twelve month period (or shorter
period commencing on the Effective Date) ending on the date of such proposed
designation and (y) the Three Month Cash Flow attributable to all asset
Dispositions made pursuant to Section 8.5(d) during the twelve month period (or
shorter period commencing on the Effective Date) ending on the date of such
proposed designation shall not exceed fifteen percent (15%) of the Three Month
Cash Flow of the Borrower and the Restricted Subsidiaries, and (ii) the sum,
without duplication, of (x) the Net Unrestricted Designated Subsidiaries Three
Month Cash Flow for the five-year period (or shorter period commencing on the
Effective Date) ending on the date of such proposed designation and (y) the
Three Month Cash Flow attributable to all asset Dispositions made pursuant to
Section 8.5(d) during the five-year period (or shorter period commencing on the
Effective Date) ending on the date of such proposed designation shall not exceed
thirty percent (30%) of the Three Month Cash Flow of the Borrower and the
Restricted Subsidiaries. Notwithstanding the foregoing, if the Leverage Ratio is
less than or equal to 3.75 to 1.00 for a period of twelve consecutive months,
all previous Unrestricted Subsidiary Designations and asset Dispositions shall
be excluded from subsequent determinations pertaining to the foregoing clause
(ii).
8.7 Limitation on Restricted Payments; Other Payment Limitations. Declare
or pay any dividend or distribution in respect of, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any shares
of or interests in any class of Capital Stock of the Borrower, whether now or
hereafter outstanding, either directly or indirectly, whether in cash or
property or in obligations of the Borrower or any of its Subsidiaries, or make,
or permit any payments of principal, interest, premium or fees on account of
Intercompany Subordinated Debt or make any payment in respect of any fees
payable to any Person (other than to the Borrower or a Restricted Subsidiary)
for management, consulting, oversight or similar services (collectively,
"Restricted Payments"), except that the Borrower may make Restricted Payments in
cash or Capital Stock so long as both
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immediately before and after making such Restricted Payment no Default or Event
of Default shall have occurred and be continuing or would result therefrom.
8.8 Limitation on Acquisitions. Purchase any stock, bonds, notes,
debentures or other securities of or any assets constituting all or any
significant part of a business unit of any Person (collectively,
"Acquisitions"), except acquisitions (substantially all of which consist of
Cable Systems or telecommunications systems) through the purchase of stock or
assets in any Permitted Line of Business, provided, that (i) no such acquisition
may be made if a Default or an Event of Default shall have occurred and be
continuing or would result therefrom and (ii) prior to such Acquisition, the
Borrower provides evidence of pro forma compliance with all of the terms and
conditions of this Agreement, and in the case of Acquisitions in excess of
$50,000,000 a ten year cash flow projection for any such Cable System or
telecommunications system being acquired, demonstrating such compliance.
8.9 Investments, Loans, Etc. Purchase or otherwise acquire or invest in the
Capital Stock of, or any other equity interest in, any Person (including,
without limitation, the Capital Stock of the Borrower), or make any loan to, or
enter into any arrangement for the purpose of providing funds or credit to, or,
guarantee or become contingently obligated in respect of the obligations of or
make any other investment, whether by way of capital contribution or otherwise,
in, to or with any Person, or permit any Restricted Subsidiary so to do (all of
which are sometimes referred to herein as "Investments"), provided that nothing
contained in this Section 8.9 shall be deemed to prohibit the Borrower or any
Restricted Subsidiary from making Investments:
(a) in certificates of deposit with maturities of 270 days or less
from the date of acquisition and overnight bank deposits of any Lender or
of any commercial bank having capital and surplus in excess of
$500,000,000;
(b) in repurchase obligations of any Lender or of any commercial bank
satisfying the requirements of clause (a) of this Section 8.9, having a
term of not more than 30 days, with respect to securities issued or fully
guaranteed or insured by the United States Government;
(c) in commercial paper of a domestic issuer maturing not in excess of
270 days from the date of acquisition and rated at least A-1 by S&P or P-1
by Moody's;
(d) in indebtedness of a domestic issuer maturing not in excess of 270
days from the date of acquisition and having the highest rating by S&P and
Moody's; and
(e) in the Subsidiaries or for the creation of new Subsidiaries,
provided that such Investments are otherwise in compliance with Sections
8.2, 8.5, 8.6 and 8.8.
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8.10 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate (other
than a Restricted Subsidiary) other than transactions (a) otherwise permitted
under this Agreement, (b) entered into in the ordinary course of the Borrower's
or such Restricted Subsidiary's business, the terms of which are fair and
reasonable and in the best interests of the Loan Party which is party to the
transaction and which transaction is approved by the Board of Directors of the
Borrower or (c) which are existing transactions set forth on Schedule 8.10 and
future transactions which are in renewal or replacement of the transactions set
forth in Schedule 8.10 provided that such future transactions are of a type and
upon terms consistent with the transactions set forth on Schedule 8.10.
8.11 Certain Intercompany Matters. Fail to (i) satisfy customary
formalities with respect to organizational separateness, including, without
limitation, (x) the maintenance of separate books and records and (y) the
maintenance of separate bank accounts in its own name; (ii) act solely in its
own name and through its authorized officers and agents; (iii) commingle any
money or other assets of the Parent or any Unrestricted Subsidiary with any
money or other assets of the Borrower or any of the Restricted Subsidiaries; or
(iv) take any action, or conduct its affairs in a manner, which could reasonably
be expected to result in the separate organizational existence of the Parent,
each Unrestricted Subsidiary, the Borrower and the Restricted Subsidiaries being
ignored under any circumstance.
8.12 Limitation on Restrictions on Subsidiary Distributions. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary of the Borrower to (a) pay dividends or
make any other distributions in respect of any Capital Stock of such Restricted
Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any other
Restricted Subsidiary of the Borrower, (b) make loans or advances to the
Borrower or any other Restricted Subsidiary of the Borrower or (c) transfer any
of its assets to the Borrower or any other Restricted Subsidiary of the
Borrower, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Loan Documents or any other
agreements in effect on the date hereof, or (ii) any restrictions with respect
to a Restricted Subsidiary imposed pursuant to an agreement which has been
entered into in connection with the sale or disposition of all or substantially
all of the Capital Stock or assets of such Restricted Subsidiary or any
restrictions arising under Franchise Agreements, Pole Agreements or leases
entered into in the ordinary course of business.
8.13 Limitation on Lines of Business. Enter into any business, either
directly or through any Restricted Subsidiary, except for the domestic cable and
telecommunications business (each, a "Permitted Line of Business").
8.14 No Negative Pledge. Covenant or agree with any other lender or other
Person, not to create, or not to allow to be created or otherwise exist, any
Lien upon any asset of the Borrower or any of the Restricted Subsidiaries or
covenant or agree with any other lenders or other Persons to any other
arrangement that is functionally equivalent or similar to a negative pledge.
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8.15 Tax Sharing Agreement. Pay any Taxes under the Tax Sharing Agreement
or other similar agreement greater than the lesser of (i) the amount that would
have been payable by the Borrower if there were no Tax Sharing Agreement or
other similar agreement and (ii) the amount actually paid by the Parent in
respect of such Taxes. Amend, supplement or in any manner modify, without the
written consent of the Majority Banks, the terms of the Tax Sharing Agreement.
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder, on or prior to the date
which is five days (or, if later, three Business Days) after any such
interest or other amount becomes due in accordance with the terms hereof;
or
(b) Any representation or warranty made or deemed made by the Parent,
the Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any Information furnished at any time under or in
connection with this Agreement or any such other Loan Document shall prove
to have been incorrect in any material respect on or as of the date made or
deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 7.7(a) or
Section 8 of this Agreement or in Section 5(b) of the Pledge Agreements; or
(d) The Borrower, the Parent or any other Loan Party shall default in
the observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days after the Administrative Agent shall
have given the Borrower notice thereof; or
(e) (i) The Parent, the Borrower or any of the Restricted Subsidiaries
shall default in making any payment of any principal of any Indebtedness
(including, without limitation, any Guarantee Obligation, but excluding the
Loans and Reimbursement Obligations) beyond the period of grace or cure, if
any, provided in the instrument or agreement under which such Indebtedness
was created; or (ii) the Parent, the Borrower or any of the Restricted
Subsidiaries shall default in making any payment of any interest on any
such Indebtedness beyond the period of grace or cure, if any, provided in
the instrument or agreement under which such Indebtedness was created; or
(iii) the Parent, the Borrower or any of the Restricted Subsidiaries shall
default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
shall occur or
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condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such Indebtedness to become due or to be
purchased or repurchased prior to its stated maturity (or, in the case of
any such Indebtedness constituting a Guarantee Obligation, to become
payable prior to the stated maturity of the primary obligation covered by
such Guarantee Obligation); provided that a default, event or condition
described in clause (i), (ii) or (iii) of this paragraph (e) shall not
constitute an Event of Default under this Agreement unless, at the time of
such default, event or condition one or more defaults, events or conditions
of the type described in clauses (i), (ii) and (iii) of this paragraph (e)
shall have occurred with respect to Indebtedness the outstanding principal
amount of which exceeds in the aggregate $10,000,000; or
(f) (i) The Parent, the Borrower or any of the Restricted Subsidiaries
shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or the Parent, the
Borrower or any of the Restricted Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Parent, the Borrower or any of the Restricted
Subsidiaries any case, proceeding or other action of a nature referred to
in clause (i) above which (A) results in the entry of an order for relief
or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Parent, the Borrower or any of the Restricted
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv) the Parent, the Borrower or any of the Restricted Subsidiaries shall
take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Parent, the Borrower or any of the Restricted
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan,
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which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Majority Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Majority Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Parent, the Borrower or any of the Restricted Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of
$10,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days after
the entry thereof; or
(i) (i) Any material provision of the Loan Documents shall cease, for
any reason, to be in full force and effect, or the Borrower or any other
Loan Party shall so assert or (ii) the Lien created by any of the Security
Documents shall cease to be enforceable and of the same effect and priority
purported to be created thereby;
(j) A Change of Control shall occur;
(k) The Capital Stock of the Borrower or any portion thereof or any
Intercompany Subordinated Note shall become subject to or covered by the
Lien of any Person; or
(l) The Asset Transfer shall not have been fully consummated or all
governmental and material third party approvals necessary in connection
therewith shall not have been obtained or shall not be in full force and
effect by March 31, 1996 or the Managing Agents shall not have received
evidence satisfactory to the Managing Agents to that effect by such date.
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section 9 with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Majority Lenders, the Administrative Agent
may, or upon the request of the Majority Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon such Commitments shall
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immediately terminate; and (ii) with the consent of the Majority Lenders, the
Administrative Agent may, or upon the request of the Majority Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
Obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied, all Loans shall have been
paid in full and no other Obligations shall be due and payable, the balance, if
any, in such cash collateral account shall be returned to the Borrower (or such
other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
SECTION 10. THE ADMINISTRATIVE AGENT
10.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement or any
other Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
10.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
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10.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
10.4 Reliance by the Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, facsimile,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Majority Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
10.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender
(except in the case of a Default under Section 9(a)) or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Majority
Lenders; provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated
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to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders.
10.6 Non-Reliance on the Administrative Agent and the Other Lenders. Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Specified Percentages in effect on the date on which
indemnification is sought (or, if indemnification is sought after the date upon
which the Loans shall have been paid in full, ratably in accordance with their
Specified Percentages immediately prior to such date), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against the Administrative Agent
in any way relating to or arising out of, the Commitments, this Agreement, any
of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Administrative Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.
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10.8 The Administrative Agent in Its Individual Capacity. The
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents. With respect to the Loans made by it, the Administrative
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
10.9 Successor Administrative Agent. (a) The Administrative Agent may
resign as the Administrative Agent upon 30 days' notice to the Lenders and the
appointment of a successor Administrative Agent as hereinafter provided. If the
Administrative Agent shall resign as the Administrative Agent under this
Agreement and the other Loan Documents, then, unless an Event of Default shall
have occurred and be continuing (in which case, the Majority Lenders shall
appoint a successor), the Borrower shall appoint from among the Lenders a
successor Administrative Agent for the Lenders, which successor Administrative
Agent shall be approved by the Majority Lenders (which approval shall not be
unreasonably withheld). If no successor Administrative Agent shall have been so
appointed by the Borrower (or in the case of an Event of Default, by the
Majority Lenders) and such successor Administrative Agent has not accepted such
appointment within 30 days after such resignation, then the resigning
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which successor Administrative Agent hereunder shall be
either a Lender or, if none of the Lenders is willing to serve as successor
Administrative Agent, a major international bank having combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as the
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor Administrative Agent effective upon such appointment and approval, and
the former Administrative Agent's rights, powers and duties as the
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. After any retiring Administrative
Agent's resignation as the Administrative Agent, the provisions of this Section
10 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was the Administrative Agent under this Agreement and the other Loan
Documents.
(b) In the event that the Administrative Agent shall have breached any of
its material obligations to the Lenders hereunder, the Majority Lenders may
remove the Administrative Agent, effective on the date specified by them, by
written notice to the Administrative Agent and the Borrower. Upon any such
removal, the Borrower, provided that no Event of Default shall have occurred and
be continuing (in which case the Majority Lenders shall make the appointment),
shall have the right to appoint a successor Administrative Agent, which
successor Administrative Agent shall be approved by the Majority Lenders (which
approval shall not be unreasonably withheld). If no successor Administrative
Agent shall have been so appointed by the Borrower (or in the case of an Event
of Default, by the Majority Lenders) and such successor Administrative Agent has
not
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accepted such appointment within 30 days after notification to the
Administrative Agent of its removal, then the retiring Administrative Agent may,
on behalf of the Lenders, appoint a successor Administrative Agent, which
successor Administrative Agent hereunder shall be either a Lender or, if none of
the Lenders is willing to serve as successor Administrative Agent, a major
international bank having combined capital and surplus of at least $500,000,000.
Such successor Administrative Agent, provided that no Event of Default shall
have occurred and be continuing, shall be reasonably satisfactory to the
Borrower. Upon the acceptance of any appointment as the Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement. The Borrower and the Lenders shall execute such documents as
shall be necessary to effect such appointment. After any retiring Administrative
Agent's removal hereunder as the Administrative Agent, the provisions of this
Section 10.9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Administrative Agent under this Agreement and the
other Loan Documents. If at any time there shall not be a duly appointed and
acting Administrative Agent, the Borrower agrees to make each payment due
hereunder and under the Notes directly to the Lenders entitled thereto during
such time.
10.10 Managing Agents and Co-Agents. No Managing Agent or Co-Agent in their
respective capacities as such shall have any duties or responsibilities
hereunder, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against any Managing Agent or
Co-Agent in their respective capacities as such.
SECTION 11. NEW RESTRICTED SUBSIDIARIES
The Borrower and each Restricted Subsidiary hereby agree to promptly, after
the creation, acquisition and/or designation of a Restricted Subsidiary, notify
the Administrative Agent of the existence thereof and to promptly cause each
such new Restricted Subsidiary to execute and deliver to the Administrative
Agent (a) an assumption agreement, in form satisfactory to the Lenders, pursuant
to which, inter alia, any such new Restricted Subsidiary shall become a party to
this Agreement, shall assume all obligations of a Restricted Subsidiary under
this Agreement and shall agree that it is a Restricted Subsidiary for all
purposes of this Agreement; and (b) a Pledge Agreement in the form of Exhibit F
hereto.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 12.1. The
Majority Lenders and each relevant Loan Party may, or, with the written consent
of the Majority Lenders, the Administrative Agent and each relevant Loan Party
may, from time to time, (a) enter into written amendments, supplements or
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modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (b) waive, on such terms and conditions as the Majority Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan or of any installment thereof,
or reduce the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the amount or extend the
expiration date of any Commitment of any Lender, or make any change in the
method of application of any payment of the Loans specified in Section 4.2 or
Section 4.8 without the consent of each Lender directly affected thereby, (ii)
waive, extend or reduce any mandatory Commitment reduction pursuant to Section
4.2, (iii) amend, modify or waive any provision of the Intercompany Subordinated
Debt Agreement, this Section 12.1 or reduce any percentage specified in the
definition of Majority Lenders, or consent to the assignment or transfer by any
Loan Party of any of its rights and obligations under this Agreement and the
other Loan Documents, (iv) release the Collateral except for any Collateral
which is (x) permitted to be disposed of pursuant to Section 8.5(a) or (y) the
subject of a transaction permitted under Sections 8.5(c) or (d), which
Collateral may be released by the Administrative Agent pursuant to Section 8.5,
(v) amend, modify or waive any condition precedent to any extension of credit
set forth in Section 6, in each case of (i), (ii), (iii), (iv) and (v) above,
without the written consent of all of the Lenders, (vi) amend, modify or waive
any provision of Section 10 without the written consent of the then
Administrative Agent or (vii) amend, modify or waive any provision of Section 3
without the written consent of the Issuing Lender. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Loan Parties, the Lenders, the Administrative
Agent and all future holders of the Notes. In the case of any waiver, the Loan
Parties, the Lenders and the Administrative Agent shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
12.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission) and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made (a) in the case of delivery by hand, when
delivered, (b) in the case of delivery by mail, three Business Days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower, the Restricted Subsidiaries and the
Administrative Agent, and as set forth in Schedule 1.1 (or, with respect to any
Lender that is an Assignee, in the applicable Assignment and Acceptance) in the
case of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:
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The Borrower: Jones Cable Holdings, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: Treasurer
Fax: (303) 790-7324
(with a copy to General Counsel)
Fax: (303) 799-1644
The Restricted Subsidiaries: c/o Jones Cable Holdings, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: Treasurer
Fax: (303) 790-7324
(with a copy to General Counsel)
Fax: (303) 799-1644
The Administrative
Agent: NationsBank of Texas, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75202
Attention: Douglas E. Roper
Fax: (212) 508-9390
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2 or 3 shall not be effective until received.
12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
12.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement
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or modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the reasonable fees and
disbursements of counsel to each Lender and of counsel to the Administrative
Agent, (c) without duplication of amounts payable pursuant to Sections 4.9 and
4.10, to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) without duplication of
amounts payable pursuant to Sections 4.9 and 4.10, to pay, indemnify, and hold
each Lender, each Issuing Lender and the Administrative Agent, and their
respective officers, directors, employees, affiliates, advisors, agents and
controlling persons (each, an "indemnitee"), harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents or the use of the proceeds of the Loans (all the foregoing in this
clause (d), collectively, the "indemnified liabilities"), provided, that the
Borrower shall have no obligation hereunder to any indemnitee with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of such indemnitee. The agreements in this Section shall survive repayment of
the Loans and all other amounts payable hereunder.
12.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent and their respective successors and assigns,
except that neither the Borrower nor the Restricted Subsidiaries may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Loan Documents. In the event of any such sale by a
Lender of a participating interest to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Loan for all purposes
under this Agreement and the other Loan Documents, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. In no
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event shall any Participant under any such participation have any right to
approve any amendment or waiver of any provision of any Loan Document, or any
consent to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Loans or any fees payable hereunder, or postpone the date of the final
scheduled maturity of the Loans, in each case to the extent subject to such
participation. The Borrower agrees that if amounts outstanding under this
Agreement are due or unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall, to the maximum extent permitted by applicable law, be deemed to have the
right of setoff in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in Section
12.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that
each Participant shall be entitled to the benefits of Sections 4.9, 4.10 and
4.11 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it were a Lender; provided that, in the case
of Section 4.10, such Participant shall have complied with the requirements of
said Section and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
Person (an "Assignee") all or any part of its rights and obligations under this
Agreement and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit A, executed by such Assignee and such
assigning Lender and delivered to the Administrative Agent for its acceptance
and recording in the Register (with a copy to the Borrower); provided that, (i)
no such assignment (other than to any Lender or any affiliate thereof) shall be
in an aggregate principal amount of less than $5,000,000 and $1,000,000
multiples thereof, (ii) after giving effect to any such assignment, the
assigning Lender (together with any Lender which is an affiliate of such
assigning Lender) shall retain no less than 49% of its original Commitment,
unless otherwise agreed to by the Borrower and (iii) each assignment (other than
to any Lender or any affiliate thereof) shall be subject to the prior written
consent of the Borrower (which consent shall not be unreasonably withheld). Upon
such execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment as set forth therein, and (y) the assigning Lender thereunder
shall, to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement.
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(d) Any Non-U.S. Lender that could become completely exempt from
withholding of any tax, assessment or other charge or levy imposed by or on
behalf of the United States or any taxing authority thereof ("U.S. Taxes") in
respect of payment of any Obligations due to such Non-U.S. Lender under this
Agreement if the Obligations were in registered form for U.S. federal income tax
purposes may request the Borrower (through the Administrative Agent), and the
Borrower agrees thereupon, to exchange any promissory note(s) evidencing such
Obligations for promissory note(s) registered as provided in paragraph (f) below
and substantially in the form of Exhibit N (an "Alternative Note"). Alternative
Notes may not be exchanged for promissory notes that are not Alternative Notes.
(e) Each Non-U.S. Lender that could become completely exempt from
withholding of U.S. Taxes in respect of payment of any Obligations due to such
Non-U.S. Lender if the Obligations were in registered form for U.S. Federal
income tax purposes and that holds Alternative Note(s) (an "Alternative
Noteholder") (or, if such Alternative Noteholder is not the beneficial owner
thereof, such beneficial owner) shall deliver to the Borrower prior to or at the
time such Non-U.S. Lender becomes an Alternative Noteholder a Form W-8
(Certificate of Foreign Status of the U.S. Department of Treasury) (or any
successor or related form adopted by the U.S. taxing authorities), together with
an annual certificate stating that (i) such Alternative Noteholder or beneficial
owner, as the case may be, is not a "bank" within the meaning of Section 881(c)
of the Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign
corporation related to the Company (within the meaning of Section 864(d)(4) of
the Code) and (ii) such Alternative Noteholder or beneficial owner, as the case
may be, shall promptly notify the Borrower if at any time such Alternative
Noteholder or beneficial owner, as the case may be, determines that it is no
longer in a position to provide such certification to the Borrower (or any other
form of certification adopted by the U.S. taxing authorities for such purposes).
(f) An Alternative Note and the Obligation(s) evidenced thereby may be
assigned or otherwise transferred in whole or in part only by registration of
such assignment or transfer of such Alternative Note and the Obligation(s)
evidenced thereby on the Register (and each Alternative Note shall expressly so
provide). Any assignment or transfer of all or part of such Obligation(s) and
the Alternative Note(s) evidencing the same shall be registered on the Register
only upon surrender for registration of assignment or transfer of the
Alternative Note(s) evidencing such Obligation(s), duly endorsed by (or
accompanied by a written instrument of assignment or transfer duly executed by)
the Alternative Noteholder thereof, and thereupon one or more new Alternative
Note(s) in the same aggregate principal amount shall be issued to the designated
Assignee(s). No assignment of an Alternative Note and the Obligation(s)
evidenced thereby shall be effective unless it has been recorded in the Register
as provided in this Section 12.6(f).
(g) The Administrative Agent, on behalf of the Borrower, shall maintain at
the address of the Administrative Agent referred to in Section 12.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders (including
Alternative Noteholders) and the Commitments of, and principal
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amounts of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders may (and, in the case of any
Loan or other obligation hereunder not evidenced by a Note, shall) treat each
Person whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement and
the other Loan Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder not evidenced by a Note
shall be effective only upon appropriate entries with respect thereto being made
in the Register. The Register shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(h) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee together with payment to the Administrative
Agent of a registration and processing fee of $3,000, the Administrative Agent
shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Lenders and the Borrower.
(i) Subject to Section 12.15, the Borrower authorizes each Lender to
disclose to any Participant or Assignee (each, a "Transferee") and any
prospective Transferee, subject to the Transferee agreeing to be bound by the
provisions of Section 12.15, any and all financial information in such Lender's
possession concerning the Borrower and the Restricted Subsidiaries which has
been delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Restricted Subsidiaries prior to becoming a party to this Agreement.
(j) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this Section concerning assignments of Loans and Notes relate
only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
12.7 Adjustments, Set-off. (a) If any Lender (a "benefitted Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 9(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
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rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount, to the extent permitted
by applicable law, any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Lender,
provided that, to the extent permitted by applicable law, the failure to give
such notice shall not affect the validity of such set-off and application.
12.8 Counterparts; When Effective. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent. This Agreement shall become effective
when the Administrative Agent has received counterparts hereof executed by the
Borrower, the Administrative Agent and each Lender (such date herein referred to
as the "Effective Date").
12.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.10 Integration. This Agreement and the other Loan Documents represent
the agreement of the Parent, the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
12.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
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12.12 SUBMISSION TO JURISDICTION: WAIVERS. (A) EACH PARTY HERETO, IN EACH
CASE FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, HEREBY IRREVOCABLY AND
UNCONDITIONALLY:
(I) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH
IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(II) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH
ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
(III) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO IT AT ITS
ADDRESS SET FORTH IN SECTION 12.2 OR SCHEDULE 1.1, AS APPLICABLE, OR AT
SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT TO SECTION 12.2; AND
(IV) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO SUE IN ANY OTHER JURISDICTION.
(B) THE BORROWER AND EACH SUBSIDIARY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION
OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
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12.13 Acknowledgements. The Borrower and each Restricted Subsidiary hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or any Subsidiary arising out of
or in connection with this Agreement or any of the other Loan Documents,
and the relationship between the Administrative Agent and the Lenders, on
one hand, and the Borrower or any Subsidiary, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower, the Subsidiaries and the Lenders.
12.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE SUBSIDIARIES, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
12.15 Confidentiality. Each Lender agrees to keep confidential all
non-public information provided to it by or on behalf of the Borrower or any of
the Restricted Subsidiaries pursuant to this Agreement or any other Loan
Document; provided that nothing herein shall prevent any Lender from disclosing
any such information (i) to the Administrative Agent or any other Lender, (ii)
to any Assignee or Participant, (iii) to its employees, directors, agents,
attorneys, accountants and other professional advisors, (iv) upon demand of any
Governmental Authority having jurisdiction over such Lender, (v) in response to
any order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (vi) which has been publicly
disclosed other than in breach of this Agreement, or (vii) in connection with
the exercise of any remedy hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGES FOLLOW.]
78
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
JONES CABLE HOLDINGS, INC.
By: /s/ J. ROY POTTLE
--------------------------------
Name: J. Roy Pottle
------------------------------
Title: Treasurer
-----------------------------
By their execution hereinbelow, the Restricted Subsidiaries agree to be
bound by each agreement, covenant, representation, warranty and term and
condition contained in this Agreement which, by their terms, apply to the
Restricted Subsidiaries.
JONES COMMUNICATIONS OF VIRGINIA, INC.
By: /s/ J. ROY POTTLE
--------------------------------
Name: J. Roy Pottle
------------------------------
Title: Treasurer
-----------------------------
JONES COMMUNICATIONS OF COLORADO, INC.
By: /s/ J. ROY POTTLE
--------------------------------
Name: J. Roy Pottle
------------------------------
Title: Treasurer
-----------------------------
<PAGE> 86
JONES COMMUNICATIONS OF MARYLAND, INC.
By: /s/ J. ROY POTTLE
--------------------------------
Name: J. Roy Pottle
------------------------------
Title: Treasurer
-----------------------------
The Administrative Agent, the
Documentation Agent and the
Syndication Agent:
NATIONS BANK OF TEXAS, N.A.,
as the Administrative Agent and
Documentation Agent
By: /s/ DOUGLAS E. ROPER
--------------------------------
Name: Douglas E. Roper
------------------------------
Title: Senior Vice President
-----------------------------
THE BANK OF NOVA SCOTIA,
as the Syndication Agent
By: /s/ CLAUDIA J. CHIFOS
--------------------------------
Name: Claudia J. Chifos
------------------------------
Title: Authorized Signatory
-----------------------------
<PAGE> 87
The Managing Agents and the Lenders:
NATIONSBANK OF TEXAS, N.A., as
Managing Agent and as a Lender
By: /s/ DOUGLAS E. ROPER
--------------------------------
Name: Douglas E. Roper
------------------------------
Title: Senior Vice President
-----------------------------
THE BANK OF NOVA SCOTIA, as Managing
Agent and as a Lender
By: /s/ CLAUDIA J. CHIFOS
--------------------------------
Name: Claudia J. Chifos
------------------------------
Title: Authorized Signatory
-----------------------------
The Co-Agents and the Lenders:
CORESTATES BANK, N.A.,
as a Co-Agent and as a Lender
By: /s/ PHILIP D. HARRISON
--------------------------------
Name: Philip D. Harrison
------------------------------
Title: Assistant Vice President
-----------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a Co-Agent and as a Lender
By: /s/ THOMAS P. CARDEN
--------------------------------
Name: Thomas P. Carden
------------------------------
Title: Vice President
-----------------------------
<PAGE> 88
ROYAL BANK OF CANADA,
as a Co-Agent and as a Lender
By: /s/ MARK D. THURSHEIM
--------------------------------
Name: Mark D. Thursheim
------------------------------
Title: Manager
-----------------------------
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH,
as a Co-Agent and as a Lender
By: /s/ [ILLEGIBLE]
--------------------------------
Name: [ILLEGIBLE]
------------------------------
Title:
-----------------------------
SOCIETE GENERALE,
as a Co-Agent and as a Lender
By: /s/ MARK VIGIL
--------------------------------
Name: Mark Vigil
------------------------------
Title: Vice President
-----------------------------
CHEMICAL BANK,
as a Lender
By: /s/ JOHN J. HUBER III
--------------------------------
Name: John J. Huber III
------------------------------
Title: Managing Director
-----------------------------
<PAGE> 89
MELLON BANK, N.A.,
as a Lender
By: /s/ MICHAEL P. HOYEINCO
--------------------------------
Name: Michael P. Hoyeinco
------------------------------
Title: Assistant Vice President
-----------------------------
THE TORONTO-DOMINION BANK,
as a Lender
By: /s/ LISA ALLISON
--------------------------------
Name: Lisa Allison
------------------------------
Title: Mgr. Cr. Admin.
-----------------------------
SHAWMUT BANK,
as a Lender
By: /s/ ROBERT F. WEST
--------------------------------
Name: Robert F. West
------------------------------
Title: Director
-----------------------------
BANQUE PARIBAS,
as a Lender
By: /s/ SONIA ISAACS
--------------------------------
Name: Sonia Isaacs
------------------------------
Title: Vice President
-----------------------------
By: /s/ JOHN G. ACKER
--------------------------------
Name: John G. Acker
------------------------------
Title: Group Vice President
-----------------------------
<PAGE> 90
NATIONAL WESTMINSTER BANK,
as a Lender
By: /s/ ROSELYN REID
--------------------------------
Name: Roselyn Reid
------------------------------
Title: Vice President
-----------------------------
COLORADO NATIONAL BANK,
as a Lender
By: /s/ LESLIE M. KELLY
--------------------------------
Name: Leslie M. Kelly
------------------------------
Title: Vice President
-----------------------------
FIRST NATIONAL BANK OF MARYLAND,
as a Lender
By: /s/ MARK L. COOK
--------------------------------
Name: Mark L. Cook
------------------------------
Title: Vice President
-----------------------------
<PAGE> 91
DRESDNER BANK AG,
New York and Grand Cayman Branches
as a Lender
By: /s/ CHARLES H. HILL
--------------------------------
Name: Charles H. Hill
------------------------------
Title: Vice President
-----------------------------
By: /s/ WILLIAM E. LAMBERT
--------------------------------
Name: William E. Lambert
------------------------------
Title: Assistant Treasurer
-----------------------------
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY,
as a Lender
By: /s/ MASATAKE YASHIRO
--------------------------------
Name: Masatake Yashiro
------------------------------
Title: General Manager
-----------------------------
ABN AMRO BANK,
as a Lender
By: /s/ JOANNA M. RIOPELLE
--------------------------------
Name: Joanna Riopelle
------------------------------
Title: Group Vice President
-----------------------------
By: /s/ JAMES JOHNSTON
--------------------------------
Name: James Johnston
------------------------------
Title: Vice President
-----------------------------
<PAGE> 92
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.,
Los Angeles Agency
as a Lender
By: /s/ Y. KAMISAWA
--------------------------------
Name: Yutada Kamisawa
-------------------------------
Title: Deputy General Manager
------------------------------
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ C. BETTLES
--------------------------------
Name: C. Bettles
-------------------------------
Title: Sr. Vice President and Manager
------------------------------
By: /s/ JANICE HO
--------------------------------
Name: Janice Ho
-------------------------------
Title: Vice President
------------------------------
FUJI BANK, LIMITED
as a Lender
By: /s/ NOBUHIRO UMEMURA
--------------------------------
Name: Nobuhiro Umemura
-------------------------------
Title: Joint General Manager
------------------------------
SUMITOMO BANK, LTD.
as a Lender
By: /s/ HIROYUKI IWAMI
--------------------------------
Name: Hiroyuki Iwami
-------------------------------
Title: Joint General Manager
------------------------------
<PAGE> 1
EXHIBIT 10.6.58
RESOLUTION NO. 95-0-2 RESOLUTION
APPROVING THE TRANSFER OF THE
CABLE TELEVISION FRANCHISE FOR
THE TOWN OF DUMFRIES, VIRGINIA
HELD BY COLUMBIA ASSOCIATES, L.P.
WHEREAS, by that certain CATV Ordinance adopted on June 16, 1992 by the
Council of the Town of Dumfries, Virginia (the "Council"), the Council granted
to Columbia Associates, L.P. ("Columbia") a franchise (the "Franchise") to
construct, own, operate and maintain a cable television system within the Town
(the "System"); and
WHEREAS, Columbia has agreed to sell the System to Jones Intercable, Inc.
("Jones") and Jones has agreed to purchase the System from Columbia; and
WHEREAS, Columbia has requested pursuant to the Franchise that the Council
of the Town of Dumfries, Virginia approve the transfer of the Franchise to Jones
Intercable of Alexandria, Inc., a Colorado corporation;
WHEREAS, Jones Intercable of Alexandria, Inc. and any affiliate of Jones
then holding the Franchise has agreed to be bound by the terms, provisions and
conditions of the Franchise.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Council of the Town of
Dumfries, Virginia (the "Town") that:
1. The Town does hereby consent to the transfer of the System and the
Franchise from Columbia to Jones Intercable of Alexandria, Inc. which shall
be bound by the terms of this Resolution and the Franchise. Any subsequent
transfer of the Franchise from Jones Intercable of Alexandria, Inc.
requires the written approval of the Town. The Town shall review and act
upon a request to transfer the Franchise within 30 days of such request if
accompanied by adequate documentation to permit the Town to evaluate the
financial and technical ability of the Affiliate or other entity. If the
transfer is approved, the transferee shall be bound by the terms of this
Resolution and of the Franchise.
2. The Town does hereby consent to a grant from time to time by Jones
or Jones Intercable of Alexandria, Inc. of a security interest in the
System and in all of its rights, powers and privileges under the Franchise
and all of its other assets to such lending institution or institutions as
may be designated from time to time by Jones or Jones Intercable of
Alexandria, Inc. which lending institution or institutions shall have all
of the rights and remedies of a secured party under the applicable Uniform
Commercial Code.
<PAGE> 2
3. The foregoing consent to the transfer and assignment of the
Franchise shall be effective upon the closing of the sale of the System by
Columbia to Jones Intercable of Alexandria, Inc. Notice of such closing
date shall be given to the Town.
4. The Town hereby confirms that, to its knowledge; (a) the Franchise
is currently in full force and effect; (b) Columbia is currently the valid
holder and authorized grantee of the Franchise; (c) Columbia is in
compliance in all material respects with the Franchise; and (d) no event
has occurred or exists which would permit the Town to revoke or terminate
the Franchise. Subject to compliance with the terms of this Resolution, all
action necessary to approve the transfer of the Franchise and the System to
Jones Intercable of Alexandria, Inc. has been duly and validly taken.
Adopted by the Council of the Town of Dumfries, Virginia on this 3rd day of
October, 1995.
TOWN OF DUMFRIES, VIRGINIA
/s/ SAMUEL W. BURCHMAN
---------------------------
TITLE: Mayor
--------------------
ATTEST:
/s/ RETTA LADD
- --------------------------
TOWN CLERK
<PAGE> 3
TOWN OF DUMFRIES
[LOGO]
Chartered 1749
Incorporated 1961
Virginia's Oldest Town
5 October 1994
Mr. Troy Fitzhugh, General Manager
Columbia Cable
4391 Dale Boulevard
Woodbridge, Virginia 22913
Dear Mr. Fitzhugh:
This letter responds to your correspondence dated 20 September 1994 in which you
notified the Town of Dumfries of your intent to sell the cable system to a
qualified buyer and provide the Town with a right of first refusal to purchase
the cable system.
At a special work session of Town Council, held on Tuesday, 27 September 1994,
members of Council voted not to exercise their right of first refusal.
We wish you success in finding a new owner for the cable system.
Sincerely,
/s/ MICHAEL E. LONG
MICHAEL E. LONG
Town Manager
cc: Town Council
TELEPHONE 221-4133 - 101 SOUTH MAIN STREET - P.O. BOX 56 - DUMFRIES, VIRGINIA
22026 - FAX 221-3544
<PAGE> 4
[COLUMBIA CABLE LETTERHEAD]
September 20, 1994
Mr. Michael E. Long
Town Manager
Town of Dumfries
101 South Main Street
Dumfries, Virginia 22026
Dear Mr. Long:
This letter is official notification from Columbia Associates, L.P. d/b/a
Columbia Cable of Virginia ("Columbia") to the Town of Dumfries ("Town") of our
intention to sell our cable system to a qualified buyer.
Per Section 7(f) of the Dumfries Cable Television Franchise, the Grantee,
Columbia, is required to notify the Town of its intentions and provide the Town
with a right of first refusal to purchase the cable system at the price offered
by a bona fide purchaser. Any interest on the Town's part must be confirmed
within ten (10) working days of such notice and the Town must conclude said
purchase within thirty (30) days unless mutually agreed to by both parties.
As of September 9, 1994, Columbia has received an offer from a bona fide party
for the purchase of Columbia's system for $136,000,000.00. The purchase would
include all of the assets of Columbia's Virginia operation serving Eastern
Prince William County including the Town of Dumfries, the Town of Quantico,
Quantico Marine Base, and Fort Belvoir. Please keep in mind that the information
provided in this paragraph is confidential, and I am requesting that the
purchase amount not be disclosed to the public.
Obviously, should the Town not elect to exercise its right of first refusal,
Columbia will still be required under Section 7(a) of the current franchise to
obtain all necessary approvals for the transfer of its franchise to a new owner.
Please feel free to contact me if you have any questions regarding the Town's
right of first refusal or any other issues regarding the potential transfer of
the Dumfries cable television franchise. I can be reached at 670-0189 extension
234.
Sincerely,
/s/ TROY FITZHUGH
Troy Fitzhugh
General Manager
<PAGE> 5
Is your RETURN ADDRESS completed on the reverse side?
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------
SENDER: I also wish to receive the
following services (for an
- - Complete items 1 and/or 2 for additional services extra fee):
- - Complete items 3, and 4a & b
- - Print your name and address on the reverse of this form 1. / / Addressee's Address
so that we can return this card to you.
- - Attach this form to the front of the mailpiece, or on 2. / / Restricted Delivery
the back if space does not permit.
- - Write "Return Receipt Requested" on the mailpiece below Consult postmaster for fee.
the article number.
- - The Return Receipt will show to whom the article was
delivered and the date delivered.
- ------------------------------------------------------------------------------------------
3. Article Addressed to: 4a. Article Number
/ / Insured
Mr. Michael E. Long P341 012 604 / / COD
Town Manager /X/ Return Receipt for
Town of Dumfries --------------------- Merchandise
101 South Main Street
Dumfries, VA 22026 4b. Service Type
/ / Registered
/X/ Certified
/ / Express Mail
---------------------
7. Date of Delivery
[STAMP]
------------------------------------------------------------------------------------------
5. Signature (Addressee) 8. Addressee's Address (Only if requested and
fee is paid)
- -------------------------------------------
6. Signature (Agent)
R. Ladd
------------------------------------------------------------------------------------------
</TABLE>
PS FORM 3811, December 1991 U.S. GPO: 1993-352-714 DOMESTIC RETURN RECEIPT
Thank you for using Return Receipt Service.
<PAGE> 6
FRANCHISE AGREEMENT
BETWEEN
DUMFRIES, VIRGINIA
AND
COLUMBIA ASSOCIATES, L.P.
D/B/A
COLUMBIA CABLE OF VIRGINIA
<PAGE> 7
AN ORDINANCE TO AMEND THE CODE OF ORDINANCES,
TOWN OF DUMFRIES, VIRGINIA (1989), AS AMENDED,
BY ADDING A SECTION NUMBERED 14-12,
RELATING TO CABLE TV SERVICE IN RESIDENTIAL SUBDIVISIONS
BE IT ORDAINED by the Council of the Town of Dumfries, Virginia, meeting in
session this day of , 1992:
1. That the Code of Ordinances, Town of Dumfries, Virginia (1989), is
hereby amended by adding a section numbered 14-12 as follows:
Sec. 14-12. Cable TV Service in Residential Subdivisions. Every subdivider shall
provide cable TV franchises with access to residential units in the subdivision
so that the franchisee can install its cables. Plats of dedicated or condemned
utility easements shall show that they are open to cable TV use.
2. This ordinance shall become effective on .
BY ORDER OF THE COUNCIL
-----------------------
Mayor
Attest:
--------------------
Town Clerk
<PAGE> 8
DUMFRIES CABLE TELEVISION FRANCHISE
Table of Contents
<TABLE>
<CAPTION>
SECTION PAGE
<C> <S> <C>
1 Definitions 1
2 Grant of Authority 4
3 Duration of Franchise 4
4 Service Availability and Records 4
5 CATV System Construction 5
6 Construction and Technical Standards 6
7 Transfer and Assignments 7
8 Subscriber Service Rates 8
9 Payment of Franchise Fee 8
10 Use of Streets 9
11 Indemnification and Insurance 10
12 Maintenance Bond 11
13 Construction Bond 11
14 Service Standards 12
15 Continuity of Service Mandatory 12
16 Complaint Procedures Applications 13
17 Availability of Books and Records 14
18 Other Petitions and Applications 14
19 Fiscal Reports 14
20 Forfeiture and Termination 14
21 Liquidated Damages 16
22 Rights of Individuals 16
23 Purchase of CATV System by Town 17
24 Performance Evaluation Sessions 17
25 Cable Service of Government Buildings 18
26 Provisions of Origination Cablecasting 18
27 New Developments 18
28 Town Procedures for New License(s) 19
29 Time is of the Essence 21
30 Failure of Town to Enforce Franchise, No Waiver of the Terms Thereof 21
31 Choice of Law; Change of Law 22
32 Severability 22
33 Address for Official Notices 22
Signature Page 22
</TABLE>
<PAGE> 9
"An Ordinance granting a franchise to Columbia Associates, L.P., d/b/a
Columbia Cable of Virginia, its successors and assigns, to install,
construct, operate and maintain in the Town of Dumfries a cable television
system.
BE IT ORDAINED by The Council of the Town of Dumfries, Virginia, meeting in
session this day of , 1991, that:
A. Name: This Ordinance shall be known as the CATV Ordinance.
B. There be and there is hereby granted to Columbia Associates, L.P., its
successors and assigns, hereinafter called the Grantee, a nonexclusive
franchise, right and authority, subject to the conditions and restrictions
hereinafter set forth, and such as may be imposed by the laws and ordinances of
the Commonwealth of Virginia, the U.S. Federal Authorities, and the Town of
Dumfries, to use the streets, alleys and public places of the Town of Dumfries
and to that end the Town adopts this Franchise Ordinance:
1. To regulate the erection, construction, reconstruction, installation,
operation, maintenance, dismantling, testing, repair, and use of cable
communications system in, upon, along, across, above, over or under or in any
manner connected with the streets, public ways or public places within the
jurisdiction of the Town of Dumfries as now or in the future may exist.
2. To provide for the payment of certain franchise fees and other valuable
considerations to the Town which, among other purposes, may be used to regulate
the construction and operation, use, and development of such system within the
Town; and
3. To provide conditions under which such franchised system will serve
present and future needs of government, public institutions commercial
enterprises, public and private organizations, and the citizens and general
public of the Town; and
4. To provide remedies and prescribe liquidated damages for any violation
of this Ordinance.
SECTION 1. DEFINITIONS
For the purpose of this Ordinance, the following terms, phrases, words,
abbreviations and their derivations shall have the meaning given herein. When
not inconsistent with the context, words used in the present tense include the
future, words in the plural number include the singular number, and words in the
singular number include the plural number, and the use of any gender shall be
applicable to all genders whenever the sense requires. The words "shall" and
"will" are mandatory and the word "may" is permissive. Words not defined shall
be given their common and ordinary meaning.
a. "Access channel" shall mean a single channel; dedicated in whole or in
part for local programming which is not originated by the Company.
b. Applicant -- shall mean any person submitting an application to the Town
for a franchise to operate a cable television system under the terms and
conditions set forth by the Town Council.
c. "Basic Service" shall mean any or all of the different combinations of
basic program services in Company including the delivery of broadcast signals,
satellite signals, local origination, and access signals, covered by the regular
monthly charges paid by
<PAGE> 10
subscribers, excluding the optional premium services for which separate charges
are made.
d. "Broad Categories of Programming" means the types of video services such
as those listed in Appendix 3. Those types are news, informational, educational,
network affiliate broadcast, superstations, sports, movies, government, and
access. The Town may, from time to time, request Grantee to add new categories
of video services and Grantee may add those if economically feasible and desired
by a substantial number of residents.
e. "Cablecasting" is programming carried on the cable system, exclusive of
broadcast signals, whether originated by the cable operator or any other party.
f. "Cable Communications System," "Cable Television system," "Cable
System," or "CATV System," shall mean the entire system of antennas, cables,
wires, lines, towers, wave guides, or other conductors, converters, equipment,
or facilities, designed and constructed for the purpose of producing, receiving,
transmitting, amplifying, and distributing, audio, video, and other forms of
electronic or electrical signals. Said definition shall not include any such
facility that serves or will serve only subscribers in one or more multiple unit
dwellings under common ownership, control, or management, and does not use the
Town rights-of-way.
g. "Certificate of Compliance" -- shall mean the approval required by the
FCC for a Grantee of a cable television franchise.
h. "Construction." The terms "completion of construction," "complete system
construction," "satisfactorily complete and fully activate" shall mean that
strand has been put up and all necessary cable (including trunk and feeder
cable) has been lashed -- or, for underground construction, that all cable has
been laid and trenches refilled and, except as prevented by weather conditions
or delayed because of seasons, landscaping restored; that all amplifier housings
and modules have been installed (including modules for return path signals);
that power supplies have been installed and all bonding and grounding has been
completed; that all necessary connectors, splitters, and taps have been
installed; that construction of the headends or hubs have been completed and all
necessary processing equipment has been installed; and that any and all other
construction necessary for the system to be ready to deliver cable service to
subscribers has been completed. Proof of performance tests shall have been
conducted on each otherwise completed segment of the cable system before direct
marketing of that segment begins. It is expected that segments of less than the
entire system will be activated and proofed when completed. Construction of any
segment or of the entire system will not be considered complete until proof of
performance tests have been conducted on such segment (or in the case of the
entire system, on all segments of the cable system) and any problems found
during testing have been corrected. The term "completion of construction" does
not include marketing and installation of subscriber service. "Significant
replacement construction" shall mean the replacement/rebuild to 50% or more of
the CATV system within any consecutive 18 month period.
i. "Council" shall mean the governing body of the Town of Dumfries.
-2-
<PAGE> 11
j. "Dedicate Channel" shall mean to make available channel space and
equipment for exclusive use of the designated user, subject to the authority of
the Town Council to authorize reassignment of channels.
k. "Franchise" shall mean the non-exclusive right granted hereunder to
construct, install, maintain, and operate a cable television system in the
incorporated Town of Dumfries. It does not include such license, permit, or tax
for the privilege of conducting a business in the Town as may be required by
other Town ordinances.
l. "Grantee" or "Company" is the party or parties to which a franchise
under this ordinance is granted by the Council, and its or their lawful
successors and assigns.
m. "Gross Revenues" shall mean all cash, barter, property of any kind or
nature, or other consideration received directly or indirectly by the grantee,
its affiliates, subsidiaries, parent, and any person in which grantee has a
financial interest, or from any source whatsoever, arising from or attributable
to the sale or exchange of cable television communications services by grantee
within the Town derived from the operation of its cable television service,
including, but not limited to, basic service, monthly fees, optional service or
pay cable fees, installation and reconnections fees, and converter rentals or
sales. These gross revenues shall not be reduced for any purposes other than
provided herein, and shall be the basis for computing the fee imposed pursuant
to Section 9. These gross revenues shall not include any taxes on services
furnished by Grantee imposed upon any subscriber or user by the State, City, or
other governmental unit and collected by grantee on behalf of said governmental
unit, converter deposits, or refunds to subscribers by the grantee. Gross
revenue includes a fraction of Grantee's revenues from selling advertising time,
lease channel fees studio rental, and other income attributed to the cable
system, the fraction being the number of subscribers in Dumfries divided by the
total number of Grantee's subscribers.
n. "Initial activation of service," or "initially providing cable
communication service" shall mean with respect to a particular segment, group of
segments or the entire cable system, as the case may be, that, all proposed
services and system capabilities as stated in the Proposal are available and/or
in place, construction has been completed (see definition of construction) and
the completed segment or segments in question or the entire cable system, as the
case may be, has been activated.
o. "Local Origination Programming" shall mean programming locally produced
by the Grantee.
p. "Proposal" or "Application" refers to a formal response by the cable
applicant to a specific invitation by the Town asking for proposals in
accordance with the Town specifications to provide cable communications services
to residents, businesses, industries, and institutions in the Town of Dumfries.
q. "Subscriber" is a recipient of cable communications service.
r. "Town" is the Town of Dumfries in its present incorporated form or as it
may be changed by annexation or interjurisdictional agreement or otherwise.
s. "Town Executive" -- shall mean the Town Administrator.
-3-
<PAGE> 12
t. "Two-way communications" means the transmission of telecommunications
signals from subscriber locations or other points throughout the system back to
the system's control center as well as transmission of signals from the control
center to subscriber locations.
u. "User" means a party utilizing a cable communications system channel for
purposes of production or transmission of material to subscribers, as contrasted
with receipt in a subscriber capacity.
v. The terms "will be available," "will be equipped," "will use," "will be
designed," "will perform," "will be utilized," "will permit," "will allow,"
"will be activated," "will be initially connected," "will be capable," "will
provide," "will include," "will employ," "will be established," "will be able,"
"will be implemented," "will be delivered," "will utilize," and other similar
uses of terms in a company's Proposal denoting the activation of cable service
or the delivery of equipment, facilities, or services, shall be interpreted to
mean delivery or accomplishment at a date no later than the initial activation
of service (see definition) unless otherwise expressly and clearly stated or
qualified in the company's Proposal to mean a more specific or different time.
SECTION 2. GRANT OF AUTHORITY
Columbia Associates, L.P., d/b/a Columbia Cable of Virginia is hereby
granted the right and privilege to construct, erect, operate, and maintain, in,
upon, along, across, above, over, and under the streets, alleys, public ways,
and public places now laid out or dedicated and all extensions thereof, and
additions thereto, in the Town poles, wires, cables, underground conduits,
manholes, and other cable conductors and fixtures necessary for the maintenance
and operation in the Town of Dumfries a cable communications system, to be used
for the sale and distribution of cable services to the residents of the Town.
SECTION 3. DURATION OF FRANCHISE
The duration of the rights, privileges, and authorization granted in a
franchise agreement shall terminate June 30, 2011, unless sooner terminated as
set forth herein.
SECTION 4. SERVICE AVAILABILITY AND RECORDS
The Grantee shall provide cable communications services to all residential
units throughout the entire franchise area pursuant to the provisions of this
ordinance and shall keep a current file of all requests for service received by
the Grantee for at least the three (3) most recent years. This record shall be
maintained during the entire life of the franchise and be available for public
inspection at the local office of the Grantee during regular office hours.
-4-
<PAGE> 13
SECTION 5. CATV SYSTEM CONSTRUCTION
Construction Map and Schedule
a. Map and Plan
Grantee shall submit a construction plan of new construction and of
significant replacement construction for approval by the Public Works Department
of the Town which shall be incorporated by reference and made a part of this
franchise agreement. The plan consists of a map of the entire franchise area
clearly delineating the following: (1) The area within the Franchise where the
cable television lines are currently located. (2) The area within the Franchise
where the cable television lines will be placed. (3) Location of headend
facilities. (4) A schedule of construction that will identify, by section or
phase, how Grantee will complete new construction to all residential units in
the Town within 18 months of grant or franchise. (5) A schedule of replacement
construction that will identify by section or phase how Grantee will complete
reconstruction within 18 months after notification of reconstruction.
b. Early Construction and Extension
Nothing in this section shall prevent the Grantee from constructing the
system earlier than planned. However, any delay in the system construction
beyond the times specified in the plan report timetable shall require
application to and consent by the Council.
C. Delay in Construction Timetable
Any delay beyond the terms of construction timetable, unless approved by
the Council, will be considered a violation of this Ordinance for which the
provisions of either Sections 20 or 21 shall apply, as determined by the
Council.
d. Commencement of Construction
Construction in accordance with the plan submitted by Grantee shall
commence as soon after the grant and acceptance of a franchise as is reasonably
possible. Failure to proceed expeditiously shall be grounds for revocation of
this franchise. Failure to proceed expeditiously shall be presumed in the event
construction is not commenced within twelve (12) months of the grant and
acceptance of a franchise.
e. Underground and Overhead Construction
In all sections of the Town where all cables, wires, or other like
facilities of public utilities are placed underground the cable television cable
shall be placed underground; where the cables, wires, or other like facilities
are placed overhead the cable television cable may be placed overhead or
underground. If at any time the Town determines that existing wire, cable, or
other like facilities of public utilities anywhere in the Town shall be changed
from an overhead to an underground installation, the Grantee shall also, at
Grantee's sole expense, convert its system to an underground installation.
f. All residential areas in the Town shall be served by CATV and no
additional cost shall be assessed by the Grantee to any citizen receiving CATV
service.
In cases of new construction or property development where
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utilities are to placed underground, unless the requirement is waived by the
Town, Grantee shall use the same trenching as the Town or public utility. The
Town shall give Grantee five (5) days notice of such construction or
development, and of the particular data on which open trenching will be
available for Grantee's installation of conduit, and/or cable. Grantee shall
also provide specifications as needed for trenching. Trenches shall be closed
within 24 hours upon completion of placement of utility lines, conduit and/or
cable.
Costs of trenching and easements required to bring service to the
development shall be borne equally by the developer/property owner, and those
sharing the trench, except that if Grantee fails to install its conduit, and/or
cable within the specified time limitation indicated above, then the cost of new
trenching is to be borne by Grantee (except for the notice of the particular
date on which trenching will be available to Grantee).
g. Special Agreements
Nothing herein shall be construed to prevent Grantee from serving areas not
covered under this section upon agreement with developers, property owners or
residents.
SECTION 6. CONSTRUCTION AND TECHNICAL STANDARDS
a. Compliance with Construction and Technical Standards Grantee shall
construct, install, operate, and maintain its system in a manner consistent with
all laws, ordinances, construction standards, governmental requirements, FCC
technical standards, and detailed standards submitted by Grantee as part of its
application, which standards submitted by Grantee as part of its application,
which standards are incorporated by reference in the franchise agreement. In
addition, Grantee shall provide the Town, upon request, with a written report of
the results of Grantee's annual proof of performance tests conducted pursuant to
FCC standards and requirements. Grantee shall reimburse the cost incurred by the
Town for qualified technical assistance as deemed necessary by the Town to
resolve disputes concerning compliance of technical standards, if Grantee is
found to be in non-compliance of standards.
b. Additional Specifications
Construction, installation, and maintenance of the cable communications
system shall be performed in an orderly and workmanlike manner. All cables and
wires shall be installed, where possible, parallel with and in the same manner
as electric and telephone lines. Multiple cable configurations shall be arranged
in parallel and bundled with due respect for engineering considerations.
Installations shall be in accordance with applicable codes.
The Grantee shall maintain equipment capable of providing standby power for
headend, transportation, and trunk amplifiers for a minimum of approximately
four (4) hours.
Grantee shall at all time comply with:
(1) National Electrical Safety Code (National Bureau of Standards):
(2) National Electrical Code (National Fire Protection Association);
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(3) Bell System Code of Pole Line Construction or Columbia Cable
construction manual as approved by Town of Dumfries;
(4) Applicable FCC or other federal, state, and local ordinances and
regulations;
(5) Requirements of Dumfries Public works Department as provided in
exhibit A.; and
In any event, the system shall not endanger or interfere with the safety of
persons or property in the franchise area or other areas where the Grantee may
have equipment located.
c. The cable television plant, including all applicable trunk and feeder
distribution lines, shall be designed and constructed so as to allow for
"community exclusive" cablecasting, as community now exists, of one or more
channels. This shall include insertion equipment and switching equipment, if
appropriate, and will provide the capability for the Town to cablecast
programming to all grantee cable customers which reside within the Town limits.
This feature may be used for purposes and times determined appropriate by the
Town.
SECTION 7. TRANSFER AND ASSIGNMENTS
a. This franchise shall not be assigned or transferred, either in whole or
in part, or leased, sublet, or mortgaged in any manner, nor shall title thereto,
in part, or leased, sublet, or mortgaged in any manner, nor shall title thereto,
either legal or equitable or any right, interest or property therein, pass to or
vest in any person without the prior written consent of the Town. The proposed
assignee must show technical ability, financial capability, legal qualifications
and general character qualifications as determined by the Town and must agree to
comply with all provisions of this franchise.
b. The Grantee shall promptly notify the Town of any actual or proposed
change in, or transfer of, or acquisition by any other party of, control of the
Grantee. The work "control" as used herein is not limited to major stockholders
but includes actual working control in whatever manner exercised. Every change,
transfer, or acquisition of control of the Grantee shall make the franchise
subject to cancellation unless and until the Town shall have consented thereto,
which consent will not be unreasonably withheld. For the purpose of determining
whether it shall consent to such change, transfer or acquisition of control, the
Town may inquire into the qualifications of the prospective controlling party
and the Grantee shall assist the Town in any such inquiry.
c. A rebuttable presumption that a transfer of control has occurred shall
arise upon the acquisition or accumulation by any person or group of persons of
10 percent of the voting interest of the Grantee.
d. The consent of approval of the Town Council to any transfer of the
franchise shall not constitute a waiver or release of the right of the Town in
and to the streets, and any transfer shall by its terms, be expressly
subordinate to the terms and conditions of this franchise.
e. In any absence of extraordinary circumstances, the Town will not approve
any transfer or assignment of a franchise prior to
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substantial completion of construction of proposed system.
f. The Town Council reserves the first right of refusal to purchase the
cable communications system at the price offered by any bona fide purchaser if
and when it is placed on the market for sale. The Town must confirm interest
within ten (10) working days of such notice and conclude said purchase within
thirty (30) days unless mutually agreed upon by both parties.
g. The Town Council reserves the right to review the purchase price of any
transfer or assignment of a cable system. Any negotiated sale value which a
mutually agreed upon appraisal firm deems to be in excess of fair market value
will not, to the extent of such excess, be considered in the rate base for any
subsequent request for rate increases subject to Town regulation as provided for
in Section 8.
h. In no event shall a transfer of ownership or control be approved until
purchaser complies with and is approved in accordance with Section 28 of this
agreement. If approved, successor in interest shall become a signatory to the
franchise agreement.
SECTION 8. SUBSCRIBER SERVICE RATES
Upon application by Grantee for increase of rates, Town may review proposed
rate increase and may adjust, to the extent permitted by applicable law, that
proposal in accordance with procedures established by or recommended by the FCC
or applicable federal or state law in the absence of such procedures, in
accordance with procedures negotiated and agreed to by Grantee and Town. Any
rate for service not regulated by the Town may be increased by Grantee only
following at least thirty (30) days prior notice to the Town and all affected
subscribers.
SECTION 9. PAYMENT OF FRANCHISE FEE
a. For the reason that the streets to be used by the Grantee in the
operation of its system within the boundaries of the Town are valuable public
properties acquired and maintained by the Town at great expense to its
taxpayers, and that the grant to the Grantee to the said streets is a valuable
property right without which the Grantee would be required to invest substantial
capital in right-of-way costs and acquisitions, and because the Town will incur
costs in regulating and administering the franchise, and at the option of the
Council, the Town may make available a portion of the franchise fee to further
the development of public and community uses of cable TV, the Grantee shall pay
to the Town a franchise fee in an amount equal to four percent (4%) of gross
revenue, as defined, from all sources attributable to the operation of Grantee
within the confines of the Town of Dumfries beginning July 1, 1992. This fee
will increase to five percent (5%) on July 1, 1996 and shall remain five percent
(5%) for remainder of the term of this ordinance.
b. The franchise fee and any other cost of liquidated damages assessed
shall be payable quarterly to the Office of the Town Treasurer. The Grantee
shall file a complete and accurate verified statement of all collected gross
revenue within the Town during the period for which said quarterly payment is
made, and said payment
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shall be made to the Town not later than sixty (60) days after the expiration of
quarter for which payment is due.
c. The Town shall have the right to inspect the Grantee's income records
and the access to an annual audit and to recompute any amounts determined to be
payable under this ordinance; provided, however, that such audit shall take
place within thirty-six (36) months following the close of each of the Grantee's
fiscal years. Any additional non-disputed amount due to the Town as a result of
the audit shall be paid within thirty (30) days following written notice to the
Grantee by the Town which notice shall include a copy of the audit report. Any
disputed amount shall be resolved by a mutually agreed upon arbitrator.
d. In the event that any franchise payment or recomputed amount, cost, or
penalty, is not made on or before the applicable dates heretofore specified,
interest shall be charged daily from such date at the annual rate equivalent to
the then existing prime rate of local banking institutions in Dumfries,
Virginia.
SECTION 10. USE OF STREETS
a. All transmission and distribution structures, lines, and equipment
erected by the Grantee within the Town shall be so located as to cause minimum
interference with the rights and reasonable convenience of property owners who
adjoin any of the said streets.
b. In case of disturbance of any street easement or paved area or other
property the Grantee shall, at its own cost and expense and in a manner approved
by the Town, replace and restore such street easement or paved area or other
property in as good a condition as before the work involving such disturbance
was done.
c. If at any time during the period of a franchise the Town shall lawfully
elect to alter or change the grade or other aspects of any street, the Grantee,
upon reasonable notice by the Town, shall remove, relay, and relocate its poles,
wires, cables, underground conduits, manholes, and other fixtures at its own
expense.
Any poles or other fixtures placed in or adjacent to any street by the
Grantee shall be placed in such manner as to cause minimum interference with the
rights and reasonable convenience of property owners who adjoin said streets.
The Grantee shall, at the request of any person holding a moving permit
issued by the Town, temporarily raise or lower its wires to permit the moving of
buildings. The expense of such temporary removal or raising or lowering of wires
shall be paid by the person requesting the same, and the Grantee shall have the
authority to require such payment in advance. The Grantee shall be given not
less than forty-eight (48) hours notice to arrange for such temporary wire
changes.
The Grantee shall have the authority to trim trees upon and overhanging
streets of the Town so as to prevent the branches of such trees from coming in
contact with the wires and cables of the Grantee, except that at the option of
the Town, such trimming may be done by it or under its supervision and direction
at the expense of the Grantee.
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At the expiration of the term of this franchise, or upon its termination
and cancellation, as provided for herein, the Town shall have the right to
require the Grantee to remove at its own expense all portions of the cable
television system from all streets within the Town.
SECTION 11. INDEMNIFICATION AND INSURANCE
a. Grantee hereby expressly covenants and agrees to hold the Town and its
agents and employees harmless from and against all claims, damages, losses, and
expenses, including attorney's fees sustained by the Town on account of any
suit, judgement, execution, claim, or demand whatsoever arising out of but not
limited to copyright infringements and all other damages arising out of the
installation, operation, or maintenance of its cable system whether or not any
act or omission complained of is authorized, allowed or prohibited by this
ordinance.
b. The Grantee shall maintain and by its acceptance of this franchise
specifically agrees that it will maintain throughout the term of its franchise,
liability insurance insuring the Town and the Grantee in the minimum amount of:
(1) Workmen's Compensation: as required by all applicable Federal,
State, Maritime or other laws.
(2) Grantee's Liability: each occurrence $1,000,000
(3) Comprehensive General Liability: Bodily injury, each occurrence
$1,000,000; Property damage, each accident $1,000,000 and aggregate
$2,000,000.
(4) Comprehensive Vehicle Liability: including non-ownership and hired
car coverage as well as owned vehicles with minimum limited as follows:
Bodily injury for each occurrence $1,000,000; Property damage for each
occurrence $1,000,000.
c. The insurance policy obtained by the Grantee in compliance with this
section must be approved by the Town Attorney and such insurance policy, along
with written evidence of payment of required premiums, shall be filed and
maintained with the Office of the Town Clerk during the term of this franchise
and may be changed from time to time to reflect changing liability limits.
Grantee shall immediately advise the Town Attorney of any litigation that may
develop that would affect the insurance.
d. Neither the provisions of this section nor any damages recovered by the
Town hereunder, shall be construed to or limit the liability of Grantee under
this franchise or for damages.
e. All insurance policies made of continued under this franchise shall name
the Town of Dumfries as an additional insured. Grantee shall have the Town of
Dumfries a Certificate of Insurance from a reputable insurance company. The
Certificate shall state that Grantee has at least the minimum coverage that this
franchise allows. Grantee's insurance policy shall provide that the insurer
shall not cancel or refuse to renew Grantee's policy until at least thirty (30)
days after the Town of Dumfries receives written notice of such intention of
cancel or not renew. Notice shall be by registered mail and the Town shall not
refuse delivery.
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SECTION 12. MAINTENANCE BOND
a. Within thirty (30) days after the award of this franchise, Grantee shall
deposit with the Town a cash security bond in the amount of $50,000. The cash
bond shall be used to insure the faithful performance by Grantee of all
provisions of this ordinance franchise; and compliance with all orders, permits,
and directions of any agency, commission, board, department, division, or office
of the Town having jurisdiction over its acts or defaults under this franchise
and the payment by the Grantee of any liquidated damages, claims, liens, and
taxes due the Town which arise by reason of the construction, operation, or
maintenance of the system.
b. The cash bond shall be maintained at $50,000 during the entire term of
this franchise, even if amounts have to be withdrawn pursuant to subdivision a.
or c. of this section.
c. if Grantee fails to pay to the Town any compensation within the time
fixed herein; or fails, after ten (10) days notice to pay to the Town any taxes
due and unpaid; or fails to repay the Town within ten (10) days, any damage
costs or expenses which the Town is compelled to pay by reason of any act or
default of the Grantee in connection with a franchise; or, fails, after three
(3) days notice by the Town of such failure to comply with any provision of this
franchise which the Town reasonably determines can be remedied by demand on the
cash bond the Town may immediately require payment of the amount thereof, with
interest and any liquidated damages, from the cash bond.
d. The rights reserved to the Town with respect to the cash bond are in
addition to all other rights of the Town, whether reserved by a franchise or
authorized by law, and no action, proceeding or exercise of a right with respect
to such cash bond shall affect any other right the Town may have.
SECTION 13. CONSTRUCTION BOND
a. Within thirty (30) days after the award of this franchise and thirty
(30) days prior to the start of any significant replacement construction,
Grantee shall obtain and maintain at its cost and expense, and file with the
Town Clerk, a corporate surety bond in a company authorized to do business in
the State of Virginia, and found acceptable by the Town Attorney, in the amount
of Five Hundred Thousand Dollar ($500,000) or, in the case of replacement
construction, an appropriate fraction as determined by the Town Council, to
guarantee the timely construction and full activation of the CATV system and the
safeguarding of damage to private and/or public property and restoration of
damages incurred.
The bond shall provide, but not be limited to, the following condition:
There shall be recoverable by the Town, jointly and severally from the principal
and surety, any and all damages, loss or costs suffered by the Town resulting
from the failure of Grantee to satisfactorily complete and fully activate the
CATV system throughout the franchise area pursuant to the terms and conditions
of this ordinance franchise agreement.
b. Any extension to the prescribed construction time limit must be
authorized by the Council. Such extension shall be
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authorized only when the Council finds that such extension is necessary and
appropriate due to causes beyond the control of Grantee.
c. The construction bond shall be terminated only after the Council finds
that Grantee has satisfactorily completed initial construction and activation of
the CATV system pursuant to the terms and conditions of this ordinance franchise
agreement.
d. The rights reserved to the Town with respect to the construction bond
are in addition to all other rights of the Town whether reserved by this
ordinance or authorized by law, and no action, proceeding or exercise of a right
with respect to such bond shall affect any other rights the Town may have.
e. The construction bond shall contain language similar to the following
endorsement:
It is hereby understood and agreed that this bond may not be cancelled by
the surety nor the intention not to renew be stated by the surety until
sixty (60) days after receipt by the Town, by registered mail, of written
notice of such intent to cancel or not to renew.
SECTION 14. SERVICE STANDARDS
a. Grantee shall put, keep, and maintain all parts of the system in good
condition throughout the entire franchise period.
b. Upon termination of service to any subscriber, Grantee shall promptly
remove all its facilities and equipment from the premises of such subscriber
upon subscriber's request.
c. Grantee shall render efficient service, make repairs promptly, and
interrupt service only for good cause and for the shortest time possible. Such
interruptions, insofar as possible, shall be preceded by notice and shall occur
during periods of minimum system use.
d. Grantee shall not allow its cable or other operations to interfere with
television reception of persons not served by Grantee, nor shall the system
interfere with, obstruct or hinder in any manner, the operation of the various
utilities serving the residents of the Town.
e. Grantee shall continue, through the term of this franchise, to maintain
the technical, operational, and maintenance standards and quality of service set
forth in this ordinance. Should the Town find, by resolution, that Grantee has
failed to maintain these standards and quality of service, and should it, by
resolution specifically enumerate improvements to be made, Grantee shall make
such improvements. Failure to make such improvements within three (3) months of
such resolution will constitute a breach of condition for which the remedy of
Section 21 is applicable.
SECTION 15. CONTINUITY OF SERVICE MANDATORY
a. It shall be the right of all subscribers to continue receiving service
insofar as their financial and other obligations to Grantee are honored. In the
event that Grantee elects to over-build, rebuild, modify, or sell the system, or
the Town gives
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notice of intent to terminate or fails to renew franchise, the Grantee shall act
so as to ensure that all subscribers receive continuous, uninterrupted service
regardless of the circumstances.
In the event of a change of Grantee, or in the event a new operator
acquires the system, Grantee shall cooperate with the Town, new Grantee or
operator in maintaining continuity of service to all subscribers. During such
period, Grantee shall be entitled to the revenues for any period during which it
operates the system.
b. In the event Grantee fails to operate the system for four (4)
consecutive days without prior approval of the Town or without just cause, the
Town may, at its option, operate the system or designate an operator until such
time as Grantee restores service under conditions acceptable to the Town or a
permanent operator is selected. If the Town is required to fulfill this
obligation for Grantee, the Grantee shall reimburse the Town for all reasonable
costs or damages.
SECTION 16. COMPLAINT PROCEDURE APPLICATIONS
a. Grantee shall maintain a central office within the Town which shall be
open during all usual business hours. Grantee shall have a local publicly-listed
telephone number and be so operated that complaints and request for repairs or
adjustments may be received on a twenty-four (24) hour basis.
b. Grantee shall maintain a repair and maintenance crew capable of
responding to subscriber complaints or requests for service within twenty-four
(24) hours after receipt of the complaint or request. No charge shall be made to
the subscriber for this service unless such maintenance or repair is required as
a result of damage caused by subscriber. Grantee may charge for service calls to
the subscriber's home that are not the result of cable failure upon approval of
a rate and equitable procedure by the Town.
c. Grantee shall establish procedures for receiving, acting upon, and
resolving subscriber complaints to the satisfaction of the Town Manager's
Office. Grantee shall furnish a notice of such procedure to each subscriber at
the time of initial subscription to the system.
d. Grantee shall keep maintenance service records which will indicate the
nature of each service complaint, the date and time it was received, the
disposition of said complaint and the time and date thereof. This information
shall be made available for periodic inspection by representatives of the Town
Manager's Office. All service complaint entries shall be retained on file for a
period consisting of the most recent three (3) years.
e. When there have been similar complaints made or when there exists other
evidence, which, in the judgement of the Town Manager casts doubt on the
reliability of quality of cable service, the Town Manager shall have the right
and authority to compel Grantee to test, analyze, and report on the performance
of the system. Such report shall be delivered to the Town Manager no later than
fourteen (14) days after the Town Manager formally notifies the Grantee and
shall include the following information: the nature of the complaints which
precipitated the special tests; what system
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component was tested, the equipment used, and procedures employed in said
testing; the results of such tests; and the method in which said complaints were
resolved.
f. The Town Manager may require that tests and analyses shall be supervised
by a professional engineer not on the permanent staff of Grantee. The aforesaid
engineer should sign all records of the special tests and forward to the Town
Manager such records with a report interpreting the results of the tests and
recommending actions to be taken by Grantee and the Town.
g. The Town's right under this section, shall be limited to requiring
tests, analyses, and reports covering specific subjects and characteristics
based on said complaints or other evidence when and under such circumstances as
the Town has reasonable grounds to believe that the complaints or other evidence
requires that tests be performed to protect the public against substandard cable
services.
SECTION 17. AVAILABILITY OF BOOKS AND RECORDS
Grantee shall fully cooperate in making available at reasonably scheduled
times, and the Town Manager or his designate shall have the right to inspect the
books, records, maps, plans, and other like materials of the Grantee applicable
to the CATV system, at any time during normal business hours; provided where
volume and convenience necessitate, Grantee may require inspection to take place
on Grantee's premises.
SECTION 18. OTHER PETITIONS AND APPLICATIONS
Copies of all petitions, applications, communications, and reports
submitted by Grantee to the Federal Communications Commission, Securities and
Exchange Commission, or any other federal or state regulatory commission or
agency having jurisdiction in respect to any matters affecting cable television
operations authorized pursuant to this franchise, shall be provided
simultaneously to the Town.
SECTION 19. FISCAL REPORTS
The Grantee shall file annually with the office of the Town Clerk, no later
than one hundred twenty (120) days after the end of the Grantee's fiscal year, a
copy of an audited financial report applicable to the CATV system serving the
Town of Dumfries, including an income statement applicable to its operations
during the preceding twelve (12) month period, a balance sheet and a statement
of its properties devoted to CATV system operations, by categories, giving its
investment in such properties on the basis of original cost, less applicable
depreciation. These reports shall be certified as correct by an authorized
officer of Grantee and there shall be submitted along with them such other
reasonable information as the Council shall request.
SECTION 20. FORFEITURE AND TERMINATION
a. In addition to all other rights and powers retained by the Town under
this ordinance or otherwise, the Town reserves the right
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to forfeit and terminate this franchise and all rights and privileges of Grantee
in the event of a material breach of its terms and conditions. A material breach
by Grantee shall include, but shall not limited to the following;
(1) Violation of any material provision of this franchise or any material
rule, order, regulation, or determination of the Town made pursuant to
this franchise;
(2) Attempt to dispose of any of the facilities or property of its CATV
system to prevent the Town from purchasing it, as provided for herein;
(3) Attempt to evade any material provision of this franchise or practices
any fraud or deceit upon the Town of its subscriber or customers;
(4) Failure to begin or complete system construction or system extension
as provided under this franchise;
(5) Failure to restore service after ninety-six (96) consecutive hours
of interrupted service, except when approval of such interruption is
obtained from the Town;
(6) Material misrepresentation of fact in the application for or
negotiation of this franchise;
(7) Bankruptcy or assignment for the benefit of creditors; receivership,
or other insolvency of Grantee;
(8) Failure to pay franchise fees as required in Section 9;
(9) Failure to provide "Broad categories" video programming of other
services.
b. This Franchise and all rights and privileges of Grantee shall not be
terminated or forfeited pursuant to this section for any act or omission beyond
the licensee's control. Grantee shall not be excused by mere economic hardship
nor by misfeasance or malfeasance of its shareholders, directors, officers, or
employees.
c. The Town may make a written demand that Grantee comply with any such
provision, rule, order, or determination under or pursuant to this ordinance. If
the violation by the Grantee continues for a period of thirty (30) days
following such written demand without written proof that the corrective action
has been taken or is being actively and expeditiously pursued, the Town may
place the issue of termination of this franchise before the Town Council. The
Town shall cause to be served upon Grantee, at least twenty (20) days prior to
the date of such a Council meeting, a written notice of intent to request such
termination and the time and place of the meeting. Public notice shall be given
of the meeting and issue which the Council is to consider.
d. The Town Council shall hear and consider the issue and shall hear any
person interested therein, and shall determine in its discretion, whether or not
any violation by the Grantee has occurred.
e. If the Town Council shall determined that a material breach exist, the
Council may, by resolution, declare that the franchise of the Grantee shall be
forfeited and terminated unless there is compliance within such period as the
Town Council may fix, such period not to be less than sixty (60) days, provided
no opportunity for compliance need be granted for fraud or misrepresentation.
f. The issue of forfeiture and termination shall automatically be placed
upon the Council agenda at the expiration of
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the time set by it for compliance. The Council then may terminate this franchise
forthwith upon finding that Grantee has failed to achieve compliance or may
further extend the period, in its discretion.
SECTION 21. LIQUIDATED DAMAGES
By acceptance of this franchise granted by the Town, Grantee understands
and agrees that failure to comply with any time and performance requirements as
stipulated in this ordinance will result in damage to the Town, and that it is
and will be impracticable to determine the actual amount of such damage in the
event of delay or nonperformance; and Grantee thereof shall agree that, in
addition to any other damage suffered by the Town, the Grantee will pay to the
Town the following amounts which will be chargeable to the security fund:
a. For failure to complete system construction in accordance with Section
5, unless the Council specifically approves the delay by motion or resolution,
due to the occurrence of conditions beyond Grantee's control, Grantee shall pay
One Thousand Dollars ($1,000) per day for each day, or part thereof, the
deficiency continues.
b. For failure to provide upon written request, data, documents, reports,
information or to cooperate with Town during an application process or CATV
system review, Grantee shall pay Fifty Dollars ($50) per day, or part thereof,
each violation occurs or continues.
c. For failure to test, analyze, and report on the performance of the
system following a written request pursuant to this ordinance, Grantee shall pay
to Town Two Hundred Dollars ($200) per day for each day, or part thereof, that
such noncompliance continues.
d. Forty-five (45) days following adoption of a resolution by the Town
Council in accordance with Section 14e determining a failure of Grantee to
comply with operational, maintenance or technical standards, Grantee shall pay
to the Town One Thousand Dollars ($1,000) for each day, or part thereof, that
such noncompliance continues.
e. For failure to provide in a continuing manner the broad categories of
video programming or other services such as those listed in Appendix B, unless
the Council specifically approves Grantee a delay or change, Grantee shall pay
to the Town one thousand dollars ($1,000.) per day for each day, or part
thereof, that non-compliance continues.
SECTION 22. RIGHTS OF INDIVIDUALS
a. Grantee shall not deny service, deny access, or otherwise discriminate
against subscribers, channel users, or general citizens on the basis of race,
color, religion, national origin, sex, or disability. Grantee shall comply at
all times with all other applicable federal, state, and local laws and
regulations, and all executive and administrative orders relating to
nondiscrimination which are hereby incorporated and made part of this ordinance
by reference.
-16-
<PAGE> 25
b. Grantee shall strictly adhere to the equal employment opportunity
requirements of federal, state, and local regulations, and as amended from time
to time.
c. No signals shall be transmitted from a subscriber terminal for purposes
of monitoring individual viewing patterns or practices without the express
written permission of the subscriber. The request for such permission shall be
contained in a separate document with a prominent statement that the subscriber
is authoring the permission in full knowledge of its provision. The
authorization shall be revocable at any time by the subscriber without penalty
of any kind whatsoever. Grantee shall be entitled to conduct system wide or
individually addressed "sweeps" for the purpose of verifying system integrity,
controlling return-path transmission or billing for any pay services including
"shop at home."
d. Grantee, or any of its agents or employees, shall not, without the
specific written or electronic consent of the subscriber involved, sell, or
otherwise make available to any party:
(1) lists of the names and addresses of such subscribers, or
(2) any list which identifies the individual viewing habits of subscribers.
SECTION 23. PURCHASE OF CATV SYSTEM BY TOWN
a. Rights to Purchase
In the event Grantee forfeits or Town terminates this franchise pursuant to
provisions of this ordinance, or at the normal expiration of the franchise term,
Town shall have the right to purchase the CATV system.
b. Franchise Valuation
(1) In the event Grantee forfeits or Town terminates this Franchise, The
Town may purchase the system at a fair market price.
(2) Upon expiration of this Franchise, the Town may purchase the system
at fair market value determined on the basis of the cable system valued as a
going concern but with no value allocated to this Franchise itself.
c. Date of Valuation
The date of valuation shall be no earlier than the day following the date
of expiration or termination and no later than the date Town makes a fair and
reasonable offer for the system or the date of transfer of ownership, whichever
occurs first.
d. Transfer to Town
Upon exercise of this option and the payment of the above sum by the Town
and its service of official notice of such action upon Grantee, the Grantee
shall immediately transfer to the Town possession and title to all facilities
and property, real and personal, of the CATV system, free from any and all liens
and encumbrances not agreed to be assumed by the Town in lieu of some portion of
the purchase price set forth above; and the Grantee shall execute such warranty
deeds or other instruments of conveyance to Town as shall be necessary for this
purpose.
SECTION 24. PERFORMANCE EVALUATION SESSIONS
a. The Town and Grantee may hold scheduled performance
-17-
<PAGE> 26
evaluation sessions within thirty (30) days of the first, third, sixth, ninth,
and twelfth anniversary dates of Grantee's award of the franchise and as may be
required by federal and state law.
b. Special evaluation sessions may be held at any time during the term of
this franchise at the request of the Town or the Grantee.
c. All evaluation sessions shall be open to the public and announced in a
newspaper of general circulation in accordance with legal notice. Grantee shall
notify its subscribers of all evaluation sessions by announcements on at least
one (1) channel of its system to include the hours of 7:00 PM and 9:00 PM, for
five (5) consecutive days preceding each session.
d. Topics which may be discussed at any scheduled or special evaluation
session may include, but not be limited to, service rate structures; franchise
fee; liquidated damages; free or discounted services; application of new
technologies; system performance; services provided; programming offered;
customer complaints; privacy; amendments to this ordinance; judicial and FCC
rulings or any applicable federal or state law; line extension policies; and
Grantee or Town rules.
SECTION 25. CABLE SERVICE TO GOVERNMENT BUILDINGS
Grantee shall provide one outlet of basic cable service upon request and
approval by Town Council, to each municipally operated public building at no
monthly cost including, but not limited to, Town Hall, fire stations, schools,
recreation center, community center, and library.
SECTION 26. PROVISIONS OF ORIGINATION CABLECASTING
Grantee shall provide cablecasting equipment or equivalent as specified in
Appendix A. The equipment shall be used by Town employees or designates for the
purpose of live cablecasting or tape recording of Town meetings or events as
approved by the Town Council. The Town or designate shall, at the sole
discretion and convenience of the Town, cablecast noncommercial, locally
produced video and audio programming of live or taped Town meetings or Town
wants as approved by the Town Council. These programs may be cablecast on
channel 3 or other channels as mutually agreed upon by the Town and Grantee and
shall preempt that programming normally carried on said channel.
SECTION 27. NEW DEVELOPMENTS
At regular intervals, approximately every five years, Grantee and Town
Council will meet to discuss developments in technology as it relates to current
technical capabilities of the CATV system. During such conference, the Town
Council and Grantee will (1) seek to determine if there exists a reasonable need
and demand for additional channel capacity and/or technology or upgrade of
facilities, and (2) that provisions will be made for any applicable additional
customer rate charges which will allow Grantee a fair rate of return on its'
investment (including the investment required
-18-
<PAGE> 27
to provide the additional channels and/or technology or upgrade of facilities)
and will not result in economic waste for the Grantee. The Town Council and
Grantee will negotiate, in good faith, to provide appropriate additional
channels and/or specified technology or upgrade of facilities.
SECTION 28. TOWN PROCEDURES FOR NEW LICENSE(S)
a. Application filing Approval Required. Any person desiring to apply for a
License to install and operate a cable television system in the incorporated
areas of the Town of Dumfries shall first appear before the Town Council to
obtain approval for the filing of the License application. A copy of the
application form is provided in Appendix C. The Town Council shall determine
whether it would be in the public interest to receive, review, and evaluate an
application for a new License. The Council will consider both whether the public
interest would be served by the possible grant of a new License and whether the
expenditure of Town time and resources in reviewing and evaluating the
application is warranted by the public interest.
b. License Required. Any person desiring to install and operate a cable
television system in the incorporated areas of the Town of Dumfries shall, after
receiving Town approval pursuant to Section 28a, apply to the Town Council for a
License pursuant to this Ordinance and in compliance with the Request for
Proposal issued under Section 28a. The License shall be for a period specified
in the License Agreement and shall be non-exclusive. Applications shall be
submitted in writing and at the office of the Town Clerk, together with a
non-refundable application fee in the amount of One Thousand Dollars ($1,000.)
to defray those costs of processing the application as set forth in Section 28c.
c. License Processing Costs. For either a new license award or a license
renewal, costs to be borne by Grantee shall include all costs of publications or
notices prior to any public meeting provided for pursuant to a license,
development and publication of relevant ordinances and License Agreement, fees,
and any reasonable out-of-pocket cost not covered by the applications,
including, consultant and attorneys' fees and Grantor staff time. Prior to
commencing evaluation processing, the Town shall, by registered mail, notify the
applicant(s) of the projected processing costs, and require each applicant to
submit a cashier's check in the specified amount no later than five (5) days
from receipt of said notice. These license processing costs are over and above
any construction, inspection and permit fees, but may be offset against the
franchise fee in the case of a license renewal.
d. Application Required. An applicant desiring to install and operate a
cable television system in the incorporated areas of the Town of Dumfries shall
be required to complete the application forms for a Cable Television System
License, as prescribed by the Town, and which shall incorporate by reference
hereto, including, but not limited to, details of the applicant's qualifications
and experience, applicant's financial capability, financial background,
subscriber rates, proposed system technical configuration and operational system
description, proposed initial service area(s) and
-19-
<PAGE> 28
construction timetable, programming and other services, all administrative
practices and policies. Existing Licenses operating in the Town are not required
to provide the application described herein. However, any existing License shall
submit at the time of renewal of the franchise and, upon request by the Town any
or all of the information set forth above, and the Town may also request the
License to submit any or all of the information at any time during the franchise
upon ninety (90) days written notice to the Licensee.
Additionally, if the applicant is requesting an overlapping Franchise
within the Town, the Town shall make a further determination in the public
interest as to whether the economic impact upon the existing cable operator will
result in a loss of or degradation of cable service to existing or potential
cable subscribers in the Town.
e. Evaluation Criteria -- General. The applicant's legal, character,
financial, technical, and other corporate qualifications, the adequacy of its
construction arrangements and system design, service proposals, and the proposed
rates and charges as specified in Section 28d will be evaluated by the Grantor
and/or its designated agent. In the event multiple applications are filed for
the same License Territory, the applicable criteria will be evaluated on a
comparative basis and Grantor may conclude that the public convenience, safety
and general welfare would be best served by denying any and all License
Applications.
(1) The economic impact upon private property within the franchise area;
(2) The public need for such franchise, if any;
(3) The capacity of public rights-of-way to accommodate the cable system;
(4) The present and future use of the public rights-of-way to be used by
the cable system;
(5) The potential disruption to existing rights-of-way to be used by the
cable system and the resulting inconvenience which may occur to the public;
(6) the financial ability of the franchise applicant to perform;
(7) Other societal interests as are generally considered in cable
television franchising;
(8) Such other additional matters, both procedural and substantive, as Town
may, in its sole discretion, determine to be relevant.
E. License Applications. Applicants for a license shall submit to the
Grantor written applications utilizing the standard format provided by the
Grantor, at the time and place designated by the Grantor for accepting
applications, and including the designated application fees.
g. Overlapping Applications. In the event a License application is filed
proposing a License Territory which overlaps in whole or in part an existing
area, a copy thereof shall be served by the applicant by registered mail upon
the current licensed Grantee or Grantees. Proof that a copy of the License
Application has been served upon the current Grantee(s) shall be provided to the
Town. No application for overlapping License Territory shall be processed until
proof of service has been furnished Grantor, and no such
-20-
<PAGE> 29
application shall be granted without full public hearing on the request.
Notwithstanding any other provisions of this Ordinance, it is not the intent of
this Ordinance to either require or prohibit over-building.
SECTION 29. TIME IS OF THE ESSENCE
Whenever this franchise shall set forth any time for an act to be performed
by or on behalf of the Grantee, such time shall be deemed of the essence and any
failure of the Grantee to perform within time allotted shall always be
sufficient ground for the Town to invoke liquidated damages or revocation of
this franchise.
SECTION 30. FAILURE OF TOWN TO ENFORCE FRANCHISE, NO WAIVER OF THE TERMS THEREOF
Grantee shall not be excused from complying with any of the terms and
conditions of this franchise ordinance by any failure of the Town upon any one
or more occasions to insist upon or to seek compliance with any such terms or
conditions.
SECTION 31. CHOICE OF LAW; CHANGE OF LAW
This franchise is entered into in the Commonwealth of Virginia and is
governed by its laws.
When change occurs in federal or state laws or regulations affecting this
franchise, the Grantee and Town shall renegotiate, in good faith, to accommodate
the change. If both parties agree that the change in law requires no change in
the franchise, they may waive the renegotiation. For the purpose of this
section, "federal or state law or regulations" includes, but is not limited to
regulations of the FCC and other federal agencies, executive orders, opinions of
courts of competent jurisdiction, international treaties, interstate compacts,
the Town's charter, and state and federal constitutions. "Change" includes, but
is not limited to, new provisions, repeal, amendment, declaratory explanations,
and procedural modifications.
SECTION 32. SEVERABILITY
If any section, sentence, clause, or phrase of this ordinance is held
unconstitutional or otherwise invalid, such infirmity shall not affect the
validity of the ordinance, and any portions in conflict are hereby repealed.
Provided, however, that in the event that the state or federal government laws
or regulations renders any section invalid, then such section or sections shall
be renegotiated by the Town and Grantee.
-21-
<PAGE> 30
SECTION 33. ADDRESS FOR OFFICIAL NOTICES
All notices, requests, and demands of an official nature that are pursuant
to requirements of this Franchise Ordinance shall be in writing and shall be
deemed to have been duly given if delivered or certified mailed to:
a. Columbia Cable of Virginia
4391 Dale Blvd.
Woodbridge, VA 22193
Attn: General Manager
b. Town Manager
Town of Dumfries
101 South Main Street
Dumfries, VA 22026
I declare that I have read all the terms and conditions of this franchise
agreement and accept and agree to abide by same.
Richard H. Rosencrans, Vice President
/s/ Richard H. Rosencrans June 16, 1992
- --------------------------------------------------------------------------------
Signature Date
Scott N. Ledbetter, Vice President
/s/ Scott N. Ledbetter June 17, 1992
- --------------------------------------------------------------------------------
Signature Date
Thomas Harris, Dumfries Town Manager
/s/ Thomas Harris June 16, 1992
- --------------------------------------------------------------------------------
Signature Date
Samuel W. Bauckman, Mayor, Dumfries
/s/ Samuel W. Bauckman June 16, 1992
- --------------------------------------------------------------------------------
Signature Date
-22-
<PAGE> 31
Certificate of Acknowledgments:
City/County of Pr Wm
State of VA
The foregoing instrument was acknowledged before me this 16th day of June,
1992, by Richard H. Rosencrans.
[ILLEGIBLE]
------------------------------------
Notary Public
My commission expires June 19, 1992.
County of Fairfield
State of Conn.
The foregoing instrument was acknowledged before me this 17th day of June,
1992, by Scott N. Ledbetter.
/s/ CLARA P. GRACE
------------------------------------
Notary Public
My commission expires October 31, 1997.
County of Pr Wm
State of VA
The foregoing instrument was acknowledged before me this 16th day of June,
1992, by Thomas E. Harris.
/s/ [ILLEGIBLE]
------------------------------------
Notary Public
My commission expires June 19, 1992.
County of Pr Wm
State of VA
The foregoing instrument was acknowledged before me this 16th day of June,
1992, by Samuel W. Bauckman.
/s/ [ILLEGIBLE]
------------------------------------
Notary Public
My commission expires June 19, 1992.
-23-
<PAGE> 32
APPENDIX A
9 Unidirectional microphones
1 Audio mixer (16 input)
1 Audio headset
1 Dual cassette audio recorder
1 Audio power amplifier
1 Video passive switcher
1 Triple 5" B&W monitor
1 S-VHS recorder
1 Cart
Installation, set-up, and initial training.
<PAGE> 33
[DIAGRAM]
<PAGE> 34
PROGRAM INSERTION EQUIPMENT
[CHART]
<PAGE> 35
APPENDIX B
[CHART]
<PAGE> 1
EXHIBIT 10.6.59
[COLE, RAYWID & BRAVERMAN, LLP LETTERHEAD]
November 21, 1995
VIA TELECOPIER AND FEDERAL EXPRESS
Mr. Richard Rosencrans
Columbia International, Inc.
9 Greenwich Park
P.O. Box 4624
Greenwich, CT 06830
Elizabeth Steele, Esq.
General Counsel
Jones Intercable, Inc.
9697 E. Mineral Avenue
P.O. Box 3309
Englewood, CO 80155-3309
RE: FORT BELVOIR TRANSFER
Dear Mr. Rosencranz and Ms. Steele:
This letter will confirm the status of Columbia International, Inc.'s
("Columbia") request for consent to transfer from Fort Belvoir, Virginia to
Jones Intercable, Inc. ("Jones"). An official at Fort Belvoir has expressed his
belief that no action on the request is necessary because the nearby base at
Quantico has approved transfer of a separate franchise from Columbia to Jones.
The short answer is that consent will be deemed granted by law after November
28, 1995, if the Fort fails to act.
Columbia filed its FCC Form 394 requesting consent to the proposed transfer
of the franchise on July 13, 1994. The Form provides a franchising authority
with the information
<PAGE> 2
Mr. Richard Rosencrans
Elizabeth Steele, Esq.
November 21, 1995
Page -2-
necessary to render a decision on a cable operator's request for consent to a
transfer. The FCC created this form pursuant to Section 617(e) of the Cable Act,
which establishes a 120-day time limit in which the franchising authority must
approve or deny a request for such consent where the franchise has been held by
the operator for more than three years. Columbia has held the Fort Belvoir
franchise for more than three years.
The FCC has explained the purposes of Section 617(e) and the FCC Form 394:
In enacting 617(e), Congress imposed a 120-day approval period on the sale
of transfer of cable systems held by three or more years because Congress
wanted to ensure that the local franchise approval process not unduly delay
the consummation of transactions that do not implicate the concerns
underlying the anti-trafficking provision . . . We believe Congress sought
to provide a degree of regulatory certainty to cable operators when it
established the 120-day time period for franchising authority action on
transfer requests pertaining to cable systems held for three or more years.
Implementation of Sections 11 and 13 of the Cable Television Consumer Protection
and Competition Act of 1992, MM Docket 92-264, FCC 95-21 at para.para.52-53
(Released January 30, 1995). The statute is unequivocal that "[i]f the
franchising authority fails to render a final decision on the request within the
120 days, such request shall be deemed granted unless the requesting party and
the franchising authority agree to an extension of time." 47 U.S.C. sec. 537(e).
The 120-day period for consideration of Columbia's request for consent to
transfer from Fort Belvoir expires on November 28, 1995. After this date, if the
Fort has not acted on the request, consent will be deemed granted by law.
Columbia may thereafter transfer its Fort Belvoir franchise to Jones in full
compliance with franchise provisions that require consent to the transfer or
sale.
<PAGE> 3
Mr. Richard Rosencrans
Elizabeth Steele, Esq.
November 21, 1995
Page -3-
Please contact this office if you have any further questions regarding this
matter.
Very truly yours,
/s/ ROBERT G. SCOTT, JR.
Robert G. Scott, Jr.
RGS/nyr
cc: Kit LeVoy
<PAGE> 4
Fort Belvoir
FEDERAL COMMUNICATIONS COMMISSION APPROVED BY OMB
WASHINGTON, D.C. 20554 3060-0573
EXPIRES 08/31/96
INSTRUCTIONS FOR FCC 394
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
A. This form shall be used when applying for franchise authority approval to
assign or transfer control of a cable television system owned for three years
or more pursuant to the Cable Television Consumer Protection and Competition
Act of 1992 ("1992 Cable Act"). As required by Section 617(e) of the 1992
Cable Act, the franchise authority shall have 120 days from the date of
filing of this form, complete with all exhibits and any information required
by the franchise agreement or applicable state or local law, to act upon such
request. If the franchise authority fails to render a final decision on such
request within 120 days, such request shall be deemed granted unless the
requesting party and the franchise authority agree to an extension of time.
This form consists of the following sections:
I. General Information: Transferor/Assignor (Part I); Transferee/Assignee
(Part II)
II. Transferee's/Assignee's Legal Qualifications
III. Transferee's/Assignee's Financial Qualifications
IV. Transferee's/Assignee's Technical Qualifications
V. Certification: Transferor/Assignor (Part I); Transferee/
Assignee (Part II)
The transferor/assignor will fill out Part I of Section I and Part I of
Section V.
The transferee/assignee will fill out Part II of Section I; all of Sections
II, III and IV, as appropriate; and Part II of Section V.
B. In addition to the information requested on this form, cable operators are
required to submit all information required by the cable franchise agreement
or applicable local law or that the franchising authority deems necessary or
appropriate in connection with the transfer determination. Requests for such
additional information by the franchise authority shall not toll the 120 day
limit on franchise authority consideration of transfer requests.
C. This form should be filed with the local franchising authority. Prepare and
submit an original and two copies of this form and all exhibits associated
therewith. Number exhibits serially in the space provided in the body of the
form and date each exhibit.
D. The names of the applicants shall be the exact corporate names, if
corporation; if partnerships, the names of all general partners and limited
partners with equity interests above 5%, and the names under which the
partnerships do business; if unincorporated associations, the names of
executive officers, their offices, and the names of the associations.
E. This application shall be personally signed by the applicant, if the
applicant is an individual; by one of the partners, if the applicant is a
partnership; by an officer, if the applicant is a corporation; by a member
who is an officer, if the applicant is an unincorporated association; or by
the applicant's attorney in case of the applicant's physical disability or of
his/her absence from the United States. The attorney shall, in the event the
attorney signs for the applicant, separately set forth the reason why the
application is not signed by the applicant. In addition, if any matter is
stated on the basis of the attorney's belief only (rather than his/her
knowledge), he/she shall separately set forth his/her reason for believing
that such statements are true.
F. All items must be answered fully and all necessary information furnished.
Time and care should be devoted to all replies, which should reflect
accurately the applicants' responsible consideration of the questions asked.
If any items of the application are not applicable, write N.A. Defective or
incomplete applications may be returned without consideration.
FCC NOTICE TO INDIVIDUALS REQUIRED BY THE PRIVACY ACT AND THE PAPERWORK
REDUCTION ACT
The disclosure of said information is solicited under the Communications Act of
1934, as amended, 47 U.S.C. Section 537. The disclosure of said information is
required to obtain the requested authority. The principal purpose of said
information is to provide basic legal, technological, financial and ownership
data concerning the qualifications of the proposed transferee/assignee. All
information provided in this form will be available for public inspection,
subject to local requirements.
Public reporting burden for this collection of information is estimated to
average 5 hours per application, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments regarding
this burden estimate or any other aspect of this collection of information,
including suggestions for reducing the burden, to the Federal Communications
Commission, Records Management Division, AMD-PIRS, Washington, D.C. 20554, and
the Office of Management and Budget Paperwork Reduction Project (3060-0573),
Washington, D.C. 20503.
THE FOREGOING NOTICE IS REQUIRED BY THE PRIVACY ACT OF 1974, P.L. 93-579,
DECEMBER 31, 1974, U.S.C. 552a(e)3, AND THE PAPERWORK REDUCTION ACT OF 1980,
P.L. 95-511, DECEMBER 11, 1980, 44 U.S.C. 3507.
FCC 394 Instructions
October 1993
<PAGE> 5
Federal Communications Commission Approved by OMB
Washington, D.C. 20554 3060-0573 Expires 08/31/96
FCC 394
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
---------------------------------------
FOR FRANCHISE AUTHORITY USE ONLY
---------------------------------------
SECTION I. GENERAL INFORMATION
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------------
DATE July 28, 1995 1. Community Unit Identification Number:
- --------------------------------------------------------------------------------------------------------------------------------
2. Application for: [X] Assignment of Franchise [ ] Transfer of Control
- --------------------------------------------------------------------------------------------------------------------------------
3. Franchising authority: The United States of America, by the Directorate of Contracting, United States Army
Fort Belvoir, Virginia
- --------------------------------------------------------------------------------------------------------------------------------
4. Identify community where the system/franchise that is the subject of the assignment or transfer of control is located:
U.S. Army Fort Belvoir, Virginia
- --------------------------------------------------------------------------------------------------------------------------------
5. Date system was acquired or (for systems constructed by the transferor/assignor) the
date on which service was provided to the first subscriber in the franchise area: August 1, 1986
- --------------------------------------------------------------------------------------------------------------------------------
6. Proposed effective date of closing of the transaction assigning or transferring
ownership of the system to transferee/assignee: On or prior to 12/28/95
- --------------------------------------------------------------------------------------------------------------------------------
7. Attach as an Exhibit a schedule of any and all additional information or material Exhibit No.
filed with this application that is identified in the franchise as required to be
provided to the franchising authority when requesting its approval of the type of --------------------
transaction that is the subject of this application.Exhibit No.
</TABLE>
PART I -- TRANSFEROR/ASSIGNOR
<TABLE>
<S> <C> <C> <C>
1. Indicate the name, mailing address, and telephone number of the transferor/assignor.
- --------------------------------------------------------------------------------------------------------------------------------
Legal name of Transferor/Assignor (if individual, list last name first)
Columbia Associates, L.P.
- --------------------------------------------------------------------------------------------------------------------------------
Assumed name used for doing business (if any)
Columbia Cable of Virginia
- --------------------------------------------------------------------------------------------------------------------------------
Mailing street address or P.O. Box
9 Greenwich Office Park
- --------------------------------------------------------------------------------------------------------------------------------
City State ZIP CODE Telephone No. (include area code)
Greenwich CT 06830 (203) 661-1509
- --------------------------------------------------------------------------------------------------------------------------------
2.(a) Attach as an Exhibit a copy of the contract or agreement that provides for the assignment Exhibit No.
or transfer of control (including any exhibits or schedules thereto necessary in order to 2.(a)
understand the terms thereof). If these is only an oral agreement, reduce the terms to --------------------
writing and attach. (Confidential trade, business, pricing or marketing information, or
other information not otherwise publicly available, may be redacted). [X] Yes [ ] No
(b) Does the contract submitted in response to (a) above embody the full and complete --------------------
agreement between the transferor/assignor and the transferee/assignee? Exhibit No.
If No, explain in an Exhibit. --------------------
</TABLE>
<PAGE> 6
PART II -- TRANSFEREE/ASSIGNEE
<TABLE>
<S> <C> <C> <C>
1.(a) Indicate the name, mailing address, and telephone number of the transferee/assignee.
- -----------------------------------------------------------------------------------------------------------------------
Legal name of Transferee/Assignee (if individual, list last name first)
Jones Intercable of Alexandria, Inc.
- -----------------------------------------------------------------------------------------------------------------------
Assumed name used for doing business (if any)
- -----------------------------------------------------------------------------------------------------------------------
Mailing street address or P.O. Box
9697 East Mineral Avenue
- -----------------------------------------------------------------------------------------------------------------------
City State ZIP Code Telephone No. (include area code)
Englewood CO 80122 (303) 792-3111
- -----------------------------------------------------------------------------------------------------------------------
(b) Indicate the name, mailing address, and telephone number of person to contact, if other than transferee/assignee.
- -----------------------------------------------------------------------------------------------------------------------
Name of contact person (list last name first)
LeVoy, Katherine
- -----------------------------------------------------------------------------------------------------------------------
Firm or company name (if any)
Jones Intercable, Inc.
- -----------------------------------------------------------------------------------------------------------------------
Mailing street address or P.O. Box
9697 East Mineral Avenue
- -----------------------------------------------------------------------------------------------------------------------
City State ZIP Code Telephone No. (include area code)
Englewood CO 80112 (303) 792-3111
- -----------------------------------------------------------------------------------------------------------------------
(c) Attach as an Exhibit the name, mailing address, and telephone number of each Exhibit No.
additional person who should be contacted, if any. n/a
--------------------
(d) Indicate the address where the system's records will be maintained.
- -----------------------------------------------------------------------------------------------------------------------
Street Address
4391 Dale Boulevard
- -----------------------------------------------------------------------------------------------------------------------
City State ZIP Code
Woodbridge Virginia 22193
- -----------------------------------------------------------------------------------------------------------------------
2. Indicate on an attached exhibit any plans to change the current terms and conditions Exhibit No.
of service and operations of the system as a consequence of the transaction for which n/a
approval is sought. --------------------
</TABLE>
There are no current plans to change the current terms and conditions of
service and operations of the system as a consequence of the transaction for
which approval is sought.
<PAGE> 7
SECTION I. TRANSFEREE'S/ASSIGNEE'S LEGAL QUALIFICATIONS
<TABLE>
<S> <C> <C>
1. Transferee/Assignee is:
-----------------------------------------------------------------------------
[XX] Corporation a. Jurisdiction of incorporation: d. Name and address of registered
Colorado agent in jurisdiction:
----------------------------------
b. Date of incorporation: The Corporation Company
September 17, 1992 1600 Broadway
---------------------------------- Denver, CO 80202
c. For profit or not-for-profit:
For profit
-----------------------------------------------------------------------------
[ ] Limited a. Jurisdiction in which formed: c. Name and address of registered
Partnership agent in jurisdiction:
----------------------------------
b. Date of formation:
-----------------------------------------------------------------------------
[ ] General a: Jurisdiction whose laws govern b. Date of formation:
Partnership formation:
-----------------------------------------------------------------------------
[ ] Individual Exhibit No.
[ ] Other. Describe in an Exhibit. -----------------
2. List the transferee/assignee, and, if the transferee/assignee is not a natural person, each of its
officers, directors, stockholders beneficially holding more than 5% of the outstanding voting shares,
general partners, and limited partners holding an equity interest of more than 5%. Use only one
column for each individual or entity. Attach additional pages if necessary. (Read carefully -- the
lettered items below refer to corresponding lines in the following table.)
(a) Name, residence, occupation or principal business, and principal place of business. (If other
than an individual, also show name, address and citizenship of natural person authorized to vote
the voting securities of the applicant that it holds.) List the applicant first, officers, next,
then directors and, thereafter, remaining stockholders and/or partners.
(b) Citizenship.
(c) Relationship to the transferee/assignee (e.g., officer, director, etc.).
(d) Number of shares or nature of partnership interest.
(e) Number of votes.
(f) Percentage of votes.
- --------------------------------------------------------------------------------------------------------
(a)
See Exhibit I92)
- --------------------------------------------------------------------------------------------------------
(b)
- --------------------------------------------------------------------------------------------------------
(c)
- --------------------------------------------------------------------------------------------------------
(d)
- --------------------------------------------------------------------------------------------------------
(e)
- --------------------------------------------------------------------------------------------------------
(f)
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
3. If the applicant is a corporation or a limited partnership, is /X/ Yes / / No
the transferee/assignee formed under the laws of, or duly
qualified to transact business in, the State or other
jurisdiction in which the system operates?
If the answer is No, explain in an Exhibit. Exhibit No.
4. Has the transferee/assignee had any interest in or in / / Yes /X/ No
connection with an application which has been dismissed or
denied by any franchise authority?
If the Answer is Yes, describe circumstances in an Exhibit. Exhibit No.
5. Has an adverse finding been made or an adverse final action / / Yes /X/ No
been taken by any court or administrative body with respect to
the transferee/assignee in a civil, criminal or administrative
proceeding, brought under the provisions of any law or
regulation related to the following: any felony; revocation,
suspension or involuntary transfer of any authorization
(including cable franchises) to provide video programming
services; mass media related antitrust or unfair competition;
fraudulent statements to another governmental unit; or
employment discrimination?
If the answer is Yes, attach as an Exhibit a full description Exhibit No.
of the persons and matter(s) involved, including an
identification of any court or administrative body and any
proceeding (by dates and file numbers, if applicable), and the
disposition of such proceeding.
6. Are there any documents, instruments, contracts or / / Yes /X/ No
understandings relating to ownership or future ownership rights
with respect to any attributable interest as described in
Question 2 (including, but not limited to, non-voting stock
interests, beneficial stock ownership interests, options,
warrants, debentures)?
If Yes, provide particulars in an Exhibit.
7. Do documents, instruments, agreements or understandings for the /X/ Yes / / No
pledge of stock of the transferee/assignee, as security for
loans or contractual performance, provide that: (a) voting
rights will remain with the applicant, even in the event of
default on the obligation; (b) in the event of default, there
will be either a private or public sale of the stock; and (c)
prior to the exercise of any ownership rights by a purchaser at
a sale described in (b), any prior consent of the FCC and/or of
the franchising authority, if required pursuant to federal,
state or local law or pursuant to the terms of the franchise
agreement will be obtained?
If No, attach as an Exhibit a full explanation. Exhibit No.
SECTION III -- TRANSFEREE'S/ASSIGNEE'S FINANCIAL QUALIFICATIONS
1. The transferee/assignee certifies that it has sufficient net /X/ Yes / / No
liquid assets on hand or available from committed resources to
consummate the transaction and operate the facilities for three
months.
2. Attach as an Exhibit the most recent financial statements, Exhibit No.
prepared in accordance with generally accepted accounting III(2)
principles, including a balance sheet and income statement for
at least one full year, for the transferee/assignee or parent
entity that has been prepared in the ordinary course of
business, if any such financial statements are routinely
prepared. Such statements, if not otherwise publicly available,
may be marked CONFIDENTIAL and will be maintained as
confidential by the franchise authority and its agents to the
extent permissible under local law.
SECTION IV -- TRANSFEREE'S/ASSIGNEE'S TECHNICAL QUALIFICATIONS
Set forth in an Exhibit a narrative account of the transferee's/
assignee's technical qualifications, experience and expertise Exhibit No.
regarding cable television systems, including, but not limited IV
to, summary information about appropriate management personnel
that will be involved in the system's management and operations.
The transferee/assignee may, but need not, list a representative
sample of cable systems currently or formerly owned or operated.
</TABLE>
<PAGE> 9
SECTION V -- CERTIFICATIONS
Part I -- Transferor/Assignor
All the statements made in the application and attached exhibits are considered
material representations, and all the Exhibits are a material part hereof and
are incorporated herein as if set out in full in the application.
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------
I CERTIFY that the statements in this Signature
application are true, complete and correct
to the best of my knowledge and belief and /s/ RICHARD H. ROSENCRANS
are made in good faith.
- -------------------------------------------------------------------------------------------------------------
Date
WILLFUL FALSE STATEMENTS MADE ON THIS FORM July 28, 1995
ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT. -------------------------------------------------------------
U.S. CODE, TITLE 18, SECTION 1001. Print full name
Richard H. Rosencrans
- -------------------------------------------------------------------------------------------------------------
Check appropriate classification
/ / Individual / / General Partner /X/ Corporate Officer / / Other -- Explain:
(Indicate Title)
Vice President of Columbia
International, Inc., the
general partner of
Columbia Associates, L.P.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Part II -- Transferee/Assignee
All the statements made in the application and attached Exhibits are considered
material representations, and all the Exhibits are a material part hereof and
are incorporated herein as if set out in full in the application.
The transferee/assignee certifies that he/she:
(a) Has a current copy of the FCC's Rules governing cable television systems.
(b) Has a current copy of the franchise that is the subject of this application,
and of any applicable state laws or local ordinances and related regulations.
(c) Will use its best efforts to comply with the terms of the franchise and
applicable state laws or local ordinances and related regulations, and to effect
changes, as promptly as practicable, in the operation of the system, if any
changes are necessary to cure any violations thereof or defaults thereunder
presently in effect or ongoing.
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------
I CERTIFY that the statements in this Signature
application are true, complete and correct JONES INTERCABLE OF ALEXANDRIA, INC.
to the best of my knowledge and belief and By: /s/ ELIZABETH STEELE
are made in good faith. ---------------------------------
- -------------------------------------------------------------------------------------------------------------
Date
WILLFUL FALSE STATEMENTS MADE ON THIS FORM July 24, 1995
ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT. -------------------------------------------------------------
U.S. CODE, TITLE 18, SECTION 1001. Print full name
Elizabeth Steele
- -------------------------------------------------------------------------------------------------------------
Check appropriate classification
/ / Individual / / General Partner /X/ Corporate Officer / / Other -- Explain:
(Indicate Title)
Vice President/General
Counsel
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
<TABLE>
<S> <C>
JONES COMMUNICATIONS OF COLUMBIA ASSOCIATES, L.P.
VIRGINIA, INC., f/k/a 9 Greenwich Office Park
JONES INTERCABLE OF Post Office Box 4624
ALEXANDRIA, INC. Greenwich, Connecticut 06830
9697 East Mineral Avenue
Englewood, Colorado 80155-33009
</TABLE>
November 21, 1995
Department of the Army
U.S. Army Fort Belvoir
Fort Belvoir, Virginia, 22060
Attention: Mr. Mark Newton
Contracting Officer
Directorate of Contracting
Contracting Division
Re: Assignment of Cable Television Franchise Agreement
No. DAHC35-90-H-0018, Fort Belvoir, Virginia
Ladies and Gentlemen:
Reference is hereby made to the Cable Television Franchise Agreement, No.
DAHC 35-90-H-0018, dated August 8, 1990 (the "Franchise Agreement"), between the
United States of America as represented by the Contracting Officer of the
Directorate of Contracting of the Contracting Division of the United States Army
Fort Belvoir (the "U.S. Army Fort Belvoir") and Columbia Associates, L.P., a
Delaware limited partnership ("Columbia"). Reference is also hereby made to the
Asset Purchase Agreement, dated as of June 30, 1995 (the "Purchase Agreement"),
by and between Columbia and Jones Intercable, Inc., a Colorado corporation
("Jones"), pursuant to which Columbia agreed to sell to Jones (or any
wholly-owned subsidiary of Jones) substantially all of Columbia's assets
comprising its cable television systems in the Commonwealth of Virginia (the
"Systems"), including, without limitation, the cable television system currently
owned by Columbia which serves the U.S. Army Fort Belvoir in Fort Belvoir,
Virginia.
Please be advised that Jones has assigned all of its rights and obligations
under the Purchase Agreement to its wholly-owned subsidiary, Jones
Communications of Virginia, Inc., a Colorado corporation formerly known as Jones
Intercable of Alexandria, Inc., ("Jones of Virginia"). It is currently
contemplated that the sale of the Systems by Columbia to Jones of Virginia shall
be consummated on November 29, 1995. Columbia and Jones of Virginia hereby agree
that upon the consummation of the sale of the Systems by Columbia to Jones of
Virginia, Columbia shall transfer and assign all of its rights, obligations,
duties and liabilities under the Franchise Agreement to Jones of Virginia and
Jones of Virginia shall assume all such rights, obligations, duties and
liabilities from Columbia. Jones of Virginia hereby also agrees that upon the
consummation of the sale of the Systems from Columbia to it, Jones of Virginia
shall perform all of its duties, liabilities and
<PAGE> 11
obligations under the Franchise Agreement in accordance with the terms and
conditions of the Franchise Agreement.
Columbia and Jones of Virginia hereby jointly request that the U.S. Army
Fort Belvoir sign this letter agreement in the space provided for its signature
below in order to signify its consent to and agreement with the following items:
1. The U.S. Army Fort Belvoir hereby consents to the sale of the Systems
from Columbia to Jones of Virginia pursuant to the terms of the Purchase
Agreement and to the transfer and assignment by Columbia to Jones of Virginia of
all of Columbia's rights, obligations, duties and liabilities under the
Franchise Agreement. The foregoing consent to the sale of the Systems from
Columbia to Jones of Virginia and to the transfer and assignment of all of
Columbia's rights, obligations, duties and liabilities under the Franchise
Agreement to Jones of Virginia shall be effective upon the closing of the sale
of the Systems by Columbia to Jones of Virginia. Such closing is currently
expected to occur on November 29, 1995 and notice of any cancellation, change or
termination of such closing date shall be given to the U.S. Army Fort Belvoir by
Columbia or Jones of Virginia.
2. The U.S. Army Fort Belvoir hereby confirms that, to its knowledge, the
Franchise Agreement is currently in full force and effect, Columbia is currently
the authorized grantee under the Franchise Agreement, Columbia is in compliance
in all material respects with the terms and conditions of the Franchise
Agreement and no event has occurred or exists which would permit the U.S. Army
Fort Belvoir to revoke or terminate the Franchise Agreement.
3. By virtue of the fact that in conjunction with the sale of the Systems
from Columbia to Jones of Virginia, Columbia and Jones of Virginia will be
entering into a Novation Agreement with the United States of America, as
represented by the Commanding General of the Marine Corps Base of Quantico,
Virginia, it is not necessary under any laws, rules, regulations, decrees or
orders of the United States of America for Columbia, Jones of Virginia and the
United States of America, as represented by the U.S. Army Fort Belvoir, to enter
into a separate Novation Agreement with respect to the sale of the Systems from
Columbia to Jones of Virginia or the transfer and assignment by Columbia to
Jones of Virginia of all of Columbia's rights, obligations, duties and
liabilities under the Franchise Agreement.
4. Upon the execution of this letter agreement by the U.S. Army Fort
Belvoir, all actions and steps necessary to approve the sale of the Systems from
Columbia to Jones of Virginia and the transfer and assignment by Columbia to
Jones of Virginia of all of Columbia's rights, obligations, duties and
liabilities under the Franchise Agreement shall have been duly and validly taken
and no further actions or steps are required to be taken by the U.S. Army Fort
Belvoir, or any representative thereof, or by Columbia or Jones of Virginia, or
any representative thereof, in order to effectuate such sale, transfer and
assignment.
-2-
<PAGE> 12
Columbia and Jones of Virginia hereby jointly request that the U.S. Army
Fort Belvoir indicate its agreement with all of the foregoing terms of this
letter agreement by signing the three (3) enclosed copies of this letter
agreement in the space provided for its signature below, retaining one executed
copy of this letter agreement for its records and returning two executed (2)
copies of this letter agreement to Mr. Troy Fitzhugh, c/o Columbia Cable of
Virginia, 4391 Dale Boulevard, Woodbridge, Virginia 22193 ((703) 670-0189) as
soon as possible. This letter agreement may be executed in separate counterpart
copies, each of which shall be deemed to be an original, but all of which taken
together shall be deemed to be a single instrument.
Thank you for your consideration of this request.
Very truly yours,
COLUMBIA ASSOCIATES, L.P.
By: Columbia International, Inc.,
its managing general partner
By:
------------------------------------
Name: Richard H. Rosencrans
Title: Vice-President
Date: November 21, 1995
JONES COMMUNICATIONS OF VIRGINIA, INC.,
JONES INTERCABLE OF ALEXANDRIA, INC.
By: /s/ Elizabeth Steele
------------------------------------
Name:
Title:
Date: November 21, 1995
ACCEPTED AND AGREED IN ALL
RESPECTS AS OF THE DATE HEREOF:
DIRECTORATE OF CONTRACTING
CONTRACTING DIVISION
UNITED STATES ARMY FORT BELVOIR
FORT BELVOIR, VIRGINIA
By:
------------------------------------
Name: Mr. Mark Newton
Title: Contracting Officer
Date:
-3-
<PAGE> 13
FRANCHISE AGREEMENT
BETWEEN
FORT BELVOIR ARMY
FORT BELVOIR, VIRGINIA
AND
COLUMBIA ASSOCIATES, L.P.
D/B/A
COLUMBIA CABLE OF VIRGINIA
<PAGE> 14
CABLE TELEVISION FRANCHISE AGREEMENT
NO. DAHC35-90-H-0018
(SUPERSEDING DABT56-8I-C-0022)
FORT BELVOIR, VIRGINIA
AUGUST 8, 1990 THROUGH MAY 31, 2005
<PAGE> 15
RENEWAL OF CABLE TELEVISION FRANCHISE AGREEMENT
FORT BELVOIR, VIRGINIA, DAHC35-90-H-0018
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I: FRANCHISE TERM
Section 1. Renewal of Franchise Agreement 1
ARTICLE II: GRANT OF AUTHORITY
Section 1. Designated Franchising Authority 1
Section 2. Franchise Non-Exclusivity 1
Section 3. Notice to the Grantee 1
ARTICLE III: DEFINITIONS 1
ARTICLE IV: FRANCHISE CONDITIONS
Section 1. Franchise Review and Modification 4
Section 2. Performance Evaluation Session 5
Section 3. Renewal of Franchise 6
Section 4. Franchise Revocation Procedures 7
Section 5. Termination of Franchise 8
Section 6. Franchise Fee 8
Section 7. Insurance-Bonds-Indemnity 9
Section 8. Transfer of Franchise 10
ARTICLE V: SUBSCRIBER FEES AND RECORDS
Section 1. Subscriber Fees 11
Section 2. Books and Records 12
ARTICLE VI: SYSTEM OPERATIONS
Section 1. System Description and Service 13
Section 2. Operational Requirements and Records 13
Section 3. Tests and Performance Monitoring 14
Section 4. Service, Adjustment and Complaint Procedure 15
Section 5. Construction & Upgrading of Cable Systems 16
Section 6. Protection of Privacy 17
Section 7. Area-Wide Interconnection of Cable System 17
Section 8. Use of Cable System By Utilities 18
ARTICLE VII: DESIGNATED FRANCHISING AUTHORITY'S ADVISORY ROLE
Section 1. Establishment of Advisory Committee 18
ARTICLE VIII: GENERAL PROVISIONS
Section 1. Limits on Grantee's Recourse 18
Section 2. Compliance With State and Federal Law 19
Section 3. Special License 19
Section 4. Franchise Validity 19
Section 5. Failure to Enforce Franchise 20
Section 6. Rights Reserved to the Grantor 20
Section 7. Employment Requirement 20
Section 8. Time Essence of Agreement 20
Section 9. Liquidated Damages 21
Section 10. Grantee May Promulgate Rules 21
Section 11. Delegation of Powers 21
Section 12. Severability 22
Section 13. Purchase Orders 22
Section 14. Incorporation of Provisions 22
Section 15. Incorporation of Grantee's Proposal 21
Section 16. Acceptance 22
Signature Page 23
</TABLE>
i
<PAGE> 16
RENEWAL OF CABLE TELEVISION FRANCHISE AGREEMENT
FORT BELVOIR, VIRGINIA, DAHC35-90-H-0018
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
APPENDIX A: Preconstruction Checklist (4 pages)
APPENDIX B: List of Subscriber Locations (17 pages)
APPENDIX C: Forms
Form A -- Ownership and Control Information
Form B -- Ownership Qualifications
Form C -- Character Qualifications
Form D -- Cable Holdings
Form E -- Former Franchises or Ownership Interests
Form F -- Financial Resources, Existing Capital Commitments, and
Potential Building Commitments
Form G -- Financial Pro Forma
Form H -- Service Areas, Construction Schedules, and Construction
Practices
Form I -- Channel Capacity And System Design
Form J -- Proposed Signal Carriage And Channel Allocations
Form K -- Command Channel and Access Programming
Form L -- Proposed Rates
Form M -- Employment Practices
</TABLE>
ii
<PAGE> 17
RENEWAL OF CABLE TELEVISION FRANCHISE AGREEMENT, FORT BELVOIR, VA.
ARTICLE I: FRANCHISE TERM
SECTION I. RENEWAL OF FRANCHISE AGREEMENT.
A. Franchise Agreement No. DABT56-81-C-0022 granted on December 20, 1980 and
expiring May 31, 1990 to provide cable television services to U.S. Army Fort
Belvoir, Virginia, is hereby superseded by this renewal agreement number
DAHC35-90-H-0018.
B. The term of this renewed franchise agreement shall be no more than fifteen
(15) years and is effective on date of Grantee's acceptance and agreement
through May 31, 2005.
ARTICLE II: GRANT OF AUTHORITY
SECTION 1. DESIGNATED FRANCHISING AUTHORITY.
A. The Installation Commander of U.S. Army Fort Belvoir or his designate shall
act as the Designated Franchising Authority.
SECTION 2. FRANCHISE NON-EXCLUSIVITY.
A. Without regard to whether the terms "exclusive" or "non-exclusive" may be
used in the franchise agreement, no franchise granted shall be deemed to
preclude the Designated Franchising Authority from granting such other
franchise(s) to use and occupy the rights-of-way of the Installation for cable
television or any other purposes as the Designated Franchising Authority may
deem appropriate in order to serve the needs and interests of the U.S. Army, the
Installation and its personnel. Provided, however, if an additional franchise(s)
or other similar rights are granted, they shall not be granted on terms more
favorable than those contained in any preexisting franchise unless the
preexisting franchisee (Grantee) is permitted to abide by the most favorable
terms and conditions.
SECTION 3. NOTICE TO THE GRANTEE
A. Except as otherwise provided in the franchise, the Designated Franchising
Authority shall not take any final action involving the review, renewal,
revocation or termination of the Grantee's franchise unless the Designated
Franchising Authority has advised the Grantee in writing, at least thirty (30)
days prior to such action, as to the proposed action and permits the Grantee to
submit a response. The notice provided for in this Section shall be in addition
to, and not in lieu of, the notice to Grantee and opportunity to cure any
default provided for herein.
ARTICLE III: DEFINITIONS
The following terms, phrases, acronyms, words and their derivations shall have
the meaning given herein, unless the context clearly indicates that another
meaning is intended. When not inconsistent with the context, words used in the
present tense include the future, words in the plural number include the
singular number, and words in the singular number include the plural number. The
word "shall"is always mandatory and not merely directory.
1
<PAGE> 18
Franchise Agreement No. DAHC35-90-H-0018
A. "AR 25-1" -- Army Regulation 25-1, The Army Information Resources Management
Program. Army's policies and regulations for the management of information and
information systems in accordance with Information Mission Area concept
throughout the Army.
B. "Auxiliary Services" means any communications services in addition to
"regular subscriber services" including, but not limited to services for which a
per-program or per-channel charge is made, pay TV, burglar alarm services, data
or other electronic transmission services, facsimile reproduction services,
meter reading services and home shopping services, interactive two-way services
and any other service utilizing any facility or equipment of a cable television
system operating pursuant to a franchise granted under the franchise.
C. "Cable Retail Rate" means the rate charged for a single outlet of basic cable
television service charged to a cable customer.
D. "Cable Television System" (or "Cable Communications System") means any
non-broadcast facility consisting of a set of transmission paths and associated
signal generation, reception, and control equipment, that distributes or is
designed to distribute to subscribers audio, video and other forms of electronic
or electrical signals, but such term shall not include any such facility that
serves or will service only subscribers in one or more multiple unit dwellings
under common ownership, control or management, which does not use municipal or
installation rights-of-way.
E. "Channel (Video)" is a band of frequencies, six megahertz wide in the
electromagnetic spectrum capable of carrying one audio-visual television signal.
F. "Converter" means an electronic device which converts signals to a frequency
not susceptible to interference within the television receiver of a subscriber,
and by an appropriate channel selector also permits a subscriber to view all
signals delivered at designated dial locations.
G. "Designated Franchising Authority" means the person, department, office or
agency designated by the Installation Commander to act in matters related to
cable television. In the absence of any specific designation by the Installation
Commander, the Installation Commander or his designate shall act as the
designated franchising authority.
H. "Installation Commander" means the Commander of the U.S. Army Installation
which encompasses the cable television franchise area.
I. Installation Cable Television (CATV) Management Functions:
1. Director of Information Management (DOIM): Provides overall staff
management and oversight. Operates the reserved government channels and
maintains the compliance log for monitoring compliance with the franchise.
2. Director of Personnel and Community Affairs (DPCA) or a corresponding
Nonappropriated Fund Instrumentality. When
2
<PAGE> 19
Franchise Agreement No. DAHC35-90-H-0018
designated, functions as the primary authority for the CATV franchising/renewal
processes.
3. Director, Facilities Engineer (DEH). Advises on construction and
installation sites.
4. Public Affairs Officer. Advises and provides programming for the
reserved government channels.
5. Contracting Officer, Directorate of Contracting (DOC) solicits and
negotiates proposals, and awards the franchise agreement.
6. Chief, T-ASA, USAISEC. Assists the DOIM and the Contracting Officer on
technical aspects of the franchise agreement when requested.
I. "Fair Market Value" means the price that a willing buyer would pay to a
willing seller for a going concern.
J. "Federal Communications Commission" or "FCC" means the federal agency of that
name as constituted by the Communications Act of 1934, or any successor agency
created by the United States Congress.
K. "Franchise" means the non-exclusive rights granted hereunder to construct and
operate a cable television system along the public ways in the Installation, or
within specified areas in the Installation, and is not intended to include any
license or permit required for the privilege of transacting and carrying on a
business within the Installation as may be required by other franchises and laws
of the Installation.
L. "Franchise Area" means that portion of the Installation for which a franchise
is granted. If not otherwise stated in the franchise, the Franchise Area shall
be the geographic limits of the Installation including all territory thereafter
annexed to the Installation.
M. "Franchisee" -- see "Grantee"
N. "Grantee" means the natural person, partnership, domestic or foreign
corporation, association, joint venture, or organization of any kind granted a
franchise by the Designated Franchising Authority or his designee or its lawful
and approved successor, transferee or assignee. Formerly known as franchises.
O. "Gross Revenues" means all revenue derived directly or indirectly from the
operation or use of all or part of the franchise cable television system by the
Grantee, its affiliates, subsidiaries, parents, and any person in which the
Grantee has a financial interest including, but not limited to, revenue from
regular subscriber service fees, auxiliary service fees, installation and
reconnection fees, leased channel fees, converter rentals, studio rental,
production equipment and personnel fees, and advertising revenues; provided,
however, that this shall not include any taxes on services furnished by the
Grantee herein imposed directly upon any subscriber or user
3
<PAGE> 20
Franchise Agreement No. DAHC35-90-H-0018
by the State, local or other governmental unit and collected by the Grantee on
behalf of said governmental unit.
P. "Installation" means the U.S. Army Installation upon which the cable
television system shall be operated and the rights of way of which Installation
shall be utilized by the franchisee.
Q. "Persons" means any people, firms, corporations, associations or other
legally recognized entities.
R. "Right-of-Way" means the surface, the air space above the surface, and the
area below the surface of any street, highway, lane, path, alley, sidewalk,
boulevard, drive, bridge, tunnel, park, parkways, waterways, or other
right-of-way including utility easements or rights-of-way, and any temporary or
permanent fixtures or improvements located thereon now or hereafter held by the
Installation which shall entitle the Installation and the Grantee to the use
thereof for the purpose of installing and maintaining the Grantee's cable
television system.
S. "Regular Subscriber Service" means the distribution to subscribers of signals
over the cable television system on all channels except those for which a
per-program or per-channel charge is made, two-way services, and those intended
for reception by equipment other than a television broadcast receiver.
T. "Schools" means all public, or private tax-exempt educational institutions,
including qualified day care facilities, elementary and secondary schools, or
other educational facilities which may be located within or adjacent to the
franchise area.
U. "Subscriber" means any person who receives the regular subscriber service
and/or any one or more of such other services as may be provided by the
Grantee's cable television system, and does not further distribute such
service(s).
V. "Two-way Service" means the subscriber or any other location shall have the
capability to choose whether or not to respond immediately or by sequential
delay by utilizing any type of terminal equipment whatever, by push-button code,
dial code, meter, voice, video including, but not limited to, audio and video,
electrical or mechanically produced signal, display and/or interrogation.
W. "User" means a person or organization utilizing a system channel or system
equipment and facilities for purposes of production and/or transmission of
material, as contrasted with receipt thereof in a subscriber capacity.
ARTICLE IV: FRANCHISE CONDITIONS
SECTION 1. FRANCHISE REVIEW AND MODIFICATION.
A. It shall be the policy of the Designated Franchising Authority to amend a
franchise, upon application of the Grantee, when necessary to enable the Grantee
to take advantage of
4
<PAGE> 21
Franchise Agreement No. DAHC35-90-H-0018
advancements in the state-of-the-art which will afford it an opportunity to more
effectively, efficiently, or economically serve its subscribers; provided,
however, that this Section shall not be construed to require the Designated
Franchising Authority to make any amendment. Further, during the term of the
franchise, the Designated Franchising Authority may set forth the time and place
of a special meeting, the purpose of which will be to consider system
performance, system design modifications, and the possible need for the adoption
of reasonable and appropriate modifications of the franchise of a nature that
would not result in effectively terminating same.
SECTION 2. PERFORMANCE EVALUATION SESSION:
A. The Designated Franchising Authority and the Grantee shall hold scheduled
performance evaluation sessions once every three years within thirty (30) days
anniversary date of the Grantee's award of the franchise. The Designated
Franchising Authority shall notify the Grantee in writing, at least sixty (60)
days in advance, of each of the specified performance evaluation sessions of the
subject matter to be evaluated and any information required to be presented by
the Grantee.
B. Special evaluation sessions may be held at any time during the term of the
franchise at the request of the Designated Franchising Authority or the Grantee.
C. Topics which may be discussed at any scheduled or special evaluation session
may include, but are not limited to, payment of franchise fees, penalties, free
or discounted services, applications of new technologies, system performance,
services provided, programming offered, customer complaints, amendments to the
franchise, judicial or regulatory rulings, line extension policies and rules or
procedures of either the Grantee or Designated Franchising Authority.
D. During a review and evaluation by the Designated Franchising Authority, the
Grantee shall fully cooperate with the Designated Franchising Authority and
shall provide such information and documents as the Designated Franchising
Authority may need to reasonably perform its review.
E. If at any time during its review, the Designated Franchising Authority
determines that reasonable evidence exists of inadequate cable system
performance, it may require the Grantee to perform tests and analyses directed
toward the suspected inadequacies. The Grantee shall fully cooperate with the
Designated Franchising Authority in performing such testing and shall prepare
results and a report if requested within thirty (30) days after notice. Such
report shall include the following information.
1. The nature of the complaint or problem which precipitated the special
tests;
2. What system component was tested;
3. The equipment used and procedures employed in testing;
5
<PAGE> 22
Franchise Agreement No. DAHC35-90-H-0018
4. The method, if any, in which such complaint or problem was resolved;
5. Any other information pertinent to said tests and analyses which may be
required.
6. The Designated Franchising Authority may require the test to be
supervised at Grantee's expense by a professional engineer to be approved by the
Designated Franchising Authority not on the permanent staff of the Grantee. The
engineer shall sign all records of special tests and forward to the Designated
Franchising Authority such records with a report interpreting the results of the
test and recommending actions to be taken.
F. The Designated Franchising Authority's right under this section shall be
limited to requiring tests, analysis and reports covering specific subjects and
characteristics based on said complaints or other evidence when and under such
circumstances as the Designated Franchising Authority has reasonable grounds to
believe that the complaints or other evidence require that tests be performed to
protect the public against substandard cable service.
SECTION 3. RENEWAL OF FRANCHISE
A. At the expiration of the term for which a franchise is granted the Designated
Franchising Authority may grant a renewal franchise pursuant to procedures
consistent with the Cable Communications Act of 1984, or other applicable
Federal Law, for a term of such reasonable length as may be determined by the
Designated Franchising Authority in its discretion. If such Federal procedures
are repealed, any franchise holder desirous of renewing its franchise shall file
an application for renewal at least twelve (12) months prior to expiration of
the term of its currently existing franchise. All renewal applications shall
contain the information required by the Designated Franchising Authority and
shall be accompanied by such application fee as has been determined by the
Designated Franchising Authority. Upon receipt of said renewal application the
Designated Franchising Authority shall determine whether the
application/proposal meets the Installation's present and future
telecommunications needs and interests. Upon the conclusion of said public
hearing, the Board may issue a renewal franchise for an additional period of up
to fifteen (15) years, based upon a consideration of the applicable factors
specified in Federal Law. Nothing contained in this section shall be construed
or interpreted to grant to any franchise holder any vested right to a renewal
term at the expiration of the original term of its franchise or any renewal
period granted under the provisions of this subsection.
B. In the event the Designated Franchising Authority elects not to grant a
renewal of the franchise under the provisions of Section A of this article, the
franchise holder shall have a period of one (1) year to sell its CATV system to
a person approved by the Designated Franchising Authority, which approval shall
not be unreasonably withheld. In the alternative, the franchisee shall have a
period of one year after termination of service to remove, at its expense, all
portions of the CATV
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system from the public rights-of-way. In the event such previous franchise
holder does not effectuate a sale of its CATV system to a person approved by the
Designated Franchising Authority or does not remove all portions of its CATV
system from said public rights-of-way within said period of one (1) year, the
portions of the CATV system that remain within said public rights-of-way shall
be forfeited to and shall thereby become the property of
C. In the period between termination of the franchise and the granting of
another franchise, which period shall not exceed ten (10) months, the Grantee
shall continue to provide service to the public as if its franchise were still
in effect.
SECTION 4. FRANCHISE REVOCATION PROCEDURES
A. Whenever a Grantee shall refuse, neglect or willfully fail to construct,
operate or maintain its cable television system or to provide service to its
subscribers in accordance with the material terms of the franchise, or to make
required extensions of service, or in any other way substantially violates the
material terms and conditions of the franchise or practices any fraud or deceit
upon the Designated Franchising Authority or its subscribers, or if a Grantee
becomes insolvent, or unable to or unwilling to pay its uncontested debts, or is
adjudged bankrupt, or seeks relief under the bankruptcy laws, then the franchise
may be revoked.
B. In the event the Designated Franchising Authority believes that grounds for
revocation exist or have existed, the Designated Franchising authority shall
notify Grantee, in writing, setting forth the nature and facts of such
noncompliance. If, within thirty (30) days following such written notification,
the Grantee has not furnished reasonably satisfactory evidence that corrective
action has been taken or is being actively and expeditiously pursued, or that
the alleged violations did not occur, or that the alleged violations were beyond
the Grantee's control, the Designated Franchising Authority may schedule a
hearing in accordance with procedures established herein.
C. The Designated Franchising Authority shall not revoke a franchise pursuant to
this Section until it has given written notice to the Grantee that it proposes
to take such action, and the grounds therefor. The Designated Franchising
Authority shall not revoke a franchise until the Grantee, or its representative,
has had reasonable opportunity to be heard before the Designated Franchising
Authority and show that the proposed grounds for revocation did not or do not
exist, as the case may be.
D. At such hearing, the Designated Franchising Authority shall be required to
present evidence establishing Grantee's breach of its obligations under the
franchise and Grantee shall have the right to examine witnesses and present
evidence on its behalf. At the conclusion of the public hearing, the Designated
Franchising Authority shall determine whether the franchise should be revoked
and shall set forth in writing, the facts and reasons upon which its decision is
based.
E. A Grantee shall not be subject to the sanctions of this Section for any act
or omission wherein such act or omission was
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beyond the Grantee's control. An act or omission shall not be deemed to be
beyond a Grantee's control if committed, omitted, or caused by a corporation or
other business entity which holds a controlling interest in the Grantee, whether
held directly or indirectly. Further, the inability of a Grantee to obtain
financing, for whatever reason, shall not be an act or omission which is "beyond
the Grantee's control."
SECTION 5. TERMINATION OF FRANCHISE
A. In the event the franchise is terminated, whether by revocation, expiration,
or otherwise, the Grantee may continue to operate the cable system pursuant to
the terms and conditions of the terminated franchise, until the happening of one
of the following:
1. A new franchise or an extension of an expired franchise is granted;
2. In the case of a revocation, or a denial of renewal or extension, the
Grantee has acquiesced in such decision or a final adjudication has been made,
including any appeal, and has resulted in a finding or order that Grantee is not
entitled to a reinstatement, renewal or extension of the Franchise and is not
otherwise entitled by law to continue operation of the cable system. The passage
of six months with no appeal to an appellate court.
3. In the event that the Designated Franchising Authority denies renewal or
revokes the franchise, Grantee shall be afforded a period of one (1) year, from
the effective date of the final order denying renewal or revoking the franchise,
including any appeal to transfer or convey the cable system. Approval of such a
transfer shall not be unreasonably withheld. In the alternative the Grantee
shall have a period of one year to remove, at its expense, all portions of the
CATV system from the public rights-of-way. In the event the Grantee does not
effectuate a sale of its CATV system to a person approved by the Designated
Franchising Authority for a new franchise or does not remove all portions of its
CATV system from the said public rights-of-way within said period of one (1)
year, the portions of the CATV which remain within the public rights-of-way
shall be forfeited to and shall thereby become the property of the Installation.
B. Nothing contained in the franchise shall be construed to limit any power the
U.S. Army, the Installation, or the Designated Franchising Authority may have to
condemn any property of the Grantee or to obtain such property through the power
or eminent domain or through other lawful exercise of its power.
SECTION 6. FRANCHISE FEE
A. In conjunction with the Grantee's provision of free cable service to various
locations as described in Article VI, Section 1.B, and Grantee's intention to
provide cable television service to post subscribers at lower rates than those
generally charged for equivalent cable service in the Washington, D.C. area, the
Army waives its right to a franchisee fee in order to allow post
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subscribers the best variety of quality programming/stations at the lowest rates
possible. However, the Designated Franchising Authority may request to negotiate
a fee if in its opinion rates are increased for post subscribers to a level that
does not reflect the absence of a franchisee fee.
SECTION 7. INSURANCE-BONDS-INDEMNITY
A. Upon the granting of a renewal and at all times during the term of the
franchise, including the time for removal of facilities or management as a
trustee as provided for herein, the Grantee shall obtain, pay all premiums for,
and file with the Installation written evidence of payment of premiums and
executed duplicate copies of the following:
1. A general comprehensive liability policy indemnifying, defending and saving
harmless the Installation, its officers, agents or employees from any and all
claims by any person whatsoever on account of injury to or death of a person or
persons occasioned by the operations of the Grantee under the franchise herein
granted, or alleged to have been so caused or occurred, with a minimum liability
of One Million Dollars ($1,000,000) per personal injury or death of any one
person and Three Million Dollars ($3,000,000) for personal injury or death of
any two or more persons in any one occurrence.
2. Property damage insurance indemnifying, defending, and saving harmless the
Installation, its officers, boards, commissions, agents and employees from and
against all claims by any person whatsoever for property damage occasioned by
the operation of Grantee under the franchise herein granted, or alleged to have
been so caused or occurred, with a minimum liability of One Million Dollars
($1,000,000) for property damage to the property of any one person and Three
Million Dollars ($3,000,000) for property damage to the property of two or more
persons in any one occurrence.
3. A performance bond running to the Installation with good and sufficient
surety approved by the Installation in the amount specified in the franchise, or
if no amount is specified therein, then in the sum of Five Hundred Thousand
Dollars ($500,000), conditioned upon the faithful performance and discharge of
the obligations imposed by the franchise. The Installation's right to recover
under the bond shall be in addition to any other rights retained by the
Installation under this franchise and other applicable law. Any proceeds
recovered under the bond may be used to reimburse the Installation for the loss
of valuable consideration given for the grant of the franchise and such
additional expenses as may be incurred by the Installation as a result of
Grantee's failure to comply with the obligations imposed by this franchise and
the franchise including, but not limited to, attorney's fees and costs of any
action or proceeding, the cost of refranchising, and the cost of removal or
abandonment of any property, or other costs which may be in default.
B. The bond and all insurance policies called for herein shall be issued by
companies licensed to do business within the Installation, and shall be in a
form satisfactory to the Army and
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shall require thirty (30) days written notice of any cancellation to both the
Designated Franchising Authority and the Grantee. The Grantee shall, in the
event of any such cancellation notice, obtain, pay all premiums for, and file
with the Installation, written evidence of the issuance of replacement bond or
policies within thirty (30) days following receipt by the Designated Franchising
Authority or the Grantee of any notice of cancellation.
C. The Grantee shall, at its sole cost and expense, indemnify and hold harmless
the Installation, its officials, boards, commissions, consultants, agents and
employees against any and all claims, suits, causes of action, proceedings, and
judgments for damage arising out of the award of a franchise to the Grantee and
its operation of the cable television system under the franchise. These damages
shall include, but not be limited to, penalties arising out of copyright
infringements and damages arising out of any failure by Grantee's cable
television system whether or not any act or omission complained of is
authorized, allowed, or prohibited by the franchise. Indemnified expenses shall
include, but not be limited to, all out-of pocket expenses, such as attorney
fees, and shall also include the reasonable value of any services rendered by
the Designated Franchising Authority or any consultants, agents and employees of
the Designated Franchising Authority.
SECTION 8. TRANSFER OF FRANCHISE
A. A franchise 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 or in part,
by voluntary sale, sale and leaseback, merger, consolidation or otherwise or by
forced or involuntary sale, without prior consent of the Designated Franchising
Authority expressed by resolution and then on only such conditions as may
therein be prescribed. Any sale, transfer or assignment not made according to
the procedures set forth in the franchise shall render the franchise void. The
sale, transfer or assignment in bulk of the major parts 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 Designated Franchising
Authority shall be made by a bill of sale or similar document, an executed copy
of which shall be filed with the Designated Franchising Authority within thirty
(30) days after any such sale, transfer or assignment. The Designated
Franchising Authority shall not withhold its consent unreasonably; provided,
however, the proposed assignee agrees to comply with all the provisions of the
franchise and amendments thereto, and must be able to provide proof of legal,
technical, financial, and character qualifications as determined by the
Designated Franchising Authority.
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 Article III) of the property used by the
Grantee in the operation of its cable television system. Prior
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consent of the Designated Franchising Authority, expressed by resolution, shall
be required for such transfer and said consent shall not be withheld
unreasonable.
D. Prior approval of the Designated Franchising Authority shall be required
where ownership or control of twenty percent (20%) 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 twenty percent (20%) or more of such
right of control, singularly or collectively on the effective date of the
franchise. By its acceptance of this franchise the Grantee specifically grants
and agrees that any such acquisition occurring without prior approval of the
Designated Franchising Authority shall render the franchise void.
E. The consent of the Designated Franchising Authority 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 Installation under the
franchise.
ARTICLE V: SUBSCRIBER FEES AND RECORDS
SECTION 1. SUBSCRIBER FEES
A. The Grantee agrees that the Designated Franchising Authority shall have the
authority and right to cause the Grantee's fees for all services, to the extent
permitted by law or FCC rules and regulations, to conform to the provisions
contained herein.
B. All charges to subscribers shall be consistent with a schedule of fees for
all services offered as established by the Grantee. Changes in the fee schedule
shall not take effect until at least thirty (30) days after notification of same
is delivered to the Designated Franchising Authority and to current subscribers
and users.
C. The Grantee shall not, with regard to fees, discriminate or grant any
preference or advantage to any person; provided, however, that the Grantee may
establish different rates for different classes of subscribers, provided that
the Grantee not discriminate between any subscribers of the same class.
D. The Grantee shall be required to apprise in writing each new subscriber of
all applicable fees and charges for providing cable television service.
E. Grantee may, at its own discretion, in a non-discriminatory manner, waive,
reduce or suspend connection fees and/or monthly service fees for promotional
purposes.
F. Except as may be otherwise provided in a franchise, a subscriber shall have
the right to have its service disconnected without charge; such disconnection
shall be made as soon as practicable and in no case later than thirty (30) days
following notice to the Grantee of same. No Grantee shall enter into any
agreement with a subscriber which imposes any charge following disconnection of
service, except for reconnection and subsequent monthly or periodic charges, and
those charges shall be no
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greater than charges for new customers. This Section shall not prevent a Grantee
from refusing service to any person because the Grantee's prior accounts with
that person remain due and owing.
G. Except as may be otherwise provided in a franchise, a Grantee may offer
service which requires advance payment of periodic service charges for no more
than one (1) year in advance subject to the conditions contained in this
paragraph. A customer shall have the right, at any time, to have its service
disconnected without charge and with a refund of unused service charges paid to
the customer within thirty (30) days from the date of service.
H. Bulk Rate: In addition to the individually billed subscribers served by the
Grantee, the Grantee will enter into annual appropriated and nonappropriated
fund contracts/orders. The bulk rate described in Form L, page 3 of 3, will
apply to those buildings that contain nine (9) or more cable outlets. Any
increase in the bulk rates will take effect on the first day of the Government
fiscal year, currently October 1st.
SECTION 2. BOOKS AND RECORDS.
A. A Grantee shall, (1) within thirty (30) days following the acceptance of a
franchise, and (2) at least yearly thereafter, and (3) within thirty (30) days
of the change of ownership of three percent (3%) or more of the outstanding
stock or equivalent ownership interest of a Grantee, furnish the Designated
Franchising Authority a list, showing the names and addresses of persons owing
three percent (3%) or more of the outstanding stock or equivalent ownership
interest of the Grantee. Such a list shall include a roster of the Grantee's
officers and directors (or equivalent managerial personnel) and their addresses.
B. A Grantee shall maintain books and records of its operations within the
Installation to show total revenues by service category in sufficient detail,
consistent with generally accepted accounting principles.
C. A Grantee shall maintain such books and records for the Franchise Area
specified in the franchise separately from any other operations; provided,
however, that any expenses or expenditures which apply to both the system in
said Franchise Area and any other operations shall be reasonably allocated
between all such operations, consistent with generally accepted accounting
principles. Such books and records shall be retained, in any reasonable form,
for a period of not less than fifteen (15) years. The Designated Franchising
Authority shall have the right to extend the retention period through the term
of any renewed franchise.
D. The books and records of the Grantee's operation within the Installation
shall be made available during normal business hours for inspection and audit by
the Designated Franchising Authority within thirty (30) days after such request
has been made.
E. Copies of the Grantee's schedule of charges, contract or application forms
for subscriber service, policy regarding the processing of subscriber
complaints, delinquent subscriber disconnect and reconnect procedures and any
other terms and
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conditions adopted as the Grantee's policy in connection with its subscribers,
including amendments thereto or changes thereof, shall be filed with the
Designated Franchising Authority and shall be made available for inspection by
the public in the Grantee's local office.
ARTICLE VI: SYSTEM OPERATIONS
SECTION 1. SYSTEM DESCRIPTION AND SERVICE
A. The cable television system installed by Grantee shall comply in all respects
with the technical performance requirements set forth in the FCC's Rules for
Cable Television including applicable amendments thereto; provided, however,
that nothing contained herein shall be construed to prohibit the Grantee from
proposing to comply with more rigid technical performance requirements, in which
case the Grantee's application shall be incorporated by reference in the
franchise and will be binding on the Grantee. If the FCC should delete said
requirements, the Designated Franchising Authority hereby reserves the right to
amend the franchise to incorporate similar standards and every franchise granted
shall be subject to such reserved power whether or not expressly so conditioned.
B. Grantee shall provide without charge a single outlet of basic service to post
firehouses, hospitals, barrack dayrooms and recreation centers. Any other
government buildings requiring cable television service would contract for
services through normal contract/order procedures as per Article VIII, Section
13. However, if it is necessary to extend Grantee's trunk or feeder lines more
than three hundred (300) feet solely to provide service to any such public
building, the Installation or such other building occupant shall have the option
either of paying Grantee's direct costs for such extension in excess of three
hundred (300) feet, or of releasing Grantee from the obligation to provide
service to such building.
C. The Grantee shall not permit the transmission of any programming which by law
is under its control that is obscene otherwise constitutionally unprotected
speech. At the option of the subscriber, the Grantee shall provide at cost a
device capable of locking out any premium programming video and audio signals.
SECTION 2. OPERATIONAL REQUIREMENTS AND RECORDS
A. Grantee shall construct, operate, and maintain the cable television system in
full compliance with the rules and regulations, including applicable amendments,
of the Federal Communications Commission and all other applicable Federal,
State, or local laws and regulations, including the latest editions of the
National Electrical Safety Code and the National Fire Protection Association
National Electrical Code. The cable television system and all its parts shall be
subject to inspection by the Designated Franchising Authority, to review a
Grantee's construction plans prior to the commencement of construction.
B. Grantee shall not be required to maintain an office on the installation
except the Grantee shall be required to maintain
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a location on post for the drop-off of converters by disconnecting subscribers.
The SOSA office would be deemed as an appropriate location for this purpose.
Grantee shall employ an operator or maintain a telephone answering service
twenty-four (24) hours per day, each day of the year, to receive subscriber
complaints.
C. Grantee shall exercise its best effort to design, construct, operate, and
maintain the systems at all times so that signals carried are delivered to
subscribers without material degradation in quality (within the limitations
imposed by the technical state-of-the art).
D. A listing of all correspondence, petitions, reports, applications and other
documents sent or received by Grantee from Federal or State agencies having
appropriate jurisdiction in matters affecting cable television operation shall
be furnished by the Grantee to the Designated Franchising Authority within sixty
(60) days of submission or receipt of such documents by Grantee upon request by
the Designated Franchising Authority, copies of any such document shall be
submitted to the Designated Franchising Authority by the Grantee within thirty
(30) days of such request.
E. In the case of any emergency or disaster, the Grantee shall, upon request of
the Designated Franchising authority, make available its facilities to the
Installation, without costs, for emergency use during the emergency or disaster
period.
SECTION 3. TESTS AND PERFORMANCE MONITORING.
A. Not later than ninety (90) days after any new or substantially rebuilt
portion of the system is made available for service to subscribers, technical
performance tests shall be conducted by the Grantee to demonstrate full
compliance with the Technical Standards of the Federal Communications Commission
and the terms of the franchise granted hereunder. Such tests shall be performed
by, or under the supervision of, a qualified registered professional engineer or
an engineer with proper training and experience. A copy of the report shall be
submitted to the Designated Franchising Authority, describing test results and
test procedures, and the qualifications of the engineer responsible for the
tests.
B. System monitor test points shall be established at or near the output of the
last amplifier in the longest feeder line, at or near trunk line extremities, or
at the locations to be specified in the franchise. Such periodic tests shall be
made at the test points as shall be described by the Designated Franchising
Authority, consistent with FCC rules.
C. At any time after commencement of service to subscribers, the Designated
Franchising Authority may require additional reasonable tests, including full or
partial repeat tests, different test procedures, or tests involving a specific
subscriber's terminal, at the Grantee's expense to the extent such tests may be
performed by the Grantee's employees utilizing its existing facilities and
equipment; provided, however, that the Designated Franchising authority reserves
the right to
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Franchise Agreement No. DAHC35-90-H-0018
conduct its own tests upon reasonable notice to the Grantee and if
non-compliance is found, the expense thereof shall be borne by the Grantee. The
Designated Franchising Authority will endeavor to arrange its request for such
special tests so as to minimize hardship or inconvenience to Grantee or to the
subscriber.
D. A copy of the annual performance tests report required by the Federal
Communications Commission shall be submitted to the Designated Franchising
Authority within thirty (30) days of its completion.
E. The Designated Franchising Authority shall have the right to employ qualified
consultants if necessary or desirable to assist in the administration of this,
or any other, section of the franchise.
SECTION 4. SERVICE, ADJUSTMENT AND COMPLAINT PROCEDURE
A. Except for circumstances beyond the Grantee's control such as strikes, acts
of God, weather, wars, riots and civil disturbances, the Grantee shall establish
a maintenance service capable of locating and correcting major system
malfunctions promptly. Said maintenance service shall be available at all hours,
to correct such major system malfunctions affecting a number of subscribers.
B. A listed local telephone number shall be made available to subscribers for
service calls at any time of the day or night. Investigative action shall be
initiated in response to all service calls, other than major outages, not later
than the next business day after the call is received. Corrective action shall
be completed as promptly as practicable. Appropriate records shall be made of
service calls showing when and what corrective action was completed. Such
records shall be available to the Designated Franchising Authority during normal
business hours and retained in Grantee's files for not less than three (3)
years.
C. The Grantee shall furnish each subscriber at the time service is installed
written instructions that clearly set forth procedures for placing a service
call, or requesting an adjustment. Said instructions shall also include the
name, address and telephone number of the designated employee of the Designated
Franchising Authority and a reminder that the subscriber can call or write the
designated employee for information regarding terms and conditions of the
Grantee's franchise if the Grantee fails to respond to the subscriber's request
for installation, service or adjustment within a reasonable period of time.
D. In the event a subscriber does not obtain a satisfactory response or
resolution to his request for service or an adjustment within a reasonable
period of time, he may advise the Designated Franchising Authority in writing of
his dissatisfaction and the Designated Franchising Authority shall have the
authority to investigate the matter and order corrective action as may be
appropriate.
E. The Grantee shall interrupt system service after 7:00 a.m. and before 1:00
a.m. of the following day only with good cause
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and for the shortest time possible and, except in emergency situations, only
after cablecasting notice of service interruption at least twenty-four (24)
hours in advance of the service interruption. Service may be interrupted between
1:00 a.m. and 7:00 a.m. for routine testing, maintenance, and repair, with
notification, on any day except Saturday or Sunday, or a holiday.
SECTION 5. CONSTRUCTION & UPGRADING OF CABLE SYSTEMS
A. All transmission lines, equipment and structures shall be so installed and
located as to cause minimum interference with the rights and appearance of the
franchise area. The Grantee shall at all times employ reasonable care and shall
install and maintain in use commonly accepted methods and devices for preventing
failures and accidents which are likely to cause damage, injuries, or nuisances
to the installation. Suitable barricades, flags, lights, flares, or other
devices shall be used at such times and places as are reasonably required for
the safety of the Installation.
B. All plans for construction, rebuild or upgrading of more than five (5) miles
of system shall be approved by the appropriate Government personnel identified
by the Government to the Grantee. Any change in the identities of the
appropriate Governmental personnel will be communicated to the Grantee as soon
as the change in personnel takes place. The following steps presented below will
apply in cases of Government approved projects:
1. Preconstruction Meeting. The basic purpose of the preconstruction meeting
is coordination and an exchange of knowledge as to Army installation's
construction standards, available resources and various other construction
related requirements. The preconstruction checklist at Appendix A shall be
utilized by the operator.
2. First Construction Meeting. The preconstruction checklist shall be
completed prior to the first construction meeting and all design issues should
be resolved. Issues include permissible cable routes, available poles and
conduits, special service locations and internal building wiring design. The
operator shall provide a construction schedule to include the following items:
a. System Activitation Date
b. System Completion Date
c. Technical Performance and Picture Quality Check (estimated date)
d. Begin Marketing (estimated date)
e. Begin Installations (estimated date)
Monthly construction reports shall be submitted. The reports shall include
amount of feet of cable installed, the amount of electronics spliced, amount of
feet of plant activated and status of permits and easements required. The report
should note the barracks which have been wired, operator comments and any
revision of the construction schedule.
3. Construction Completion. A Technical Performance and Picture Quality Check
Report shall be completed. The operator would then be permitted to commence
normal operations.
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Franchise Agreement No. DAHC35-90-H-0018
SECTION 6. PROTECTION OF PRIVACY
A. Grantee shall not permit the transmission of any signal, aural, visual or
digital, including "polling" the channel selection, from any subscriber's
premises without first obtaining the informed consent of the subscriber, which
shall not have been obtained from the subscriber as a condition of any service
for which transmission is not an essential element. The request for such consent
shall be contained in a separate document which enumerates and describes the
transmissions being authorized and includes a prominent statement that the
subscriber is authorizing the permission in full knowledge of its provision, and
shall be revocable at any time by the subscriber without penalty of any kind
whatsoever. This provision is not intended to prohibit the use or transmission
of signals useful only for the control or measurement of system performance or
used only for billing subscribers.
B. Grantee shall not permit the Designated Franchising Authority of any special
terminal equipment in any subscriber's premises that will permit transmission
from the subscriber's premises of two-way services utilizing aural, visual or
digital signals without first obtaining written permission of the subscriber as
provided in Paragraph A of this Section.
C. Grantee, or any of its agents or employees, shall not, without the specific
written authorization of the subscriber involved as provided in Paragraph A of
this Section, sell or otherwise make available to any party any list which
identifies the viewing habits or responses of individual subscribers.
SECTION 7. AREA-WIDE INTERCONNECTION OF CABLE SYSTEM
A. Grantee, if ordered to do so by the Designated Franchising Authority, shall
interconnect Access Channels and/or Local Origination Channels of its cable
television system with any or all other cable systems providing service in
adjacent areas.
B. Upon receiving an order to interconnect, the Grantee shall make a good faith
effort to obtain agreements for the sharing of interconnection costs among all
interconnecting companies. The Designated Franchising Authority may extend the
time to interconnect or may rescind its order to interconnect upon finding that
the Grantee has made a good faith effort but has been unable to obtain a
reasonable interconnection agreement or that the cost of the interconnection
would cause an unreasonable increase in subscriber rates.
C. Grantee shall cooperate with any entity established for the purpose of
regulating, financing, or otherwise providing for the interconnection of cable
television systems.
D. The Designated Franchising Authority does not require Grantee to provide
Local Origination equipment that is compatible with that used by other cable
systems within the adjacent areas.
E. Grantee shall make every reasonable effort to cooperate with cable television
franchise holders in contiguous communities in order to provide cable service in
areas outside the Grantee's Franchise Area.
17
<PAGE> 34
Franchise Agreement No. DAHC35-90-H-0018
SECTION 8. USE OF CABLE SYSTEM BY UTILITIES
A. Grantee shall, upon request by the Designated Franchising Authority, provide
channel capacity and technical assistance to permit appropriate public or
private utilities companies to utilize the cable system in conjunction with
utility service or other necessary services. The Grantee shall provide such
channel capacity as may be needed for government services. Reasonable charges
may be made for provision of additional equipment or labor which may be needed
in order to provide or facilitate such uses of the system by the Designated
Franchising Authority. The Grantee shall use its best efforts to provide the
services and facilities required to accommodate the use of the cable systems for
these purposes.
ARTICLE VII: DESIGNATED FRANCHISING AUTHORITY'S ADVISORY ROLE
SECTION 1. ESTABLISHMENT OF ADVISORY COMMITTEE
A. The Designated Franchising Authority may create a committee to act as an
advisory body to the Designated Franchising Authority with regard to issues
affecting the operation of government, public or educational access channels,
and the programs offered on such channels on the cable television system(s) on
the Installation. In its advisory capacity, the Committee shall endeavor to
promote and develop maximum involvement and utilization of the public and
educational/cultural access channels.
B. The Committee may have the following specific functions, but not necessarily
be limited to these functions:
1. Develop a plan for maximum involvement and utilization of the public and
educational or government access channels.
2. Submit annually a written advisory report to the Designated Franchising
Authority reviewing said plan, recommending changes thereto, and describing
fully the actions of the Committee for the preceding year.
3. Assure that the operation of the non-government access channels remains
free from direct or indirect program censorship, and governmental interference
with, or control of, program content.
4. Adopt rules and regulations governing its meetings and other activities.
5. Perform such other advisory functions as the Designated Franchising
Authority may direct.
6. The Committee may appear before the Designated Franchising Authority in any
proceedings on matters pertaining to the cable communications system.
ARTICLE VIII: GENERAL PROVISIONS
SECTION 1. LIMITS ON GRANTEE'S RECOURSE
A. Except as expressly provided in the franchise, the Grantee shall have no
recourse against the Designated Franchising
18
<PAGE> 35
Franchise Agreement No. DAHC35-90-H-0018
Authority for any loss, expense or damage resulting from the terms and
conditions of the franchise or because of the Designated Franchising authority's
enforcement thereof nor for the Designated Franchising Authority's failure to
have the authority to grant the franchise. The Grantee expressly agrees that
upon its acceptance of the franchise it does so relying upon its own
investigation and understanding of the power and authority of the Designated
Franchising Authority to grant said franchise.
B. The Grantee, by accepting the franchise, acknowledges that it has not been
induced to accept same by any promise, verbal or written, by or on behalf of the
Designated Franchising Authority or by any third person regarding any term or
condition of the franchise not expressed therein. The Grantee further pledges
that no promise or inducement, oral or written, has been made to any
Installation employee or official regarding receipt of the cable television
franchise.
C. The Grantee further acknowledges by acceptance of the franchise that it has
carefully read the terms and conditions of the franchise and accepts without
reservation the obligations imposed by the terms and conditions herein.
D. The decision of the Designated Franchising Authority concerning Grantee
selection and awarding of the franchise shall be final.
SECTION 2. COMPLIANCE WITH STATE AND FEDERAL LAW
A. The Grantee shall, at all times, comply with all laws of the State and
Federal government and the rules and regulations of any Federal or State
administrative agency; provided, however, this Section shall not be construed to
require the Designated Franchising Authority to make an initial determination of
any such violation.
SECTION 3. SPECIAL LICENSE
A. The Designated Franchising Authority reserves the right to issue a license,
easement or other permit to anyone other than the Grantee to permit that person
to traverse any portion of the Grantee's franchise area within the Installation
in order to provide service outside the Installation. Such license or easement,
absent a grant of a franchise which shall not authorize nor permit said person
to provide a cable television service of any nature to any home or place of
business within the Installation, nor to render any service or connect any
subscriber within the Installation to the Grantee's cable television system.
SECTION 4. FRANCHISE VALIDITY
A. The Grantee agrees, by the acceptance of the franchise renewal, to accept the
validity of the terms and conditions of the renewal in its entirety and that it
will not, at any time, proceed against the Designated Franchising Authority in
any claim or proceeding challenging any term or provision of the franchise as
unreasonable, arbitrary or void, or that the Designated Franchising Authority
did not have the authority to impose such term or condition.
19
<PAGE> 36
Franchise Agreement No. DAHC35-90-H-0018
SECTION 5. FAILURE TO ENFORCE FRANCHISE
A. The Grantee shall not be excused from complying with any of the terms and
conditions of the franchise by any failure of the Designated Franchising
Authority, upon any one or more occasions, to insist upon the Grantee's
performance or to seek Grantee's compliance with any one or more of such terms
or conditions.
SECTION 6. RIGHTS RESERVED TO THE GRANTOR.
A. The Designated Franchising Authority hereby expressly reserves the following
rights:
1. To exercise its governmental powers, now or hereafter, to the full extent
that such powers may be vested in or granted to
2. To adopt, in addition to the provisions contained in the franchise and in
any existing applicable rules or regulations such additional reasonable
regulations as it shall find necessary in the exercise of its authority. Grantee
will have the opportunity to object to any proposed regulations unilaterally
imposed by the Franchising Authority and will be given an opportunity to offer
alternatives to the desired new regulations. However, Grantee does not give up
its right to refuse such new regulations and seek an equitable resolution to any
disagreements resulting from proposed regulations.
3. To renegotiate any provision of a franchise granted pursuant hereto, which
is declared or rendered void or unenforceable by any court or administrative
body having jurisdiction thereof, or by changes in state or Federal laws enacted
after the award of the franchise.
4. To renegotiate the entire franchise should decision(s) of courts or
administrative bodies have appropriate jurisdiction, or State or Federal laws
enacted after the award of a franchise, render void or unenforceable substantial
and material portions of a franchise granted pursuant hereto, where the result
thereof is to make the balance of the franchise meaningless or where the
authority of the Designated Franchising Authority to regulate cable
communications systems within the Installation is substantially and materially
abrogated.
SECTION 7. EMPLOYMENT REQUIREMENT
A. The Grantee shall not refuse to hire, nor discharge from employment, nor
discriminate against any person regarding compensation, terms, conditions, or
privileges of employment because of age, sex, race, color, creed, or national
origin. The Grantee shall take affirmative action to insure that employees are
treated during employment without regard to their age, sex, race, color, creed
or national origin. This condition includes, but is not limited to, the
following: recruitment advertising, employment interviews, employment, rates of
pay, upgrading, transfer, demotion, lay-off, and termination.
SECTION 8. TIME ESSENCE OF AGREEMENT
A. Whenever the franchise sets forth any time for any act to be performed by or
on the behalf of the Grantee, such time shall be
20
<PAGE> 37
Franchise Agreement No. DAHC35-90-H-0018
deemed of the essence and the Grantee's failure to perform within the time
allotted shall, in all cases, be sufficient grounds for the Designated
Franchising Authority to invoke the remedies available under the terms and
conditions of the franchise. The Designated Franchising Authority recognizes
that time is of the essence in its fulfillment of its responsibilities to
approve contracts/orders, construction projects, facilities markings and any
other acts required to allow Grantee to operate its business in manner
convenient to its cable television customers.
SECTION 9. LIQUIDATED DAMAGES
A. Notwithstanding any other remedies provided for in the franchise or otherwise
available under law, the Designated Franchising Authority shall have the power
to collect liquidated damages in the following amounts in the event the Grantee
violates any provision of the franchise or any rule or regulation lawfully
adopted thereunder. The fines listed below can only be effective with 30 days'
prior written notice to the Grantee from the Designated Franchise Authority.
Grantee would have 30 days to remedy any of the defaults listed below before any
of the fines below would begin accruing:
1. For failure to submit plans to the Designated Franchising Authority
indicating expected dates of completion of various parts of the system -- up to
$100 per day.
2. For failure to commence operations in accordance with herein stated
provisions -- up to $200 per day.
3. For failure to complete construction and installation of system within
proper time -- up to $300 per day.
4. For failure to supply data requested by the Designated Franchising
Authority in connection with installation, construction, customers, finances or
financial reports, -- up to $50 per day.
5. For failure to comply with reasonable recommendations of the Designated
Franchising Authority relating to services and/or interconnection and such other
reasonable requests or recommendations as may be made pursuant to authority
granted by the franchise, or to respond to subscriber complaints within the
proper time -- up to $50 per day as the Designated Franchising Authority may
determine.
SECTION 10. GRANTEE MAY PROMULGATE RULES
A. Grantee shall have the authority to promulgate such rules, regulations, terms
and conditions of its business as shall be reasonably necessary to enable it to
exercise its rights and perform its services under the franchise and the Rules
of the FCC, and to assure uninterrupted service to each and all of its
subscribers. Such rules and regulations shall not be deemed to have the force of
law.
SECTION 11. DELEGATION OF POWERS
A. Any delegable power, right or duty of the Installation Commander, the
Designated Franchising Authority, or any official
21
<PAGE> 38
Franchise Agreement No. DAHC35-90-H-0018
of the Installation may be transferred or delegated with the written approval of
the Installation Commander transmitted to an appropriate officer, employee, or
Department of the Army. Grantee will be given written notice of such delegation
of power as soon as possible to allow for its compliance with the terms and
conditions of this document.
SECTION 12. SEVERABILITY
A. If any section of the franchise, or any portion thereof, is held invalid or
unconstitutional by any court of competent jurisdiction or administrative
agency, such decision shall not affect the validity of the remaining portions
hereof, except as otherwise provided for herein.
SECTION 13. PURCHASE ORDERS. The Contracting Officer, Directorate of Contracting
(DOC), will issue purchase orders for all For Belvoir cable television
requirements. The orders will be for appropriated and nonappropriated fund
activities. With the exception of orders issued by a nonappropriated fund
Contracting Officer, the Grantee shall not honor orders, contracts or agreements
that are issued by individuals other than the Contracting Officer, DOC. All Fort
Belvoir and tenant administrative offices will contract through the DOC. Grantee
maintains the right to contract with and provide service directly to
individually billed subscribers such as private residences located on post.
SECTION 14. INCORPORATED OF PROVISIONS
A. The foregoing provisions are hereby incorporated into the basic franchise
agreement. When the provisions of the basic agreement conflict with the
provisions of this renewal agreement, the provisions of this renewal agreement
will govern.
SECTION 15. INCORPORATION OF GRANTEE'S PROPOSAL. The forms at Appendix C are
incorporated into this agreement.
SECTION 16. ACCEPTANCE
A. The Grantee shall, in its acceptance of the renewed franchise agreement,
declare that it has carefully read the foregoing and accepts all of the terms
and conditions imposed by the renewed franchise and agrees to abide by same.
22
<PAGE> 39
Franchise Agreement No. DAHC35-90-H-0018
COLUMBIA CABLE
I declare that I have read all the terms and conditions of the renewed franchise
agreement and accept and agree to abide by same.
(Type or Print Name and Title)
- --------------------------------------------------------------------------------
Signature Date
(Type or Print Name and Title)
- --------------------------------------------------------------------------------
Signature Date
DIRECTORATE OF CONTRACTING
UNITED STATES ARMY FORT BELVOIR
FORT BELVOIR, VA
- --------------------------------------------------------------------------------
WILLIAM E. CAMPBELL, JR., Contracting Officer, (Date)
23
<PAGE> 40
INDIVIDUAL SUBSCRIBERS
<TABLE>
<CAPTION>
ESTIMATED NUMBER
AREAS TO BE SERVED LOCATION OF OUTLETS
- ------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
1. Family Housing (Belvoir Village) Area 1-99 61
2. Family Housing Area 400 119
3. Family Housing (Dogue Creek) Area 900 270
4. Family Housing (George Washington) Area 800 & 1500 244
5. Family Housing (Colyer Village) Area 800 92
6. Family Housing (Fairfax Village) Area 500 152
7. Family Housing (Gerber Village) Area 100 73
8. Family Housing (Woodlawn Village) North Post 444
9. Family Housing (River Village) Area 1600 188
10. Family Housing (Lewis Heights) North Post 446
------
2,089
</TABLE>
<PAGE> 41
Franchise Agreement No. DAHC35-90-H-0018
COLUMBIA CABLE
I declare that I have read all the terms and conditions of the renewed franchise
agreement and accept and agree to abide by same.
(Type or Print Name and Title)
- --------------------------------------------------------------------------------
Signature Date
(Type or Print Name and Title)
- --------------------------------------------------------------------------------
Signature Date
DIRECTORATE OF CONTRACTING
UNITED STATES ARMY FORT BELVOIR
FORT BELVOIR, VA
- --------------------------------------------------------------------------------
WILLIAM E. CAMPBELL, JR., Contracting Officer, (Date)
23
<PAGE> 42
Franchise Agreement No. DAHC35-90-H-0018
COLUMBIA CABLE
I declare that I have read all the terms and conditions of the renewed franchise
agreement and accept and agree to abide by same.
(Type or Print Name and Title)
- --------------------------------------------------------------------------------
Signature Date
(Type or Print Name and Title)
- --------------------------------------------------------------------------------
Signature Date
DIRECTORATE OF CONTRACTING
UNITED STATES ARMY FORT BELVOIR
FORT BELVOIR, VA
- --------------------------------------------------------------------------------
WILLIAM E. CAMPBELL, JR., Contracting Officer, (Date)
23
<PAGE> 1
EXHIBIT 10.6.60
[LOGO]
August 4, 1995
Lake Ridge Parks and Recreation Association
Mrs. Martha Kaczmarskyj
12350 Oakwood Drive
Lake Ridge, Virginia 22192-1928
Dear Mrs. Kaczmarskyj:
Columbia Associates, L.P., a Delaware limited partnership ("Columbia") is a
party to an Agreement with you, dated January 15, 1982, ("the Agreement"), in
connection with its operation of a cable television system serving the
communities of Dale City, Lake Ridge, Woodbridge, Fort Belvoir, Triangle,
Dumfries, Quantico, Occoquan and Prince William County, Virginia (the
"Systems"). Pursuant to an agreement (the "Purchase Agreement") dated as of June
30, 1995, Columbia agreed to sell substantially all of the assets employed in
the System to Jones Intercable, Inc. a Colorado corporation, or its permitted
assigns ("Jones").
We hereby request your consent to the assignment, transfer and conveyance by
Columbia to Jones (and to subsequent assignments to and among affiliates of
Jones) of all of Columbia's rights, obligations and liabilities under the
Agreement from the date of the closing of the transaction, going forward. Kindly
execute the enclosed copy of this letter, and return it to us in the enclosed
postage paid pre-addressed envelope, to evidence your acknowledgement and
consent to the following:
1. There is no known uncured material default by Columbia which would cause a
forfeiture of the rights granted to Columbia under the Agreement and the
Agreement is valid and in full force and effect at the date hereof.
2. You hereby consent to Columbia's assignment to Jones (and to subsequent
assignments to and among affiliates of Jones) of all of Columbia's right, title,
and interest in and pursuant to the Agreement, all of which right, title and
interest shall be vested in Jones effective upon the closing of the transactions
contemplated by the Purchase Agreement.
3. You hereby consent to the grant by Jones and/or any affiliate of Jones now or
hereafter having any interest in the Systems or the Agreement of a security
interest in all of its right, title, and interest in and pursuant to the
Agreement to such lending institution or institutions as may be selected by
Jones or such affiliate, which institution or institutions shall have all of the
rights and remedies of a secured party under applicable law.
<PAGE> 2
We would appreciate receiving your consent as soon as possible. If you have any
questions, please do not hesitate to call troy Fitzhugh or Marsha Sluss at (703)
670-0189 extension 231.
Sincerely,
/s/ TROY FITZHUGH
COLUMBIA ASSOCIATES, L.P.
a Delaware limited partnership
d/b/a Columbia Cable of Virginia
By: COLUMBIA INTERNATIONAL, INC.,
a Delaware corporation and its managing general partner
Name: /s/ [ILLEGIBLE]
---------------------------------------
Title: Vice President
---------------------------------------
Date: August 24, 1995
---------------------------------------
CONSENTED AND AGREED TO:
By: Lake Ridge Parks and Recreation Association
Name: /s/ RICHARD ELEL
---------------------------------------
Title: President
---------------------------------------
Date: 15 Aug 1995
---------------------------------------
<PAGE> 3
NOTICE OF CLOSING DATE
To: Lake Ridge Parks & Recreation
Association, Inc.
You are hereby given notice that the closing of the sale of the assets of
Columbia Associates, L.P. ("Columbia") to Jones Communications of Virginia,
Inc., formerly known as Jones Intercable of Alexandria, Inc. ("Jones") occurred
and was effective as of November 29, 1995, and that the Agreement between Lake
Ridge Parks and Recreation Association, Inc. ("Lake Ridge") and Columbia (the
"Agreement") dated January 15, 1982, and approved for transfer to Jones by that
certain Letter Agreement dated August 4, 1995 and executed by Lake Ridge on
August 15, 1995, was transferred to Jones as of November 29, 1995.
JONES COMMUNICATIONS OF
VIRGINIA, INC. f/k/a Jones
Intercable of Alexandria, Inc.,
a Colorado corporation
By: /s/ ELIZABETH M. STEELE
--------------------------------
Elizabeth M. Steele
Vice President
Dated: December 12, 1995
<PAGE> 4
EASEMENT AGREEMENT
BETWEEN
LAKE RIDGE PARKS & RECREATION ASSOCIATION
LAKE RIDGE, VIRGINIA
AND
COLUMBIA ASSOCIATES, L.P.
D/B/A
COLUMBIA CABLE OF VIRGINIA
<PAGE> 5
EXHIBIT 2
AGREEMENT
BETWEEN
LAKE RIDGE
PARKS AND RECREATION ASSOCIATION, INC.
AND
WEAVER BROS. MANAGEMENT CORP.
<PAGE> 6
AGREEMENT BETWEEN LAKE RIDGE PARKS
AND RECREATION ASSOCIATION, INC. AND
WEAVER BROS. MANAGEMENT CORP.
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
PARTIES P. 1
RECITALS P. 1
1. EASEMENT RIGHTS P. 3
2. EXCLUSIVE RIGHTS P. 3
3. TERM P. 4
4. RENEWAL P. 5
5. FEE P. 6
6. CABLE TELEVISION SYSTEM PROPOSAL P. 9
7. INSTALLATION P. 10
8. SUBSCRIPTION FEES AND RATES P. 11
9. RESTORATION AND CLEAN-UP P. 11
10. LOCAL OFFICE P. 12
11. BOOKS AND RECORDS P. 13
12. ADMINISTRATIVE FILINGS P. 13
13. PERMITS AND FEES P. 13
14. COMPLIANCE WITH LAWS P. 14
15. INDEMNIFICATION P. 14
16. INSURANCE P. 15
17. REPRESENTATIONS AND WARRANTIES BY LRPRA P. 16
</TABLE>
i
<PAGE> 7
<TABLE>
<C> <S> <C>
18. RIGHT OF TERMINATION P. 16
19. TRANSFER OF OWNERSHIP P. 17
20. PROTECTION OF PRIVACY P. 17
21 INDEPENDENT CONTRACTOR P. 18
22. WAIVER P. 18
23. NOTICE P. 18
24. SEVERABILITY P. 19
25. APPLICABLE LAW P. 19
26. AMENDMENT P. 19
27. RELATIONSHIP BETWEEN PARTIES P. 19
28. CAPTIONS P. 20
</TABLE>
ii
<PAGE> 8
AGREEMENT
THIS AGREEMENT is made and executed this 15th day of January, 1982, by and
between LAKE RIDGE PARKS AND RECREATION ASSOCIATION, INC., a nonprofit Virginia
corporation (hereinafter referred to as "LRPRA"), and WEAVER BROS. MANAGEMENT
CORP., a Maryland corporation (hereinafter referred to as "Grantee").
***** W I T N E S S E T H *****
WHEREAS, LRPRA is a nonprofit Virginia corporation created under the terms
of a certain Declaration of Covenants, Conditions and Restrictions, dated March
29, 1972 and recorded among the land records of Prince William County, Virginia
in Deed Book 625 at page 443 (hereinafter referred to as the "Declaration").
WHEREAS, under the terms of this Declaration, LRPRA was granted certain
ownership interests in a certain parcel of real property made subject to the
Declaration therein, located in Occoquan Magesterial District, Prince William
County, Virginia, and containing approximately 2161.70398 acres of land, as
described with more particularity in Exhibit A hereto (hereinafter referred to
as the "Property").
<PAGE> 9
WHEREAS, Article IV, Section 2S of the Declaration created certain blanket
utility easements upon, across, over and under the Property for ingress, egress,
installation, replacement, repair and maintenance of utility and service lines
and systems, including, but not limited to, television, cable and communication
lines and systems, subject to the approval, authorization and consent of the
Board of Directors of LRPRA.
WHEREAS, Grantee desires to obtain the approval, authorization and consent
of LRPRA to install, maintain and operate a cable television system on the
Property and use the above-described blanket utility easements upon, across,
over and under the Property for ingress, egress, installation, replacement,
repair and maintenance of utility and service lines and systems in connection
therewith.
WHEREAS, LRPRA has agreed to provide its approval, authorization and
consent to Grantee to install, maintain and operate a cable television system on
the Property and use the above-described blanket utility easements, subject to
certain terms, conditions and restrictions to be described herein.
WHEREAS, it is now the desire and express intention of the parties to set
forth in writing the terms of their agreement and to define and describe their
respective rights, duties and obligations thereunder.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
provided herein, the receipt and sufficiency of which are acknowledged by both
parties, LRPRA and Grantee contract and agree as follows:
-2-
<PAGE> 10
1. EASEMENT RIGHTS: In consideration of the mutual covenants and
undertakings provided herein; LRPRA does hereby approve, authorize and consent
to the use by Grantee of the blanket utility easements created by Article iv,
Section 2S of the Declaration of Covenants, Conditions and Restrictions, dated
March 29, 1972 and recorded among the land records of Prince William County,
Virginia in Deed Book 625 at page 443, upon, across, over and under the Property
for ingress, egress, installation, replacement, repair and maintenance of
utility and service lines and systems, including television, cable and
communication lines and systems, in connection with the installation, operation
and maintenance of the cable television system contemplated under the terms of
this Agreement (hereinafter referred to as the "cable television system"). LRPRA
covenants and agrees that during the term of this Agreement, it shall not
approve, authorize or consent to the use of these said blanket utility easements
by any other person, firm or corporation for the purpose of installing,
operating or maintaining a similar or competing cable television system, without
the prior written approval of Grantee, in its sole and absolute discretion.
2. EXCLUSIVE RIGHTS:
A. In consideration of the mutual covenants and undertakings provided
herein, LRPRA does hereby grant to Grantee for the term of this Agreement,
the exclusive right, authority and franchise to erect, install, construct,
reconstruct, equip, own, test, replace, repair, use, maintain, operate and
dismantle
-3-
<PAGE> 11
cable television and communication lines and systems within the confines of the
Property, subject to the terms and conditions set forth in this Agreement.
LRPRA covenants and agrees that during the term of this Agreement, it shall not
grant to any other person, firm or corporation the exclusive or non-exclusive
franchise or right to install, operate or maintain a similar or competing cable
television system within the confines of the Property, without the prior
written approval of Grantee, in its sole and absolute discretion.
B. No provision of this Agreement shall alter or affect Grantee's
ownership, during the term of this Agreement or upon any termination hereof, of
all cables, equipment, facilities, fixtures and improvements installed,
constructed or maintained by Grantee in connection with its cable television
system.
C. This Agreement shall constitute approval by the Board of Directors
of LRPRA of the installation within the easements, as described in Paragraph 1,
supra, of cable television and communication lines and systems at Lake Ridge.
3. TERM: The term of this Agreement shall be for an initial period of
fifteen (15) years from the date of final execution of this document by the
parties, subject to the provisions of this Agreement relating to renewal, set
forth in Paragraph 4, infra, and rights of termination, set forth in Paragraph
18, infra.
-4-
<PAGE> 12
4. RENEWAL:
A. The term of this Agreement and all of the rights, duties and
obligations of the parties hereunder may be renewed and extended by LRPRA and
Grantee for an additional term of fifteen (15) years. Such renewal of the term
of this Agreement must be approved in advance by the Board of Directors of
LRPRA, but such approval may not be unreasonably withheld by the Board.
B. Prior to the approval or disapproval of any proposed renewal or
extension of the term of this Agreement, LRPRA shall establish a specific time
and place for a Special Meeting of its Board of Directors to review the
performance of Grantee during the prior term, to consider any proposed
amendments, alterations, modifications or changes that may be requested by
LRPRA or Grantee to the provisions of this Agreement, and to determine the
feasibility of the proposed renewal or extension of the term of this Agreement.
LRPRA shall provide Grantee with at least thirty (30) days' written notice of
the proposed time, place and reasons for any such meeting and shall provide
Grantee with an adequate opportunity to present evidence, opinions and
arguments on the issues to be decided.
C. If Grantee has been in reasonable compliance with the terms and
conditions of this Agreement, the Board shall approve a renewal and extension
of the term of this Agreement for a period of fifteen (15) years, subject to
such additional terms and conditions as the parties may deem advisable.
-5-
<PAGE> 13
D. If Grantee has not been in reasonable compliance with the terms and
conditions of this Agreement, the Board may disapprove any proposed renewal or
extension of the term of this Agreement.
5. FEE:
A. In consideration of the grant by LRPRA to Grantee of the Exclusive
franchise and right to install, operate and maintain the cable television
system within the confines of the Property during the term of this Agreement,
the administrative services to be rendered by LRPRA to Grantee in connection
with the installation, operation and maintenance of this system, and the
further mutual covenants and undertakings provided herein, Grantee shall pay to
LRPRA a fee as follows:
(1) The term "Basic Subscriber Revenues" is defined as all payments
made to Grantee by direct home subscribers for Basic Service (as defined
herein), specifically excluding any revenues received from subscribers for
optional services and any revenues received from sources other than direct home
subscribers. "Basic Service" is defined as the minimum charge paid by direct
home subscribers to Grantee for the minimum level of cable television service.
(2) The fee shall commence upon the date Grantee first provides
cable television service to a subscriber in Lake Ridge. The fee for each
quarter shall be due on the 15th day of the month after the expiration of each
calendar quarter.
-6-
<PAGE> 14
(3) Until such time as sixty percent (60%) of all housing units
passed by Grantee's cable system have subscribed to the Basic Service, Grantee
shall pay to LRPRA an amount equal to three percent (3%) of all Basic
Subscriber Revenues received by Grantee.
(4) At such time as sixty percent (60%) of all housing units passed
by Grantee's cable system have subscribed to the Basic Service, the total
amount due LRPRA shall equal (1) three percent (3%) of the Basic Subscriber
Revenues received by Grantee from sixty percent (60%) of the housing units
passed and (2) four percent (4%) of the Basic Subscriber Revenues received by
Grantee from the percentage of housing units passed in excess of sixty percent
(60%).
(5) At such time as seventy-five percent (75%) of all housing units
passed by Grantee's cable system have subscribed to the Basic Service, the
total amount due LRPRA shall equal (1) three percent (3%) of the Basic
Subscriber Revenues received by Grantee form sixty percent (60%) of the housing
units passed, (2) four percent (4%) of the Basic Subscriber Revenues received
by Grantee from the percentage of housing units passed in excess of sixty
percent (60%) but less than seventy-five percent (75%), and (3) five percent
(5%) of the Basic Subscriber Revenues received by Grantee from the percentage
of housing units passed in excess of seventy-five percent (75%).
B. If Grantee provides Basic Service to housing units in any
subdivision located adjacent to Lake Ridge, Grantee shall also pay to LRPRA a
percentage fee of the Basic Subscriber
-7-
<PAGE> 15
Revenues received by Grantee from such housing units, with such fee to be
computed under the formula contained in subparagraph A of this Paragraph 5;
provided, however, that no such fee shall be due LRPRA unless all of the
following conditions are satisfied:
(1) Such housing units are served from and by the same "head-end"
serving Lake Ridge;
(2) Grantee is not obligated to pay to any other granting
authority, association, corporation or other entity of any type, whether
governmental or otherwise, in order to provide cable television to such housing
units, any fees for any reason which would represent a percentage of any form
of the income of Grantee; and
(3) LRPRA has used and continues to use its best efforts to assist
Grantee in obtaining any rights or permissions necessary to provide cable
television to such housing units.
C. All fees due hereunder shall be paid by Grantee to LRPRA within
fifteen (15) days after the expiration of each of the fiscal quarters of
Grantee's fiscal year. In the event that any fee payment is not made by Grantee
within the time prescribed herein, all such unpaid principal amounts shall bear
interest from the said due date in accordance with the applicable judgment rate
of interest in effect in Virginia at that time, now fixed by Section 6.1-330.10
of the code of Virginia at ten percent (10%) per annum.
-8-
<PAGE> 16
D. In the event that Grantee continues to receive any additional
revenues from the operation of the cable television system after the expiration
of the term of this Agreement, Grantee shall remain obligated under the
provisions of this Paragraph to pay LRPRA the applicable fees on all such
revenues so received up until the final termination of the operation by Grantee
of this system.
6. CABLE TELEVISION SYSTEM PROPOSAL:
A. Grantee covenants and agrees to install, operate and maintain a
cable television system on the Property during the term of this Agreement for
the use, benefit and enjoyment of LRPRA and its members. This cable television
system shall be installed, operated and maintained by Grantee in accordance
with the terms and conditions of this Agreement and in substantial compliance
with a certain written Proposal prepared by Telesystems Development, Inc.,
submitted to LRPRA by transmittal letter dated October 28, 1981 from Walton W.
Sanderson. A copy of this Proposal is attached hereto as Exhibit B and
expressly incorporated by reference as a part of this Agreement. In the case of
any conflict, discrepancy or difference between the provisions of this Proposal
and the other provisions of this Agreement, the other provisions of this
Agreement shall control.
B. Grantee covenants and agrees to provide, at its own sole cost and
expense, all labor, materials, improvements, structures, cables, wires,
conduits, conductors, poles, manholes, equipment, appliances, fixtures and
facilities
-9-
<PAGE> 17
that are or may be necessary and proper for the installation, operation and
maintenance of this cable television system during the entire term of this
Agreement.
C. Grantee covenants and agrees to commence installation of the cable
television system within twelve (12) months of the final execution of this
Agreement by the parties and to use its best efforts to complete installation
of the system to all potential customers residing on the Property within five
(5) years thereafter.
7. INSTALLATION:
A. In accordance with the provisions of Paragraph 6B, supra, plans for
the design, location and placement of all materials, improvements, structures,
cables, wires, conduits, conductors, poles, manholes, equipment, appliances,
fixtures and facilities that are or may be necessary and proper for the
installation, operation and maintenance of the cable television system must be
provided to LRPRA prior to any such construction work thereon by Grantee.
B. Grantee covenants and agrees to use its best efforts to install all
cables, wires, conduits, conductors and related equipment beneath the surface
of the ground on the Property.
C. To the extent that it is practical and economically feasible to do
so, Grantee further covenants and agrees to design, locate, place and install
all such materials, improvements, structures, cables, wires, conduits,
conductors,
-10-
<PAGE> 18
poles, manholes, equipment, appliances, fixtures and facilities in such a
manner as to cause minimum interference with the rights and reasonable
convenience of LRPRA and its members.
D. Grantee shall use ordinary care at all times in the installation,
operation and maintenance of the cable television system and shall use all
reasonable methods and devices for preventing accidents which may cause damage,
injury, nuisance or unreasonable inconvenience to LRPRA, its members or the
general public. Grantee shall use suitable warning signs, barriers, flags,
lights, flares and devices at such times, places and circumstances as are
reasonably required for the safety of LRPRA, its members and the general
public. All such materials, improvements, structures, cables, wires, conduits,
conductors, poles, manholes, equipment, appliances, fixtures and facilities
shall be maintained by Grantee at all times in a safe, suitable and substantial
condition and in good order and repair during the term of this Agreement.
8. SUBSCRIPTION FEES AND RATES: Grantee covenants and agrees that the
subscription fees and rates, including connection charges, disconnection charges
and monthly service charges, itemized and set forth in the written proposal
attached hereto as Exhibit B, shall not be increased in any amount whatsoever
for a period of two (2) years from the date of the final execution of this
Agreement by the parties.
9. RESTORATION AND CLEAN-UP: Upon the completion of any installation work,
maintenance work or other construction work performed by Grantee hereunder which
damages, disrupts,
-11-
<PAGE> 19
disturbs or destroys any portion of the Property or the improvements,
structures, streets, roads, driveways, plants, trees, lawn, shrubbery or other
chattels located thereon, Grantee shall use its best efforts to restore, repair,
reconstruct or replace any such affected portion to its pre-existing condition
before the work was performed by Grantee. Grantee shall also maintain and keep
the areas of the Property surrounding such installation work, maintenance work
and construction work free from the accumulation of construction debris, waste
materials, trash and rubbish and upon the completion of any such work, Grantee
shall remove all such construction debris, waste materials, trash and rubbish
that may be attributable to its work.
10. LOCAL OFFICE: Grantee covenants and agrees that within ninety (90)
days of the final execution of this Agreement by the parties and thereafter
during the entire term of this Agreement, it shall establish and maintain a
local, publicly accessible business office within Lake Ridge or within a two (2)
miles radius thereof to supervise the installation, operation and maintenance of
the cable television system and to accept customer inquiries and/or complaints.
Grantee further covenants and agrees to maintain a sufficient force of resident
employees and personnel within this local office to provide safe, adequate and
prompt service for all of its facilities within the cable television system.
-12-
<PAGE> 20
11. BOOKS AND RECORDS: Grantee shall maintain adequate records of its cable
operations at its principal office. Upon prior notice to Grantee, authorized
representatives of LRPRA shall have the right to inspect, during reasonable
business hours, any records, documents, maps, plans or other materials of
Grantee to determine the location of all existing and proposed installations and
to insure compliance with the terms of Paragraph 5, supra. The quarterly fee
payable to LRPRA shall be accompanied by a complete and accurate written
statement showing the Basic Subscriber Revenues of Grantee for the quarter upon
which the computation of the fee accompanying such statement is made.
12. ADMINISTRATIVE FILINGS: Grantee covenants and agrees to submit promptly
to LRPRA copies of any and all filings, petitions, applications, rulings,
certificates, documents or correspondence which it sends to or receives from the
Federal Communications Commission, the Securities and Exchange Commission, the
Commonwealth of Virginia, Prince William County or any other Federal, State,
county, city, municipal or administrative office, agency, commission or
organization, in connection with or affecting in any way whatsoever the
installation, operation or maintenance of the cable television system.
13. PERMITS AND FEES: Grantee covenants and agrees to file for and obtain,
at its own cost and expense, any and all permits, licenses, certificates,
notices and approvals from the appropriate governmental and non-governmental
authorities which
-13-
<PAGE> 21
are or may be necessary to carry out and complete the installation, operation
and maintenance of the cable television system during the term of this
Agreement. Grantee further covenants and agrees to pay any and all fees, levies,
taxes, charges, costs or expenses imposed by these governmental and
nongovernmental authorities in connection therewith.
14. COMPLIANCE WITH LAWS: Grantee covenants and agrees that the
installation, operation and maintenance of the cable television system shall
comply strictly with the provisions, terms, conditions and requirements of any
and all applicable Federal, State, county, city, municipal or other governmental
statutes, codes, acts, ordinances, rules, regulations and requirements. Grantee
covenants and agrees to protect, indemnify and hold LRPRA harmless from any an
all claims, loss, cost or expense suffered by LRPRA by reason of the
nonobservance or alleged violation of any applicable laws by Grantee.
15. INDEMNIFICATION: Grantee covenants and agrees to protect, indemnify and
hold LRPRA harmless form any and all claims, demands, suits, complaints and
legal proceedings of every kind for damages to property or injuries to,
including the death of, persons, which may be brought against LRPRA or any of
its officers, directors, employees or agents, in any way arising out of or
incident to the installation, operation or maintenance of the cable television
system by Grantee under this Agreement, irrespective of whether such claims are
based upon the relationship of master and servant, principal and agent,
third-party or otherwise, except where such claims are based upon the
-14-
<PAGE> 22
sole gross negligence or willful misconduct of LRPRA or its officers, directors,
employees or agents. Upon receipt of written notice from LRPRA, Grantee shall
defend all such claims on LRPRA's behalf and shall bear all costs and expenses,
including attorney's fees, incident thereto.
16. INSURANCE: Grantee covenants and agrees to purchase and maintain the
following insurance policies or coverage during the entire term of this
Agreement, containing, where applicable, waivers of subrogation in favor of
LRPRA, with a reputable insurance carrier authorized to transact business in
Virginia: (1) motor vehicle liability insurance, with a minimum coverage of
$500,000.00 per person, $1,000,000.00 per occurrence and $250,000.00 for
property damage; (2) comprehensive public liability insurance, with a minimum
coverage of $500,000.00 per person, $1,000,000.00 per occurrence and $250,000.00
for property damage; and (3) unemployment and workmen's compensation insurance
in accordance with all statutes, codes, acts, ordinances, regulations and
requirements applicable in the Commonwealth of Virginia. Certificates of the
above insurance coverage shall be filed with LRPRA before any of the
construction work contemplated hereunder shall begin. Grantee further covenants
and agrees to notify LRPRA immediately of any actual or anticipated cancellation
of or change in this insurance coverage and to submit new certificates of
insurance to LRPRA as soon as they are available. In the event that Grantee
fails, refuses or neglect to obtain all or any portion of the above insurance
coverage or fails to notify LRPRA immediately of any cancellation of or
-15-
<PAGE> 23
change in this coverage, LRPRA may cancel the remaining term of this Agreement
under the provisions of Paragraph 18, infra, or, at its own option, LRPRA may
obtain such insurance coverage on Grantee's behalf and charge any and all
premiums, costs or expenses associated therewith directly to Grantee.
17. REPRESENTATIONS AND WARRANTIES BY LRPRA: It is expressly understood and
agreed by Grantee that neither LRPRA, nor any of its officers, directors,
employees, agents or members, shall be bound by any representations, warranties,
assurances, inducements or statements to Grantee other than those set forth in
this Agreement. It is further expressly understood and agreed by Grantee that
neither LRPRA, nor any of its officers, directors, employees, agents or members,
has made or given any such representations, warranties, assurances, inducements
or statements to Grantee with respect to the interpretation, meaning, effect or
enforceability of the provisions of the Declaration of Covenants, Conditions and
Restrictions, dated March 29, 1972 and recorded among the land records of Prince
William County, Virginia in Deed Book 625 at page 443, or with respect to the
condition of the Property or its suitability for the installation, operation or
maintenance of the cable television system.
18. RIGHT OF TERMINATION: In the event of any material breach by Grantee of
the terms and provisions of this Agreement, LRPRA shall have the right to
terminate this Agreement as its sole and exclusive remedy hereunder.
-16-
<PAGE> 24
19. TRANSFER OF OWNERSHIP: During the first seven (7) years of the term of
this Agreement, Grantee will not sell or transfer its rights in the cable
television system (other than to mortgage the whole of its system of any part
thereof) without the prior approval of the Board of Directors of LRPRA of such
transfer; provided, however, that such approval shall not be unreasonably
withheld. LRPRA acknowledges and consents to Grantee's assignment of all rights
and obligations hereunder to an entity to be formed by Grantee or any subsidiary
thereof, specifically for the purpose of installing and operating a cable
television system in Lake Ridge. If any time after seven (7) years from the date
of this Agreement, Grantee desires to sell its cable television system, Grantee
shall notify the Board of Directors of LRPRA of its desire to sell the cable
system, and LRPRA shall have the non-exclusive right, for a period of sixty (60)
days following notice to LRPRA, to submit a bid to Grantee to purchase the cable
television system. If Grantee does not accept the bid offered by LRPRA, Grantee
shall nevertheless consider any suggestions of the Board of Directors of LRPRA
communicated in writing by the Board to Grantee concerning negotiations with
other potential purchasers of the cable system, but such suggestions shall not
be binding upon grantee.
20. PROTECTION OF PRIVACY: Grantee shall use its best efforts, at all times
during the term of this Agreement, to protect, respect and observe the right of
privacy of its customers. This Paragraph is not intended to prohibit the
-17-
<PAGE> 25
transmission or reception of any signal used solely for the control, measurement
or testing of the technical performance of the cable television system.
21. INDEPENDENT CONTRACTOR: It is expressly understood and agreed by the
parties that nothing contained in this Agreement shall be construed as creating
a relationship of employer and employee between LRPRA and Grantee. Grantee
covenants and agrees that in the performance of its duties and obligations under
this Agreement, Grantee does and shall act as an independent contractor, free
from any domination or control by LRPRA in the manner in which the work
contemplated hereunder shall be done.
22. WAIVER: It is expressly understood and agreed by the parties that the
waiver by LRPRA of any breach by Grantee of any of the provisions contained in
this Agreement shall not operate and shall not be construed as a waiver by LRPRA
of any subsequent breach thereof by Grantee.
23. NOTICE: Whenever written notice is required to be given under any
provision of this Agreement, it shall be mailed by certified mail, return
receipt requested, and shall be sent to:
A. LRPRA: Lake Ridge Parks and
Recreation Association, Inc.
P.O. Drawer C
Occoquan, Virginia 22125
Attn: Kenneth O. Thompson,
President
B. Grantee: Weaver Bros. Management Corp.
5530 Wisconsin Avenue
Chevy Chase, Maryland 20815
Attn: Donald G. West
Walton W. Sanderson
-18-
<PAGE> 26
24. SEVERABILITY: If any term, provision, section, sentence, clause, phrase
or portion of this Agreement should be declared invalid, unenforceable, illegal
or unconstitutional by any court of competent jurisdiction or administrative
agency, such term shall be deemed a severable, separate, distinct and
independent provision and shall not affect the validity of the remaining
portions of this Agreement in any way, except as provided herein.
25. APPLICABLE LAW: This Agreement is being executed and delivered within
the confines of the Commonwealth of Virginia and shall be interpreted, construed
and enforced in accordance with the laws of the Commonwealth of Virginia.
26. AMENDMENT: This Agreement, including the Exhibits attached hereto,
contains the entire agreement between the parties and may not be amended,
altered, modified or otherwise changed, other than changes in the Proposal which
do not substantially affect the standards of operation of the cable television
system, unless such amendment, alteration, modification or change is specified
in writing, approved by the Board of Directors of LRPRA, and signed by the
authorized representatives of both LRPRA and Grantee.
27. RELATIONSHIP BETWEEN PARTIES: The parties hereto are not and shall not
be considered as joint venturers, partners or agents of each other, and no party
shall have the power to bind or obligate the other.
-19-
<PAGE> 27
28. CAPTIONS: The captions of this Agreement are for the convenience of the
parties and shall not be considered a material part hereof.
IN WITNESS WHEREOF, we have executed this Agreement and set our hands and
seals thereto on the date and year first written above:
<TABLE>
<S> <C>
ATTEST: LAKE RIDGE PARKS AND RECREATION
ASSOCIATION, INC.
By: /s/ EDNA M. WAY By: /s/ KENNETH O. THOMPSON,
-------------------------------- ------------------------------
Corporate Secretary Kenneth O. Thompson,
President
</TABLE>
CORPORATE SEAL
<TABLE>
<S> <C>
ATTEST: WEAVER BROS. MANAGEMENT CORP.
GRANTEE
By: /s/ DONALD WARD By: /s/ WALTON W. SANDERSON
-------------------------------- ------------------------------
Corporate Secretary Walton W. Sanderson,
Senior Vice President
</TABLE>
CORPORATE SEAL
-20-
<PAGE> 28
STATE OF VIRGINIA
COUNTY OF ARLINGTON, to-wit:
I, undersigned, a Notary Public in and for the State and County aforesaid,
do hereby certify that KENNETH O. THOMPSON, who holds the office of President of
LAKE RIDGE PARKS AND RECREATION ASSOCIATION, INC., and who is authorized to
execute the foregoing document on behalf of the corporation, has personally
appeared before me in my County aforesaid and acknowledged the same before me
this 12th day of January, 1982.
My Commission Expires: August 6, 1984
/s/ ANNE M. BOSCHINI
-------------------------------
Notary Public
STATE OF VIRGINIA
COUNTY OF ARLINGTON, to-wit:
I, undersigned, a Notary Public in and for the State and County aforesaid,
do hereby certify that WALTON W. SANDERSON, who holds the office of Senior Vice
President of WEAVER BROS MANAGEMENT CORP., and who is authorized to execute the
foregoing document on behalf of the corporation, has personally appeared before
me in my County aforesaid and acknowledged the same before me this 12th day of
January, 1982.
My Commission Expires: August 6, 1984
/s/ ANNE M. BOSCHINI
-------------------------------
Notary Public
-21-
<PAGE> 29
[LAKE RIDGE LETTERHEAD]
March 16, 1989
Mr. Troy Fitzhugh
Columbia Cable
4391 Dale Boulevard
Woodbridge, Va. 22193
Dear Mr. Fitzhugh
As requested, I am enclosing a copy of the document by which Columbia Associates
effected its execution of the Lake Ridge Cable/LRPRA, Inc. agreement as amended
by the LRPRA, Inc. resolution. If you have any questions or need additional
information, please call.
Thank you for your time and attention in this matter.
Very truly yours,
/s/ MARTHA KACZMARSKYJ
Martha Kaczmarskyj
Assistant Manager
Enclosure
<PAGE> 30
MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT ("Memorandum") is made this 22nd day of March,
1982, between LAKE RIDGE PARKS AND RECREATION ASSOCIATION, INC., a non-profit
Virginia corporation (hereinafter referred to as "LRPRA"), and WEAVER BROS.
MANAGEMENT CORP., a Maryland corporation (hereinafter referred to as "Grantee").
RECITALS:
1. LRPRA is a non-profit Virginia corporation created under the terms of a
certain Declaration of Covenants, Conditions and Restrictions, dated March 29,
1972, and recorded among the land records of Prince William County, Virginia, in
Deed Book 625 at page 443 (hereinafter referred to as the "Declaration").
2. Under the terms of the Declaration, LRPRA was granted certain ownership
interests in a certain parcel of real property made subject to the Declaration
therein, located in Occoquan Magisterial District, Prince William County,
Virginia, and containing approximately 2161.70398 acres of land, as described
with more particularity in Exhibit A hereto (hereinafter referred to as the
"Property").
3. Article IV, Section 2.S. of the Declaration created certain blanket
utility easements upon, across, over and under the Property for ingress, egress,
installation, replacement, repair and maintenance of utility and service lines
and systems, including, but not limited to, television, cable and communication
lines and systems, subject to the approval, authorization and consent of the
Board of Directors of LRPRA.
4. Grantee has obtained the approval, authorization and consent of LRPRA to
install, maintain and operate a cable television system on the Property and to
use the above-described blanket utility easements upon, across, over and under
the Property for ingress, egress, installation, replacement, repair and
maintenance of utility and services lines and systems in connection therewith,
pursuant to the terms, conditions, and restrictions contained in the Agreement
executed
<PAGE> 31
by and LRPRA and Grantee on January 15, 1982 (the "Agreement").
Now therefore, the parties do execute this Memorandum to set forth certain
of the terms of the Agreement as follows:
1. A. In consideration of the mutual covenants and undertakings provided in
the Agreement, LRPRA approved, authorized and consented to the use by Grantee of
the blanket utility easements created by Article IV, Section 2.S. of the
Declaration of Covenants, Conditions and Restrictions, dated March 29, 1972, and
recorded among the land records of Prince William County, Virginia, in Deed Book
625, at page 443, upon, across, over and under the Property for ingress, egress,
installation, replacement, repair and maintenance of utility and service lines
and systems, in connection with the installation, operation and maintenance of
the cable television system contemplated under the terms of the Agreement
(hereinafter referred to as the "cable television system"). LRPRA further
covenanted and agreed that during the term of the Agreement, it shall not
approve, authorize or consent to the use of these said blanket utility easements
by any other person, firm or corporation for the purpose of installing,
operating or maintaining a similar or competing cable television system, without
the prior written approval of Grantee, in its sole and absolute discretion.
B. In consideration of the mutual covenants and under takings provided
in the Agreement, LRPRA granted to Grantee for the term of the Agreement, the
exclusive right and authority to erect, install, construct, reconstruct, equip,
own, test, replace, repair, use, maintain, operate and dismantle cable
television and communication lines and systems within the confines of the
Property, subject to the terms and conditions set forth in the Agreement. LRPRA
further covenanted and agreed that during the term of the Agreement, it shall
not grant to any other person, firm or corporation the exclusive or
non-exclusive right to install, operate or maintain a
2
<PAGE> 32
similar or competing cable television system within the confines of the
Property, without the prior written approval of Grantee, in its sole and
absolute discretion.
C. No provision of the Agreement shall alter or affect Grantee's
ownership, during the term of the Agreement or upon any termination thereof, of
all cables, equipment, facilities, fixtures and improvements installed,
constructed or maintained by Grantee in connection with its cable television
system.
D. The Agreement constituted approval by the Board of Directors of
LRPRA of the installation within the easements, as described in Paragraph 1,
supra, of cable television and communication lines and systems at Lake Ridge.
E. The term of the Agreement is an initial period of fifteen (15) years
from the date of execution thereof. The Agreement may be renewed for an
additional fifteen (15) year term upon the terms and conditions contained
herein.
2. The agreements between LRPRA and Grantee are more fully set forth and
defined in the Agreement. In the event of any inconsistency between the terms of
the Agreement and this Memorandum, the terms of the Agreement shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Agreement as of the day and year first above written.
LAKE RIDGE PARKS AND
RECREATION ASSOCIATION, INC.
By: /s/ KENNETH O. THOMPSON
--------------------------------
ATTEST:
/s/ MARGUERITA J. SMITH
- ----------------------------
WEAVER BROS. MANAGEMENT, INC.
By: /s/ WALTON W. SANDERSON
--------------------------------
ATTEST:
/s/ DIANNA M. BELGARD
- ----------------------------
Assistant Secretary
3
<PAGE> 33
STATE OF MARYLAND
COUNTY OF MONTGOMERY to-wit:
I, the undersigned, a Notary Public in and for the State and County
aforesaid, do hereby certify that KENNETH O. THOMPSON and MARGUIRITA J. SMITH,
who are President and Director, respectively of LAKE RIDGE PARKS AND RECREATION
ASSOCIATION, INC., and whose names are signed to the foregoing Memorandum of
Agreement bearing date on the 22nd day of March, 1982, have acknowledged the
same before me in my State and County aforesaid.
GIVEN under my hand and seal this 23rd day of April, 1982.
/s/ ROXANNE McMICHAEL
-----------------------------
Notary Public
My commission expires:
July 1, 1982
STATE OF MARYLAND
COUNTY OF MONTGOMERY, to-wit:
I, the undersigned, a Notary Public in and for the State and County
aforesaid, do hereby certify that WALTON W. SANDERSON and DIANNA M. BOLYARD, who
are Senior Vice President and Assistant Secretary, respectively of WEAVER BROS.
MANAGEMENT, INC., and whose names are signed to the foregoing Memorandum of
Agreement bearing date on the 22nd day of March, 1982, have acknowledged the
same before me in my State and County aforesaid.
GIVEN under my hand and seal this 14th day of April, 1982.
/s/ ROXANNE McMICHAEL
-----------------------------
Notary Public
My commission expires:
July 1, 1982
4
<PAGE> 34
LAKE RIDGE PARKS AND
RECREATION ASSOCIATION, INC.
CERTIFIED RESOLUTION
The undersigned certifies that she is the Secretary of Lake Ridge Parks and
Recreation Association, Inc., a corporation duly organized and existing under
the laws of the State of Virginia, and that as such she is authorized to execute
this Certificate, and further certifies that the following Resolution was duly
adopted by unanimous vote at a special meeting of the Board of Directors of Lake
Ridge Parks and Recreation Association, Inc., held on April 23, 1985, in
accordance with the Articles of Incorporation and Bylaws with all amendments
thereto, of Lake Ridge Parks and Recreation Association, Inc. (LRPRA); and that
such Resolution remains in full force and effect:
WHEREAS, Lake Ridge Cablevision Limited Partnership has notified LRPRA of
its intention to sell and transfer its interest in the Lake Ridge cable
television system (System) to Columbia Associates, L.P.
WHEREAS, under the agreement dated January 15, 1982, between LRPRA and
Weaver Bros. Management Corporation (Agreement), the sale or transfer of
rights in the System is subject to the prior approval of the Board of
Directors of LRPRA of the transfer, provided that such approval shall not
be unreasonably withheld,
NOW, THEREFORE, BE IT RESOLVED that the Board of Directors of Lake Ridge
Parks and Recreation Association, Inc., approve the sale of Lake Ridge
Cablevision Limited Partnership to Columbia Associates, L.P. of all right,
title, and interest in the System, including all rights under the Agreement
between LRPRA and Weaver Bros. Management Corporation, and that the
President of LRPRA is hereby authorized and directed to execute and deliver
on behalf of LRPRA any and all such further documentation as may be
necessary to carry out the terms of this resolution; provided, that this
resolution of approval is subject to the following terms and conditions:
<PAGE> 35
1. Columbia Associates, L.P. will furnish to LRPRA and to all
subscribers to the System not less than ninety (90) days advance
notice of any increase in rates for cable service to Lake Ridge,
during its ownership of the System.
2. Columbia Associates, L.P. will not during the term of the Agreement
sell or transfer its rights in the System without the prior approval
of the Board of Directors of LRPRA of such transfer, which approval
shall not be unreasonably withheld. Paragraph 19 of the Agreement
shall be amended accordingly.
3. Columbia Associates, L.P. will furnish to LRPRA copies of any
financial statement or other books and records provided to Prince
William County under the Prince William County Cable Television
Ordinance, at the time such materials are furnished to the County;
and will further continue all disclosure of all books and records
provided for under the Agreement. Paragraph 11 of the Agreement shall
be amended accordingly.
4. Columbia Associates, L.P. will comply with the requirements of the
Prince William County Cable Television Ordinance requiring repairs to
be made within twenty-four (24) hours of receipt of notification of
the need therefor. Paragraph 10 of the Agreement shall be amended
accordingly.
5. Right of termination under Paragraph 18 of the Agreement shall remain
in effect during the term of the Agreement.
6. Restoration and clean-up provisions of Paragraph 9 of the Agreement
shall remain in effect during the term of the Agreement.
<PAGE> 36
7. Except as provided herein, all terms and conditions of the Agreement
shall remain in full force and effect as between LRPRA and Columbia
Associates, L.P.
8. Columbia Associates, L.P. will execute as a principal, and assume all
rights, duties, and obligations under, the Agreement, and will
relieve Weaver Bros. Management Corporation and Lake Ridge
Cablevision Limited Partnership thereof; and Columbia Associates,
L.P. and LRPRA will execute an addendum to the Agreement reflecting
the terms and conditions set forth in this Resolution.
WITNESS the seal of Lake Ridge Parks and Recreation Association, Inc., and
the signature of the undersigned this 23rd day of April, 1985.
/s/ KENNETH O. THOMPSON /s/ MARGUERITA J. SMITH
- ------------------------------- ------------------------------
Kenneth O. Thompson, President Marguerita J. Smith, Secretary
<PAGE> 37
ASSIGNMENT AND ASSUMPTION OF
LEASE, EASEMENT, AND OTHER RIGHTS
This Assignment and Assumption of Lease, Easement, and Other Rights
("Assignment") is made the 30th day of April, 1985, by and among LAKE RIDGE
CABLEVISION LIMITED PARTNERSHIP, a Virginia limited partnership having offices
in Woodbridge, Virginia ("Seller"), WEAVER BROS. MANAGEMENT CORP., a Maryland
corporation ("Weaver"), and COLUMBIA ASSOCIATES, L.P., a Delaware limited
partnership having an address c/o Columbia International, Inc., 60 Round Hill
Road, Greenwich, Connecticut ("Buyer").
Seller, Buyer, and Weaver entered into an "Agreement to Purchase" dated
April 4, 1985, the provisions and defined terms of which are hereby incorporated
herein by reference. Seller now desires to transfer certain assets of Seller to
Buyer in accord with the Agreement to Purchase. Although Weaver claims no
interest in and to the assets transferred by Seller to Buyer other than by
virtue of Weaver's interest as a general partner in Seller, Weaver has agreed to
join in the execution of this Assignment and Assumption Agreement for the
purpose of acknowledging to Buyer that it claims no right, title, or interest in
and to these assets and to convey to Buyer any right, title, and interest to the
assets transferred hereby which Weaver may have.
In consideration of good and valuable consideration paid pursuant to the
Agreement to Purchase, the receipt and adequacy of which is hereby acknowledged,
and subject to and
<PAGE> 38
in further consideration of the terms and conditions of the Agreement to
Purchase, each of Seller and Weaver hereby sells, transfers, conveys, assigns,
and delivers to Buyer all of its right, title, and interest in and to all
easement, lease, or other rights (hereinafter collectively referred to as the
"Contracts") used in the operation of the System transferred pursuant to the
Agreement to Purchase. Each of Seller and Weaver warrants that this transfer is
effective to vest good and marketable title to the Contracts in Buyer and that
the same are free and clear of all claims, liens, liabilities, and encumbrances
whatsoever. These easements, leases, and other rights include, but are not
limited to, those set forth on Exhibit A to this Assignment, a copy of which is
attached hereto and hereby incorporated herein.
Except as otherwise provided in the Agreement to Purchase, Buyer, as
evidenced by its execution and acceptance of this Assignment, agrees to assume
and perform all of the obligations of Seller under or associated with each of
the agreements, leases, easements, or other rights assigned to Buyer by Seller
hereunder arising, accruing, or attributable to periods from and after, but not
prior to, the date of this Assignment.
The Board of Directors of Lake Ridge Parks and Recreation Association, Inc.
("LRPRA"), by resolution dated April 23, 1985, unanimously consented to the
Assignment by seller to Buyer of Seller's right, title, and interest under the
agreement referred to on Exhibit A as the LRPRA Agreement. A certified copy of
this resolution is attached hereto and incorporated
2
<PAGE> 39
herein as Exhibit B. Except as otherwise provided in the Agreement to Purchase,
Buyer, as evidenced by its acceptance of this Assignment, hereby accepts and
consents to the terms and conditions set forth in the resolution; executes and
adopts the LRPRA Agreement as principals thereto; and agrees to assume all
rights, duties, and obligations of Seller and Weaver Bros. Management Corp.
under the LRPRA Agreement arising, accruing, or attributable to periods from and
after, but not prior to, the date of this Assignment.
IN WITNESS WHEREOF, Buyer, Seller, and Weaver have executed this Assignment
on the date first set forth above.
SELLER:
LAKE RIDGE CABLEVISION
LIMITED PARTNERSHIP
By: Weaver Bros. Management Corp.,
its general partner
By: /s/ DONALD G. WEST
------------------------------
Donald G. West
Executive Vice President
BUYER:
COLUMBIA ASSOCIATES, L.P., a
Delaware limited partnership
By: Columbia International, Inc.,
its general partner
By: /s/ ROBERT M. ROSENCRANS
------------------------------
Robert M. Rosencrans
President
WEAVER:
WEAVER BROS. MANAGEMENT CORP.,
a Maryland corporation
By: /s/ DONALD G. WEST
------------------------------
Donald G. West,
Executive Vice President
3
<PAGE> 40
STATE OF VIRGINIA
COUNTY OF FAIRFAX, to-wit:
I, the undersigned Notary Public, in the state and county aforesaid, whose
commission expires on the 4th day of October, 1988, do hereby certify that
DONALD G. WEST, Executive Vice President of Weaver Bros. Management Corp., the
general partner of LAKE RIDGE CABLEVISION LIMITED PARTNERSHIP, whose name is
signed to the foregoing Assignment appeared before me and personally
acknowledged the same in my jurisdiction aforesaid.
GIVEN under my hand and seal this 30th day of April, 1985.
/s/ JEAN M. LYON
---------------------
Notary Public
STATE OF VIRGINIA
COUNTY OF FAIRFAX, to-wit:
I, the undersigned Notary Public, in the state and county aforesaid, whose
commission expires on the 4th day of October, 1988, do hereby certify that
Robert M. Rosencrans, President of Columbia International, Inc., the general
partner of COLUMBIA ASSOCIATES, L.P., whose name is signed to the foregoing
Assignment appeared before me and personally acknowledged the same in my
jurisdiction aforesaid.
GIVEN under my hand and seal this 30th day of April, 1985.
/s/ JEAN M. LYON
---------------------
Notary Public
STATE OF VIRGINIA
COUNTY OF FAIRFAX, to-wit:
I, the undersigned Notary Public, in the state and county aforesaid, whose
commission expires on the 4th day of October, 1988, do hereby certify that
DONALD G. WEST, Executive Vice President of WEAVER BROS. MANAGEMENT CORP., whose
name is signed to the foregoing Assignment appeared before me and personally
acknowledged the same in my jurisdiction aforesaid.
GIVEN under my hand and seal this 30th day of April, 1985.
/s/ JEAN M. LYON
---------------------
Notary Public
4
<PAGE> 41
EXHIBIT A
(a) The Agreement dated January 15, 1982, by and between Lake Ridge Parks
and Recreation Association, Inc. ("LRPRA"), and Weaver Bros. Management Corp.
(the "LRPRA Agreement") evidenced by a Memorandum of Agreement dated March 22,
1982, and recorded among the land records of Prince William County, Virginia, on
May 4, 1982, in Deed Book 1177, at page 1248. The Assignment Agreement dated
August 5, 1982, by which Weaver Bros. Management Corp. assigned its rights under
the foregoing Agreement to Lake Ridge Cablevision Limited Partnership. The
Assignment Agreement was recorded on October 2, 1982, among the land records of
Prince William County, Virginia, in Deed Book 1190, at page 1758.
(b) The Agreement dated October 24, 1983, by and between Paul C. Kincheloe,
Jr., Trustee, and Aman Kincheloe Partnership, a Virginia general partnership,
and Lake Ridge Cablevision Limited Partnership.
(c) The Easement Agreement dated August 25, 1982, by and between Thousand
Oaks Townhouse Association, a Virginia corporation, and Lake Ridge Cablevision
Limited Partnership, and recorded among the land records of Prince William
County, Virginia, on October 1, 1982, in Deed Book 1190, at page 1811.
(d) The Lease Agreement dated August 10, 1982, by and between
Occoquan-Woodbridge/Dumfries-Triangle Sanitary District and Lake Ridge
Cablevision Limited Partnership and evidenced by a Memorandum of Lease dated
December 6, 1982, executed by both parties and recorded among the land records
of Prince William County, Virginia, on January 20, 1983, in Book 1200, at page
1845.
(e) The Lease Agreement dated August 6, 1982, by and between Ridge
Development Corp., a Virginia corporation, and Lake Ridge Cablevision Limited
Partnership, as amended by a First Amendment to Lease Agreement dated December
6, 1982, executed by both parties, and evidenced by a Memorandum of Lease dated
December 6, 1982, executed by both parties and recorded among the land records
of Prince William County, Virginia, on January 20, 1983, in Book 1200, at page
1849.
(f) The Easement dated June 24, 1982, by and between Pinewood Forest
Condominium Association and Lake Ridge Cablevision Limited Partnership.
(g) The Easement Agreement, dated October 24, 1983, by and between the
Eighth Section Community Association of Rollingwood Village, a Virginia
non-stock corporation, and Lake Ridge Cablevision Limited Partnership, a
Virginia limited partnership, and recorded among the land records of Prince
William County, Virginia, on December 5, 1983, in Deed Book 1243, at page 0674.
5
<PAGE> 42
(h) The Easement Agreement dated October 24, 1983, by and between the First
Section Community Association of Rollingwood Village, a Virginia non-stock
corporation, and Lake Ridge Cablevision Limited Partnership, a Virginia limited
partnership, and recorded among the land records of Prince William County,
Virginia, on December 5, 1983, in Deed Book 1243, at page 0661.
(i) The Easement Agreement dated September 15, 1984, by and between Section
Six Rollingwood Homeowners Association, a Virginia non-stock corporation, and
Lake Ridge Cablevision Limited Partnership, a Virginia limited partnership, and
recorded among the land records of Prince William County, Virginia, on February
1, 1985, in Deed Book 1301, at page 3621.
(j) The Easement dated October 21, 1982, by and between Rockledge Clusters
Condominium Association and Lake Ridge Cablevision Limited Partnership, and
recorded among the land records of Prince William County, Virginia, on April 26,
1985, in Deed Book 1312, at page 1653.
6
<PAGE> 1
EXHIBIT 10.6.61
ACCEPTANCE OF CABLE FRANCHISE
BY JONES COMMUNICATIONS OF VIRGINIA, INC.
Douglas N. Bourne, Cable TV Coordinator
Office of Executive Management
1 County Complex
Prince William, VA 22192
RE: Transfer of Cable Television License from Columbia Associates L.P. dba
Columbia Cable to Jones Communications of Virginia, Inc.
Dear Mr. Bourne:
Pursuant to the provision of 5.5-1 et seq. of the Prince William County Code's
Cable television ordinance, this letter is for the purpose of Jones
Communications of Virginia, Inc.'s formal acceptance of the license as required
by 5.5-6(a) of the Prince William County Code. The undersigned, as an officer of
Jones Communications of Virginia, Inc. ("JCV"), and authorized to act on its
behalf, has carefully read and clearly understands the terms and conditions of
5.5-1 et seq. of the Prince William County Code and of the license ordinance
adopted by the Board (ord.#85-424) and agrees that JCV will strictly comply with
both their terms. JCV hereby acknowledges and concedes the validity of the terms
and conditions of the cable television ordinance in their entirety.
Notwithstanding the terms of the license ordinance, JCV hereby acknowledges and
concedes that it is at all times subject to the lawful exercise of the County's
police power, and acknowledges the Board of County Supervisors' right to adopt
such other ordinances or amendments as it deems necessary to protect the public
health, safety and welfare. JCV fully understands that failure to comply with
any section of the cable television ordinance or of the license ordinance may be
grounds for revocation of the license.
Sincerely,
JONES COMMUNICATIONS OF VIRGINIA, INC.
SIGNED: /s/ Elizabeth Steele
----------------------------
Print name: Elizabeth Steele
----------------------------
Title: Vice President
----------------------------
Date: 12/12/95
----------------------------
<PAGE> 2
PRINCE WILLIAM COUNTY CODE
CONSUMER AFFAIRS AND CABLE TV
<PAGE> 3
Chapter 5.5
CABLE TELEVISION*
<TABLE>
<S> <C> <C>
Art. I. In General, sections 5.5-1--5.5-3
Art. II. Application for License, section 5.5-4
Art. III. Grant of License, sections 5.5-5--5.5-7
Art. IV. Consumer Protection and Subscriber Privacy, sections 5.5-8--5.5-15
Art. V. License Fee, section 5.5-16
Art. VI. Administration and Enforcement, sections 5.5-17--5.5-21
Art. VII. Renewal and Revocation of Licenses, sections 5.5-22--5.5-24
Art. VII. Creation of License Service Areas, section 5.5-25
Art. IX. Miscellaneous, sections 5.5-26--5.5-28
</TABLE>
ARTICLE I. IN GENERAL
Sec. 5.5-1. Short title; purpose; authority.
(a) This chapter shall be known and may be cited as the "Prince William
County Cable Television Ordinance."
(b) This chapter is intended to provide for the licensing and regulation of
one (1) or more cable television systems, and to impose a fee on the privilege
of operating such system or systems, in the unincorporated area of Prince
William county, Virginia.
(c) This chapter is enacted pursuant to sections 15.1-23.1 and 15.1-512.1,
Virginia Code Annotated. (No. 84-829, 10-23-84)
SEC. 5.5-2. DEFINITIONS.
As used in this chapter, the following words and phrases shall have the
meanings herein specified, except where the context is clearly to the contrary.
Consistent with context, words used in the plural contemplate and include the
singular, and words used in the singular contemplate and include the plural.
Context notwithstanding, the word "shall" is mandatory, never directory.
Basic subscriber service shall mean the distribution to subscribers of
signals over a cable television system on all channels except:
(1) Those for which a per-program or per-channel charge is made;
(2) Those intended for reception by equipment other than a television
broadcast receiver;
- ---------------
*Editor's note--Res. No. 84-829, enacted Oct. 23, 1984, amended the Code by
adding thereto a new Ch. 5.1 sec.sec. 5.1-1--5.1-28. In order to provide for the
future addition of chapters, Ch. 5.1 was redesignated by the editor as Ch. 5.5,
and the sections were also redesignated accordingly; otherwise, the chapter is
included herein substantially as enacted.
Cross references--Consumer protection, Ch. 6; emergency services, Ch. 7;
licenses generally, Ch. 11; taxation, Ch. 26; telephones, Ch. 28.
Supp. No. 16
267
<PAGE> 4
sec. 5.5-2 PRINCE WILLIAM COUNTY CODE
(3) Two-way services;
(4) Services, the delivery of which are regulated or pre-empted by the
Federal Communications Commission; and
(5) Emergency services.
Board shall mean the board of county supervisors of Prince William County,
Virginia.
Cable television system shall mean a community antenna television system as
defined by section 15.1-23.1, Virginia Code Annotated.
County shall mean Prince William County, Virginia.
County executive shall mean the chief executive officer of the county,
appointed by the board, or his designee so indicated in writing.
Fair market value shall mean the price that property will command when sold
by one who is under no need to sell, a willing seller, and bought by one who is
under no need to buy, a willing buyer.
Federal Communications Commission shall mean the federal agency established
under the Communications Act of 1934, as amended, or any successor agency.
Gross revenues shall mean any and all revenues derived from the operation
of a cable television system in the county, including but not limited to monthly
or periodic charges for service, installation fees and reconnect fees, revenues
derived from per-program or per-channel charges, studio and equipment rentals,
and subscriber and advertising revenues.
License shall mean the nonexclusive right granted hereunder to construct,
install, maintain, and operate a cable television system or systems in any
unincorporated area of the county. It does not include any other license or
permit for the privilege of conducting a business in the county, as may be
required by other county ordinances.
License ordinance shall mean an ordinance adopted pursuant to section 5.5-4
of this chapter, formally granting a license to construct, install, maintain, or
operate a cable television system in the county.
License service area shall mean the geographical area within the
unincorporated area of the county for which a nonexclusive right has been
granted hereunder to construct, install, maintain, and operate a cable
television system.
Licensee shall mean a person granted a license hereunder.
Person shall mean and include any individual, firm, partnership,
cooperative, nonprofit membership corporation, joint venture, association,
corporation, estate, trust, business trust, trustee in bankruptcy, receiver,
auctioneer, syndicate, assignee, club, society, or any other group or
combination acting as a unit.
Public way shall mean any highway, street, road, alley, way, easement,
right-of-way, place, or other right or interest in real property, belonging to
any public body, including the county, the commonwealth, or any subdivision,
agency, department, or authority of either.
268
<PAGE> 5
CABLE TELEVISION sec. 5.5-4
Subscriber shall mean any person who receives, or contracts with a licensee
to receive, basic subscriber service, or one (1) or more of such other services
as may be offered by the licensee's cable television system, or both. (No.
84-829, 10-23-84)
Sec. 5.5-3. Requirement of license; prohibition on expansion.
(a) No person shall construct, install, maintain, expand, enlarge, or
otherwise increase, or operate a cable television system through, on, over, or
under any public way in the unincorporated area of the county without first
having applied for, been granted, and accepted a license under the provisions
hereof; provided, however, that any person operating a cable television system
in the county on the effective date of this chapter may continue operating such
existing system as it is then constituted, without further extension of service
to any additional subscriber if such extension of service requires the crossing
or use of any public way.
(b) Notwithstanding the permission granted hereby to continue operation of
existing systems, board of supervisors Resolution No. 83-696, dated August 2,
1983, is expressly repealed upon the adoption of this chapter, and the
permission granted thereby for the use of the public ways of the county for the
purpose of providing cable television service is revoked, except as to those
portions of existing systems grandfathered under the provisions of subsection
(a) of this section. (No. 84-829, 10-23-84)
ARTICLE II. APPLICATION FOR LICENSE
Sec. 5.5-4. Application; fee; contents.
(a) The board shall, by resolution, establish procedures and forms
governing the invitation for, and submission, review, and evaluation of, written
applications for a license. Each person applying for a license shall pay, by
certified check to the order of "Prince William County," a nonrefundable fee in
the amount of five hundred dollars ($500.00) to defray expenses incurred by the
county in processing applications. In addition to such other information as the
board may deem necessary or appropriate to include in the aforesaid resolution,
all applications shall include, at a minimum, unless otherwise determined by the
board:
(1) A map delineating all areas to which cable service must be provided in
accordance with the service extensions required by section 5.5-14
hereof.
(2) A detailed statement of services proposed to be offered, including
public, civic, or community services.
(3) A schedule of initial rates, fees, and other charges to be established
by the applicant.
(4) Information sufficient to determine the character and business
responsibility of the applicant, its financial, technical and other
qualifications.
(5) Full and true disclosure of the actual ownership of the applicant,
including the identity of all principals and ultimate beneficial
owners, however designated, specifi-
269
<PAGE> 6
sec. 5.5-4 PRINCE WILLIAM COUNTY CODE
cally including all stockholders of corporations (nominal and
beneficial) owning more than one (1) percent of the issued and
outstanding stock, and all partners of any general or limited
partnership.
(b) Submitted applications shall be amended only with the consent of the
board.
(c) Applications shall be signed by the applicant, or by a duly authorized
representative of the applicant, evidence of whose authority shall be supplied
with the application. (No. 84-829, 10-23-84)
ARTICLE III. GRANT OF LICENSE
Sec. 5.5-5. Form; nonexclusive term.
(a) The board may, by individual ordinance adopted for the purpose, grant
one (1) or more nonexclusive licenses, subject to the terms, conditions, and
other provisions of this chapter. Such licenses shall be for a term of
fifteen(15) years beginning with the date a written instrument accepting the
license is filed with the county pursuant to this chapter.
(b) Nothing in this chapter shall be deemed, construed, or applied to
require the board to grant any license. Any decision or decisions of the board
concerning the granting, or the refusal to grant, one or more licenses shall be
final.
(c) The license ordinance shall constitute the license, and shall include
at a minimum a description of the area or areas to be served, the terms of any
agreements which may be made between the county and licensee beyond the
requirements of this chapter, and such other terms and conditions as shall be
lawful and appropriate. (No. 84-829, 10-23-84)
Sec. 5.5-6. Acceptance of license; police power, fee.
(a) A license granted pursuant to this chapter shall not become effective
unless and until accepted by written instrument filed with the county within
thirty (30) days after the license ordinance has been adopted. Such instrument
shall state that the licensee has carefully read and clearly understands the
terms and conditions of this chapter and of the license ordinance, and agrees to
strict compliance with both. By accepting a license, the licensee acknowledges
and concedes the validity of the terms and conditions of this chapter and of the
license ordinance in their entireties, at the time of adoption of the license
ordinance.
(b) By accepting a license granted pursuant to this chapter, the licensee
acknowledges and concedes that, notwithstanding the terms of the license, it is
at all times subject to the lawful exercise of the county's police power. The
board hereby expressly reserves the right to adopt, in addition to this chapter
and to the license ordinance, such other ordinances as it deems necessary to
protect the public health, safety, or welfare, provided that such other
ordinances are consistent with state and federal law and authorized by said
police power. The board may adopt amendments to this chapter, provided that such
amendments shall not deprive any licensee of rights which have vested during the
license period.
270
<PAGE> 7
CABLE TELEVISION sec. 5.5-10
(c) Upon accepting a license, the licensee shall pay to the county a fee in
an amount set by resolution of the board, not to exceed one thousand dollars
($1,000.00). Such fee shall be nonrefundable, and shall be paid by a certified
check to the order of "Prince William County." (No. 84-829, 10-23-84)
Sec. 5.5-7. Filing with county.
Unless otherwise expressly provided by resolution of the board, all
materials herein required to be filed with the county shall be filed at an with
the office of consumer affairs. (No. 84-829, 10-23-84)
ARTICLE IV. CONSUMER PROTECTION AND SUBSCRIBER PRIVACY
Sec. 5.5-8. Continuous, efficient service; pro rata refunds or credits.
(a) The licensee shall provide continuous, efficient service, on a
nondiscriminatory basis, in return for payment of its rates, fees, and other
charges for service. Interruptions of service shall be for good cause only and
for the shortest time possible. Planned interruptions of thirty (30) minutes or
more shall be preceded by a least twenty-four (24) hours' advance notice to all
subscribers and, to the extent feasible, shall occur during periods of minimum
use of the cable television system.
(b) In the event service to one-fourth ( 1/4) or more of the subscribers of
any licensee is interrupted for more than twenty-four (24) consecutive hours,
whether pre-planned or not, the licensee shall provide each such subscriber
subject to such interruption with a pro rata credit or refund for the entire
period of such interruption. (No. 84-829, 10-23-84)
Sec. 5.5-9. Maintenance; complaint answering service; repairs.
The licensee shall establish maintenance service capability enabling the
prompt location and correction of system malfunctions, and shall make repairs
promptly within twenty-four (24) hours of receipt of notification of the need
therefor. The licensee shall provide a twenty-four-hour complaint answering
service, and shall maintain adequate records of all complaints and requests for
repairs, and their resolution, which records shall be open for public
inspection. (No. 84-829, 10-23-84)
Sec. 5.5-10. Local office; complaints; notice of procedures.
(a) The licensee shall maintain an office within the license service area,
or in the Cities of Manassas or Manassas Park, which shall be open and
accessible to the public during normal business hours and which shall provide
twenty-four-hour recording of subscriber complaints, including, but not limited
to, billing errors, service disconnections, service loss, and equipment failure.
Complaints other than those related to system malfunction addressed by section
5.5-9 shall be answered not later than the next business day after the complaint
has been received, and corrective action shall be completed as soon as
practical. Adequate records shall be made of all subscriber complaints,
describing the nature of each complaint and showing
271
<PAGE> 8
sec. 5.5-10 PRINCE WILLIAM COUNTY CODE
when and what corrective action was completed. Such records shall be available
to the public or to representatives of the board, during normal business hours,
and shall be retained in the licensee's files for not less than three (3) years.
Annual summaries of complaints shall be filed with the office of consumer
affairs, not later than June thirtieth of each year.
(b) Unresolved complaints, if any, shall be reported to the office of
consumer affairs, in writing, within thirty (30) days after the end of each
calendar year quarter. The nature and number of any unresolved complaints shall
be taken into account by the board in considering whether to renew or to revoke
a license.
(c) Each licensee shall, at the time of entering into an agreement to
provide cable service of any kind, inform every subscriber of the provisions of
this article, and of the procedures which may be used to make complaints,
requests for repairs, and to contest alleged billing errors.
(d) Licensees serving more than one (1) license service area need provide a
local office in only one (1) such area, or in either of the two (2) cities
above. (No. 84-829, 10-23-84)
Sec. 5.5-11. Notice of rate changes.
Licenses shall give not less than thirty (30) nor more than ninety (90)
days' prior written notice to each subscriber of any prospective increase in any
rate, fee, or charge subject to local regulation. Increases made without such
prior notice shall be void. (No. 84-829, 10-23-94)
Sec. 5.5-12. Protection of subscriber information.
(A)(1) At the time of entering into an agreement to provide any cable
service or other service to a subscriber, and at least once a year
thereafter, a cable operator shall provide notice in the form of a
separate, written statement to such subscriber which clearly and
conspicuously informs the subscriber of:
(a) The nature of personally identifiable information collected or
to be collected with respect to the subscriber and the nature
of the use of such information;
(b) The nature, frequency, and purpose of any disclosure which may
be made of such information, including an identification of
the types of persons to whom the disclosure may be made;
(c) The period during which such information will be maintained by
the licensee;
(d) The times and place at which the subscriber may have access to
such information in accordance with subsection (d); and
(e) The limitations provided by this section with respect to the
collection and disclosure of information by a licensee and the
right of the subscriber under subsections (f) and (h) to
enforce such limitations.
In the case of subscribers who have entered into such an agreement
before the effective date of this chapter, such notice shall be
provided within one hundred eighty (180) days of such date, and at
least once a year thereafter.
(2) For purposes of this section, the term "personally identifiable
information" does not include any record of aggregate data which
does not identify particular persons.
272
<PAGE> 9
CABLE TELEVISION sec. 5.5-12
(B)(1) Except as provided in paragraph (B)(2) of this subsection, no
licensee shall use the cable system to collect personally
identifiable information concerning any subscriber, without the
prior written or electronic consent of the subscriber concerned.
(2) A licensee may use the cable system to collect such information in
order to:
(a) Obtain information necessary to render a cable service or other
service provided by the licensee to the subscriber; or
(b) Detect unauthorized reception of cable communications.
(C)(1) Except as provided in paragraph (C)(2), a licensee shall not
disclose personally identifiable information concerning any
subscriber without the prior written or electronic consent of the
subscriber concerned.
(2) A licensee may disclose such information if the disclosure is:
(a) Necessary to render, or conduct, a legitimate business
activity related to, cable service or other service provided
by the licensee to the subscriber.
(b) Subject to subsection (h), made pursuant to a court order
authorizing such disclosure, if the subscriber is notified of
such order by the person to whom the order is directed; or
(c) A disclosure of the names and addresses of subscribers to any
cable service or other service, if:
1. The licensee has provided the subscriber the opportunity
to prohibit or limit such disclosure, and
2. The disclosure does not reveal, directly or indirectly,
the:
a. Extent of any viewing or other use by the subscriber of
a cable service or other service provided by the
licensee; or
b. The nature of any transaction made by the subscriber
over the cable system of the licensee.
(D) A cable subscriber shall be provided access to all personally
identifiable information regarding that subscriber which is collected and
maintained by a licensee. Such information shall be made available to the
subscriber at reasonable times and at a convenient place designated by such
licensee. A cable subscriber shall be provided reasonable opportunity to correct
any error in such information.
(E) A licensee shall destroy personally identifiable information if the
information is no longer necessary for the purpose for which it was collected
and there are no pending requests or orders for access to such information under
subsection (D) or pursuant to a court order.
(F) Any person aggrieved by any act of a licensee in violation of this
section may bring a civil action in accordance with the provisions of section
631 of the Cable Franchise Policy and Communications Act of 1984.
(G) Nothing in this chapter shall be construed to prohibit the board from
enacting or enforcing laws consistent with federal law for the protection of
subscriber privacy.
273
<PAGE> 10
sec. 5.5-12
PRINCE WILLIAM COUNTY CODE
(H) A governmental entity may obtain personally identifiable information
concerning a cable subscriber pursuant to a court order only if, in the court
proceeding relevant to such court order:
(1) The entity offers clear and convincing evidence that the subject
of the information is reasonably suspected of engaging in criminal
activity and that the information sought would be material evidence
in the case; and
(2) The subject of the information is afforded the opportunity to appear
and contest such entity's claim. (No. 84-829, 10-23-84)
SEC. 5.5-13. CONSUMER ACCESS TO CABLE SERVICE.
(a) The owner of any multiple-unit residential or commercial building or
manufactured home park may not prevent or interfere with the construction or
installation of facilities necessary for a cable system, consistent with this
section, if cable service has been requested by a lessee or owner (including a
person legally entitled to occupy a unit in a cooperative project) of a unit in
such building or park, provided that the owner of such property is justly
compensated for any physical invasion of his property to provide such service,
in accordance with this section.
(b) The county executive is authorized to prescribe regulations to
implement this section which provide:
(1) That the safety, functioning, and appearance of premises and
convenience and safety of other persons shall not be adversely
affected by the installation or construction of the facilities
necessary for extension of a licensee's cable system;
(2) That the reasonable and just cost of the installation, construction, o
peration, or removal of such facilities be borne by the licensee or
subscriber, or a combination of both;
(3) That the owner be justly compensated by the licensee for any taking or
damage caused by the installation, construction, operation or removal
of such facilities by the licensee; and
(4) That methods be developed for determining just compensation under this
section. In the event that a property owner declines to accept just
compensation as established in accordance with regulations promulgated
hereunder, and the county executive determines that it is necessary to
effect the provisions of this section by other means, he is hereby
authorized to initiate condemnation proceedings for the purposes
hereof, and to request the county attorney to assist, or to retain
qualified counsel approved by the county attorney for the purpose of
conducting such proceedings, and to compensate such counsel from the
proceeds of any license fee required under this chapter.
(c) Any owner of such a multiple-unit building or park may not demand or
accept payment from any licensee in exchange for permitting construction or
installation necessary for a cable system on or within the premises in excess of
any amount which constitutes just compensation as determined in accordance with
regulations promulgated hereunder.
274
<PAGE> 11
CABLE TELEVISION sec. 5.5-14
(d) In prescribing methods under subsection (b) for determining just
compensation, the county executive shall give consideration to:
(1) The extent to which the cable system facilities actually occupy
the premises;
(2) The actual long-term damage which the cable system facilitates may
cost to the premises;
(3) The extent to which the cable system facilities would interfere
with the normal use and enjoyment of the premises; and
(4) The enhancement in value of the premises resulting from the
availability of cable service.
(e) This section shall not apply to units which are customarily leased to a
person for a period of less than thirty (30) days, or to units in a hospital.
(f) This section shall not apply to any owner of a multiple unit
residential or commercial building or manufactured home park who, in the opinion
of the county executive, makes available to residents a diversity of information
sources and services equivalent to those offered by the cable system authorized
to provide cable service in the area in which such dwelling is located in
accordance with regulations prescribed by the county executive (No. 84-829,
10-23-84)
SEC. 5.5-14. SERVICE EXTENSIONS REQUIRED.
(a) Except as may be otherwise authorized in the license ordinance, each
licensee shall provide service to all continuous and contiguous areas where the
number of occupied dwelling units meets or exceeds a density of fifty (50)
dwelling units per mile of cable, such areas to be measured linearly from any
point of existing service. Such service shall be extended as soon as practicable
after the adoption of this chapter, and in any event upon request of any person
residing within any area where the aforesaid density conditions exist.
(b) In areas not meeting the aforementioned density of fifty (50) occupied
dwellings per mile in which mandatory extension of service is provided, upon the
request of fifty (50) percent of the owners of occupied dwelling units along the
shortest and most direct feasible route from the nearest termination point of
licensee's existing service to the dwelling of the last person requesting such
nonmandatory extension, and within five hundred (500) feet on either side of
such route, the licensee shall extend service to any such subscriber(s) upon
their payment to the licensee of an amount equal to the proportional cost of
such extension by such route, determined by multiplying the cost of such
extension by a fraction with a denominator of fifty (50) and a numerator equal
to fifty (50) less the density of occupied dwelling units along the route of
such extension, and occupied dwellings within five hundred (500) feet of such
route.
(c) Nothing contained in this section shall be construed to require
licensees to overbuild in any portion of a service area, and either mandatory or
nonmandatory service extensions required hereby shall be provided by the
licensee whose existing service terminates nearest to any occupied dwelling
subject to either extension requirement. Nor shall this section be construed to
preclude any person or group of persons from requesting nonmandatory connec-
275
<PAGE> 12
sec. 5.5-14 PRINCE WILLIAM COUNTY CODE
tion from any other licensee in the service area other than the nearest
licensee, nor be construed to preclude voluntary overbuild in any area for which
a license is held. (No. 84-829, 10-23-84)
SEC. 5.5-15. SYSTEM DESIGN; CAPACITY.
The licensee shall design, install, construct, operate and maintain the
cable television system:
(1) So as to provide high quality service, to meet or exceed the technical
standards set forth in rules and regulations promulgated by the
Federal Communications Commission regarding cable television, as such
rules and regulations may from time to time be amended, or, in the
absence of such rules and regulations, or federal pre-emption of the
area, in full compliance with such technical standards as the board
may, by ordinance, adopt, and the board hereby expressly reserves the
right to adopt such standards;
(2) So that signals are at all times within the limitations imposed by
the technical standards established, and delivered to subscribers
without material degradation in quality; and
(3) For an audio override of all channels simultaneously, for use in
case of public emergencies, or disasters. (No. 84-829, 10-23-84)
ARTICLE V. LICENSE FEE
SEC. 5.5-16. REQUIRED.
(a) The licensee shall pay to the county for the duration of the license a
license fee which shall be the sum of one dollar ($1.00) per year per basic
subscriber to that licensee's system; provided, that in no event may such fee
exceed five (5) percent of the annual gross revenues of the licensee. The number
of subscribers upon which such fee shall be calculated shall be the number of
basic subscribers to each system as of December 31st of each year. The fee shall
be payable to the county in a single payment made not later than January 31st of
each year. In the event that any license is granted to any cable operator after
January 1, 1985, but before December 31, 1985, the licensee shall pay such
license fee based on the number of basic subscribers to its system on December
31, 1984, and such fee shall be paid to the county within thirty (30) days of
the grant of the license.
(b) Notwithstanding subsection (a) of this section, the board reserves the
right, at any time during which any license is in effect, to establish a
different license fee in an amount then to be established by ordinance of the
board, such license fee not to exceed five (5) percent of the licensee's gross
revenues. The board may establish a lesser percentage without prejudice to its
right to change the fee at any time, provided that the said fee does not exceed
the foregoing five (5) percent limitation. Any such fee based on a percentage
shall be paid quarterly within thirty (30) days after the expiration of the
calendar year quarters ending
276
<PAGE> 13
CABLE TELEVISION sec. 5.5-17
March 31, June 30, September 30, and December 31, at which time the licensee
shall file with the county a financial statement clearly showing the gross
revenues received by the licensee during the preceding quarter. In the event any
quarterly payment of the license fee is not made within thirty (30) days
specified herein, interest shall be charged from the thirty-first day at the
interest rate permitted on judgments by general law.
(c) Acceptance of any fee payment shall not constitute, and shall not be
deemed, construed, or applied as, an admission or an agreement by the county
that the amount paid is in fact correct, or as a waiver of its rights, hereby
expressly reserved to audit the licensee's financial records at any time, and to
recompute the amount of fee payable hereunder. Any additional amounts found to
be due as a result of such audit shall be paid, upon demand, together with
interest at the rate permitted on judgments by general law computed from the
date upon which the correct fee was due.
(d) In the event a license is revoked prior to its expiration date, and in
the event that a percentage license fee has been imposed, the licensee shall,
within thirty (30) days of the date of revocation:
(1) File with the county a financial statement clearly showing the gross
revenues received by the licensee since the expiration of the
immediately preceding calendar year quarter; and
(2) Pay the license fee accrued as of the date of revocation.
(e) Nothing in this section shall be deemed construed, or applied to exempt
the licensee from the payment of any taxes, fees, or charges lawfully imposed.
(No. 84-829, 10-23-84)
ARTICLE VI. ADMINISTRATION AND ENFORCEMENT
SEC. 5.5-17. BOOKS AND RECORDS.
(a) The licensee shall keep and maintain such books and records of its
operations within the county as may be specified by the county executive, which
he deems reasonably necessary to enable the county to properly determine the
amount of any license fee due to it, and to otherwise enforce the provisions of
this chapter.
The licensee shall retain such books and records, in any reasonable form,
for not less than five (5) years. The county shall have the right to extend the
retention period through the term of any renewed license, and shall have the
right to inspect, copy or audit the licensee's books and records at any
reasonable time, upon twenty-four (24) hours' written notice to the licensee.
(b) At the request of the county executive, within one hundred twenty (120)
days following the conclusion of its fiscal year, the licensee shall, at its
sole cost and expense, file with the county its financial statements for that
year, examined and reported on by an independent public accountant. The licensee
shall advise the office of consumer affairs of the period of its fiscal year.
277
<PAGE> 14
sec. 5.5-18 PRINCE WILLIAM COUNTY CODE
SEC. 5.5-18. INSURANCE.
(a) Not later than thirty (30) days after accepting a license, and at all
times during the term of the license, the licensee shall obtain, pay all
premiums for, and file with the county executive written evidence of payment of
premiums for and executed duplicate copies of the following:
(1) A general comprehensive public liability insurance policy
indemnifying, defending, and holding harmless the county, its
officers, boards, commissions, agents, or employees from any and all
claims by any person whatsoever on account of injury to or death of a
person or persons caused by the operations of the licensee under the
license herein granted, or alleged to have been so caused, with a
minimum liability of one million dollars ($1,000,000.00) for personal
injury or death of all persons so injured or killed in any one (1)
occurrence.
(2) A property damage insurance policy indemnifying, defending, and
holding harmless the county, its officers, boards, commissions,
agents, or employees from any and all claims by any person whatsoever
for property damage caused by the operations of the licensee under the
license herein granted, or alleged to have been so caused, with a
minimum liability of one million dollars ($1,000,000.00) for damage to
such property in any one occurrence.
(b) Each of the foregoing insurance policies shall be in a form acceptable
to the county and each shall require thirty (30) calendar days' notice of any
cancellations to both the county and the licensee. Within thirty (30) days
following receipt by the county or licensee of any cancellation notice, the
licensee shall obtain, pay all premiums for, and file with the county written
evidence of payment of premiums for and executed duplicate copies of a
replacement policy in the same minimum amount as the canceled policy. (No.
84-829, 10-23-84)
SEC. 5.5-19. INDEMNITY.
(a) The licensee shall, at its sole cost and expense, indemnify, defend,
and hold harmless the county, its officials, boards, commissions, agents, and
employees against any and all claims, suits, causes of action, proceedings, and
judgments for damages or relief, of any kind, arising out of:
(1) The grant of a license to the licensee or the licensee's acceptance
thereof:
(2) The operations of the licensee under such license, specifically
including antitrust actions under state or federal law. Indemnified
expenses shall include, but not be limited to, all out-of-pocket
expenses, court costs, attorneys' fees, and the reasonable value of
any services rendered by county employees.
(b) The foregoing indemnity is conditioned upon the county's giving the
licensee prompt notice of the making of any claim or the commencement of any
suit, action, or other proceeding covered by this section. Nothing in this
section shall be deemed, construed, or applied to prevent the county from
cooperating with the licensee and participating in the defense of any litigation
by its own counsel at its sole cost and expense. (No. 84-829, 10-23-94)
278
<PAGE> 15
CABLE TELEVISION sec. 5.5-22
SEC. 5.5-20. FAILURE TO ENFORCE LICENSE.
The licensee shall not be excused from complying with any of the terms and
conditions of this chapter or of the license ordinance by any delay or failure
of the county, upon any one (1) or more occasions, to insist upon the licensee's
performance or to seek the licensee's compliance with any one (1) or more of
such terms or conditions. (No. 84-829, 10-23-84)
SEC. 5.5-21. ADMINISTRATION AND ENFORCEMENT RESPONSIBILITIES.
(a) The administration and enforcement of this chapter and any license
granted and accepted pursuant to this chapter shall be vested in the office of
consumer affairs, under the supervision and control of the county executive.
(b) The county executive is hereby authorized to promulgate such rules,
regulations, and orders as he shall deem necessary and appropriate to enforce,
administer, and interpret, this chapter; provided that he shall cause reasonable
notice of the proposed adoption of any rules or regulations to be published in a
newspaper of general circulation in the county, and shall conduct at least one
(1) public hearing on the adoption thereof. The county executive may not
delegate this responsibility.
(c) The county executive may enforce this chapter, the terms and conditions
of any license, and any rules, regulations, or orders issued in the
interpretation and administration thereof, by any appropriate action at law or
cause in chancery. The county attorney is authorized to file and prosecute such
proceedings in the name of the board, upon the written request of the county
executive. This authority may not be delegated by the county executive. (No.
84-829, 10-23-84)
ARTICLE VII. RENEWAL AND REVOCATION OF LICENSES
SEC. 5.5-22. RENEWAL OF LICENSES.
(A) Licenses may be renewed in accordance with this section, and shall
terminate unless so renewed.
(B) During the six-month period which begins with the thirty-sixth month
before license expiration, the board may, on its own initiative, and shall upon
application of the licensee, commence proceedings for the purpose of:
(1) Identifying the future cable-related community needs and interests
of the county; and
(2) Reviewing the performance of the licensee under the license during
the then-current license term.
(C)(1) Upon completion of a proceeding under subsection (B), above, a
licensee seeking renewal of a license may, on its own initiative or
at the request of the board, submit a proposal for renewal thereof.
(2) Subject to the applicable provisions of federal law and regulation,
any such proposal shall contain such material as the board may
require, including proposals for upgrade of the cable system.
279
<PAGE> 16
EXHIBIT 10.6.47
sec. 5.5-22 PRINCE WILLIAM COUNTY CODE
(3) The board may establish a date by which such proposals shall be
submitted.
(D) (1) Upon submittal by a license of a proposal for renewal of a
license, the board shall provide prompt public notice of such
proposal and, during the four-month period which begins on the
completion of any proceedings under subsection (B), either renew
the license or issue a preliminary assessment that the license
should not be renewed, and at the request of the operator, or on
its own initiative, commence an administrative proceeding, after
providing prompt public notice of such proceeding in accordance
with paragraph (D)(2) to consider whether:
(a) The licensee has substantially complied with the material
terms of the existing license and with the applicable law;
(b) The quality of the licensee's service, including signal
quality, response to consumer complaints, and billing
practices, but without regard to the mix, quality, or level
of cable services or other services provided over the system,
has been reasonable in light of community needs;
(c) The licensee has the financial, legal, and technical ability
to provide the services, facilities, and equipment as set
forth in the licensee's proposal; and
(d) The licensee's proposal is reasonable to meet the future
cable-related community needs and interests, taking into
account the costs of meeting such needs and interests.
(2) In any proceeding under paragraph (DX1), the licensee shall be
afforded adequate notice, and both the licensee and the board, or
its designee, shall be afforded fair opportunity for full
participation therein, including the right to introduce evidence
(including evidence related to issues raised in the proceedings
under subsection (b)), to require the production of evidence, and
to question witnesses. A transcript shall be made of any such
proceeding.
(3) At the completion of a proceeding under this subsection, the board
shall issue a written decision granting or denying the proposal
for renewal based upon the record of such proceeding, and transmit
a copy of such decision to the licensee. Such decision shall state
the reasons therefor.
(E) Any denial of a proposal for renewal shall be based on one or more
adverse findings made with respect to the factors described in subparagraphs (a)
through (d) of subsection (DX1), pursuant to and based upon the record of the
proceeding under subsection (D). The board may not base a denial of renewal on a
failure to substantially comply with the material terms of the license under
subsection (D)(1)(a) or on events considered under subsection (D)(1)(b) in any
case in which a violation of the license or the events considered under
subsection (D)(1)(b) occur after the effective date of the Cable Franchise
Policy and Communications Act of 1984, unless the board has provided the
licensee with notice and the opportunity to cure, or in any case in which it is
documented that the board has waived its right to object, or has effectively
acquiesced.
(F) Any licensee whose proposal for renewal has been denied by final
decision of the board made pursuant to this section, or has been adversely
affected by a failure of the board to act in accordance with the procedural
requirements of this section, may appeal such final
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<PAGE> 17
CABLE TELEVISION sec. 5.5-23
decision or failure pursuant to the provisions of sections 626 and 636 of the
Cable Franchise Policy and Communications Act of 1984.
(G) Notwithstanding the provisions of subsections (A) through (F) of this
section, a licensee may submit a proposal for renewal of a license at any time,
and the board may grant or deny such proposal at any time (including after
proceedings pursuant to this section have commenced). The provisions of
subsections (A) through (F) shall not apply to a decision to grant or deny a
proposal under this section. The denial of a renewal under this subsection shall
not affect on a renewal proposal that is submitted in accordance with subsection
(A) through (F). (No. 84-829, 10-23-84)
Sec. 5.5-23. Revocation of license.
(a) In addition to other rights and powers provided by this chapter, or
general law, the county hereby expressly reserves the right to revoke any
license granted under this chapter on any one (1) or more of the following
grounds:
(1) The licensee's material misrepresentation of fact in an application
submitted pursuant to this chapter.
(2) The licensee's willful or negligent failure or refusal to construct,
install, maintain, or operate its cable television system in compliance
with any term or condition of this chapter or of the license ordinance.
(3) The licensee's insolvency, or its seeking relief under the bankruptcy
laws or having been adjudged bankrupt.
(4) Foreclosure or other judicial sale of all or a substantial part of
licensee's cable television system, or
(5) The licensee's repeated or substantial violation of any provision of
the Virginia Consumer Protection Act of 1977, as amended.
(6) The licensee's repeated failure to provide efficient, continuous
service, or to maintain the system in good repair, or to satisfactorily
resolve bona fide subscriber complaints.
(b) The board may revoke a license pursuant to this section, by ordinance,
only after it has given the licensee notice of its intention to adopt such an
ordinance and the grounds therefor, and has afforded the licensee a reasonable
opportunity to prove in a hearing before the board that the proposed grounds for
revocation never existed or do not warrant revocation. The board shall give at
least the same notice of such hearing as required for the adoption of
ordinances.
(c) A license shall not be revoked pursuant to this section for any act or
omission beyond the licensee's control; provided, however, that an act or
omission shall not be deemed or construed to be beyond the licensee's control
because of financial difficulties of any sort.
(d) In the event that a license is revoked by the board, the county shall
have the option to acquire the assets of the licensee's cable television at
their then fair market value, or to select a successor licensee, consistent with
the provisions of this chapter, and to permit such
281
<PAGE> 18
sec. 5.5-23 PRINCE WILLIAM COUNTY CODE
successor to acquire said assets at their then fair market value. Such option
must be exercised within one (1) year of the date of revocation.
(e) In the event that a license is revoked by the board, and until such
time as the licensee transfers to the county or to a successor licensee
possession and title to the assets of its cable television system, the licensee
shall, as trustee for its successor in interest, continue to operate the cable
television system under the terms and conditions of this chapter and of the
license ordinance. During such interim period, the licensee shall not make any
material administrative or operational change that would tend to:
(1) Degrade the quality of service to subscribers;
(2) Decrease income; or
(3) Materially increase expenses without the express permission, in
writing, of the county.
For its management services during this period of trusteeship, the licensee
shall be entitled to receive, as compensation, the net profit generated from the
operation of its cable television system during such period. Such management
services shall not be continued without the licensee's consent for more than
twelve (12) months. (No. 84-829, 10-23-84)
Sec. 5.5-24. Removal of materials upon termination of license.
In the event a license is revoked, or otherwise terminated for any lawful
reason, the licensee shall, if the system is not sold to a successor licensee,
or acquired by the board within the period for exercise of its option to acquire
or after said option shall have been declined, remove all supporting structures,
poles, transmission and distribution systems, and other appurtenances, owned by
it, from all public ways in, over, under, through, and along which installed,
and restore such areas to their original condition. If not done within six (6)
months from notice by the board to restore, such property shall be deemed
abandoned. (No. 84-829, 10-23-84)
ARTICLE VIII. CREATION OF LICENSE SERVICE AREAS
Sec. 5.5-25. License service areas.
The board may, by ordinance, establish one or more license service areas
within which it may grant licenses as provided in this chapter. Unless and until
the board determines to create other license service areas, the entire
geographical area of Prince William County shall constitute the license service
area for purposes of this chapter. (No. 84-829, 10-23-84)
ARTICLE IX. MISCELLANEOUS
Sec. 5.5-26. Time of the essence.
Whenever this chapter or the license ordinance specifies any time for any
act to be performed by or on the behalf of a licensee, such time shall be deemed
to be of the essence and
282
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CABLE TELEVISION sec. 5.5-28
the licensee's failure to perform within the time specified shall, in all cases,
be sufficient grounds for the county to invoke the remedies available under the
terms and conditions of this chapter and of the license ordinance. (No. 84-829,
10-23-84)
Sec. 5.5-27. Severability.
If any provision of this chapter or of the license ordinance is held
invalid or unconstitutional by any court or administrative agency of competent
jurisdiction, such holding shall not affect the validity of the remaining
provisions thereof. (No. 84-829, 10-23-84)
Sec. 5.5-28. Effect of state or federal regulation or law.
The provisions of this chapter, any resolution adopted by the board
hereunder, and any license ordinance or agreement entered into shall be deemed
amended pro tanto to comply with any requirement of state or federal law or
regulation which is applicable thereto which has been, or shall be adopted, and
which is inconsistent with provisions of this chapter, and this chapter shall be
deemed to include mandatory and self-effectuating provisions of such law or
regulation. Nothing shall preclude the board from adopting express amendments to
this chapter, and any resolution, other ordinance, or agreement to conform local
law, regulation, and agreements to such federal or state law or regulation. (No.
84-829, 10-23-84)
[The next page is 297]
283
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PROPOSED AMENDMENTS TO CHAPTER 5.5
Chapter 5.5
CABLE TELEVISION
* * *
ARTICLE I. IN GENERAL
* * *
Sec. 5.5-2. Definitions.
As used in this chapter, the following words and phrases shall have the
meanings herein specified, except where the context is clearly to the contrary.
Consistent with context, words used in the plural contemplate and include the
singular, and words used in the singular contemplate and include the plural.
Context notwithstanding, the word "shall" is mandatory, never directory.
Basic subscriber service shall mean the distribution to subscribers of
signals over a cable television system on all channels except:
(1) Those for which a per-program or per-channel charge is made;
(2) Those intended for reception by equipment other than a television
broadcast receiver;
(3) Two-way services;
(4) Services, the delivery of which are regulated or pre-empted by the
Federal Communications Commission; and
(5) Emergency services.
Board shall mean the board of county supervisors of Prince William County,
Virginia.
Cable televisions system shall mean a cable television system as defined by
section 15.1-23.1, Virginia Code Annotated.
County shall mean Prince William County, Virginia.
County Executive shall mean the chief executive officer of the county,
appointed by the board, or his designee so indicated in writing.
Fair market value shall mean the price that property will command when sold
by one who is under no need to sell, a willing seller, and bought by one who is
under no need to buy, a willing buyer.
Federal Communications Commission, shall mean the federal agency
established under the Communications Act of 1934, as amended, or any successor
agency.
<PAGE> 21
2
Gross revenues shall mean any and all revenues derived from the operation
of a cable television system in the county, including but not limited to monthly
or periodic charges for service, installation fees and reconnect fees, revenues
derived from per-program or per-channel charges, studio and equipment rentals,
and subscriber and advertising revenues.
License shall mean the nonexclusive right granted hereunder to construct,
install, maintain, and operate a cable television system or systems in any
unincorporated area of the county. It does not include any other license or
permit for the privilege of conducting a business in the county, as may be
required by other county ordinances.
License ordinance shall mean an ordinance adopted pursuant to section 5.5-4
of this chapter, formally granting a license to construct, install, maintain, or
operate a cable television system in the county.
License service area shall mean the geographical area within the
unincorporated area of the county for which a nonexclusive right has been
granted hereunder to construct, install, maintain, and operate a cable
television system.
Licensee shall mean a person granted a license hereunder.
Normal Business Hours shall mean those hours during which most similar
businesses in the community are open to serve customers. In all cases, normal
business hours must include some evening hours at least one night per week
and/or some weekend hours.
Normal Operating Conditions shall mean those service conditions which are
within the control of the cable operator. Those conditions which are not within
the control of the cable operator include, but are not limited to, natural
disasters, civil disturbances, power outages, telephone network outages, and
severe or unusual weather conditions. Those conditions which are ordinarily
within the control of the cable operator include, but are not limited to,
special promotions, pay-per-view events, rate increases, regular peak or
seasonal demand periods, and maintenance or upgrade of the cable television
system.
Person shall mean and include any individual, firm, partnership,
cooperative, nonprofit membership corporation, joint venture, association,
corporation, estate, trust, business trust, trustee in bankruptcy, receiver,
auctioneer, syndicate, assignee, club, society, or any other group or
combination acting as a unit.
Public way shall mean any highway, street, road, alley, way, easement,
right-of-way, place, or other right or interest in real property, belonging to
any public body, including the county, the commonwealth, or any subdivision,
agency, department, or authority of either.
Service Interruption shall mean the loss of picture or sound on one or more
cable channels.
Subscriber shall mean any person who receives, or contracts with a licensee
to receive, basic subscriber service, or one (1) or more of such other services
as may be offered by the licensee's cable television system, or both.
* * *
<PAGE> 22
3
ARTICLE IV. CONSUMER PROTECTION AND SUBSCRIBER PRIVACY
* * *
Sec. 5.5-9. Maintenance; repairs.
(a) The licensee shall establish maintenance service capability enabling
the prompt location and correction of system malfunctions. The licensee shall
maintain adequate records of all complaints and requests for repairs, and their
resolution, which records shall be open for public inspection.
(b) Under normal operating conditions, each of the following four standards
will be met no less than ninety-five (95) percent of the time measured on a
quarterly basis:
(1) Standard installations will be performed within seven (7) business
days after an order has been placed. Standard installations are those that are
located up to 125 feet from the existing distribution system.
(2) Excluding conditions beyond the control of the licensee, the
licensee will begin working on service interruptions promptly and in no event
later than 24 hours after the interruption becomes known. Licensee must begin
actions to correct other service problems the next business day after
notification of the service problem.
(3) For all installations, service calls, and other installation
activities, licensee shall provide its customer either a specific appointment
time or, at maximum, a four-hour time block during business hours. Licensee may
schedule service calls and other installation activities outside of normal
business hours for the express convenience of the customer.
(4) A licensee may not cancel an appointment with a customer after the
close of business on the business day prior to the scheduled appointment.
(c) If a representative of licensee is running late for an appointment with
a customer and will not be able to keep the appointment as scheduled, the
customer will be contacted. The appointment will be rescheduled, as necessary,
at a time which is convenient for the customer.
Sec. 5.5-10. Local office hours; telephone availability; complaints; notice
of procedures.
(a) The licensee shall maintain an office and bill payment location within
the license service area, or in the Cities of Manassas or Manassas Park, which
shall be open and accessible to the public during normal business hours. The
licensee shall provide a local, toll-free or collect call telephone access line
which will be available to its subscribers 24 hours a day, seven days a week for
recording of subscriber complaints, including, but not limited to, billing
errors, service disconnections, service interruptions, and equipment failure.
Complaints other than those related to a system malfunction or service
interruption addressed by section 5.5-9 shall be answered not later than the
next business day after the complaint has been received, and corrective action
shall be completed as soon as practical. Adequate records shall be made of all
subscriber complaints, describing the nature of each complaint and showing when
<PAGE> 23
4
and what corrective action was completed. Such records shall be available to the
public or to representatives of the board, during normal business hours, and
shall be retained in the licensee's files for not less than three (3) years.
Annual summaries of complaints shall be filed with the office of consumer
affairs, not later than June thirtieth of each year.
(b) Unresolved complaints, if any, shall be reported to the office of
consumer affairs, in writing, within thirty (30) days after the end of each
calendar year quarter. The nature and number of any unresolved complaints shall
be taken into account by the board in considering whether to renew or to revoke
a license.
(c) Each licensee shall, at any time of entering into an agreement to
provide cable service of any kind, inform every subscriber of the provisions of
this article.
(d) Licensees serving more than one (1) license service area need provide a
local office in only one (1) such area, or in either of the two (2) cities
above.
(e) Trained representatives of licensee will be available to respond to
customer telephone inquiries during normal business hours.
(f) After normal business hours, the telephone access line may be answered
by a service or an automated response system, including an answering machine.
Inquiries received after normal business hours must be responded to by a trained
representative of licensee on the next business day.
(g) Under normal operating conditions, telephone answer time by a
representative of licensee, including wait time, shall not exceed thirty (30)
second when the connection is made. If the call needs to be transferred,
transfer time shall not exceed thirty (30) seconds. Under normal operating
conditions, the customer will receive a busy signal less than three (3) percent
of the time. These standards shall be met no less than ninety (90) percent of
the time under normal operating conditions, measured on a quarterly basis.
(h) The licensee will not be required to acquire equipment or perform
surveys to measure compliance with the telephone answering standards of section
5.5-10(g) unless an historical record of complaints indicates a clear failure to
comply.
Sec. 5.5-11. Notification to subscribers; billing; refunds; and credits.
(a) The licensee shall provide written information on each of the following
areas at the time of installation of service, at least annually to all
subscribers, and at any time upon request:
(1) Products and services offered;
(2) Prices and options for programming services and conditions of
subscription to programming and other services;
<PAGE> 24
5
(3) Installation and service maintenance policies;
(4) Instructions on how to use the cable service;
(5) Channel positions of programming carried on the system; and
(6) Procedures which may be used to make complaints, requests for
repairs and to contest alleged billing errors, including the address and
telephone number of the county's cable office.
(b) Customers will be notified of any changes in rates, programming
services or channel positions as soon as possible through announcements on the
cable system and in writing. Notice must be given to subscribers a minimum of
thirty (30) days in advance of such changes if the change is within the control
of the licensee. Increases made without such prior notice shall be void. In
addition, the licensee shall notify subscribers thirty (30) days in advance of
any significant changes in the other information required by Section 5.5-11(a).
(c) Bills will be clear, concise and understandable. Bills must be fully
itemized, with itemizations including, but not limited to, basic and premium
service charges and equipment charges. Bills will also clearly delineate all
activity during the billing period, including optional charges, rebates and
credits.
(d) In case of a billing dispute, the licensee must respond to a written
complaint from a subscriber within thirty (30) days.
(e) Refund checks will be issued promptly by licensee, but no later than
either:
(1) The customer's next billing cycle following resolution of the
request or thirty (30) days, whichever is earlier; or
(2) The return of the equipment supplied by the licensee if service is
terminated.
(f) Credits for service will be issued no later than the customer's next
billing cycle following the determination that a credit is warranted.
* * *
<PAGE> 1
EXHIBIT 10.6.62
NOTICE OF CLOSING DATE
To: The Town of Quantico, Virginia
You are hereby given notice that the closing of the sale of certain cable
assets of Columbia Associates, L.P. ("Columbia") to Jones Communications of
Virginia, Inc., formerly known as Jones Intercable of Alexandria, Inc. ("Jones")
occurred and was effective as of November 29, 1995, and that the Agreement
Relating to Television Transmission and Distribution System in Quantico Virginia
dated May 13, 1980 (the "Agreement") between the Town of Quantico and Triangle
Cable TV, Incorporated ("Triangle"), as previously assigned by Triangle to
Columbia, was transferred to Jones as of November 29, 1995.
JONES COMMUNICATIONS OF VIRGINIA, INC.,
f/k/a Jones Intercable of
Alexandria, Inc., a Colorado corporation
By: /s/ ELIZABETH M. STEELE
------------------------------------
Elizabeth M. Steele
Vice President
Dated: December 12, 1995
<PAGE> 2
FRANCHISE AGREEMENT
BETWEEN
QUANTICO, VIRGINIA
AND
COLUMBIA ASSOCIATES, L.P.
D/B/A
COLUMBIA CABLE OF VIRGINIA
<PAGE> 3
AGREEMENT RELATING TO TELEVISION TRANSMISSION
AND DISTRIBUTION SYSTEM IN QUANTICO, VIRGINIA
THIS AGREEMENT is entered into by and between the MAYOR AND COUNCIL OF THE
TOWN OF QUANTICO, hereinafter referred to as the "Town" and Triangle Cable TV,
Incorporated, its successors, assigns and designees, hereinafter referred to as
the "Company", and the same WITNESSETH:
In consideration of the mutual covenants and promises herein contained, it
is agreed as follows:
Section 1. Grant of Authority. The Company is hereby given the
non-exclusive right to erect, maintain and operate television transmission and
distribution facilities, and additions thereto, in, under, over, along, across
and upon the public highways, streets, alleys, sidewalks, ways, and other public
places within the Town limits of Quantico, Virginia, and subsequent additions
thereto, for the purpose of the transmission and distribution of television and
radio impulses and signals and television energy in accordance with the laws and
regulations of the United States of America and the State of Virginia and the
ordinances and regulations of the Town. This right shall continue for a period
of twenty (20) years from the date of this Agreement.
Section 2. "Television" defined. Whenever used in this contract, the word
"television" shall mean a system for transmission of audio signals and/or visual
images by means of electrical impulses.
Section 3. Construction, Maintenance and Removal of Facilities. The poles
and posts used for the Company's television distribution system shall be those
erected by it or its successors or assigns and/or erected and maintained by such
other persons, firms or corporations maintaining poles or posts within the Town
limits, when and where practicable, under mutually satisfactory rental
agreements with said persons, firms or corporations.
Construction and maintenance of the transmission and distribution system
shall be in accordance with the provisions of the National Electric Safety Code,
prepared by the National Bureau of Standards, the National Electric Code of the
National Board of Fire Underwriters, and such applicable ordinances and
regulations of the Town affecting electrical installations, which may be in
effect now or in the future.
<PAGE> 4
-2-
All installations shall be of permanent nature and installed in accordance
with good engineering practices, and shall be of sufficient height to comply
with all Town regulations, ordinances and state laws so as not to interfere in
any manner with the right of the public or individual property owners, and shall
not interfere with the travel and use of public places by the public, and during
construction, repair or removal thereof, shall not obstruct or impede traffic.
The Company's transmission and distribution system, poles, wires, and
appurtenances shall be located, erected and maintained so as not to endanger the
lives of persons, or cause damage to property, or to interfere with new
improvements the Town may deem proper to make, or to unnecessarily hinder or
obstruct the free use of the public highways, streets, alleys and other public
ways, and removal of poles to avoid such interference will be at the Company's
expense.
In the maintenance and operation of the television transmission and
distribution system in Quantico and in the course of construction or additions
to its facilities, the Company shall proceed so as to cause the least possible
inconvenience to the general public. Any opening or obstruction in the streets
or other public places made by the Company in the course of its operations or
the operations of its successors or assigns shall be guarded and protected at
all times by the placement of adequate barriers, fencings, or boardings, the
bounds of which during period of dusk and darkness shall be designated by
warning lights of approved types.
The Company agrees to remove the facilities erected under the terms of this
Agreement in the event the Company ceases to operate hereunder.
Section 4. Use of Company Facilities by Town. The Company shall grant to
Quantico, free of expense, joint use of any and all poles owned by it for any
proper Town purpose acceptable to the Company, insofar as that may be done
without interfering with the free use and enjoyment of
<PAGE> 5
-3-
of the Company's own wires and facilities, and the Town shall hold the Company
harmless from any and all actions, causes of action, or damages and expenses
caused by the placing of the Town's wires or appurtenances upon the poles of the
Company. Proper regard shall be given to all existing safety rules governing
construction and maintenance in effect at the time of such construction.
Section 5. Indemnification of Quantico by the Company. The Company shall
indemnify, protect and save harmless Quantico from and against any losses and
physical damage to property and bodily injuries or death to persons, including
payments made under Workmen's Compensation Law, which may arise out of or be
caused by the construction, maintenance or removal of the Company's facilities
within the Town or by any act of the Company, its agents or employees.
The Company shall procure and keep in force insurance to protect the
parties hereto from and against all claims, demands, actions, judgments, costs,
expenses and liabilities which may arise or result, directly or indirectly, from
or by reason of any such loss, injury or damage. The amounts of such insurance
against liability due to physical damage to property shall not be less than One
Hundred Fifty Thousand Dollars ($150,000.00) as to any one accident and not less
than Three Hundred Thousand Dollars ($300,000.00) aggregate in any single policy
year. The amounts of such insurance against liability for bodily injury or death
shall not be less than One Hundred Thousand Dollars ($100,000.00) as to any one
person and not less than Three Hundred Thousand Dollars ($300,000.00) as to any
one accident.
Section 6. Commencement of Construction. In the event of the failure of the
Company to commence construction of its transmission and distribution system, as
contemplated provided for by this Agreement, within a period of one (1) year
from the date necessary pole agreements are signed with the holders of public
licenses (as set forth in Section 3, hereof), which
<PAGE> 6
-4-
agreements the Company will use due diligence to obtain and after being advised
by the holders of public licenses that the poles are ready for occupancy by the
Company, the Town shall have the right, on reasonable notice to the Company, to
declare this Agreement, and the rights granted hereunder, terminated provided,
however, the failure to comply with this stipulation by reason of causes beyond
the reasonable control of the Company, which could not have been reasonably
anticipated at the time of acceptance by the Company, shall not be sufficient
grounds to declare a termination. Upon the termination of this Agreement for any
reason, the Company shall remove its posts, poles, television transmission and
distribution system and equipment, and other appurtenances, from the streets,
lanes, sidewalks, highways, alleys, bridges and other public places of the Town
and shall restore such streets, etc., to their original condition.
Section 7. Payments to the Town. Beginning with the second year of
operation, the Company shall pay to the Town, in annual payments, a sum equal to
three percent (3%) of the gross receipts of the Company derived from the
subscription of residents within the Town to the basic cable television
services, and it shall be the duty of the Company to make the payments herein
specified at the time of filing said statement.
Section 8. Federal Communications Commission Requirements. Notwithstanding
anything in this Agreement to the contrary, the Company's transmission and
distribution system shall conform to the lawful regulations and lawful
requirements of the Federal Communications Commission.
Section 9. Grant to be Non-Exclusive. It is understood and agreed by the
parties hereto that the rights herein granted to the Company for the use of
public streets and places are non-exclusive, and the Town may hereafter, from
time to time, grant similar rights to other persons, firms or corporations, upon
whatever terms the Town deems advisable, so long as
<PAGE> 7
-5-
such grant of rights does not physically interfere with the facilities
constructed and maintained hereafter by the Company.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized representatives this 13 day of May, 1980.
THE MAYOR AND COUNCIL OF THE
TOWN OF QUANTICO
By: /s/ T.A. GIANNOPOULOS
--------------------------------
T.A. GIANNOPOULOS, MAYOR
ATTEST:
/s/ MICHAEL P. RAFTILIS
- -------------------------------
Clerk
TRIANGLE CABLE TV, INC.
By: /s/ RONALD DICKERSON
--------------------------------
June 22, 1980
ATTEST:
/s/ DARLENE LIPTON
- -------------------------------
Secretary
<PAGE> 1
EXHIBIT 10.6.63
NOVATION AGREEMENT
COLUMBIA ASSOCIATES, L.P. ("Transferor"), a limited partnership duly
organized and existing under the laws of Delaware with its principal office in
Greenwich, Connecticut; JONES INTERCABLE OF ALEXANDRIA, INC. ("Transferee"), a
corporation duly organized and existing under the laws of Colorado with its
principal office in Englewood, Colorado; and the UNITED STATES OF AMERICA
("Government") enter into this Agreement as of 29 November 1995.
(a) THE PARTIES AGREE TO THE FOLLOWING FACTS:
(1) The Government, represented by the Commanding General of the Marine
Corps Base, Marine Corps Combat Development Command at Quantico, Virginia (the
"Quantico MCCDC"), has entered into a Franchise Agreement for Cable Television
Service with Transferor dated June 1990 (The "Franchise Agreement"). Pursuant to
administrative changes within the Marine Corps Combat Development Command since
the Franchise Agreement was originally executed, the Commanding General of the
Quantico Marine Corps Base has been delegated all responsibility for the
protection of its rights and the performance of its obligations under this
Agreement. The rights and obligations of both parties to this Agreement remain
unaffected by this realignment of Marine Corps functions. From this day forward,
authority to act on behalf of the Marine Corps with regard to its rights and/or
obligations under this Agreement reside in the Commanding General of the
Quantico Marine Corps Base, or his duly appointed representative. The term "the
contracts," as used in this Agreement, means the above Franchise Agreement and
all other contracts and purchase orders, including all modifications, made
between the Government and the Transferor before the effective date of this
Agreement (whether or not performance and payment have been completed and
releases executed if the Government or the Transferor has any remaining rights,
duties, or obligations under these contracts and purchase orders). Included in
the term "the contracts" are also all modifications made under the terms and
conditions of these contracts and purchase orders between the Government and the
Transferee, on or after the effective date of this Agreement.
(2) The Transferor has transferred to the Transferee all the assets of the
Transferor which comprise the cable system serving the Quantico MCCDC by virtue
of a Purchase and Sale Agreement dated as of 30 June, 1995, between the
Transferor and the Transferee.
(3) The Transferee has acquired all the assets of the Transferor which
comprise the cable television system serving the Quantico MCCDC by virtue of the
above transfer.
(4) The Transferee has assumed all obligations and liabilities of the
Transferor under the contracts by virtue of the above transfer.
1
<PAGE> 2
(5) The Transferee is in a position to fully perform all obligations that
may exist under the contracts.
(6) It is consistent with the Government's interest to recognize the
Transferee as the successor party to the contracts.
(7) This Novation Agreement shall be effective upon filing of evidence of
the consummation of the above transfer being filed with the Government.
(b) IN CONSIDERATION OF THESE FACTS, THE PARTIES AGREE THAT BY THIS
AGREEMENT --
(1) The Transferor confirms the transfer to the Transferee, and waives any
claims and rights against the Government that it now has or may have in the
future in connection with the contracts.
(2) The Transferee agrees to be bound by and to perform each contract in
accordance with the conditions contained in the contracts. The Transferee also
assumes all obligations and liabilities of, and all claims against, the
Transferor under the contracts as if the Transferee were the original party to
the contracts.
(3) The Transferee ratifies all previous actions taken by the Transferor
with respect to the contracts, with the same force and effect as if the actions
had been taken by the Transferee.
(4) The Government recognizes the Transferee as the Transferor's successor
in interest in and to the contracts. The Transferee by this Agreement becomes
entitled to all rights, titles, and interests of the Transferor in and to the
contracts as if the Transferee were the original party to the contracts.
Following the effective date of this Agreement, the term "Contractor," as used
in the contracts, shall refer to the Transferee.
(5) Except as expressly provided in this Agreement, nothing in it shall be
construed as a waiver of any rights of the Government against the Transferor.
(6) All payments and reimbursements previously made by the Government to
the Transferor, and all other previous actions taken by the Government under the
contracts, shall be considered to have discharged those parts of the
Government's obligations under the contracts. All payments and reimbursements
made by the Government after the date of this Agreement in the name of or to the
Transferor shall have the same force and effect as if made to the Transferee,
and shall constitute a complete discharge of the Government's obligations under
the contracts, to the extent of the amounts paid or reimbursed.
2
<PAGE> 3
(7) The Transferor and the Transferee agree that the Government is not
obligated to pay or reimburse either of them for, or otherwise give effect to,
any costs, taxes, or other expenses, or any related increases, directly or
indirectly arising out of or resulting from the transfer of this Agreement,
other than those that the Government in the absence of this transfer or
Agreement would have been obligated to pay or reimburse under the terms of the
contracts.
(8) The Transferor guarantees payment of all liabilities and the
performance of all obligations that the Transferee (i) assumes under this
Agreement or (ii) may undertake in the future should these contracts be modified
under their terms and conditions. The Transferor waives notice of, and consents
to, any such future modifications.
(9) The contracts shall remain in full force and effect, except as modified
by this Agreement. Each party has executed this Agreement as of the day and year
first above written.
UNITED STATES OF AMERICA
By: Commanding General, Marine Corps Base, Quantico, VA
---------------------------------------------------
/s/ E. C. KELLEY, JR.
Name: E. C. KELLEY, JR.
---------------------------------------------------
Title: Brigadier General, U.S. Marine Corps
---------------------------------------------------
3
<PAGE> 4
JONES INTERCABLE OF ALEXANDRIA, INC.
By: /s/ ELIZABETH STEELE
------------------------------------
Name: Elizabeth Steele
------------------------------------
Title: Vice President
------------------------------------
CERTIFICATE
I, Katherine A. LeVoy, certify that I am an Assistant secretary of JONES
INTERCABLE OF ALEXANDRIA, INC.; that Elizabeth Steele, who signed this Agreement
for this corporation, was then Vice President of this corporation; and that this
Agreement was duly signed for and on behalf of this corporation by authority of
its governing body and within the scope of its corporate powers.
Witness my hand and the seal of this corporation this 1st day of November
1995.
By: /s/ KATHERINE A. LEVOY
------------------------------------
Name: Katherine A. LeVoy
------------------------------------
Title: Assistant Secretary
------------------------------------
(CORPORATE SEAL)
4
<PAGE> 5
COLUMBIA ASSOCIATES, L.P.
Columbia International, Inc., its managing general
By: partner
------------------------------------
By: /s/ RICHARD H. ROSENCRANS
------------------------------------
Name: Richard H. Rosencrans
------------------------------------
Title: Vice-President
------------------------------------
CERTIFICATE
I, Scott N. Ledbetter certify that I am the Secretary of COLUMBIA
INTERNATIONAL, INC.; that this corporation is the sole managing general partner
of COLUMBIA ASSOCIATES, L.P. (the "Transferor"); that Richard H. Rosencrans, who
signed this Agreement for this corporation on behalf of the Transferor, was then
the Vice-President of this corporation; and that this Agreement was duly signed
for and on behalf of this corporation (on behalf of the Transferor) by authority
of its governing body and within the scope of its corporate powers.
Witness my hand and the seal of this corporation this 1st day of November
1995.
By: /s/ SCOTT N. LEDBETTER
------------------------------------
Name: Scott N. Ledbetter
------------------------------------
Title: Vice-President
------------------------------------
(Corporate Seal)
5
<PAGE> 6
FRANCHISE AGREEMENT
between
MARINE CORPS BASE
MCCDC
QUANTICO, VIRGINIA
and
COLUMBIA ASSOCIATES, L.P.
d/b/a
COLUMBIA CABLE OF VIRGINIA
<PAGE> 7
[COLUMBIA INTERNATIONAL, INC. LETTERHEAD]
December 5, 1990
Mr. Ralph E. Anderson
Head, Training and Audio Visual
Support Center Branch
TAVSC Operations Division
MCCDC
Quantico, VA 22134-5000
Re: Cable Television Franchise
Dear Ralph:
Enclosed is the fully executed franchise agreement signed by both the Commanding
General and the president of Columbia Associates, LP. This document includes the
newly worded version of Section 35, clarifying franchise fees.
I would like to reiterate that we find some language contained in this agreement
to be inconsistent with the Cable Communications Policy Act of 1984 with regard
to rate regulation. Specifically sections 22, 29d. and 41. The ultimate
authority vested with the Commanding General to terminate this franchise should
he or she feel that a proposed rate increase is "unreasonable" appears to
contradict the rate regulation provisions of the 1984 Cable Act. It is
Columbia's intention to work closely with you and base authorities over the
coming years and we would not expect this issue of rate regulation to arise.
However, I did want to make you aware of our concerns at this time.
Beyond the issues mentioned above, we feel that this franchise agreement is an
excellent one for both parties and we look forward to a long and successful
relationship between Columbia Cable of Virginia and the United States Marine
Corps. Thanks again for all your assistance in making this refranchising process
work.
Best regards,
[ILLEGIBLE]
cc: Troy L. Fitzhugh - Columbia Cable of Virginia
Enclosure
<PAGE> 8
CABLE TELEVISION FRANCHISE
FRANCHISE AGREEMENT
FOR
CABLE TELEVISION SERVICE
AT
MARINE CORPS BASE
MARINE CORPS COMBAT DEVELOPMENT COMMAND
QUANTICO, VIRGINIA 22134
Franchisee Columbia Associates
L.P. d/b/a Columbia Cable of
Virginia
Parent Company Columbia International, Inc.
Address 9 Greenwich Office Park
P.O. Box 4624
Greenwich, Connecticut 06830
Phone (203) 661-1509
Award date: Expiration date: June 2006
<PAGE> 9
CABLE TELEVISION FRANCHISE AGREEMENT
Table of Contents
Section 1 General Requirements
1. Scope of Agreement
2. Definitions
3. Government Furnished Property or Support
4. Required Insurance
5. Safety Requirements
6. Permits
7. Hold Harmless Agreement
8. Conflict of Law
9. Passes and Badges
10. Activity Regulations
11. Franchisee Maps or Plans
12. Approval of Construction Operations
13. Construction and Operation Deadline
14. Subscriber Locations; Service Area
15. Line Extension Policy
16. Connections and Disconnects
17. Repair Service
18. Continuity of Service
19. Government Use Channels
20. Emergency Override
21. Program Guide and Channel Card
22. Franchise Holder's Rates
23. Technical Requirements
24. Reporting Requirements
25. Performance Evaluation/Compliance
26. Term of CATV Franchise
27. Franchise Renewal
28. Nontransferability of Franchise
29. Termination
30. Government Liability
31. Deactivation of the Base
32. Removal of Facilities
33. Disputes
34. Modifications of Government Regulations
35. Franchise and Analogous Fees
36. Utilities Services
37. Contractor Vehicle Authorization
38. Security Requirements
39. FAR Provisions Incorporated by Reference
40. Compliance with Section 634 of CCPA
41. Deregulation of Franchise Holders Fees
42. Compliance with Drug Free Work Place Act
43. Disclaimer of Official Sanction
44. Nondiscriminatory Availability
45. Compliance with Laws and Regulations
46. Protection of Subscriber Information
47. Signatures
<PAGE> 10
Section 2 Facilities Services
<TABLE>
<S> <C>
Exhibit 1: MCCDC Base Map
Exhibit 2: Future Service Extension Map
Exhibit 3: Technical Requirements
Schedule A: Annual Management Report
Schedule B: Technical Description and Performance
Specifications
</TABLE>
<PAGE> 11
CABLE TELEVISION (CATV) FRANCHISE AGREEMENT
1. Scope of Agreement. This CATV Franchise Agreement ("Agreement") constitutes
an agreement setting forth the terms and conditions under which Columbia
International Inc., the Franchisee, is hereby granted a nonexclusive right to
enter the Marine Corps Base, Marine Corps Combat Development Command,
hereinafter referred to as Base, to construct, install and maintain facilities
and equipment; to utilize specific Government property; and to solicit
subscribers (including appropriated fund activities, nonappropriated fund
activities, and individual subscribers) for the sole purpose of providing the
services of a CATV system. This agreement in no way obligates the Government or
Base at any time to reimburse the Franchisee for any costs, fixed or otherwise,
required to put a CATV system into operation on the Base; for the provision of
CATV services to any category of subscribers; or for loss, damage or destruction
to the cable television system. The Government is responsible for any damage to
the CATV system caused by the negligence of its agents to the extent permissible
under the Federal Tort Claims Act; provided, however, that subscribers are not
deemed agents of the Government. The Federal Tort Claims Act is the exclusive
remedy for any such negligence. Liability for user and connection fees for the
provisions of CATV services to on-base subscribers shall be established by
separate agreements between the CATV Franchisee and the subscribers in the case
of nonappropriated fund activities or individual subscribers; and by delivery
orders on a contract issued by the Marine Corps Base Purchasing and Contracting
Officer in the case of appropriated fund activities. No fees shall be charged
for the use of Marine Corps real property granted by the Government in this
Agreement, the Franchisee shall provide service at no cost to various designated
locations. Other considerations include a 5% fee on all gross receipts payable
to the Morale, Welfare and Recreation Division (MWR), equipment as specified in
Paragraph 19 for programming the Command Information Channels, or other
cable-related items or services as determined by the Base to benefit the
Command. Upon the agreement of both the Franchise Holder and the Government, the
Government may choose to contribute funds to aid in the cost of construction to
those areas of the base that do not fulfill the density requirements as
described in Paragraph 15 of this agreement.
2. Definitions.
a. "Base" refers to the geographic area within the boundaries of the Marine
Corps Base, Marine Corps Combat Development Command, Quantico, Virginia and the
U.S. Naval Medical Clinic.
b. "Basic Service" means the Cable TV programming and services exclusive of
premium services to be provided by the Franchise Holder to base subscribers for
the periodic user rates.
<PAGE> 12
c. "Cable Act" is the Cable Communications Policy Act of 1984, Public Law
98-549, 47 USC 521-559 and all subsequent revisions to this law.
d. "Cable Officer" is the individual appointed by the Commanding General
who will act independently, but in cooperation with the cable operator and the
Commanding General, as the technical and administrative liaison or
representative of the Base subscribers in matters dealing with adequacy of type
broadcasts, access to channels, reception problems, etc. The Head, Training and
Audiovisual Support Center (TAVSC) is designated as the MCCDC "Cable Officer".
e. "Cable Television System", also referred to as a "CATV system", means
any reception, distribution and amplification equipment including but not
limited to a headend antenna complex and related equipment; a system of
microwave retransmitters, coaxial cables (including trunk, distribution and drop
cables), or other electrical conductors; signal amplifiers; program origination
(or cable-casting) facilities; and other equipment utilized by a private
operator to receive, to transmit or to retransmit television satellite or radio
signals to subscribers who shall receive such signals in a fashion other than
off-the-air.
f. "Commanding General" means the Commanding General of the Marine Corps
Combat Development Command, or his duly authorized representative. The
Commanding General holds signature authority for the cable Franchise Agreement
which is delegated to the Contracting Officer, Head, Services Branch, Morale,
Welfare and Recreation (MWR) Division.
g. "Connection Fee" means that charge, if any, imposed on a subscriber by
Franchise Holder for initial hookup, reconnection or relocation of equipment
necessary to transmit the CATV signal from the distribution cable to a
subscriber's receiver.
h. "Contracting Officer" means the Head, Services Branch, MWR, Marine Corps
Base, Marine Corps Combat Development Command, Quantico, Virginia.
i. "Franchisee", "Franchise Holder", or "Cable Operator" means that person
or entity awarded a CATV franchise under this Agreement.
j. "Franchise Agreement", "Agreement" includes this Agreement and attached
Schedules A and B; the Proposal, including Exhibits 1 through 3; all
documentation required by the above items; and all subsequent amendments.
k. "Franchise" means the right or privilege with expressed permission or
competent authority to provide cable television services to subscribers on the
Base.
l. "Franchise Renewal Agreement", "Agreement" means the
<PAGE> 13
document, including all attachments and reference, which specifies the terms and
conditions of this Franchise.
m. "Government", means the United States of America.
n. "Installation", "Connection Fee" means the charge, if any, imposed on a
subscriber by the CATV Franchisee for initial hookup, reconnecting, or
relocation of equipment necessary to transmit the CATV signal from the
distribution cable to a subscriber's receiver.
o. "Rate", "User Fee" means the periodic service charge paid by a
subscriber to the Franchise Holder for CATV services.
p. "Subscriber" means any on-base person, group, organization, or
nonappropriated or appropriated fund activity that procures CATV services that
have been made available pursuant to the terms of this CATV Franchise Agreement.
3. Government Furnished Property or Support. The Government has no obligation to
provide any property or support for the Franchisee's CATV system other than that
specified in this Agreement. Rights to non-Government property, such as
easements over private lands, required to install and to operate the system,
shall be acquired at the expense and solely through the efforts of the
Franchisee or its agents. No warranties are expressed or implied as to the
suitability of either the Government facilities or any existing CATV equipment.
4. Required Insurance.
a. Twenty days after Notice of Award the Franchisee shall procure and
maintain during the entire period of this performance under this contract the
following minimum insurance.
<TABLE>
<CAPTION>
TYPE OF INSURANCE PER PERSON PER ACCIDENT PROPERTY
------------------------------------------------------ ---------- ------------ --------
<S> <C> <C> <C> <C>
1. Comprehensive General Liability $300,000 $300,000 $100,000
2. Automobile Liability $300,000 $300,000 $100,000
3. Workmen's Compensation As required by Virginia state law
4. Other As required by Virginia state law
</TABLE>
b. Prior to commencement of work, the Franchisee shall furnish to the
Contracting Officer a certificate or written statement of the above required
insurance. The Contracting Officer shall be noted on the certificate and shall
receive revised copies as available as well as 30-day minimum notice from the
insurance carrier regarding any intent to cancel or materially change coverage.
c. The Franchise Holder shall indemnify and hold harmless the Government
and its employees from all liability under the Federal Tort Claims Act (28
U.S.C. 1346, 2671-2680) or otherwise,
<PAGE> 14
for death or injury to all persons, or loss or damage to the property of all
persons resulting from or arising out of the negligent installation, operation
or maintenance of cable television facilities on Government property.
5. Safety Requirements. The Franchisee agrees to conduct all of its
construction, installation or maintenance activities in accordance with all
applicable federal, state and local statutes and regulations, including Marine
Corps orders, in the conduct and performance of service activities aboard the
base, and, to adhere at all times to the security regulations governing Marine
Corps Combat Development Command regulations pertaining to Base admission,
identification, security and personnel conduct. The applicable regulations shall
be made available for review in the office of the Cable Officer.
6. Permits. The Franchisee shall be responsible for obtaining any necessary
licenses, registrations, and/or permits, and for complying with applicable laws,
ordinances, and base regulations. The Franchisee hereby agrees to indemnify the
Government against any expenses, taxes, liabilities, and charges of whatever
kind or nature, including fees for copyright licenses or infringement fines,
that may arise as a result of the activities of the Franchisee, whether said
liability be tortious, contractual or other.
7. Responsibility for Government Property. The Franchisee agrees that it will,
at its expense, repair or replace at the Government's option, any Government
property that it may damage or destroy. If the franchisee fails or refuses to
repair damaged Government property within 60 days, the Contracting Officer shall
be entitled to effect repairs through other means and to impose the costs of the
repairs on the Franchisee.
8. Conflict of Law. This Agreement is governed by federal law, and by the laws
of the state of Virginia, where not in conflict with federal law.
9. Passes and Badges. All Franchise Holder employees will carry an
identification card, with photograph and physical statistics, which positively
identifies them as working for the Franchise Holder. All employees will carry
this card in plain view whenever on Government property. Upon release of any
employee, the Franchise Holder will ensure that any Government issued passes and
the required Franchise Holder identification card are returned to the issuing
office. The Cable Officer will assist in obtaining and returning such documents.
10. Activity Regulations. The Franchise Holder and all employees will obey all
Government regulations while on Government property. The Government will supply,
upon written request, a copy of applicable regulations. The Government will
enforce regulations, regardless of whether or not the Franchise Holder has
requested copies. The Commanding General reserves the right
<PAGE> 15
to expel and exclude from base access, employees of the Franchise Holder or its
subcontractors for violations of law or regulations. Such expulsion or exclusion
shall not give rise to any action at law or equity on the part of the Franchise
Holder, its employees, a subcontractor's employees or any other person for
interference with business relationships or for any similar suit whether
grounded in contract or tort.
11. Franchisee Maps or Plans. The Franchisee agrees to provide the Cable
Officer, at construction completion or upon the latter's request, with three
copies of maps, plans or equivalent documents describing the location of all
CATV equipment, facilities and material that the Franchisee will place or has
placed on the Base including antenna or microwave dish mounting details. Exhibit
1; Y & D drawing No. 963, 997 shows the total area of Government property at the
Marine Corps Combat Development Command, Quantico, Virginia. Exhibit 2 provides
future CATV service planned for the Base.
12. Approval of Franchisee's Construction Operation
a. The construction or placement of any equipment or facilities on the Base
by the Franchisee (including temporary buildings, if needed), as well as any
alterations or additions to existing Government property, must be approved in
advance by the Cable Officer and the Director of Facilities Division. All
pedestals and equipment enclosures of the CATV system owned and maintained by
the Franchisee shall be clearly marked to encompass any equipments and/or
equipment enclosures and other mutually agreed-to marking requirements.
b. Approval of the placement or location of CATV equipment or facilities
may be denied, withdrawn or modified at any time if essential to avoid or
minimize interference with Base operations or activities. The Franchisee shall
not be entitled to reimbursement for any expenses associated with relocation of
any equipment or facilities required by the withdrawal or modification of
approval. Furthermore, the Cable Officer shall have the right to require the
Franchisee to restore a site to its condition existing prior to the placement of
CATV equipment or facilities.
13. Construction and Operations Deadline. The Franchisee shall extend energized
trunk cable to 75% of the franchise area six months after receiving award of the
franchise and shall extend trunk cable to the remaining 25% of its franchise
area within four months of said date. Compliance with this construction schedule
shall be determined by demonstrations of performance in accordance with
Paragraph 23a herein. The Franchise Holder may offer an alternate construction
schedule as part of its proposal if deemed necessary and demonstrated. The
Government will identify and mark all locations of buried water, power, and
telephone lines, etc. within 10 days of receipt of the Cable Officer's work
request. Any delays on the part of the Government
<PAGE> 16
will not be assessed against the Government.
14. Subscriber Locations; Service Area and Base Expansion. The Base shall
determine whether any buildings constructed in the future shall be included in
the Service Area. The Cable Officer will coordinate with the Franchisee
regarding the subject of installation of cable in planned buildings. Expanded
cable service will be negotiated in consideration of the geographical location
of a facility, the number of potential subscribers, and other economic factors.
15. Line Extension Policy to Existing Service Area. If the Base increases the
service area, including residential housing or barracks, the Franchise Holder
will extend cable service to the new locations within 180 days of a written
request from the Cable Officer, at no additional cost to the Government. The
density of population is defined as 35 subscribers/outlets per linear mile.
16. Connections and Disconnects.
a. The Franchisee shall have 5 calendar days to respond to a subscriber's
request to initiate service and 5 calendar days to respond to a subscriber's
direction to discontinue service. Widespread or repeated failures on the part of
the Franchisee to meet these deadlines shall be grounds for termination of this
Agreement under the clause entitled "Termination". A subscriber ordering a
discontinuance of service shall be entitled to a reduction in monthly user fees
in the amount of one day's user fee for each full day remaining following the
subscriber's discontinuance order.
b. The Franchisee shall provide each subscriber, at the time of initial
subscription to the system and upon request, notice as to the procedures to be
used for reporting and resolving complaints regarding the quality of service,
defective equipment and similar matters; a complete listing of cable related
rates and fees, and a copy of the billing policies and programming guides.
17. Repair Service.
a. Unreasonable, frequent or widespread delays in making repairs shall be
grounds for termination of this Agreement under the clause entitled
"Termination". Agents of the Franchisee responsible for making repairs may be
contacted at 670-3500 and shall be available during the following hours: 8:00
a.m. - 5:00 p.m., Monday through Saturday. Failure to make timely repairs at a
subscriber's location shall constitute grounds for termination under paragraph
29 of this Agreement.
b. Repairs due to major outages will be made on evenings and weekends as
necessary. Agents of the Franchisee responsible for evening and weekend repairs
must be available at a local telephone number.
<PAGE> 17
c. Proper identification shall be provided to all employees of the
Franchisee per Section 9. Employees are responsible for proper installation and
cleanup procedures on the subscriber's premises.
d. The Franchisee shall maintain an office within the license service area,
or in the area of Quantico/Dumfries, which shall be open and accessible to the
public during normal business hours and which shall provide twenty-four hour
recording of subscriber complaints, including, but not limited to, billing
errors, service disconnections, service loss, and equipment failure. Complaints
other than those related to system malfunction addressed by section 17 shall be
answered not later than the next business day after the complaint has been
received, and corrective action shall be completed as soon as practical.
Adequate records shall be made of all subscriber complaints, including
description of each complaint.
18. Continuity of Service.
a. The Franchisee hereby agrees to make every effort to ensure that CATV
signals meeting the performance requirements of this Agreement are available on
an uninterrupted basis at every subscriber's outlet on the Base. The Franchisee
must respond telephonically and document within one business day in writing the
intent to resume service. Failure to meet this requirement shall be grounds for
termination of this Agreement under the clause entitled "Termination". The only
exceptions are for conditions which result from an act of God or nature or from
illegal subscriber action.
b. In the event that signal interruption or diminution of one or more
channels, whatever its cause, lasts for a period of 24 hours or more, the
Franchisee shall credit to the subscribers a rebate consistent with fines levied
similar to those at Fort Belvoir and Prince William County. The reduction in
charges must be credited against monthly user fees for the monthly billings
immediately subsequent to the interruption in service upon the individual
subscriber's request. The only exceptions are for interruptions due exclusively
to base power outages, acts of God or nature, or illegal subscriber actions
which will not entitle users to a fee reduction.
c. The Franchisee shall establish maintenance service capability enabling
the prompt location and correction of system malfunctions, and shall make
repairs within twenty-four (24) hours of receipt of notification during the work
week, Monday through Saturday. The Franchisee shall provide a twenty-four hour
day complaint answering service, and shall maintain adequate records of all
complaints and requests for repairs, and their resolution, which records shall
be open for public inspection.
<PAGE> 18
19. Government Use Channels.
a. The Franchise Holder will provide and maintain, for exclusive Base use,
at no cost to the Government through the life of the agreement, at least five
channels, or as prescribed in the Cable TV Act of 1984 if additional channels
are added. All subscribers will receive four Government use channels with one
narrow cast channel being reserved for official Marine Corps training and
education, or information programs. The Franchise Holder may not use the
assigned Government channels for distribution to other than base subscribers.
b. Origination equipment for Base programming will Headend (originate) at
the MCCDC TAVSC. The Government will provide video recording equipment, video
editing equipment, video cameras, video switching equipment, video graphic
equipment, and film transfer equipment so as to provide a broadcast quality
signal for cable distribution on the five designated Government use channels.
The Franchisee will provide audio/video modulators, carrier cable, and
amplification equipment to carry the Government generated video signal from the
TAVSC headend to the Franchisee's distribution facility. The Franchisee will
provide maintenance of all equipment/cable from the modulators to the
Franchisee's distribution facility. The Government will be responsible for
maintenance of the program origination equipment. The Franchisee will provide
one narrow cast channel for broadcast of official Marine Corps training and
education, or information programs or designated facilities. The other four
channels will be distributed to all MCCDC subscribers.
20. Emergency Override. The Franchisee shall provide an "emergency override"
system for use by the Commanding General. This emergency alert system will allow
live voice communications to interrupt on all system channels on the base. The
equipment shall be accessible to the Commanding General 24 hours/7 days/week
through an exclusive code which can be used from a touch-tone telephone. The
Franchisee shall provide and maintain the equipment, services and personnel for
the emergency alert system as part to this Agreement at no cost to the
Government. The Government is responsible for monthly testing and notifying the
Franchisee of any malfunctions.
21. Program Guide and Channel Card. The Franchisee will give each subscriber a
card indicating the channel lineup for cable service, for each outlet of
service. This card shall be provided free of charge at the time of installation.
The Franchisee shall furnish one new card free to each subscriber whenever there
is a change in the channel assignments. The Franchisee shall provide a printed
program guide for basic service channels, or if feasible, an electronic program
guide. The Franchisee will also provide a premium program guide to subscribers
of such service. A charge for program guides may be applied for providing a more
in-depth guide at subscriber's request.
<PAGE> 19
22. Franchise Holder's Rates. The Franchisee agrees that user and connection
fees shall be uniform as to all on-base subscribers within the categories set
forth in Schedule A.
a. Rates for cable service shall be comparable to those in the general area
of the base, i.e., contiguous counties offering comparable services in
accordance with the most advanced industry service.
b. The Franchisee shall notify the Cable Officer and subscribers in writing
of any proposed change in rates no less than 30 days or more than 90 days prior
to the change.
c. If the Cable Officer determines that the proposed rate change is
unreasonable, i.e., that it is disproportionate to the number and quality of
programming options, the quality of signals and services, channel capacity or
the overall economics of the system, such determination shall be made in writing
to the Franchisee. Such determination may be appealed to the Commanding General
under paragraph 33 of this Agreement. In the event the parties are unable to
reach an agreement on a reasonable amount for a rate change, either the
Franchisee or the Government may elect to terminate this Agreement under
paragraph 29 d.
d. Where the Franchisee operates a CATV system in a nearby community, the
Franchisee agrees to make available to the Cable Officer, at any time upon the
latter's demand, a schedule of its off-base fees.
e. Official services purchased by the Government will not be subject to a
converter deposit; however, the Government agrees to report and pay for missing
or stolen converters utilized for official services.
23. Technical Requirements. The Franchisee agrees to provide a minimum system
channel capacity of 54 channels as shown in Schedule B which will meet all
technical requirements set forth in Exhibit 3. The performance criteria for the
composite system shall be as specified in Subpart K, Technical Standards, 47 CFR
76.601-619. The Cable Operator shall maintain the cable system so as to meet or
exceed the technical and design specifications described in Exhibit 3, Technical
System Description and Performance Specifications. The Franchisee is strongly
encouraged to design, construct and maintain a system that will exceed FCC
requirements. Standards and Practices as advanced by the National Cable
Television Association are suggested as minimal operating standards to ensure
acceptable quality service to all subscribers.
a. Demonstrations of Performance. The Franchisee agrees to conduct
demonstrations of the performance and signal quality of its system utilizing
Franchisee-provided test equipment, at the following times: within the deadline
specified in the clause of this agreement entitled "Construction and Operation
Deadline", at
<PAGE> 20
least once each calendar year (at intervals of not less than six months and not
to exceed fourteen months); and when ordered to do so by the Cable Officer to
determine whether the system meets the performance requirements set forth in
Exhibit 3 and/or whether the construction schedule of paragraph 18 herein is
met. A copy of each performance demonstration, verifying compliance with
technical requirements, shall be forwarded to the Cable Officer.
b. Inspection Rights. Following written notice to the Franchisee, the
Commanding General shall have a right of access to the Franchisee's facilities
and equipment for purpose of inspection to ensure compliance with the terms and
conditions of this Agreement.
24. Reporting Requirements. In addition to any other reports or documents
required in this Franchise Agreement, the Franchise Holder shall maintain and
provide the following reports to the Cable Officer within 60 calendar days of
the close of each calendar year unless otherwise stated.
a. During the construction, installation, upgrade or rebuild phases, the
Franchisee shall submit a monthly Progress Report (due on the 10th day of each
calendar month until a phase is completed) which describes the contractor's
progress during the previous month. At a minimum the report shall indicate:
1) Dates of actions and milestones achieved;
2) Schedule extensions requested/received;
3) Problems encountered and their resolutions.
b. Upon establishing cable service availability, the Franchise Holder shall
complete and submit on an annual basis attached Schedules A and B and their
required documentation. Schedule A, the Annual Management Report, describes
operational status which will afford a clear understanding of the Franchise
Holder's current position; Schedule B summarizes technical performance.
c. The Franchise Holder shall maintain a daily complaint log which
identifies all such calls and correspondence and their resolutions. At a minimum
the log shall identify the subscriber's name, address and telephone number;
nature of complaint; and the date, time and resolution of the problem. The log
shall be available for periodic inspection by the Cable Officer and during any
performance evaluation or franchise renewal proceedings. A summary of this log
shall be included in Schedule A.
d. In the event the Franchise Holder publishes reports to shareholders, the
base's Cable Officer shall receive copies when distributed. Any audited
financial statements prepared for the Franchise Holder by a CPA shall also be
provided promptly to the Commanding General and the Contracting Officer.
<PAGE> 21
25. Performance Evaluation/Franchise Compliance. The Cable Officer shall
maintain a record of the Franchisee's performance for the purposes of franchise
administration and renewal as outlined in Section 546-c-1 of the Cable Act.
Performance and compliance will be determined in part based on the information
provided in Schedules A-B attached.
a. The Cable Officer shall hold performance evaluation sessions starting
within 30 days of the even numbered anniversaries of the Franchisee's award or
renewal. Special evaluation sessions may be held at any time at the request of
the Cable Officer or Franchise Holder.
b. Topics which may be discussed include, but are not limited to, system
performance; services provided; programming offered; customer complaints;
amendments to the franchise; line extension policies; franchise fee; free or
discounted service.
c. The Cable Officer may organize a subscriber committee which will inform
the Contracting Officer of problems encountered with franchise service so that
the latter might work with the Franchisee to determine the extent of the problem
and best means of resolution. The Cable Officer shall conduct, at least once
during each 12-month period during the term of this Agreement, a meeting of the
subscriber committee and/or of individual subscribers in order to determine
subscriber opinion of overall quality and acceptability of Franchisee
performance. The Franchisee will be afforded the opportunity to participate in
such a meeting.
26. Term of CATV Franchise. Unless terminated beforehand pursuant to the terms
of Section 30 of this Agreement entitled "Termination", this Agreement shall
take effect upon execution by the Government via the Commanding General for a
term of fifteen years thereafter.
27. Franchise Renewal
a. The renewal procedure shall follow the guidelines specified by Section
546 of the Cable Act, including but not limited to:
1) Ascertainment by the Cable Officer, or designated representative,
of the Base's cable related needs and best interests.
2) Review of the Franchisee's performance during the franchise term.
3) Submissions of a renewal proposal by the Franchisee addressing the
Base's cable related needs and best interests.
b. Determination of renewal will be base on:
<PAGE> 22
1) Franchisee's compliance with the franchise and applicable law.
2) Quality of service, including signal quality, customer complaints
and billing practices.
3) Ability of incumbent to provide satisfactory services, facilities
and equipment offered in the renewal proposal.
4) Reasonableness of the renewal proposal in meeting the Base's cable
related interests.
c. The Cable Officer shall forward a recommendation to the Contracting
Officer and the Commanding General regarding the appropriateness of renewal of
the franchise in the light of the renewal process, documentation and other
available information. The Commanding General shall have signature authority for
initial and renewal franchises.
d. Denial of proposal for renewal shall be based on any of the factors
described in Section 29a(1) through (14).
28. Nontransferability of Franchise Rights. The rights accruing to the
Franchisee under this Agreement are nontransferable without the written consent
of the Contracting Officer. Assignments or other transfer of the Franchisee's
rights under this Agreement without the written consent of the Contracting
Officer shall be grounds for default under the clause of this Agreement entitled
"Termination." This clause shall not apply to assignments of accounts receivable
or to mortgages, deeds of trust, or similar financing instruments, unless
operational or organizational control of the Franchisee is altered by such
instruments.
a. The Franchisee shall notify the Contracting Officer promptly of any
proposed change in, transfer of, or acquisition by any other person of control
of the Grantee or any parent company. For purposes of this Agreement, a change
of control of the parent company will be deemed to have taken place upon the
transfer of 50% or more of the common stock of such parent company to an
unaffiliated entity. Every such change shall make the Franchisee subject to
immediate termination unless and until the Contracting Officer has granted
consent.
b. As a condition of the Contracting Officer's consent, the proposed
transferee must agree to comply with all provisions of the Agreement, and must
show the financial, legal, technical and character qualifications to do so. The
Franchisee will bear the cost of independent evaluation of these qualifications.
<PAGE> 23
29. Termination.
a. Provided that the Contracting Officer first serves the Franchisees with
written notice of a default under this Agreement, and gives the Franchisee the
opportunity to cure such default within 30 days after receipt of such notice,
the Government reserves the right to terminate this Agreement for default by the
Franchisee at any time in the event of any material breach of the franchise,
including but not limited to the following:
1) Violation of any provision of this Agreement or the Cable Act, or any
rule, order, regulation or determination pursuant to the agreement or the Act;
2) Attempt to evade any material provision of the Agreement or the
practicing of any fraud or deceit upon its subscribers or the Government;
3) Misrepresentation of fact in the application for or negotiation of
the franchise agreement or renewal agreement;
4) Failure to meet the installation and operation deadlines established
pursuant to the clauses of this Agreement unless such failure is due to factors
beyond the control of the Franchise Holder, acts of God included;
5) Insolvency, bankruptcy, inability or unwillingness to pay its debts,
including subscriber refunds, where owed.
6) Breach of the clause of this Agreement entitled "Transferability of
Franchise Rights";
7) Loss of or failure to obtain or renew any FCC certificate,
registration or other Government authorization that may be required.
8) Failure to obtain and maintain any public utility easements, road
crossings, or the like required to provide service.
9) Frequent or unjustified delays in providing repair services.
10) Failure to provide the types of services promised, assuming the
Franchisee has unsuccessfully pursued whatever recourse is available under
Section 545 of the Cable Act.
11) Refusal or otherwise unreasonable failure to meet any of its
obligations under this Franchise Agreement and failure to correct the deficiency
within 10 days.
12) Breach of any of the following clauses of this Agreement:
"Connections and Disconnects;" "Repairs;" "Continuity
<PAGE> 24
of Service;" or "Nontransferability of Franchise Rights".
13) A broadcast without permission on the Government use channels.
14) Placement on the list of debarred, ineligible or suspended firms
maintained by the Department of Defense.
b. The foregoing shall not constitute a material breach if the violation is
not the fault of the Franchisee or results from circumstances beyond its
control. The Franchisee shall not be excused by mere economic hardship nor by
malfeasance of its shareholders, directors, officers, employees, or agents.
c. Any decision by the Contracting Officer to terminate this Agreement
under paragraph 29 a. above is subject to review in accordance with paragraph 33
"Disputes."
d. This provision may be invoked by either the Government or the
Franchisee. However, the provision concerning rate changes may be invoked only
after the Government and Franchisee are unable to reach agreement on what
constitutes a reasonable rate change, and a final determination has been issued
under Paragraph 33 advising the Franchisee that his proposed rate change is
unreasonable. Within 60 days of the issuance of such determination, either the
Franchisee or the Contracting Officer may initiate a written Notice of
Termination of Cable Agreement for Convenience of the Parties.
e. In the event of termination, the Franchisee shall continue to provide
service until the effective date of the termination.
30. Government Liability Upon Expiration or Termination. The Government assumes
no liability whatsoever to the Franchisee for recovery of fixed costs required
to install the CATV system and to put it into operation or for any other
expenses incurred by the Franchisee as a result of expiration of this Agreement
under the clause entitled "Term of CATV Franchise Agreement" or of its
termination under the clause entitled "Termination." Where, however,
negotiations for the award of a new CATV Franchise Agreement are made necessary
by the expiration of the term of this Agreement or by the termination of this
Agreement under the conditions of the clause entitled "Termination", the
Contracting Officer shall, where feasible and where the equipment of the CATV
system has continued utility to the Base, permit the incumbent Franchisee to
offer its installed facilities for sale to those who desire to submit proposals
for the new CATV Franchise Agreement. However, nothing contained herein shall in
any way obligate the Government to purchase or effectuate a sale of the benefit
to the Franchisee. In lieu of the above, the Franchisee shall remove this
equipment from the Base as required in Section 33 entitled "Removal of
Facilities".
<PAGE> 25
31. Deactivation of the Base. The Government assumes no liability whatsoever to
the Franchisee for recovery of costs relating to the installation, construction
and hookup of the CATV system, or for any other costs, should the Base covered
by this Agreement be deactivated in whole or in part. In the event that all or
part of the base is deactivated and put to civilian uses that create a demand
for the Franchisee's services, this Agreement shall be conveyed only at the
discretion of the new franchise authority. The Agreement shall, upon the
Franchisee's request, be terminated as to the deactivated areas.
32. Removal of Facilities. The Government reserves the right to require the
Franchisee to remove from the Base at the Franchisee's expense, all equipment,
facilities and materials of the CATV System, and to restore affected areas to
their former condition, within 90 calendar days after expiration or termination
of this Agreement. In the event the Franchisee shall fail to remove the
aforesaid, it shall be deemed to have been abandoned by the Franchisee. The
Franchisee shall reimburse the Government for the cost, if any, incurred by the
Government, in effecting removal or otherwise restoring its property to its
former condition. Abandoned materials become the property of the Government.
33. Disputes. The Cable Officer shall decide all disputes concerning questions
of fact that may arise between the Franchise Holder and subscribers. The
Contracting Officer shall decide disputes between the Cable Officer and the
Franchisee; appeals may be made to the Commanding General. The Commanding
General shall put his decision in writing and mail a copy to the Franchisee
within 30 days of reaching such decision. The decision of the Commanding General
shall be final, conclusive and not subject to further review by administrative
or judicial tribunals.
a. If a dispute arises concerning interpretation of terms and conditions in
this Agreement, the Franchisee and Contracting Officer shall meet and attempt to
reach a mutually agreeable resolution. If such effort fails, the Contracting
Officer shall issue, in writing, a final decision which may be appealed to the
U.S. Claims Court within 12 months of the date of issuance of the Contracting
Officer's final decision. The Government reserves the right to require
certification as to entitlement and accuracy of sums claimed by the Franchisee
as a condition precedent to payment of such claims.
b. The Franchisee shall, in all good faith, proceed diligently with
performance of all aspects of this contract, pending final resolution of any
request for relief, claim, appeal or action related to the contract.
34. Modifications of Government Regulations. The parties reserve the right to
reopen and renegotiate the terms of this Agreement in the event that statutory
or regulatory changes of a material,
<PAGE> 26
substantive nature are made with respect to regulation and implementation of the
cable television industry and franchisees therefor.
35. Franchise and Analogous Fees. The Franchise Holder shall remit to the
Government a franchise fee which shall be equal to 5% of the gross receipts
received from all base subscribers for "all cable service". "All cable service"
shall be defined as basic and premium programming and all other subscriber
income resources. Installation fees, and one time service fees are not subject
to franchise fees. Franchise fees from "Pay for View" programming will only be
charged against the amount of the total "Pay for View" fee that is retained by
the Franchise Holder. The first monthly Franchise fee payment will be due 75
days after the contract's effective date (e.g., 15 August 1991 if contract
effective on 1 June 1991). Franchise fee payments will be paid monthly
thereafter with payments due by the 15th of each calendar month. In lieu of
submitting utility pole fees to the Government, the Franchisee shall provide
cable service at no charge to the Government for up to forty (40) common areas
identified in writing by the Government's Cable Officer and effective annually
on 1 January.
36. Utilities Services. The Franchise Holder shall pay the Commanding General
for the use authorized herein for utilities services on a metered basis, with
the metering being installed at the Franchisee Holder's expense, for the entire
system. The rate for such use shall be the same rate charged to other private
party users.
37. Contractor Vehicle Authorization. All privately owned vehicles must be
properly registered and identified in accordance with Base regulations. All
drivers must have valid motor vehicle operator's licenses. All vehicles must
conform to federal and state safety standards and be properly and currently
licensed, inspected, and insured. Any accidents must be immediately reported to
the Cable Officer and Base Security Officer.
38. Security Requirements. The Franchise Holder shall furnish the Cable Officer
a roster of personnel assigned, will keep the roster current, and will report in
writing immediately any termination of personnel assigned. All employees of the
Franchise Holder employed in the performance of work under this Agreement shall
be employees of or contractors working on behalf of the Franchise Holder at all
times and not employees of the Government.
<PAGE> 27
39. FAR Provisions Incorporated by Reference. The following FAR provisions are
hereby incorporated by reference in this CATV Franchise Agreement.
<TABLE>
<CAPTION>
FAR CLAUSE TITLE
--------------------------------- --------------------------------
<S> <C>
FAR 52.229-3 Federal, State and Local Taxes
FAR 52.203-1 Officials Not to Benefit
FAR 52.203-5 Convent Against Contingent Fees
FAR 52.203-3 Gratuities
FAR 52.222-3 Convict Labor
FAR 52.232-17 Interest
</TABLE>
40. Compliance with Section 554 of CCPA. The Franchise Holder shall comply with
Section 554 of the Cable Communications Policy Act of 1984 with respect to Equal
Opportunity.
41. The Franchise Holders fees shall be deregulated, as provided for under the
CCPA and FCC rules. In no event shall the rates charged to subscribers on the
Base be higher than the rates for equivalent cable television service provided
by the Franchise Holder in the geographic area proximate to the Base. The
Franchise Holder shall give all existing customers and the Commanding General no
less than 30 days notice and no more than 90 days notice before the effective
date of any fee increase.
42. Compliance with Drug Free Work Place Act. The Franchise Holder shall comply
with the Drug Free Work Place Act of 1988.
43. Disclaimer of Official Sanction. In soliciting subscribers following
execution of this Agreement, the Franchise Holder shall under no circumstances
purport to offer its services as an officially sanctioned or recommended benefit
or in any other way convey the impression that subscription is anything other
than totally voluntary on behalf of subscribers.
44. Nondiscriminatory Availability. The Franchise Holder shall not, as to rates,
charges, service, service facilities, or in any other respect grant undue
preference to any subscriber or subject any subscriber to prejudice or
disadvantage.
45. Compliance with Laws and Regulations. The Franchise Holder shall comply with
all laws, ordinances, statutes and regulations pertaining to the provisions of
this Franchise Renewal Agreement, including those Marine Corps Combat
Development Command regulations pertaining to Base admission, identification,
security and personnel conduct.
<PAGE> 28
46. Protection of Subscriber Information.
a. At the time of entering into an agreement to provide any cable service
or other service to a subscriber, and at least once a year thereafter, the
Franchisee shall provide notice in the form of a separate, written statement to
such subscriber which clearly and conspicuously informs the subscriber of:
(1) The nature of personally identifiable information collected or to be
collected with respect to the subscriber and the nature of the use of such
information;
(2) The nature, frequency, and purpose of any disclosure which may be
made of such information, including an identification of the types of persons to
whom the disclosure may be made;
(3) The period during which such information will be maintained by the
Franchisee;
(4) The times and places at which the subscriber may have access to such
information in accordance with paragraph 16b;
(5) The limitations provided by this section with respect to the
collection and disclosure of information by a Franchisee and the right of the
subscriber.
In the case of subscribers who have entered into such an agreement before
the effective date of this paragraph, such notice shall be provided within one
hundred eighty (180) days of such date, and at least once a year thereafter.
b. For purposes of this section, the term "personally identifiable
information" does not include any record of aggregate data which does not
identify particular persons.
<PAGE> 29
47. Signatures.
IN WITNESS WHEREOF, the Government and the Franchisee have caused this
Agreement to be executed as of the day and year first below written.
THE UNITED STATES OF AMERICA
by /s/ [ILLEGIBLE]
---------------------------------------
Commanding General DATE
Marine Corps Base
Marine Corps Combat Development Command
Quantico, Virginia 22134
Telephone: (703) 640-5902
FRANCHISEE
by /s/ ROBERT ROSENCRANS Dec. 5, 1990
---------------------------------------
(Name) Robert Rosencrans DATE
Title President
---------------------------------
Company Columbia Associates, L.P.
-------------------------------
Address 9 Greenwich Office Park
-------------------------------
City/State Greenwich, CT 06330
----------------------------
Telephone: (203) 661-1509
----------------------------
I, Scott N. Ledbetter certifiy that I am the Secretary of the Corporation
named herein; and that the foregoing instrument was duly signed for and on
behalf of said corporation by authority of its governing body and is within the
scope of its incorporated power.
<PAGE> 30
EXHIBIT 3
Technical Requirements
1. SCOPE
1.1 This exhibit sets forth the minimum technical engineering, performance,
installation, and construction requirements which shall be met by the Franchisee
in fulfilling his obligations under the Franchise Agreement. Summaries of the
Cable Operator's design and technical specifications appear in Schedule B and
are included in this exhibit by reference.
1.2 The Franchisee may request a waiver of any requirement of this Exhibit where
local conditions render a waiver essential. Such requests shall be directed to
the Contracting Officer who, in consultation with the Cable Officer, shall
determine whether such requests should be considered. Waivers shall be granted
only where technically acceptable to and in the best interests of the United
States Marine Corps. Any such waivers must be signed by both parties and
incorporated as Amendments to this Agreement.
2. APPLICABLE DOCUMENTS
2.1 Military Specifications or Standards. There are no military specifications
applicable to this exhibit.
2.2 Other. Federal: Federal Communications Commission (FCC) Rules and
Regulations ("R&R") Parts 73, 76 and 78. Industry: Electronic Industry
Association (EIA) RS-170; National Cable Television Association (NCTA)
Standards; National Electrical Code; National Electrical Safety Code.
3. REQUIREMENTS
3.1 Engineering. The system furnished in accordance with this exhibit shall
distribute NTSC-TV signals with standard 6 Mhz channel bandwidths, as designated
by FCC R&R, Part 73, Sections 73.6703 and 73.682 and/or as specified in
supporting documentation.
3.2 General. All cabling shall be of a size and construction that will assure
that the system functions as specified herein. All cable and components
installed shall be wholly suitable for the conditions to which they may be
exposed. (Note: Where not required for initial operation, unused cable ends
shall be sealed and protected from moisture and other possible damage. In
addition, all unused cable outputs shall be electrically terminated by 75 ohm
resistors.)
1
<PAGE> 31
3.3 Antennas. Antennas shall comply with all the United States Marine Corps
and/or FAA safety requirements concerning lighting, marking and analogous
features. Each antenna shall be of sufficient gain and directivity to provide
adequate reserve signal to noise ratio and suppression of adjacent channel
interference.
3.4 Electricity. The Franchisee shall meet all National Electrical Safety Code
standards with regard to lightning, power surges and proper grounding.
3.5 Subscriber Installation Material. Cable fittings, ground blocks, etc., shall
be of a quality that will provide secure and safe construction. Where grounding
wire, rod, clamps, etc. are used, they shall be selected to conform to pertinent
National Electric Code and local electrical safety specifications.
3.6 Best Engineering Effort. The Franchisee shall employ a best engineering
effort in antenna design, limited only by restrictions imposed by the state of
the art and zoning limitations, to avoid or to minimize co-channel interference,
electrical noise interference, multipath signal or excessive fading.
3.7 Performance Standards. The Franchisee shall ensure that the CATV system
meets or exceeds the performance standards specified in Schedule B of the
Proposal, and meets at a minimum the following technical specifications.
a. Hum modulation in any amplifier shall be kept to a minimum and shall in
no event be greater than 5%.
b. Carrier to noise ratio at any television receiver, including the
receiver in the system that is located electrically the farthest away from the
headend, shall be at least 42 dB.
c. Composite triple beat at any television receiver, including that
receiver in the system that is located electrically the farthest away from the
headend, shall be at least 52 dB below the carrier level.
d. In addition, all relevant FCC and Franchisee-proposed technical
performance rules shall be complied with. In any event meeting the
specifications set forth herein shall not relieve the Franchisee from providing
clear quality video and aural signals, including any color information that may
be present.
3.8 Radiation Leakage. Incidental radiation from any part of the system or
service outlets shall conform with Part 15 of FCC Rules
2
<PAGE> 32
and Cumulative Leakage Index requirements, or such modifications thereof as may
be adopted subsequently.
3.9 Overhead. The installation shall conform to the requirements applicable to
urban districts in the National Electrical Safety Code and shall apply to all
streets, alleys, roads, and drives. All aerial coaxial cables shall be laced
with lashing wire to messenger cables by means of a suitable lashing machine.
Lashing wire shall be 0.045-inch stainless steel of the type used to lash aerial
telephone cables. The pitch of lashing wire may be from 10 to 15 inches but
shall be consistent throughout the system. At a minimum the system shall be
grounded at every first, tenth and last pole in a span.
3.10 Ground Clearance. The installation of all CATV cabling shall not conflict
with or cause any other cabling (i.e., communications, power, etc.) to violate
established ground clearance criteria (existing and/or future).
3.11 Underground. Cables shall be unreeled and placed at the bottom of the
trench. Cables normally shall not be unreeled and pulled into the trench from
one end. Cable shall be in one piece without splices between connections except
where the distance exceeds the length in which the cable is manufactured.
3.12 Conduit. Under paved areas and roadways, the cables shall be installed in
adequately sized conduit in accordance with NEC and NESC standards. Conduit
shall be extended not less than two feet beyond pavements and roadways, when
such roadway is utilized for vehicular traffic.
3.13 Trenches. Trenches in which direct burial cables are placed shall have a
minimum depth of 18 inches below grade, and shall generally be in straight lines
between cable connections, except as otherwise necessary. Bends in trenches
shall have a radius of not less than 36 inches.
3.14 Rock. Armored cable or conduit shall be used where rock is encountered.
Rock, where encountered, shall be removed to a depth of not less than three
inches below the cable depth and the space filled with sand or clean earth, free
from particles that would be retained in a one quarter inch sieve.
3
<PAGE> 33
SCHEDULE A
ANNUAL MANAGEMENT REPORT
This form is to be filed with the Franchise Administrator within 60 days of
the close of each calendar.
<TABLE>
<S> <C> <C>
A. Construction/Service
--------------------
1. Current Plant Miles
-------------------------
2. Remaining Construction
-------------------------
3. No. Channels Activated
-------------------------
4. Rates Increased During year?
-------------------------
5. Previous basic rate/# channels
-------------------------
6. Prev. exp. basic rate/# channels
-------------------------
7. Prev. Premium rate(s)
-------------------------
8. Please attach a current channel lineup and rate card.
9. Program additions and/or deletions.
- ------------------------------------------------------------------------------------------
B. Subscriptions
-------------
1. Potential outlets in area
-------------------------
2. Number of outlets passed
-------------------------
3. Beginning Subscribers
-------------------------
a. New connects
-------------------------
b. Reconnects
-------------------------
c. Other
-------------------------
4. Total Disconnects
-------------------------
a. Moved
-------------------------
b. Bad Debt
-------------------------
c. Other
-------------------------
d. Change: Increase (Decrease)
-------------------------
5. Additions/deletions of consideration drops (Schedule D)
- ------------------------------------------------------------------------------------------
C. Customer Service Standards Service Repairs
-------------------------- ------- -------
1. Customer Service Phone Number
------------------ ------------------
2. Hours/days of CSR availability
------------------ ------------------
3. Answering Service Hours
------------------ ------------------
4. Number of phone lines
------------------ ------------------
5. Avg. # CSR's available at one time
------------------ ------------------
6. Maximum time before CSR pick-up
------------------ ------------------
7. Hours/days repairs will be made
----------------------------------------
8. Max. time before repair visit
----------------------------------------
9. Appt. available for install repairs Yes No
10. On-base payment location
----------------------------------------
11. Payment due days after receipt of bill
12. Written notification before disconnection Yes No
</TABLE>
1 of 2
<PAGE> 34
SCHEDULE A
Annual Management Report
<TABLE>
<C> <S> <C> <C> <C> <C>
D. Service/Repair Visits
1. Installation 2. Disconnects
---------- ----------
3. Reconnect 4. Up/downgrade
---------- ----------
5. VCR hookup 6. Illegal hookup
---------- ----------
7. Installation Error 8. TV set problem
---------- ----------
9. Converter problem 10. Drop problem
---------- ----------
11. Line problem 12. No trouble found
---------- ----------
13. Not home 14. Other
---------- ----------
15. Total service visits 16. Telephone Report
---------- ----------
</TABLE>
E. Outages
Date Length #Calls #Units affected Reason for outage
-----------------------------------------------------------------------------
a.
-----------------------------------------------------------------------------
b.
-----------------------------------------------------------------------------
c.
-----------------------------------------------------------------------------
F. Comments, plans, problems, issues (indicate any changes in policies,
management, address, telephone number etc.)
2 of 2
<PAGE> 35
SCHEDULE B
Technical Description and Performance Specifications
A. Physical Plant
--------------
1. Miles of plant: Aerial
------------
Underground
------------
Construction complete? Yes No
---- ----
2. Channel capacity: channels, passband - MHz.
---- ----- -----
3. Activated channels: Downstream to MHz.
---- ------- -----
Upstream to MHz.
---- ------- -----
4. Features (check if available):
Audio
-------
Stereo Audio
-------
Pay-per-view
-------
Cable-ready basic
-------
5. Channels unusable for video due to interference or other reasons:
- --------------------------------------------------------------------------------
6. Maximum cascade from headend:
Trunk amplifiers
-------
Bridger(s)
-------
Line Extender(s)
-------
7. Equipment added or replaced during previous year:
- --------------------------------------------------------------------------------
B. Signal Quality
--------------
1. Date of last demonstration of technical performance:
-------------------------
2. Results of demonstration (measured levels) at worst case test points:
a. Carrier to noise dB
-----------
b. Carrier to low frequency dB
-----------
c. Carrier to second order dB
-----------
d. Carrier to cross modulation dB
-----------
e. Carrier to composite beat dB
-----------
3. Frequency vs. gain response of the passband shall not exceed N / 10 +
__________dB, where N = number of amplifiers in cascade.
1 of 2
<PAGE> 36
SCHEDULE B
Technical Description and Performance Specifications
4. Frequency vs. gain response of a signal channel as measured across any 6 MHz
spectrum shall not exceed +/- dB.
5. The system shall meet or exceed all FCC technical standards contained in Part
76, Subpart K of FCC Rules and Regulations.
C. Comments
2 of 2
<PAGE> 37
Addendum #1 to Franchise Agreement entered into on 6 December 1990 at Marine
Corps Base, Marine Corps Combat Development Command, Quantico, Virginia, 22134
by and between the United States of America, and Columbia Associates (L.P. d/b/a
Columbia Cable of Virginia) which parent company is Columbia International,
Inc., 9 Greenwich Office Park, P.O. Box 4624, Greenwich, Connecticut, 06830.
For the mutual benefit of all parties, this Addendum, the terms of which are set
forth, is made and entered into on 7 June 1991, by and between the United States
of America, hereinafter called USA, and Columbia Associates, hereinafter called
the Franchisee.
1. That the five percent (5%) franchise fee shall apply to basic service only.
That the franchise fee is not allowable as a separate increase to the bill with
a direct pass through expense to customers.
2. That a 50% discount coupon off the price of the non-promotional installation
fees for basic service shall be made available by the Franchisee to all military
patrons at Marine Corps Combat Development Command.
3. That the computation of the franchise fee payable shall commence on 1 July
1991.
4. That the current five percent (5%) rate increase published by the Franchisee
shall be rescinded. No rate increase shall occur prior to 1 January 1992.
5. That the format of the current customer fee schedule shall remain as
currently printed until 1 July 1992 when a "breakout" of the franchise amount as
a separate line item will become effective. A customer fee increase will not be
effected at this time. The basic cable rate amount shown will be reduced by the
five percent (5%) franchise fee "breakout" shown.
6. That this Addendum will commence and become effective on 7 June 1991.
7. Except as rendered inconsistent by provisions of the Addendum, all provisions
of the basic agreement will be part of this Addendum.
THE UNITED STATES OF AMERICA
by /s/ Ed Cook Jr. 10 June 91
---------------------------------
Commanding General DATE
Marine Corps Base
Marine Corps Combat Development
Command
Quantico, Virginia 22134
Telephone: (703) 640-5902
1 of 2
<PAGE> 38
FRANCHISEE
by /s/ Richard H. Rosencrans 6/7/91
----------------------------------------------------
(Name) DATE
Title Vice President -- Columbia International, Inc.
----------------------------------------------
9 Greenwich Office Park
P.O. Box 4624
Greenwich, Connecticut 06830
Telephone: (203) 661-1509
2 of 2
<PAGE> 1
EXHIBIT 10.6.64
RESOLUTION NO.
RESOLUTION APPROVING THE TRANSFER OF
THE CABLE TELEVISION FRANCHISE FOR THE
TOWN OF HAYMARKET, VIRGINIA
HELD BY BENCHMARK/MANASSAS CABLE FUND
LIMITED PARTNERSHIP
WHEREAS, by Ordinance adopted on January 20, 1986 (the "Ordinance"), the
Town Council of the Town of Haymarket, Virginia (the "Town") granted to Telesat
Communications, Inc. ("Telesat") a franchise (the "Franchise") to construct,
own, operate and maintain a cable television system within the Town (the
"System"); and
WHEREAS, by Consent to and Approval of Merger and Consent to and Approval
of Assignment dated July 22, 1987, the Town approved the assignment of the
Franchise from Telesat to Benchmark/Manassas Cable Fund Limited Partnership
(d/b/a Cablevision of Manassas, Ltd.) ("Cablevision"), and the Franchise was
subsequently so assigned, such that Cablevision is now the duly authorized
holder of the Franchise; and
WHEREAS, Cablevision has agreed to sell the System to Jones Intercable,
Inc. ("Jones") and Jones has agreed to purchase the System from Cablevision; and
WHEREAS, Cablevision has requested pursuant to Section 9 of the Ordinance
that the Town Council of the Town of Haymarket, Virginia approve (i) the
transfer of the Franchise to Jones Intercable, Inc., a Colorado corporation
("Jones") or any affiliate of Jones, including any limited partnership 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 or partnerships is a general partner (any such entity being
hereinafter referred to as an "Affiliate of Jones"); (ii) the subsequent
transfer of the Franchise to any Affiliate of Jones; and (iii) the granting from
time to time by Jones or any Affiliate of Jones then holding the Franchise of a
security interest in its assets, including the Franchise and the System, to an
institutional lender or lenders as security for its obligations to such lender
or lenders; and
WHEREAS, Jones or any Affiliate then holding the Franchise has agreed to be
bound by the terms, provisions and conditions of the Franchise.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Council of the Town of
Haymarket, Virginia that:
1. The Town does hereby consent to the transfer of the System and the
Franchise from Cablevision to Jones or any Affiliate of Jones and to any
subsequent transfers to any Affiliate of Jones.
2. The Town does hereby consent to the grant from time to time by Jones or
any Affiliate of Jones then holding the Franchise of a security interest in the
System
<PAGE> 2
and in all of its rights, powers and privileges under the Franchise and all of
its other assets to such lending institution or institutions as may be
designated from time to time by Jones or such Affiliate, which lending
institution or institutions shall have all of the rights and remedies of a
secured party under the applicable Uniform Commercial Code.
3. The foregoing consent to the transfer and assignment of the Franchise
shall be effective upon the closing of the sale of the System by Cablevision to
Jones or an Affiliate of Jones. Notice of such closing date shall be given to
the Town. Any subsequent transfer of the Franchise from Jones to any Affiliate
of Jones or between Affiliates of Jones shall be effective upon written notice
being given to the Town by the entity then holding the Franchise.
4. The Town hereby confirms that, to its knowledge, (a) the Franchise is
currently in full force and effect; (b) Cablevision is currently the valid
holder and authorized grantee of the Franchise; (c) Cablevision is in compliance
in all material respects with the Franchise; and (d) no event has occurred or
exists which would permit the Town to revoke or terminate the Franchise. Subject
to compliance with the terms of this Resolution, all action necessary to approve
the transfer of the Franchise and the System to Jones or any Affiliate of Jones
or to any subsequent transfers to any Affiliate of Jones has been duly and
validly taken.
Adopted by the Town Council of the Town of Haymarket, Virginia on this day
of August 7, 1995.
TOWN OF HAYMARKET, VIRGINIA
[ILLEGIBLE]
------------------------------------
Title: Mayor
ATTEST:
[ILLEGIBLE]
- ------------------------------
Town Clerk
<PAGE> 3
CONSENT TO AND APPROVAL OF MERGER, AND
CONSENT TO AND APPROVAL OF ASSIGNMENT
This Consent to and Approval of Merger, and Consent to and Approval of
Assignment is hereby made this 22nd day of July, 1987 by and among the Town of
Haymarket, Virginia (the "Franchise Authority"), Telesat Communications, Inc.
("Telesat"), and Cablevision of Manassas Ltd., which plans to change its name to
Benchmark/Manassas Cable Fund Limited Partnership (the "Partnership").
RECITALS
A. Telesat currently owns and operates a cable television system serving
Haymarket, Virginia (the "System").
B. Telesat has entered into an Agreement and Plan of Merger ("Merger
Agreement"), dated June 19, 1987, with ABS/Benchmark Acquiring Corp., a Virginia
corporation ("Acquiring Corp."). Pursuant to the Merger Agreement, among other
things, Acquiring Corp. will be merged into Telesat (the "Merger") and Telesat
will be the surviving corporation (the "Survivor"). The former holders of Common
Stock and Series A Preferred Stock of Telesat will receive cash in exchange for
their stock in the Merger and the stockholders of Acquiring Corp. will become
the sole stockholders of Survivor.
C. Acquiring Corp. represents that after the Merger, the Survivor will
transfer all of its assets and
<PAGE> 4
-2-
liabilities to the Partnership in exchange for a limited partnership interest in
the Partnership.
D. The Franchise Authority granted to Telesat a cable television franchise
on January 20, 1986 (the "Franchise"), which Franchise will expire on January
20, 2001.
E. As a condition to the Closing of the Merger between Telesat and
Acquiring Corp., Telesat must obtain the consent of and approval of the
Franchise Authority to the Merger.
F. Pursuant to the terms of the Franchise, the Survivor must obtain the
consent of and approval of the Franchise Authority to the assignment and
transfer of the Franchise by Survivor to the Partnership.
NOW THEREFORE, in consideration of the premises and the mutual promises and
covenants herein contained, the sufficiency of which is hereby acknowledged, the
Franchise Authority hereby consents to the following:
1. The Franchise Authority hereby consents to and approves the Merger of
the Acquiring Corp. with and into Telesat pursuant to the Merger Agreement and,
accordingly, acknowledges that the Franchise shall not be rescinded, negated or
otherwise affected in any manner by the Merger or the transactions contemplated
thereby.
<PAGE> 5
-3-
2. The Franchise Authority hereby consents to and approves the assignment
and transfer of the Franchise by Survivor to the Partnership, such assignment to
be effective upon the date of closing for the transfer of assets and liabilities
by Survivor to the Partnership (the "Closing");*
3. It is understood by all the parties hereto that no assignment or other
transfer of any rights currently held by Telesat pursuant to the Franchise shall
be effective, and the consents and the approvals requested hereby shall not take
effect, unless and until a certificate of merger in connection with the Merger
is issued by the State Corporation Commission of Virginia.
4. The Franchise Authority acknowledges that Telesat is in full compliance
with the terms of the Franchise.
IN WITNESS WHEREOF, this Agreement is made on the date first written above.
TELESAT COMMUNICATIONS, INC.
By: /s/ DAVID K. VITALIS
--------------------------------
David K. Vitalis, Chairman
President and Chief
Executive Officer
(SIGNATURES CONTINUED ON NEXT PAGE]
provided that prior to the effective date of such transfer, the partnership, as
the ultimate assignee has filed in the office to the Town Clerk an instrument,
duly executed, reciting the fact of such assignment, accepting the terms of
Franchise, and agreeing to perform all the conditions thereof.
<PAGE> 6
-4-
CABLEVISION OF MANASSAS LTD.
BY: /s/ R. CALVIN SUTLIFF
--------------------------------
R. Calvin Sutliff,
General Partner
TOWN OF HAYMARKET, VIRGINIA
BY: /s/ GERTRUDE BEAN
--------------------------------
Name:
Title: Mayor
State of Virginia
Town of Haymarket,
County of Prince William,
to-wit:
I hereby certify that before me, the subscriber, a notary public in and for
the State and County aforesaid, personally appeared Gertrude Bean, Mayor of the
above referenced Franchise Authority, known to me or satisfactorily proven to be
the person whose name is subscribed to the foregoing instrument and acknowledged
that he executed same for the purposes therein contained.
/s/ THOMAS MACAULAY
------------------------------------
Notary Public
[Notarial Seal] My commission Expires:
-------------
MY COMMISSION EXPIRES APRIL 4, 1990
<PAGE> 7
[BENCHMARK COMMUNICATIONS LETTERHEAD]
TOWN OF HAYMARKET
FRANCHISE AGREEMENT
July 30, 1987
Gertrude Bean
Mayor
Town of Haymarket
Haymarket, VA
Dear Mayor Bean:
In connection with the transfer from Telesat Communications, Inc. to
Benchmark/Manassas Cable Fund Limited Partnership, the Franchise (known as the
"Cable Television Ordnance") for providing cable television services in the Town
of Haymarket, Virginia, we hereby accept the terms of that Franchise dated 20
January, 1986 and as amended by Town ordnance on 20 July, 1987 and agree to
perform all the conditions thereof.
Sincerely,
BENCHMARK/MANASSAS CABLE FUND
LIMITED PARTNERSHIP
By: /s/ R. CALVIN SUTLIFF, JR.
--------------------------------
R. Calvin Sutliff, Jr.
General Partner
<PAGE> 8
AN ORDINANCE TO AMEND THE ORDINANCE
GRANTING TO TELESAT COMMUNICATIONS, INC.
A FRANCHISE TO OPERATE
A COMMUNITY ANTENNA TELEVISION SYSTEM SERVICE
IN THE TOWN OF HAYMARKET, VIRGINIA
WHEREAS, an Ordinance was adopted by the Council of the Town of Haymarket,
Virginia, on the 20th day of January, 1986, granting a Franchise to Telesat
Communications, Inc., known as the "Cable Television Ordinance"; and
WHEREAS, Telesat Communications, Inc., has requested approval by the Town
Council to assign and transfer, through merger with ABS/Benchmark Acquiring
Corporation, a Virginia corporation, which corporation will sell its assets to a
partnership known as Benchmark/Manassas Cable Fund Limited Partnership; and
WHEREAS, Telesat Communications, Inc., has also requested the Town to amend
SECTION 27 of the said Franchise Ordinance to reduce the bonding requirement
therein from Fifty Thousand Dollars ($50,000.00) to Five Thousand Dollars
($5,000.00); and WHEREAS, the Town has agreed to reduce the said bonding
requirements to Fifteen Thousand Dollars ($15,000.00) rather than the Five
Thousand Dollars ($5,000.00) requested; and
WHEREAS, pursuant to the requirements of Section 15.1-314 of the 1950 Code
of Virginia, as amended, in order to amend the Franchise Ordinance, a public
hearing was held on the 20th day of July, 1987, pursuant to notice published in
The Journal Messenger on the 9th day of July, 1987, to reduce the requirements
as set forth in Section 27 upon the said Franchisee.
-1-
<PAGE> 9
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE TOWN OF HAYMARKET
meeting in regular session this 20th day of July, 1987, that the Cable Franchise
Ordinance entered into with Telesat Communications, Inc., be and it is hereby
amended to grant approval of the assignment and transfer by Telesat
Communications, Inc., to Benchmark/Manassas Cable Fund Limited Partnership,
conditioned upon its filing with the Town Clerk the necessary acceptance of the
terms of the Franchise and the Agreement to perform all the conditions thereof
pursuant to the requirements of SECTION 9 of the Franchise; and
BE IT FURTHER ORDAINED that "SECTION 27. Bonding Requirements" be amended
and reenacted to read as follows:
SECTION 27. Bonding Requirements.
(1) Performance Bond. From and after the effective date of this Amendment,
Company, and any successors or assigns thereof, shall keep on deposit in an
escrow account in the name of the Town of Haymarket a cash deposit,
corporate surety bond or irrevocable letter of credit in the amount of
Fifteen Thousand Dollars ($15,000.00). The cash bond or letter of credit
shall be used to insure the faithful performance by Company, its successors
or assigns, of all provisions of this franchise ordinance; and its
compliance with all orders, permits and directions of any agency,
commission, board, department, division or office of the Town having
jurisdiction over its acts or default under this franchise and the payment
by the Company, or its successors or assigns, of any liquidated damages,
claims, liens and taxes due the Town which arise by reason of the
construction, operation or maintenance of the system.
This ordinance shall be effective upon its passage.
BY ORDER OF THE COUNCIL
Endorsed: [ILLEGIBLE]
Mayor --------------------------
Attest: /s/ DOROTHY KELLER
----------------------------
Town Clerk
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<PAGE> 10
TO: BANK OF VIRGINIA:
We, the undersigned, hereby notify you that pursuant to an Ordinance of the
Town of Haymarket, Virginia, dated January 20, 1986, the Town of Haymarket
granted a cable system franchise to Telesat Communications, Inc.; that an Escrow
Agreement depositing $50,000.000 with the Bank of Virginia was entered into the
17th day of November, 1986, pursuant to the franchise requirement with the Bank
of Virginia as Escrow Agent and with the provisions of escrow; that said
ordinance was amended the 20th day of July, 1987, approving the assignment and
transfer of the franchise from Telesat Communications, Inc., to
Benchmark/Manassas Cable Fund Limited Partnership, a General Partnership, of
which R. Calvin Sutliff, Jr., is General Partner; that the amendment to the said
Franchise Ordinance further amended Section 27 of the original Franchise
Ordinance to reduce from $50,000.00 to $15,000.00 the bonding requirement
thereof, thereby amending the said Agreement dated November 17, 1986, between
Telesat Communications, Inc., and the Town of Haymarket.
You are further notified that all other directions, requirements and
instructions in the said Escrow Agreement dated November 17, 1986, are hereby
ratified and remain in force.
You are hereby requested to forward to the Town of Haymarket a copy of the
deposit slip or other verification of the receipt of the escrow of $15,000.00,
thereby releasing the initial investment savings account certificate deposit
receipt showing deposit of $50,000.00 in the name of the Town of Haymarket dated
November 18, 1986, made at the Westgate Branch of the Bank of Virginia.
TELESAT COMMUNICATIONS, INC.
By: /s/ DAVID K. VITALIS
---------------------------------
David K. Vitalis, President
CABLEVISION OF MANASSAS LTD.
(Benchmark/Manassas Cable Fund
Limited Partnership)
By: /s/ R. CALVIN SUTLIFF, JR.
---------------------------------
R. Calvin Sutliff, Jr.
General Partner
TOWN OF HAYMARKET
By: /s/ GERTRUDE BEAN
---------------------------------
Gertrude Bean, Mayor
<PAGE> 11
AN ORDINANCE
TO ADVERTISE
CABLE TELEVISION FRANCHISE ORDINANCE
WHEREAS, the Town of Haymarket, Virginia, desires to seek qualified
applicants to provide cable television service to the citizens of Haymarket,
Virginia; and
WHEREAS, the Town of Haymarket sets forth herein the proposed Cable
Television Franchise Ordinance to be granted and the Request for Proposals
respecting the same containing information and instructions relating to the
preparation and filing of proposals as well as conditions and provisions
regarding installation, operation and maintenance of a cable television system;
and
WHEREAS, such ordinance and proposals are on file at the Town Hall in
Haymarket.
NOW, THEREFORE, BE IT ORDAINED by the Council of the Town of Haymarket,
Virginia, in Regular session this 20th day of January, 1986:
I. That there shall be granted in the mode prescribed by the laws of the
Commonwealth of Virginia for franchise grants (Title 15.1, Chapter 9, Article 2,
Section 15.1-307, et seq., and Title 15.1, Chapter 1, Article 2, Section
15.1-23.1 of The 1950 Code of Virginia, as amended, and in accordance with The
Cable Communications Policy Act of 1984, identified as "Title VI -- Cable
Communications," an amendment to the Communications Act of 1934) upon the
conditions hereinafter specified, the rights and privileges embodied in the
foregoing draft of ordinance together with Request for Proposals for the
provision of cable television services to the citizens of the Town of Haymarket,
such ordinance being entitled:
<PAGE> 12
AN ORDINANCE GRANTING UNTO TELESAT, ITS SUCCESSORS AND ASSIGNS, A
FRANCHISE, RIGHT OF CONVENIENCE OR PRIVILEGE TO ERECT, OPERATE AND MAINTAIN
POLES, CABLES, AND ALL OTHER ELECTRICAL EQUIPMENT, STRUCTURES, OR FIXTURES
NECESSARY AND INCIDENTAL TO THE OPERATING OF A COMMUNITY ANTENNA TELEVISION
SYSTEM SERVICE AND CLOSED CIRCUIT TELEVISION TRANSMISSION SERVICE, SUBJECT TO
THE LIMITATIONS AND RESTRICTIONS HEREIN SET FORTH, UNDER, OVER, UPON AND ACROSS
THE STREETS, ALLEYS, SIDEWALKS, AND PUBLIC PLACES OF THE TOWN OF HAYMARKET,
VIRGINIA, FOR THE PURPOSE OF ERECTING, OPERATING, AND MAINTAINING A COMMUNITY
ANTENNA TELEVISION SYSTEM AND CLOSED CIRCUIT TELEVISION TRANSMISSION SERVICE FOR
THE USE OF THE RESIDENTS AND CITIZENS OF SAID TOWN, AND FOR THE PERSONS FIRMS
AND CORPORATIONS DOING BUSINESS THEREIN, AND TO USE THE PROPERTY OF OTHER
COMPANIES UPON SUCH ARRANGEMENTS AND CONDITIONS AS THE COMPANIES MAY AGREE.
BE IT ORDAINED, by the Town of Haymarket, State of Virginia.
SECTION 1. Short Title.
This Ordinance shall be known and may be cited as the "Cable Television
Ordinance".
SECTION 2. Definitions.
For the purpose of this Ordinance, the following terms, phrases, words, and
their derivations shall have the meaning given herein. When not inconsistent
with the context, words used in the present tense include the future, words in
the plural number include the singular number and words in the singular number
include the plural number. The word "shall" is always mandatory and not merely
directory.
(1) "Town" is the Town of Haymarket, Virginia.
(2) "County" is the County of Prince William, Virginia.
(3) "Company" is the grantee of rights under this Ordinance.
<PAGE> 13
(4) "Council" is the Town Council of the Town of Haymarket, Virginia.
(5) "Person" is any individual, partnership, association, corporation,
joint stock company, trust, or governmental entity of any kind.
(6) Whenever used in the ordinance, the words "audio", "video",
"television" and "frequency modulation" shall mean a system for transmission of
audio signals and visual images, or the separate transmission of either of them,
by means of electrical impulses. The system shall have the emergency alert audio
and video interruption feature to all channels.
(7) "Subscriber System" means that portion of the cable television system
that is designed to serve all residences, businesses, and institutions in the
Town.
(8) "Cable System Activation" means the date on which fifteen (15) percent
of the trunk and feeder cable for the subscriber system has been installed, or
the date on which the trunk or feeder cable of the subscriber system passes
within one hundred fifty (150) feet of the property lines of fifteen (15) per
cent of all residences in the Primary Service Area (PSA).
(9) "Primary Service Area" (PSA) as used in this section means the total
area of the town limits of Haymarket.
(10) "Operator's Gross Revenues" shall include all revenues derived from
supplying regular subscriber service, that is, the installation fees, disconnect
and reconnect fees, and fees for regular cable benefits including the
transmission of broadcast signals and access and origination channels, if any.
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<PAGE> 14
It also includes revenues derived from per-program and per-channel charges,
leased channel revenues, and advertising revenues.
(11) "Cable Office" shall mean the business office of the franchise which
shall be conveniently accessible to the public.
(12) "Homes Per Mile" shall mean the total number of residential units
located on the property directly adjacent to two consecutive miles of street, as
measured along established streets. The total residential units thus obtained
shall be divided by two to obtain the "homes per mile." Example: 8 apartments in
one building count as 8 homes.
SECTION 3. Authority and Terms
(a) Grant of Authority. The town is hereby authorized to grant a
non-exclusive right and privilege to construct, erect, operate and maintain, in,
upon, along, across, above, over and under the streets, alleys, public ways and
public places now laid out or dedicated, and all extensions thereof, and
additions thereto, in the Town, poles, wires, cables, underground conduits,
manholes and other television conductors and fixtures necessary for the
maintenance and operation in the town of a community television system for the
interception, sale and distribution of television signals.
(b) Term of Franchise. This grant shall be for a period of fifteen (15)
years from the effective date of this Ordinance, subject to a review of
satisfactory performance commencing not later than the thirty-sixth (36) month
prior to the expiration
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<PAGE> 15
of the franchise to determine grant of a five (5) year extension thereof.
SECTION 4. Compliance with Applicable Laws and Ordinances.
The Company shall, at all times during the life of a Franchise, be subject
to all lawful exercise of the police power of the Town, and to reasonable
regulation as the Town shall hereafter, by resolution or Ordinance, provide.
SECTION 5. Liability -- Indemnification -- Insurance.
The Company shall maintain and by its acceptance of a franchise,
specifically agrees that it will maintain throughout the term of its franchise,
liability insuring the Town and the Company in the minimum amount of:
(1) Workmen's Compensation: As required by all applicable Federal, State,
Maritime or other laws.
(2) Company's Liability: Each occurrence one million dollars ($1,000,000).
(3) Comprehensive General Liability: Bodily injury, each occurrence one
million dollars ($1,000,000); property damage, each occurrence one million
dollars ($1,000,000) and aggregate one million dollars ($1,000,000).
(4) Comprehensive, Automobile Liability: including non-ownership and hired
car coverages as well as owned vehicles with minimum limits as follows: bodily
injury for each occurrence three hundred thousand
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<PAGE> 16
dollars ($300,000); property damage for each occurrence one hundred thousand
dollars ($100,000).
(5) The Insurance Policy obtained by the Company in compliance with this
section must be approved by the Town Attorney and such policies along with
written evidence of payment of premiums shall be filed and maintained with the
Office of the Town Clerk during the term of this franchise and may be changed
from time to time to reflect changing liability limits. The Company shall
immediately advise the Town Attorney of any litigation that may develop that
would affect the insurance.
(6) Liability Limits: Neither the provisions of this section nor any
damages recovered by the Town hereunder shall be construed to or limit the
liability of the Company under this franchise or for damages.
(7) Insurance Cancellation: The insurance policy maintained pursuant to
this franchise shall contain the following endorsement: It is hereby understood
that this insurance policy may not be canceled by the surety nor the intention
not to renew be stated by the surety thirty (30) days after receipt by the Town
by registered mail of written notice of such intention to cancel or not renew.
SECTION 6. Poles and Conduits.
The poles and underground conduit facilities used for the Grantee's
distribution system shall be those erected and maintained by the locally
franchised Telephone Company and/or the locally franchised Power Company, when
and where practicable,
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<PAGE> 17
providing mutually satisfactory rental agreements can be entered into with said
Companies. Where the use of poles and underground conduit facilities owned by
the locally franchised Telephone Company and/or the locally franchised Power
Company is not practicable, or mutually satisfactory rental agreements cannot be
entered into with said Companies, the Grantee shall have the right to erect and
maintain its own poles and underground conduit facilities as may be necessary
for the proper construction and maintenance of the television distribution
system, with the approval of locating poles and underground conduit facilities
to be first given by the Town Council.
SECTION 7. Construction Approval.
The Company shall furnish the Town true and accurate maps or plans of all
existing installations, and the Town hereby reserves the right at all times to
reject any proposed installation whose manner or place of construction it deems
contrary to public interest, and may order and direct the Company, at its own
expense, to move the location or alter the construction of any existing
installation wherever the Town deems the public interest to require such removal
or alteration, having due regard to the equities of the parties concerned and
the purpose of this Ordinance.
SECTION 8. Conditions on Street Occupancy.
(1) Use. All transmission and distribution structures, lines and equipment
erected by the Company within the Town shall
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<PAGE> 18
be so located as to cause minimum interference with the proper use of streets,
alleys, and other public ways and places, and to cause minimum interference with
the rights or reasonable convenience of property owners who adjoin any of the
said streets, alleys, or other public ways and places.
(2) Restoration. In case of any damage of any property during installation,
construction, operation, or removal, the Company shall, at its own cost and
expense justly compensate the owner of said property for all damages incurred by
the property owner.
(3) Relocation. In the event that at any time during the period of this
Franchise the Town shall lawfully elect to alter, or change the grade of, any
street, alley, or other public way, the Company, upon reasonable notice by the
Town, shall remove, relay, and relocate its poles, wires, cables, underground
conduits, manholes and other fixtures at its own expense.
(4) Placement of Fixtures. The Company shall not place poles or other
fixtures where the same will interfere with any gas, electric, or telephone
fixture, water hydrant or main, and all such poles or other fixtures placed in
any street shall be placed at the outer edge of the sidewalk and inside the curb
line, and those placed in alleys shall be placed close to the line of the lot
abutting on said alley, and then in such a manner as not to interfere with the
usual travel on said streets, alleys, and public ways.
(5) Temporary Removal of Wire for Building Moving. The Company shall, on
the request of any person holding a building
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<PAGE> 19
moving permit issued by the Town, temporarily remove, raise, or lower its wires
to permit the moving of buildings. The expense of such temporary removal,
raising, or lowering of wires, shall be paid by the person requesting the same,
and the Company shall have the authority to require such payment in advance. The
Company shall be given not less than forty-eight (48) hours advance notice to
arrange for such temporary wire changes.
(6) Tree Trimming. The Company shall have the authority to trim trees upon
and overhanging streets, alleys, sidewalks and public places of the Town so as
to prevent the branches of such trees from coming in contact with the wires and
cables of the Company, all trimming to be done under the supervision and
direction of the Town and at the expense of the Company.
(7) Existing Structures. Existing poles, posts, and other such structures
of telephone and power companies for leasing or licensing at reasonable terms
shall be used as practicable in order to minimize interference with travel.
SECTION 9. Approval of Transfer.
The Company shall not sell or transfer effective control of its plant or
system to another, nor transfer any rights under the Franchise to another
without Council approval. Provided, that no sale or transfer shall be effective
until the Vendee, assignee or lessee has filed in the office of the Town Clerk
an instrument, duly executed, reciting the fact of such sale, assignment or
lease, accepting the terms of the Franchise, and agreeing to perform all the
conditions thereof.
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<PAGE> 20
SECTION 10. Franchisor Rights in Franchise.
(1) Franchisor Rules. The right is hereby reserved to the Franchisor to
adopt, in addition to the provisions herein contained and existing, applicable
ordinances, such additional regulations as it shall find necessary in the
exercise of the police power, provided that such regulations, by ordinances or
otherwise, shall be reasonable, and not in conflict with the rights herein
granted, and shall not be in conflict with the laws of the State of Virginia and
the Cable Communications Policy Act of 1984.
(2) Supervision and Inspection. The Town shall have the right to supervise
all construction or installation work performed subject to the provisions of
this Ordinance and to make such inspections as it shall find necessary to insure
compliance with governing ordinances.
(3) Town rights. All rights, rights of way, and easements acquired
hereinabove designated shall remain the property of the Town. Until such time as
said poles or other equipment are actually installed, and in the event of future
removal of said equipment, said rights shall immediately revert to the Town.
Should said rights not sooner revert to the Town, then this grant shall
terminate and expire fifteen (15) years from the effective date hereof. It being
understood that the Company shall have the right at any time during the
effective term of this grant to surrender and relinquish all of its rights
hereunder and thereupon be released from its duties as herein required.
Surrender, by the Company, of this grant, shall be
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<PAGE> 21
preceded by written notice of its intention to do so at least six (6) months
before the surrender date. On the surrender date specified in such notice, all
of the rights and privileges and all of the obligations, duties and liabilities
of the Company under this Ordinance, except as to the extent previously accrued
hereunder, shall terminate.
SECTION 11. Franchise Fee.
The Company shall pay to the Town five (5) percent of its gross revenues
during the preceding year as a franchise fee in order to compensate the Town for
the time and expense it incurs in regulating cable television said fee to be
paid on or before 30 June of each year during the term hereof.
SECTION 12. Interference.
The Company shall at all times operate and maintain its community antenna
television system in such a manner as not to interfere with existing television
reception, including interference by radiation, and the town shall enforce the
provisions of this section.
SECTION 13. Records and Reports.
The Town shall have access at all reasonable hours to all of the Company's
engineering data, accounting, financial, and customer service records relating
to the property and the operation of the Company and to all other records
required to be kept by other governmental authorities and hereunder.
(1) Company Rules and Regulations. Copies of such rules, regulations, terms
and conditions adopted by the Company for the conduct of its business.
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<PAGE> 22
(2) Gross Revenue. An annual summary report showing gross revenues received
by the Company from its operation within the Town during the preceding year and
such other information as the Town shall request with respect to properties and
expenses of the Company's service within the Town. Said report shall be due on
31 May of each year during the term hereof.
SECTION 14. Reimbursement of Costs.
In addition to paying a franchise fee, the Company agrees to reimburse the
Town for all direct and reasonable charges actually incurred by the Town in
connection with the award of the franchise.
SECTION 15. Channel Capacity.
The Company shall establish a minimum channel capacity of thirty five (35)
channels in the forward direction and expansion capability to four (4) in the
reverse.
SECTION 16. Subdivision Policy.
The Town shall have the power to require the Company to install cable and
fixtures in a proposed subdivision of such quality and service capability as is
commensurate with the requirements of this ordinance and the Company's service
elsewhere in the Town. The Company shall be reimbursed for all costs attendant +
10% with such reinstallation.
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<PAGE> 23
SECTION 17. Service Review.
The Town shall have the power to require periodic quality of service
reviews for the purpose of regulation and franchise renewal.
SECTION 18. Technical Standards.
The Town shall have the right to establish minimum technical standards
which the Company shall comply with. Until such standards are adopted, the
following minimum system standards apply to all one-way and two-way channels,
regardless of program content:
(a) Subscriber Terminal
1. Minimum signal level 0 dBmV (+4 plus or minus 4 dBmV)
2. Adjacent visual carrier level maximum variation plus or minus 3 dB
3. Associated aural signals between 13 and 17 dB below visual signal
level
4. FM signals and test signals carried at same signal level as aural
signals
5. Amplitude characteristics within plus or minus 2 dB from .75 MHz
below to 5.0 MHz above the video carrier frequency as measured from
input to subscriber terminal
6. Signal-to-noise ratio 40 dB of visual signal level to 4.3 MHz noise
7. Frequency stability of total system conversion any input to any
output plus or minus 50 kHz
8. Intermodulation products 46 dB below visual signal level
9. Cross modulation products fully loaded synchronous modulation 48 dB
below visual level
10. Peak-to-Peak hum less than 5% of visual signal level
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<PAGE> 24
11. Minimum terminal isolation 26 dB
(b) Radiation
The Town has the right to deactivate any and all channels immediately
if there is a documented violation of radiation levels above the
following:
<TABLE>
<CAPTION>
LIMIT
MICROVOLT/
FREQUENCY METER DISTANCE
- -------------- ---------- --------
<S> <C> <C>
Up to 54 MHz 15 100"
54 to 216 MHz 20 10"
Over 216 MHz 15 100"
</TABLE>
SECTION 19. Reliability.
The Town shall have the right to establish minimum reliability standards
for the system.
SECTION 20. System Testing.
The cable television system shall be maintained in an appropriate manner as
to provide state-of-the-art quality and signal transmission reliability.
Properly calibrated state-of-the-art test equipment and tools shall be used in
maintaining the system. System testing to monitor technical performance shall
comply with generally accepted industry procedures as specified from time to
time by the Town. As of the Agreement date, the Company shall utilize "NCTA
Recommended Practices for Measurements on Cable Television Systems," published
by the National Cable Television Association -- ISBN 0-940272-09-1, 1983(C). If
there is a dispute concerning the source of visual impairment on video channels,
the Company shall compare the subscriber's television with a portable television
set on an A/B substitution basis.
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<PAGE> 25
SECTION 21. Subscriber Connections.
Only full time employees of the Company shall be used to install cable
drops and connect subscriber facilities on the subscriber's property. All
installation personnel shall be bonded.
Cable drops shall be installed in compliance with the National Electric
Code, Article 820 or its successor. Whenever technically possible, the Company
shall meet each subscriber's desire regarding the point at which the cable drops
enter the subscriber's residence or other structure, and the points at which the
drops terminate inside the structure.
All cable within buildings shall be located so as to make it as unobtrusive
as possible.
SECTION 22. Rates.
The Company shall clearly define its rate structure and rates. The Town
shall have the right from time to time to regulate the rates charged to
subscribers in conformance with the Cable Communications Policy Act of 1984 and
as further defined by the Federal Communications Commission.
SECTION 23. Rights of Individuals Protected.
(1) Sales of Subscriber Lists Prohibited. The Company shall not sell or
allow the use of subscriber lists for any purpose not connected with the
operation of the cable television system.
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<PAGE> 26
(2) Monitoring. No monitoring of any terminal connected to the system shall
take place without specific written authorization by the user of the terminal in
question on each occasion.
(3) Cable Tapping. The provisions of Section 18.2-187.1 of the Code of
Virginia of 1950 and Section 633 of the Cable Communications Policy Act of 1984,
as the same may from time to time be amended, is hereby incorporated by
reference.
(4) Discriminatory or Preferential Practices Prohibited. The Company shall
not, in its rates or charges, or in making available the service or facilities
of its system, or in its rules and regulations, or in any other respect, make or
grant preferences or advantages to any subscriber or potential subscriber to the
system, or to any user or potential user of the system, and shall not subject
any such persons to any prejudice or disadvantage. This provision shall not be
deemed to prohibit promotional campaigns to stimulate subscriptions to the
system or other legitimate uses thereof; nor shall it be deemed to prohibit the
establishment of a graduated scale of charges, and classified rate schedules to
which any customer coming within classification shall be entitled.
(5) Open Access. The entire system of the Company shall be operated in a
manner consistent with the principle of fairness and equal accessibility of its
facilities, equipment, channels, studios, and other services to all citizens,
businesses, public agencies, or other entities having legitimate use of the
system, and no one shall be arbitrarily excluded from its use; allocation of use
of said facilities shall be made
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<PAGE> 27
according to the rules and decisions of regulatory agencies affecting the same,
and where such rules or decisions are not effective to resolve a dispute between
conflicting users, or potential users, the matter shall be submitted for
resolution to the Town.
SECTION 24. Miscellaneous Provisions.
(1) Severability. If any section, sentence, clause or phrase of the
Ordinance is held invalid or unconstitutional, such invalidity or
unconstitutionality shall not affect the validity of any remaining provision of
this Ordinance. Provided, however, that in the event a court of competent
jurisdiction declares any section invalid, then such section or sections will be
renegotiated by the Town and the Company.
(2) Captions. The captions to sections are inserted, solely for information
and shall not affect the meaning or interpretation of the Ordinance.
(3) No Recourse Against the Town. The Company shall have no recourse
whatsoever against the Town or its officers, boards, commissions, agents, or
employees for any loss, cost, expense or damage arising out of any provision or
requirement of the franchise or because of its enforcement.
(4) Non-Enforcement. The Company shall not be relieved of its obligation to
comply promptly with any of the provisions of the franchise by any failure of
the Town to enforce prompt compliance.
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<PAGE> 28
(5) Employee Indoctrination. The Company shall have an ongoing
indoctrination program such that each new employee shall be made fully aware of
all the provisions of this ordinance, with special regard to the service
provisions, subscriber complaint procedures and reports to be filed with the
Town.
(6) Other Business Activities. The Company shall not engage in the business
of selling, repairing or installing television receivers, radio receivers, or
accessories for such receivers within the town during the term of this
franchise.
SECTION 25. Franchise Application.
Proposal. Proposals and applications for franchise shall be submitted in
the form prescribed by the Town.
SECTION 26. Incorporation by Reference Provision.
Bid Incorporation by Reference. The Company upon its acceptance of their
franchise shall be bound by the provisions of this Ordinance and all written and
documentary responses, statements, promises of performance and information
contained in its bid.
SECTION 27. Bonding Requirements.
(1) Performance Bond. Within thirty (30) days after the award of this
franchise, Company shall deposit with the Town a cash security bond or
irrevocable letter of credit in the amount of fifty thousand dollars
($50,000.00). The cash bond or letter of credit shall be used to insure the
faithful performance by
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<PAGE> 29
Company of all provisions of this ordinance franchise; and compliance with all
orders, permits and directions of any agency, commission, board, department,
division or office of the Town having jurisdiction over its acts or default
under this franchise and the payment by the Company of any liquidated damages,
claims, liens and taxes due the Town which arise by reason of the construction,
operation or maintenance of the system.
(2) Bonding Term. The cash bond or letter of credit shall be maintained at
fifty thousand dollars ($50,000.00) during the entire term of this franchise,
even if amounts have to be withdrawn pursuant to subdivision 1. or 3. of this
section.
(3) Town's Remedies Under Bond. If Company fails to pay to the Town any
compensation within the time fixed herein; or, fails, after ten (10) days notice
to pay to the Town any taxes due and unpaid; or fails to repay the Town within
ten (10) days, any damages, costs or expenses which the Town is compelled to pay
by reason of any act or default of the Company in connection with a franchise;
or, fails, after three (3) days notice by the Town of such failure to comply
with any provision of this franchise which the Town reasonably determines can be
remedied by demand on the cash bond or letter of credit the Town may immediately
require payment of the amount thereof, with interest and any liquidated damages,
from the cash bond or letter of credit.
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<PAGE> 30
(4) Town's Limitations. The rights reserved to the Town with respect to the
cash bond or letter of credit are in addition to all other rights of the Town,
whether reserved by a franchise or authorized by law, and no action, proceeding
or exercise of a right with respect to such cash bond or letter of credit shall
affect any other right the Town may have.
SECTION 28. Construction Bond.
Within thirty (30) days after the award of this franchise, Company shall
obtain and maintain at its cost and expense, and file with the Town Clerk, a
Corporate surety bond in a company authorized to do business in the State of
Virginia, and found acceptable by the Town Attorney or an irrevocable letter of
credit comparable to cash deposit and without condition in the amount of three
hundred thousand dollars ($300,000) to guarantee the timely construction and
full activation of the system and the safeguarding of damage to private property
and restoration of damages incurred with utilities.
The bond shall provide, but not be limited to, the following condition:
There shall be recoverable by the Town, jointly and severally from the principal
and surety, any and all damages, loss or costs suffered by the Town resulting
from the failure of Company to satisfactorily complete and fully activate the
system throughout the franchise area pursuant to the terms and conditions of
this ordinance franchise agreement.
Any extension to the prescribed construction time limit must be authorized
by the Town Council. Such extension shall be
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<PAGE> 31
authorized only when the Council finds that such extension is necessary and
appropriate due to causes beyond the control of Company.
The construction bond shall be terminated or the letter of credit canceled
only after the Council finds that Company has satisfactorily completed initial
construction and activation of the system pursuant to the terms and conditions
of this ordinance franchise agreement.
The rights reserved to the Town with respect to the construction bond are
in addition to all other rights of the Town, whether reserved by this ordinance
or authorized by law, and no action, proceeding or exercise of a right with
respect to such bond shall affect any other rights the Town may have.
The construction bond shall contain the following endorsement:
It is hereby understood and agreed that this bond may not be canceled by
the surety nor the intention not to renew be stated by the surety until
sixty (60) days after receipt by the Town, by registered mail, of written
notice of such intent to cancel or not to renew.
SECTION 29. Revocation of Franchise for Cause.
(1) The Town may terminate the franchise agreement entered into pursuant to
this Ordinance upon its determination, after at least thirty (30) days written
notice to the Chief Executive Officer of the Company in question and after
public bearing, advertised for two (2) weeks in a newspaper having general
circulation in the Town, that the Company has failed to cure any one or more of
the following problems: (1) Breach,
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whether by act or omission, of any terms or conditions of this Ordinance or of
the franchise agreement; or (2) Material misrepresentation of fact; or (3)
Insolvency of the Company, or inability or unwillingness to meet its debts as
they arise or mature, or the filing of a voluntary or involuntary petition in
bankruptcy for the benefit of the creditors of the Company; or (4) For any other
good cause shown.
(2) Upon termination of a franchise for cause, the Town may acquire the
cable system of the cable system operator whose franchise has been terminated at
an equitable price based on the ongoing business value of the system. In the
event that the Company and the Town cannot agree upon any such equitable price,
then the matter of determining an equitable price shall be submitted to binding
arbitration.
(3) Any franchise revocation proceeding shall be appealable to the Circuit
Court which has jurisdiction in the Town within sixty (60) days of the date of
the order of the Town Council by Motion of Declaratory Judgment.
This ordinance shall be in force from its passage.
TOWN OF HAYMARKET
By: /s/ GERTRUDE BEAN
------------------------------------
Gertrude Bean, Mayor
ATTEST: /s/ DOROTHY KELLER
-----------------------
Town Clerk
ADOPTED this 20th day January, 1986.
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<PAGE> 1
EXHIBIT 10.6.65
RESOLUTION NO. R-96-50 RESOLUTION
APPROVING THE TRANSFER OF THE CABLE
TELEVISION FRANCHISE FOR THE CITY OF
MANASSAS, VIRGINIA HELD BY
BENCHMARK/MANASSAS CABLE FUND LIMITED
PARTNERSHIP
WHEREAS, by Ordinance enacted on October 30, 1985 (the "Ordinance"), the
Council of the City of Manassas, Virginia (the "City") granted to
Benchmark/Manassas Cable Fund limited Partnership (d/b/a Cablevision of
Manassas, Ltd.) ("Cablevision") a franchise (the "Franchise") to construct, own,
operate and maintain a cable television system within the City (the "System");
and
WHEREAS, Cablevision has agreed to sell the System to Jones Intercable,
Inc. ("Jones") and Jones has agreed to purchase the System from Cablevision; and
WHEREAS, Cablevision has requested pursuant to Section 7 of the Ordinance
that the Council of the City of Manassas, Virginia approve (i) the transfer of
the Franchise to Jones Intercable Inc., a Colorado corporation (Jones) or any
affiliate of Jones, including any limited partnership 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 or partnerships is a general partner (any such entity being
hereinafter referred to as an "Affiliate of Jones"); (ii) the subsequent
transfer of the Franchise to any Affiliate of Jones; and (iii) the granting from
time to time by Jones or any Affiliate of Jones then holding the Franchise of a
security interest in its assets, including the franchise and the System, to an
institutional lender or lenders as security for its obligations to such lender
or lenders; and
WHEREAS, Jones or any Affiliate then holding the Franchise has agreed to be
bound by the terms, provisions and conditions of the Franchise; and
WHEREAS, pursuant to the existing interim "Cost of Service" Rules of the
FCC, the City reserves the right in future rate determinations to exclude
acquisition costs and goodwill as reasonable costs to be included in the rate
base for any request for rate increases; and
WHEREAS, City, after considering professional advice, finds that portion of
the purchase price reflecting acquisition costs (as defined in sec. 89-97 of the
Cost of Service Order) and goodwill to be excessive.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Council of the City of
Manassas, Virginia that:
1. The City does hereby consent to the transfer of the System and the
Franchise from Cablevision to Jones Intercable of Alexandria, Inc. which
shall be
<PAGE> 2
bound by the terms of this Resolution and the Franchise. Any subsequent transfer
of the Franchise from Jones Intercable of Alexandria, Inc. requires the written
approval of the City. The City shall review and act upon a request to transfer
the Franchise within 30 days of such request if accompanied by adequate
documentation to permit the City to evaluate the financial and technical ability
of the Affiliate or other entity. If the transfer is approved, the transferee
shall be bound by the terms of this Resolution and of the Franchise.
2. The City does hereby consent to the grant from time to time by Jones or
Jones Intercable of Alexandria, Inc. of a security interest in the System and in
all of its rights, powers and privileges under the Franchise and all of its
other assets to such lending institution or institutions as may be designated
from time to time by Jones or Jones Intercable of Alexandria, Inc. which lending
institution or institutions shall have all of the rights and remedies of a
secured party under the applicable Uniform Commercial Code.
The existing basic tier service rates shall remain in effect through
December 31, 1995. In consideration of the City foregoing its first right of
refusal to purchase the cable communications system at the price offered to a
bonafide purchaser in accordance with Section 7(f) of the Ordinance, from
January 1, 1996, for so long as required by FCC rules and Regulations, Jones
Intercable of Alexandria, Inc. shall maintain the existing basic tier service
rates except for adjustments for inflation or to reflect any change in its
external costs, as defined by the Federal Communications Commission and subject
to any other changes in such rates permitted by any subsequent changes in the
applicable laws or rules and Regulations of the FCC.
Consent herein granted for the transfer to Jones Intercable of Alexandria,
Inc. is conditional upon the acknowledgment by Jones and Jones Intercable of
Alexandria, Inc. that the existing interim "Cost-of-Service" Rule of the FCC
establish a presumption that the inclusion of the acquisition costs and goodwill
shall not be considered as reasonable costs to be included in the rate base for
any request for rate increase.
The consent herein granted for the transfer to Jones Intercable of
Alexandria, Inc. is also conditioned upon Jones' and Jones' Intercable of
Alexandria, Inc. assumption of all rights, responsibilities and obligations of
the Franchise.
3. the foregoing consent to the transfer and assignment of the Franchise
shall be effective upon the closing of the sale of the System by Cablevision to
Jones Intercable of Alexandria, Inc. Notice of such closing date shall be given
to the City.
4. The City hereby confirms that, to its knowledge; (a) the Franchise is
currently in full force and effect; and (b) Cablevision is currently the valid
holder
<PAGE> 3
and authorized grantee of the Franchise; (c) Cablevision is in compliance in all
material respects with the Franchise; and (d) no event has occurred or exists
which would permit the City to revoke or terminate the Franchise. Subject to
compliance with the terms of this Resolution, all action necessary to approve
the transfer of the Franchise and the System to Jones Intercable of Alexandria,
Inc. has been duly and validly taken.
Adopted by the Council of the City of Manassas, Virginia on this 23rd day
of October, 1995.
CITY OF MANASSAS
/s/ ROBERT L. BROWN
------------------------------
TITLE: Mayor
ATTEST:
/s/ LINDA HAWLEY
- ------------------------------
Linda Hawley, City Clerk
<PAGE> 4
Second Reading: October 30, 1985
Enacted: October 30, 1985
Effective: October 30, 1985
"An Ordinance granting a franchise to Cablevision of Manassas, Ltd., its
successors and assigns, to install, construct, operate and maintain in the
City of Manassas a cable television system."
BE IT ORDAINED by The Council of the City of Manassas, Virginia, meeting in
regular session this 16th day of October, 1985, that:
A. Name: This Ordinance shall be known as the CATV Ordinance.
B. There be and there is hereby granted to Cablevision of Manassas, Ltd.,
its successors and assigns, hereinafter called the Grantee, a nonexclusive
franchise, right and authority, subject to the conditions and restrictions
hereinafter set forth, and in accordance with the Bid offering of Cablevision of
Manassas, Ltd., incorporated herein and made a part hereof, and such as may be
imposed by the laws and ordinances of the Commonwealth of Virginia, the U.S.
Federal Authorities, and City of Manassas, to use the streets, alleys and public
places of the City of Manassas and to that end the City adopts this Franchise
Ordinance:
1. To regulate the erection, construction, reconstruction, installation,
operation, maintenance, dismantling, testing, repair and use of a cable
communications system in, upon, along, across, above, over or under or in any
manner connected with the streets, public ways or public places within the
jurisdiction of the City of Manassas as now or in the future may exist.
2. To provide for the payment of certain franchise fees and other valuable
considerations to the City which, among other purposes, may be used to regulate
the construction and operation, use and development of such a system within the
City; and
<PAGE> 5
3. To provide conditions under which such franchised system will serve
present and future needs of government, public institutions, commercial
enterprises, public and private organizations, and the citizens and general
public of the City; and
4. To provide remedies and prescribe liquidated damages for any violation
of this Ordinance.
SECTION 1. DEFINITIONS
For the purpose of this Ordinance, the following terms, phrases, words and
their derivations shall have the meaning given herein. When not inconsistent
with the context, words used in the present tense include the future, words in
the plural number include the singular number, and words in the singular number
include the plural number, and the use of any gender shall be applicable to all
genders whenever the sense requires. The words "shall" and "will" are mandatory
and the word "may" is permissive. Words not defined shall be given their common
and ordinary meaning.
a. "Access channel" shall mean a single channel dedicated in whole or in
part for local programming which is not originated by the Company.
b. "Basic Service" shall mean any or all of the different combinations of
basic program services as described in a Company's proposal including the
delivery of broadcast signals, satellite signals, local origination and access
signals, covered by the regular monthly charges paid by subscribers, excluding
the optional premium services for which separate charges are made.
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c. "Cablecasting" is programming carried on the cable system, exclusive of
broadcast signals, whether originated by the cable operator or any other party.
d. "Cable Communications System," "Cable Television System" or "CATV
System," shall mean a system of antennas, cables, wires, lines, towers,
waveguides, or other conductors, converters, equipment or facilities, designed
and constructed for the purpose of producing, receiving, transmitting,
amplifying and distributing, audio, video and other forms of electronic or
electrical signals, located in the City. Said definition shall not include any
such facility that serves or will serve only subscribers in one or more multiple
unit dwellings under common ownership, control or management, and does not use
City rights-of-way.
e. "City" is the City of Manassas in its present incorporated form or as it
may be changed by annexation or interjurisdictional agreement or otherwise.
f. "Construction." The terms "completion of construction," "complete system
construction," "satisfactorily complete and fully activate" shall mean that
strand has been put up and all necessary cable (including trunk and feeder
cable) has been lashed -- or, for underground construction, that all cable has
been laid and trenches refilled and, except as prevented by weather conditions
or delayed because of seasons, landscaping restored; that all amplifier housings
and modules have been installed (including modules for return path signals);
that power supplies have been installed and all bonding and grounding has been
completed; that all necessary connectors, splitters and taps have been
installed; that construction of the headends or
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hubs have been completed and all necessary processing equipment has been
installed; and that any and all other construction necessary for the system to
be ready to deliver cable service to subscribers has been completed. Proof of
performance tests shall have been conducted on each otherwise completed segment
of the cable system before direct marketing of that segment begins. It is
expected that segments of less than the entire system will be activated and
proofed when completed. Construction of any segment or of the entire system will
not be considered complete until proof of performance tests have been conducted
on such segment (or in the case of the entire system, on all segments of the
cable system) and any problems found during testing have been corrected. The
term "completion of construction" does not include marketing and installation of
subscriber service.
g. "Council" shall mean the governing body of the City of Manassas.
h. "Dedicate" shall mean to make available channel space or equipment for
exclusive use of the designated user, subject to the authority of the City
Council to authorize reassignment of channels.
i. "Grantee" or "company" is the party or parties to which a franchise
under this ordinance is granted by the Council, and its or their lawful
successors and assigns.
j. "Gross Revenues" shall mean all cash, credits, property of any kind or
nature, or other consideration received directly or indirectly by the grantee,
its affiliates, subsidiaries, parent and any person in which grantee has a
financial interest, or from any source whatsoever, arising from or attributable
to the sale or exchange of cable communications services by grantee within the
City or in any way
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derived from the operation of its system, including, but not limited to, basic
service, monthly fees, optional service or pay cable fees, installation and
reconnection fees, leased channel fees, converter rentals or sales, studio
rental, and advertising revenues. These gross revenues shall not be reduced for
any purposes other than provided herein, and shall be the basis for computing
the fee imposed pursuant to Section 9. These gross revenues shall not include
any taxes on services furnished by Grantee imposed upon any subscriber or user
by the State, City or other governmental unit and collected by grantee on behalf
of said governmental unit, converter deposits or refunds to subscribers by the
grantee.
k. "Initial activation of service," or "initially providing cable
communication service" shall mean with respect to a particular segment, group of
segments or the entire cable system, as the case may be, that, all proposed
services and system capabilities as stated in the Proposal are available and/or
in place, construction has been completed (see definition of construction) and
the completed segment or segments in question or the entire cable system, as the
case may be, has been activated.
1. "Local Origination Programming" shall mean programming locally produced
by the Grantee.
m. "Proposal" or "Application" refers to a formal response by the cable
applicant to a specific invitation by the City asking for proposals in
accordance with City specifications to provide cable communications services to
residents, businesses, industries, and institutions in the City of Manassas.
n. "Subscriber" is a recipient of cable communications service.
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o. "Two-way communications" means the transmission of telecommunications
signals from subscriber locations or other points throughout the system back to
the system's control center, as well as transmission of signals from the control
center to subscriber locations.
p. "User" means a party utilizing a cable communications system channel for
purposes of production or transmission of material to subscribers, as contrasted
with receipt in a subscriber capacity.
q. The terms "will be available," "will be equipped," "will use," "will be
designed," "will perform," "will be utilized," "will permit," "will allow,"
"will be activated," "will be initially connected," "will be capable," "will
provide," "will include," "will employ," "will be established," "will be able,"
"will be implemented," "will be delivered," "will utilize," and other similar
uses of terms in a company's Proposal denoting the activation of cable service
or the delivery of equipment, facilities, or services, shall be interpreted to
mean delivery or accomplishment at a date no later than the initial activation
of service (see definition) unless otherwise expressly and clearly stated or
qualified in the company's Proposal to mean a more specific or different time.
SECTION 2. GRANT OF AUTHORITY
Grantee is hereby granted the right and privilege to construct, erect,
operate and maintain, in, upon, along, across, above, over and under the
streets, alleys, public ways and public places now laid out or dedicated and all
extensions thereof, and additions thereto, in the City poles, wires, cables,
underground conduits, manholes, and other
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cable conductors and fixtures necessary for the maintenance and operation in the
City of Manassas of a cable communications system, to be used for the sale and
distribution of cable services to the residents of the City.
SECTION 3. DURATION OF FRANCHISE
The duration of the rights, privileges and authorizations granted in a
franchise agreement shall be fifteen (15) years from the date hereof unless
sooner terminated as set forth herein.
SECTION 4. SERVICE AVAILABILITY AND RECORDS
The Grantee shall provide cable communication services throughout the
entire franchise area pursuant to the provisions of this ordinance and shall
keep a current file of all requests for service received by the Grantee for at
least the three (3) most recent years. This record shall be maintained during
the entire life of the franchise and be available for public inspection at the
local office of the Grantee during regular office hours.
SECTION 5. CATV SYSTEM CONSTRUCTION
Construction MAP and Schedule
(a) Map and Plan
Grantee has submitted a construction plan for approval of the Public Works
Department of the City which shall be incorporated by
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reference and made a part of this franchise agreement. The plan consists of a
map of the entire franchise area clearly delineating the following:
(1) The areas within the franchise area where the cable television
system will be initially available to subscribers including a schedule of
construction for each year of construction.
(2) Areas within the franchise area where extension of the cable
communication system cannot reasonably be done due to lack of present or
planned development or other similar reasons, with the areas and the reasons
for not serving them clearly identified on the map.
(b) Early Construction and Extension
Nothing in this section shall prevent the Grantee from construction the
system earlier than planned. However, any delay in the system construction
beyond the times specified in the plan report timetable shall require
application to and consent by the Council.
(c) Delay in Construction Timetable
Any delay beyond the terms of construction timetable, unless approved by
the Council, will be considered a violation of this ordinance for which the
provisions of either Sections 20 or 21 shall apply, as determined by the
Council.
(d) Commencement of Construction
Construction in accordance with the plan submitted by Grantee shall
commence as soon after the grant and acceptance of a franchise as is reasonably
possible. Failure to proceed expeditiously shall be grounds for revocation of
this franchise. Failure to proceed expeditiously shall be presumed i the event
construction is not
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commenced within twelve (12) months of the grant and acceptance of a franchise.
(e) Underground and Overhead Construction
In all sections of the City where all cables, wires, or other like
facilities of public utilities served by the City of Manassas are placed
underground the Cable television cable shall be placed underground; where the
cables, wires, or other like facilities of public utilities served by the City
of Manassas are placed overhead the Cable television cable shall be placed
overhead. In all stations of the City where all cable, wires, or other like
facilities of public utilities served by other utility companies are placed
underground, the Cable television cable must be placed underground. If at any
time the City determines that existing wire, cable or other like facilities of
public utilities anywhere in the City shall be changed from an overhead to an
underground installation, the Grantee shall also, at Grantee's sole expense,
convert its system to an underground installation.
In areas of the City where the municipal electric system is installed on
poles above ground, the Grantee shall have the option of installing the system
in like manner above or underground.
(f) The entire City shall be served by CATV and no additional cost shall be
assessed by the Grantee to any citizen receiving CATV service.
In cases of new construction or property development where utilities are to
be placed underground, unless the requirement is waived by City, Grantee shall
use the same trenching as the City or public utility. City shall give Grantee
five (5) days notice of such construction or development, and of the particular
date on which open
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trenching will be available for Grantee's installation of conduit, and/or cable.
Grantee shall also provide specifications as needed for trenching. Trenches
shall be closed within 24 hours upon completion of placement of utility lines,
conduit and/or cable.
Costs of trenching and easements required to bring service to the
development shall be borne equally by the developer/property, and those sharing
the trench, except that if Grantee fails to install its conduit, and/or cable
within the specified time limitation indicated above, then the cost of new
trenching is to be borne by Grantee (except for the notice of the particular
date on which trenching will be available to Grantee).
(3) Special Agreements
Nothing herein shall be construed to prevent Grantee from serving areas not
covered under this section upon agreement with developers, property owners or
residents.
SECTION 6. CONSTRUCTION AND TECHNICAL STANDARDS
a. Compliance with Construction and Technical Standards
Grantee shall construct, install, operate and maintain its system in a
manner consistent with all laws, ordinances, construction standards,
governmental requirements, FCC technical standards, and detailed standards
submitted by Grantee as part of its application, which standards are
incorporated by reference in the franchise agreement. In addition, Grantee shall
provide the City, upon request, with a written report of the results of
Grantee's annual proof of performance tests conducted pursuant to FCC standards
and
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requirements. Grantee shall pay the costs incurred by the City for any technical
assistance deemed necessary by the City for obtaining independent verification
of technical compliance with all standards.
b. Additional Specifications
Construction, installation and maintenance of the cable communications
system shall be performed in an orderly and workmanlike manner. All cables and
wires shall be installed, where possible, parallel with and in the same manner
as electric and telephone lines. Multiple cable configurations shall be arranged
in parallel and bundled with due respect for engineering considerations.
Installations shall be in conformance with applicable codes.
The Grantee shall maintain equipment capable of providing standby power for
headend, transportation and trunk amplifiers for a minimum of four (4) hours.
Grantee shall at all times comply with:
(1) National Electrical Safety Code (National Bureau of Standards);
(2) National Electrical Code (National Fire Protection Association);
(3) Bell System Code of Pole Line Construction;
(4) Applicable FCC or other federal, state and local ordinances and
regulations; and
(5) Requirements of Manassas Public Works Department.
In any event, the system shall not endanger or interfere with the safety of
persons or property in the franchise area or other areas where the Grantee may
have equipment located.
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SECTION 7. TRANSFERS AND ASSIGNMENTS
a. This franchise shall not be assigned or transferred, either in whole or
in part, or leased, sublet, or mortgaged in any manner, nor shall title thereto,
in part, or leased, sublet, or mortgaged in any manner, nor shall title thereto,
either legal or equitable or any right, interest or property therein, pass to or
vest in any person without the prior written consent of the City. The proposed
assignee must show technical ability, financial capability, legal qualifications
and general character qualifications as determined by the City and must agree to
comply with all provisions of this franchise.
b. The Grantee shall promptly notify the City of any actual or proposed
change in, or transfer of, or acquisition by any other party of, control of the
Grantee. The word "control" as used herein is not limited to major stockholders
but includes actual working control in whatever manner exercised. Every change,
transfer, or acquisition of control of the Grantee shall make the franchise
subject to cancellation unless and until the City shall have consented thereto,
which consent will not be unreasonably withheld. For the purpose of determining
whether it shall consent to such change, transfer or acquisition of control, the
City may inquire into the qualifications of the prospective controlling party
and the Grantee shall assist the City in any such inquiry.
c. A rebuttable presumption that a transfer of control has occurred shall
arise upon the acquisition or accumulation by any person or group of persons of
10 percent of the voting interest of the Grantee.
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d. The consent or approval of the City Council to any transfer of the
franchise shall not constitute a waiver or release of the right of the City in
and to the streets, and any transfer shall by its terms, be expressly
subordinate to the terms and conditions of this franchise.
e. In any absence of extraordinary circumstances, the City will not approve
any transfer or assignment of a franchise prior to substantial completion of
construction of proposed system.
f. The City Council reserves the first right of refusal to purchase a cable
communications system at the price offered to any bonafide purchaser if and when
it is placed on the market for sale.
g. The City Council reserves the right to review the purchase price of any
transfer or assignment of a cable system. Any assignee to a franchise expressly
agrees that any negotiated sale value which the Council (acting upon
professional advice) deems unreasonable will not be considered in the rate base
for any subsequent request for rate increases subject to City regulation.
h. In no event shall a transfer of ownership or control be approved without
successor in interest becoming a signatory to the franchise agreement.
SECTION 8. SUBSCRIBER SERVICE RATES
The City may regulate rates to the extent, if any, permitted by applicable
law at any time and from time to time during the term of this franchise in
accordance with procedures established by the City. Any rate for service not
regulated by the City may be increased by
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Grantee only following at least thirty (30) days prior notice to the City and
all affected subscribers.
SECTION 9. PAYMENT OF FRANCHISE FEE
a. For the reason that the streets to be used by the Grantee in the
operation of its system within the boundaries of the City are valuable public
properties acquired and maintained by the City at great expense to its
taxpayers, and that the grant to the Grantee to the said streets is a valuable
property right without which the Grantee would be required to invest substantial
capital in right-of-way costs and acquisitions, and because the City will incur
costs in regulating and administering the franchise, and at the option of the
Council, the City may make available a portion of the franchise fee to further
the development of public and community uses of cable TV, the Grantee shall pay
to the City an amount equal to five percent (5%) of Grantee's gross annual
revenue from all sources attributable to the operations of the Grantee within
the confines of the City of Manassas.
b. The franchise fee and any other cost or liquidated damages assessed
shall be payable quarterly to the Office of the City Treasurer. The Grantee
shall file a complete and accurate verified statement of all collected gross
revenue within the City during the period for which said quarterly payment is
made, and said payment shall be made to the City not later than sixty (60) days
after the expiration of quarter for which payment is due.
c. The City shall have the right to inspect the Grantee's income records
and the right to annually audit at Grantee expense and to
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recompute any amounts determined to be payable under this ordinance; provided,
however, that such audit shall take place within thirty-six (36) months
following the close of each of the Grantee's fiscal years. Any additional amount
due to the City as a result of the audit shall be paid within thirty (30) days
following written notice to the Grantee by the City which notice shall include a
copy of the audit report.
d. In the event that any franchise payment or recomputed amount, cost or
penalty, is not made on or before the applicable dates heretofore specified,
interest shall be charged daily from such date at the annual rate equivalent to
the then existing prime rate of local banking institutions in Manassas,
Virginia.
SECTION 10. USE OF STREETS
a. All transmission and distribution structures, lines, and equipment
erected by the Grantee within the City shall be so located as to cause minimum
interference with the rights and reasonable convenience of property owners who
adjoin any of the said streets.
b. In the case of disturbance of any street easement or paved area or other
property the Grantee shall, at its own cost and expense and in a manner approved
by the City, replace and restore such street easement or paved area or other
property in as good a condition as before the work involving such disturbance
was done.
c. If at any time during the period of a franchise the City shall lawfully
elect to alter or change the grade of other aspects of any street, the Grantee,
upon reasonable notice by the City, shall
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remove, relay, and relocate its poles, wires, cables, underground conduits,
manholes, and other fixtures at its own expense.
Any poles or other fixtures placed in or adjacent to any street by the
Grantee shall be placed in such manner as to comply with all requirements of the
City.
The Grantee shall, at the request of any person holding a moving permit
issued by the City, temporarily raise or lower its wires to permit the moving of
buildings. The expense of such temporary removal or raising or lowering of wires
shall be paid by the person requesting the same, and the Grantee shall have the
authority to require such payment in advance. The Grantee shall be given not
less than forty-eight (48) hours notice to arrange for such temporary wire
changes.
The Grantee shall have the authority to trim trees upon and overhanging
streets of the City so as to prevent the branches of such trees from coming in
contact with the wires and cables of the Grantee, except that at the option of
the City, such trimming may be done by it or under its supervision and direction
at the expense of the Grantee.
At the expiration of the term of this franchise, or upon its termination
and cancellation, as provided for herein, the City shall have the right to
require the Grantee to remove at its own expense all portions of the cable
television system from all streets within the City.
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SECTION 11. INDEMNIFICATION AND INSURANCE
a. Grantee hereby expressly covenants and agrees to hold the City and its
agents and employees harmless from and against all claims, damages, losses, and
expenses, including attorney's fees sustained by the City on account of any
suit, judgment, execution, claim or demand whatsoever arising out of but not
limited to copyright infringements and all other damages arising out of the
installation, operation or maintenance of its cable system whether or not any
act or omission complained of is authorized, allowed or prohibited by this
ordinance.
b. The Grantee shall maintain and by its acceptance of this franchise
specifically agrees that it will maintain throughout the term of its franchise,
liability insurance insuring the City and the Grantee in the minimum amount of:
(1) Workmen's Compensation: as required by all applicable Federal, State,
Maritime or other laws.
(2) Grantee's Liability: each occurrence $1,000,000
(3) Comprehensive General Liability: Bodily injury, each occurrence
$1,000,000; Property damage, each accident $1,000,000 and aggregate
$1,000,000.
(4) Comprehensive Automobile Liability: including nonownership and hired
car coverage as well as owned vehicles with minimum limits as follows:
Bodily injury for each occurrence $1,000,000; Property damage for each
occurrence $1,000,000.
c. The insurance policy obtained by the Grantee in compliance with this
section must be approved by the City Attorney and such insurance policy, along
with written evidence of payment of required premiums, shall be filed and
maintained with the Office of the City Clerk during the term of this franchise
and may be changed from time to time to reflect changing liability limits.
Grantee shall immediately
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advise the City Attorney of any litigation that may develop that would affect
the insurance.
d. Neither the provisions of this section nor any damages recovered by the
City hereunder, shall be construed to or limit the liability of Grantee under
this franchise or for damages.
e. All insurance policies maintained pursuant to this franchise shall
contain the following endorsement:
It is hereby understood and agreed that this insurance policy may not be
cancelled by the surety nor the intention not to renew be stated by the
surety until thirty (30) days after receipt by the City, by registered
mail, of written notice of such intention to cancel or not to renew.
SECTION 12. MAINTENANCE BOND
a. Within thirty (30) days after the award of this franchise, Grantee shall
deposit with the City a cash security bond in the amount of $50,000. The cash
bond shall be used to insure the faithful performance by Grantee of all
provisions of this ordinance franchise; and compliance with all orders, permits
and directions of any agency, commission, board, department, division or office
of the City having jurisdiction over its acts or defaults under this franchise
and the payment by the Grantee of any liquidated damages, claims, liens and
taxes due the City which arise by reason of the construction, operation or
maintenance of the system.
b. The cash bond shall be maintained at $50,000 during the entire term of
this franchise, even if amounts have to be withdrawn pursuant to subdivision a.
or c. of this section.
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c. If Grantee fails to pay to the City any compensation within the time
fixed herein; or, fails, after ten (10) days notice to pay to the City any taxes
due and unpaid; or fails to repay the City within ten (10) days, any damages
costs or expenses which the City is compelled to pay by reason of any act or
default of the Grantee in connection with a franchise, or, fails, after three
(3) days notice by the City of such failure to comply with any provision of this
franchise which the City reasonably determines can be remedied by demand on the
cash bond the City may immediately require payment of the amount thereof, with
interest and any liquidated damages, from the cash bond.
d. The rights reserved to the City with respect to the cash bond are in
addition to all other rights of the City, whether reserved by a franchise or
authorized by law, and no action, proceeding or exercise of a right with respect
to such cash bond shall affect any other right the City may have.
SECTION 13. CONSTRUCTION BOND
a. Within thirty (30) days after the award of this franchise, Grantee shall
obtain and maintain at its cost and expense, and file with the City Clerk, a
corporate surety bond in a company authorized to do business in the State of
Virginia, and found acceptable by the City Attorney, in the amount of Five
Hundred Thousand Dollars ($500,000) to guarantee the timely construction and
full activation of the CATV system and the safeguarding of damage to private
and/or public property and restoration of damages incurred.
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The bond shall provide, but not be limited to, the following condition:
There shall be recoverable by the City, jointly and severally from the principal
and surety, any and all damages, loss or costs suffered by the City resulting
from the failure of Grantee to satisfactorily complete and fully activate the
CATV system throughout the franchise area pursuant to the terms and conditions
of this ordinance franchise agreement.
b. Any extension to the prescribed construction time limit must be
authorized by the Council. Such extension shall be authorized only when the
Council finds that such extension is necessary and appropriate due to causes
beyond the control of Grantee.
c. The construction bond shall be terminated only after the Council finds
that Grantee has satisfactorily completed initial construction and activation of
the CATV system pursuant to the terms and conditions of this ordinance franchise
agreement.
d. The rights reserved to the City with respect to the construction bond
are in addition to all other rights of the City, whether reserved by this
ordinance or authorized by law, and no action, proceeding or exercise of a right
with respect to such bond shall affect any other rights the City may have.
e. The construction bond shall contain the following endorsement:
It is hereby understood and agreed that this bond may not be cancelled
by the surety nor the intention not to renew be stated by the surety
until sixty (60) days after receipt by the City, by registered mail, of
written notice of such intent to cancel or not to renew.
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SECTION 14. SERVICE STANDARDS
a. Grantee shall put, keep, and maintain all parts of the system in good
condition throughout the entire franchise period.
b. Upon termination of service to any subscriber, Grantee shall promptly
remove all its facilities and equipment from the premises of such subscriber
upon subscriber's request.
c. Grantee shall render efficient service, make repairs promptly, and
interrupt service only for good cause and for the shortest time possible. Such
interruptions, insofar as possible, shall be preceded by notice and shall occur
during periods of minimum system use.
d. Grantee shall not allow its cable or other operations to interfere with
television reception of persons not served by Grantee, nor shall the system
interfere with, obstruct or hinder in any manner, the operation of the various
utilities serving the residents of the City.
e. Grantee shall continue, through the term of this franchise, to maintain
the technical, operational, and maintenance standards and quality of service set
forth in this ordinance. Should the City find, by resolution, that Grantee has
failed to maintain these standards and quality of service, and should it, by
resolution specifically enumerate improvements to be made, Grantee shall make
such improvements. Failure to make such improvements within three (3) months of
such resolution will constitute a breach of condition for which the remedy of
Section 21 is applicable.
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SECTION 15. CONTINUITY OF SERVICE MANDATORY
a. it shall be the right of all subscribers to continue receiving service
insofar as their financial and other obligations to Grantee are honored. In the
event that Grantee elects to overbuild, rebuild, modify, or sell the system, or
the City gives notice of intent to terminate or fails to renew franchise, the
Grantee shall act so as to ensure that all subscribers receive continuous,
uninterrupted service regardless of the circumstances.
In the event of a change of Grantee, or in the event a new operator
acquires the system, Grantee shall cooperate with the City, new Grantee or
operator in maintaining continuity of service to all subscribers. During such
period, Grantee shall be entitled to the revenues for any period during which it
operates the system.
b. In the event Grantee fails to operate the system for four (4)
consecutive days without prior approval of the City or without just cause, the
City may, at its option, operate the system or designate an operator until such
time as Grantee restores service under conditions acceptable to the City or a
permanent operator is selected. If the City is required to fulfill this
obligation for Grantee, the Grantee shall reimburse the City for all reasonable
costs or damages.
SECTION 16. COMPLAINT PROCEDURE APPLICATIONS
a. Grantee shall maintain a central office within the City, which shall be
open during all usual business hours, have a publicly-listed telephone and be so
operated that complaints and
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request for repairs or adjustments may be received on a twenty-four (24) hour
basis.
b. Grantee shall maintain a repair and maintenance crew capable of
responding to subscriber complaints or requests for service within twenty-four
(24) hours after receipt of the complaint or request. No charge shall be made to
the subscriber for this service unless such maintenance or repair is required as
a result of damage caused by subscriber. Grantee may charge for service calls to
the subscribers' home that are not the result of cable failure upon approval of
a rate and equitable procedure by the City.
c. Grantee shall establish procedures for receiving, acting upon, and
resolving subscriber complaints to the satisfaction of the City Manager's
Office. Grantee shall furnish a notice of such procedures to each subscriber at
the time of initial subscription to the system.
d. Grantee shall keep a maintenance service log which will indicate the
nature of each service complaint, the date and time it was received, the
disposition of said complaint and the time and date thereof. This log shall be
made available for periodic inspection by representatives of the City Manager's
Office. All service complaint entries shall be retained on file for a period
consisting of the most recent three (3) years.
e. When there have been similar complaints made or when there exists other
evidence, which, in the judgment of the City Manager casts doubt on the
reliability or quality of cable service, the City Manager shall have the right
and authority to compel Grantee to test, analyze, and report on the performance
of the system. Such report shall be
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delivered to the City Manager no later than fourteen (14) days after the City
Manager formally notifies the Grantee and shall include the following
information: the nature of the complaints which precipitated the special tests;
what system component was tested, the equipment used, and procedures employed in
said testing; the results of such tests; and the method in which said complaints
were resolved.
f. The City Manager may require that tests and analyses shall be supervised
by a professional engineer not on the permanent staff of Grantee. The aforesaid
engineer should sign all records of the special tests and forward to the City
Manager such records with a report interpreting the results of the tests and
recommending actions to be taken by Grantee and the City.
g. The City's right under this section, shall be limited to requiring
tests, analyses, and reports covering specific subjects and characteristics
based on said complaints or other evidence when and under such circumstances as
the City has reasonable grounds to believe that the complaints or other evidence
requires that tests be performed to protect the public against substandard cable
service.
SECTION 17. AVAILABILITY OF BOOKS AND RECORDS
Grantee shall fully cooperate in making available at reasonable times, and
the City Manager or his designee shall have the right to inspect the books,
records, maps, plans and other like materials of the Grantee applicable to the
CATV system, at any time during normal business hours; provided where volume and
convenience necessitate, Grantee may require inspection to take place on
Grantee's premises.
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SECTION 18. OTHER PETITIONS AND APPLICATIONS
Copies of all petitions, applications, communications and reports submitted
by Grantee to the Federal Communications Commission, Securities and Exchange
Commission, or any other federal or state regulatory commission or agency having
jurisdiction in respect to any matters affecting cable television operations
authorized pursuant to this franchise, shall be provided simultaneously to the
City.
SECTION 19. FISCAL REPORTS
The Grantee shall file annually with the office of the City Clerk, no later
than one hundred twenty (120) days after the end of the Grantee's fiscal year, a
copy of an audited financial report applicable to the CATV system serving the
City of Manassas, including an income statement applicable to its operations
during the preceding twelve (12) month period, a balance sheet and a statement
of its properties devoted to CATV system operations, by categories, giving its
investment in such properties on the basis of original cost, less applicable
depreciation. These reports shall be certified as correct by an authorized
officer of Grantee and there shall be submitted along with them such other
reasonable information as the Council shall request.
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SECTION 20. FORFEITURE AND TERMINATION
a. In addition to all other rights and powers retained by the City under
this ordinance or otherwise, the City reserves the right to forfeit and
terminate this franchise and all rights and privileges of Grantee in the event
of a material breach of its terms and conditions. A material breach by Grantee
shall include, but shall not be limited to the following:
(1) Violation of any material provision of this franchise or any material
rule, order, regulation or determination of the City made pursuant to
this franchise;
(2) Attempt to dispose of any of the facilities or property of its CATV
system to prevent the City from purchasing it, as provided for herein;
(3) Attempt to evade any material provision of this franchise or practices
any fraud or deceit upon the City or its subscribers or customers;
(4) Failure to begin or complete system construction or system extension
as provided under this franchise;
(5) Failure to provide the broad categories of video programming or other
services proposed;
(6) Failure to restore service after ninety-six (96) consecutive hours of
interrupted service, except when approval of such interruption is
obtained from the City;
(7) Material misrepresentation of fact in the application for or
negotiation of this franchise; or
(8) Bankruptcy or assignment for the benefit of creditors; receivership,
or other insolvency of Grantee.
b. Grantee shall not be excused by mere economic hardship nor by
misfeasance or malfeasance of its shareholders, directors, officers, or
employees.
c. The City may make a written demand that Grantee comply with any such
provision, rule, order, or determination under or pursuant to this ordinance. If
the violation by the Grantee continues for a period of thirty (30) days
following such written demand without written proof that the corrective action
has been taken or is being actively and
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expeditiously pursued, the City may place the issue of termination of this
franchise before the City Council. The City shall cause to be served upon
Grantee, at least twenty (20) days prior to the date of such a Council meeting,
a written notice of intent to request such termination and the time and place of
the meeting. Public notice shall be given of the meeting and issue which the
Council is to consider.
d. The City Council shall hear and consider the issue and shall hear any
person interested therein, and shall determine in its discretion, whether or not
any violation by the Grantee has occurred.
e. If the City Council shall determine that a material breach exist, the
Council may, by resolution, declare that the franchise of the Grantee shall be
forfeited and terminated unless there is compliance within such period as the
City Council may fix, such period not to be less than sixty (60) days, provided
no opportunity for compliance need be granted for fraud or misrepresentation.
f. The issue of forfeiture and termination shall automatically be placed
upon the Council agenda at the expiration of the time set by it for compliance.
The Council then may terminate this franchise forthwith upon finding that
Grantee has failed to achieve compliance or may further extend the period, in
its discretion.
SECTION 21. LIQUIDATED DAMAGES
By acceptance of this franchise granted by the City, Grantee understands
and agrees that failure to comply with any time and performance requirements as
stipulated in this ordinance will result in damage to the City, and that it is
and will be impracticable to
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determine the actual amount of such damage in the event of delay or
nonperformance; and Grantee therefore shall agree that, in addition to any other
damage suffered by the City, the Grantee will pay to the City the following
amounts which will be chargeable to the security fund:
a. For failure to complete system construction in accordance with Section
5, unless the Council specifically approves the delay by motion or resolution,
due to the occurrence of conditions beyond Grantee's control, Grantee shall pay
One Thousand Dollars ($1,000.00) per day for each day, or part thereof, the
deficiency continues.
b. For failure to provide upon written request, data, documents, reports,
information or to cooperate with City during an application process or CATV
system review, Grantee shall pay Fifty Dollars ($50.00) per day, or part
thereof, each violation occurs or continues.
c. For failure to test, analyze and report on the performance of the system
following a written request pursuant to this ordinance, Grantee shall pay to
City Two Hundred Dollars ($200.00) per day for each day, or part thereof, that
such noncompliance continues.
d. For failure to provide in a continuing manner the broad categories of
video programming or other services proposed in the accepted application
incorporated herein by reference, unless the Council specifically approves
Grantee a delay or change, Grantee shall pay to the City One Thousand Dollars
($1,000.00) per day for each day, or part thereof, that each noncompliance
continues.
e. Forty-five (45) days following adoption of a resolution by the City
Council in accordance with Section 14e determining a failure of Grantee to
comply with operational, maintenance or technical standards, Grantee shall pay
to the City One Thousand Dollars
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($1,000.00) for each day, or part thereof, that such noncompliance continues.
SECTION 22. RIGHTS OF INDIVIDUALS
a. Grantee shall not deny service, deny access, or otherwise discriminate
against subscribers, channel users, or general citizens on the basis of race,
color, religion, national origin, or sex. Grantee shall comply at all times with
all other applicable federal, state and local laws and regulations, and all
executive and administrative orders relating to nondiscrimination which are
hereby incorporated and made part of this ordinance by reference.
b. Grantee shall strictly adhere to the equal employment opportunity
requirements of federal, state and local regulations, and as amended from time
to time.
c. No signals shall be transmitted from a subscriber terminal for purposes
of monitoring individual viewing patterns or practices without the express
written permission of the subscriber. The request for such permission shall be
contained in a separate document with a prominent statement that the subscriber
is authorizing the permission in full knowledge of its provision. The
authorization shall be revocable at any time by the subscriber without penalty
of any kind whatsoever. Such authorization is required for each type or
classification of two-way cable communications activity planned, provided,
however, that Grantee shall be entitled to conduct systemwide or individually
addressed "sweeps" for the purpose of
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verifying system integrity, controlling return-path transmission, or billing for
pay services.
d. Grantee, or any of its agents or employees, shall not, without the
specific written authorization of the subscriber involved, sell, or otherwise
make available to any party:
(1) lists of the names and addresses of such subscribers, or
(2) any list which identifies the individual viewing habits of
subscribers.
SECTION 23. PURCHASE OF CATV SYSTEM BY CITY
a. Rights to Purchase
In the event Grantee forfeits or City terminates this franchise pursuant to
provisions of this ordinance, or at the normal expiration of the franchise term,
City shall have the right to purchase the CATV system.
b. Franchise Valuation
(1) In the event Grantee forfeits or City terminates this Franchise,
the City may purchase the system at an equitable price.
(2) Upon expiration of this Franchise, the City may purchase the
system at fair market value determined on the basis of the cable system valued
as a going concern but with no value allocated to the Franchise itself.
c. Date of Valuation
The date of valuation shall be no earlier than the day following the date
of expiration or termination and no later than the date City makes a fair and
reasonable offer for the system or the date of transfer of ownership, whichever
occurs first.
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d. Transfer to City
Upon exercise of this option and the payment of the above sum by the City
and its service of official notice of such action upon Grantee, the Grantee
shall immediately transfer to the City possession and title to all facilities
and property, real and personal, of the CATV system, free from any and all liens
and encumbrances not agreed to be assumed by the City in lieu of some portion of
the purchase price set forth above; and the Grantee shall execute such warranty
deeds or other instruments of conveyance to City as shall be necessary for this
purpose.
SECTION 24. PERFORMANCE EVALUATION SESSIONS
a. The City and Grantee shall hold scheduled performance evaluation
sessions within thirty (30) days of the first, second, third, sixth, ninth, and
twelfth anniversary dates of Grantee's award of the franchise and as may be
required by federal and state law.
b. Special evaluation sessions may be held at any time during the term of
this franchise at the request of the City or the Grantee.
c. All evaluation sessions shall be open to the public and announced in a
newspaper of general circulation in accordance with legal notice. Grantee shall
notify its subscribers of all evaluation sessions by announcement on at least
two (2) channels of its system between the hours of 7:00 p.m. and 9:00 p.m., for
five (5) consecutive days preceding each session.
d. Topics which may be discussed at any scheduled or special evaluation
session may include, but not be limited to, service rate
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structures; franchise fee; liquidated damages; free or discounted services;
application of new technologies; system performance; services provided;
programming offered; customer complaints; privacy; amendments to this ordinance;
judicial and FCC rulings; line extension policies; and Grantee or City rules.
SECTION 25. NEW DEVELOPMENTS
a. The City Council shall have the authority to order a public hearing from
time to time on the provision of additional channel capacity by Grantee or on
the inclusion in the Grantee's CATV system of "State-of-the-Art" technology or
upgraded facilities.
b. If after such a hearing, the City Council determines (1) that there
exists a reasonable need and demand for additional channel capacity and/or
State-of-the-Art technology or upgraded facilities, and (2) that provision has
been made or will be made for adequate rates which will allow Grantee a fair
rate of return on its investment (including the investment required to provide
the additional channels and/or the State-of-the-Art technology or upgraded
facilities), and will not result in economic waste for the Grantee, the City
Council may order Grantee to provide a specified number of additional channels
and/or specified State-of-the-Art technology or upgraded facilities. Without
implying any limitations as to other provisions of this ordinance, this Section
is deemed a material provision within the meaning of Section 20 of this
ordinance.
c. If any access channel(s), in the opinion of the Council, have become
fully utilized, Grantee shall within six (6) months from receipt
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of written notice make a new channel available for the same purpose(s);
provided, however, that nothing in this paragraph shall require Grantee to add
additional channel capacity to the CATV System. Such requirement may be met by
making available, on a part-time basis, one or more other underutilized access
channels, or on a full or part-time basis one or more other unused access
channels until such time as such underutilized or unused channels are needed for
the uses to which they have been dedicated.
d. Whenever, in the opinion of the City Council, any access channel is
underutilized, the City may order or permit different or additional uses for
said channel.
SECTION 26. AREAWIDE INTERCONNECTION OF CATV SYSTEMS
a. Interconnection Required
Grantee shall interconnect access channels of the cable system with any or
all other CATV systems in adjacent areas, upon the directive of the City.
Interconnection of systems may be done by direct cable connection, microwave
link, satellite, or other appropriate method.
b. Interconnection Procedure
Upon receiving the directive of the City to interconnect, Grantee shall
immediately initiate negotiations with the other affected system or systems in
order that all costs may be shared equally among cable companies for both
construction and operation of the interconnection link.
c. Relief
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Grantee may be granted reasonable extensions of time to interconnect or the
City may rescind its order to interconnect upon petition by the Grantee to the
City. The City shall grant said request if it finds that Grantee has negotiated
in good faith and has failed to obtain an approval from the system or systems of
the proposed interconnection, or that the cost of the interconnection would
cause an unreasonable or unacceptable increase in subscriber rates.
d. Cooperation Required
Grantee shall cooperate with any interconnection corporation, regional
interconnection authority or city, county, state and federal regulatory agency
which may be hereafter established for the purpose of regulating, financing, or
otherwise providing for the interconnection of cable systems beyond the
boundaries of the City.
SECTION 27. TIME IS OF THE ESSENCE
Whenever this franchise shall set forth any time for an act to be performed
by or on behalf of the Grantee, such time shall be deemed of the essence and any
failure of the Grantee to perform within time allotted shall always be
sufficient ground for the City to invoke liquidated damages or revocation of
this franchise.
SECTION 28. FAILURE OF CITY TO ENFORCE FRANCHISE, NO WAIVER OF THE TERMS THEREOF
Grantee shall not be excused from complying with any of the terms and
conditions of this franchise ordinance by any failure of the City
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upon any one or more occasions to insist upon or to seek compliance with any
such terms or conditions.
SECTION 29. SEVERABILITY
If any section, sentence, clause or phrase of this ordinance is held
unconstitutional or otherwise invalid, such infirmity shall not affect the
validity of the ordinance, and any portions in conflict are hereby repealed.
Provided, however, that in the event that the state or federal government laws
or regulations renders any section invalid, then such section or sections may be
renegotiated by the City and Grantee.
This Ordinance shall be in force from its passage.
City of Manassas
By /s/ EDGAR E. ROHR
--------------------------------
Edgar E. Rohr, Mayor
ATTEST: /s/ R. H. MOORE
-------------------------
R. H. Moore, Clerk
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EXHIBIT 10.6.66
CABLE TELEVISION FRANCHISE TRANSFER AGREEMENT
AMONG
CABLEVISION OF MANASSAS PARK, INC.,
JONES COMMUNICATIONS OF VIRGINIA, INC.,
JONES CABLE HOLDINGS, INC.
AND
THE CITY OF MANASSAS PARK, VIRGINIA
<PAGE> 2
CABLE TELEVISION FRANCHISE TRANSFER AGREEMENT
This Cable Television Franchise Transfer Agreement ("Agreement") is made
this 19th day of December, 1995 among CABLEVISION OF MANASSAS PARK, INC.
("Transferor"), a Virginia corporation, JONES COMMUNICATIONS OF VIRGINIA, INC.,
a Colorado corporation, registered to do business in Virginia, ("Transferee"),
and JONES CABLE HOLDINGS, INC., a Colorado corporation registered to do business
in Virginia ("Guarantor"), and THE CITY OF MANASSAS PARK, VIRGINIA, a Virginia
municipal corporation, (the "City"). The Transferor and Transferee are sometimes
collectively referred to herein as "the Companies".
W I T N E S S E T H :
WHEREAS, the City granted a non-exclusive franchise (the "Franchise"), for
a term of fifteen (15) years beginning on May 16, 1983 (the "Franchise Term"),
to the Transferor to construct, operate, maintain and use a cable television
system in the City pursuant to: Chapter 7.5 of the Code of the City of Manassas
Park, Virginia (the "Cable Television Regulations"); City of Manassas Park,
Virginia Ordinance No. 83-1700-219, adopted on May 3, 1983 (the "Franchise
Ordinance"); a Franchise Agreement between Cablevision of Manassas Park, Inc.
and the City of Manassas Park, Virginia dated may 16, 1983, together with
amendments thereto between such parties dated June 1986 and November 1, 1994
(jointly the "Franchise Agreement"); and An Application For Cable Television
System Franchise Rights For the City of Manassas Park, Virginia, submitted to
the City by Cablevision of Manassas Park, Inc., dated September 27, 1982, with
exhibits (the "Proposal"). The Cable Television Regulations, Franchise
Ordinance, Franchise Agreement, and the Proposal are jointly referred to as the
"Franchise Documents"; and
WHEREAS, pursuant to the Franchise Documents, since May 16, 1983, the
Transferor has held a cable television franchise to serve subscribers in the
City and in surrounding jurisdictions through the Transferor's cable television
system (the "System"); and
WHEREAS, the Transferor desires to transfer the Franchise and sell the
System to the Transferee (the "Transfer") in accordance with a certain Asset
Purchase Agreement Between Cablevision of Manassas Park, Inc. and Jones
Intercable, Inc.,
<PAGE> 3
dated May 31, 1995 (the "Purchase Agreement"), which Purchase Agreement was
thereafter assigned to, and assumed by, the Transferee by Assignment and
Assumption Agreement between Jones Intercable, Inc. and the Transferee dated
September 1, 1995 (the "Assignment and Assumption Agreement"); and
WHEREAS, the Transferee desires to pledge, mortgage, hypothecate or
otherwise transfer an interest in the System exceeding seventy five percent
(75%) of the fair market value of the property of the System; and
WHEREAS, the Franchise is scheduled to expire on May 15, 1998 and the City
is expected, in the near future, to begin considering whether to renew the
Franchise; and
WHEREAS, the Franchise Documents provide that the Franchise shall neither
be assigned nor transferred without the consent of the Governing Body of the
City of Manassas Park, Virginia (the "Governing Body"); and
WHEREAS, the Cable Television Regulations further provide that the
Franchisee shall not pledge, mortgage, hypothecate or otherwise transfer an
interest in the System, exceeding seventy five percent (75%) of the fair market
value of the property of the System without the consent of the Governing Body;
and
WHEREAS, on September 25, 1995, the Companies (the Transferee by its former
name, Jones Intercable of Alexandria, Inc.) jointly submitted to the City an
application on Federal Communications Commission ("FCC") Form No. 394, dated
September 22, 1995 (the "Transfer Application"), requesting that the City
acknowledge notice of, and approve, the Transfer; and
WHEREAS, the City has reviewed the Transfer Application and has examined
the financial responsibility, technical expertise, legal and other
qualifications of the Transferee in accordance with applicable laws and as
permitted by the Franchise Documents; and
WHEREAS, under Section 617 of the Cable Television Consumer Protection and
Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992), the City is
authorized to determine whether to approve the request for the Transfer; and
WHEREAS, based on such review and examination, the Governing Body, after
having considered this matter and after having held a public hearing thereon, is
willing to grant its consent to the requested Transfer of the Franchise from the
Transferor to the
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Transferee for the remainder of the Franchise term, subject to the agreement of
the Companies to perform various terms and conditions required by the Franchise
Documents and necessary to protect the public interest; and
WHEREAS, the Governing Body is further willing to grant its consent for the
Transferee to pledge, mortgage, hypothecate or otherwise transfer an interest in
the System, exceeding seventy five percent (75%) of the fair market value of the
Property of the System, subject to certain conditions; and
WHEREAS, the Companies are willing to agree to, and be bound by, the terms
and conditions provided in this Agreement; and
WHEREAS, the Governing Body, after due advertisement and after a full
public hearing, has enacted an ordinance (the "Transfer Ordinance") granting
approval of the proposed transfer and consenting to the proposed pledge,
mortgage or hypothecation of a portion of the Property of the System, which
approval and consent are subject to various conditions, including the condition
that the Companies enter into this Agreement;
NOW, THEREFORE, in consideration of the sum of ten dollars ($10.00), the
consent to transfer the Franchise, the mutual covenants set forth herein, and
other valuable consideration, the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
Section 1. Acceptance of Franchise Obligations.
1.1 Acceptance. The Transferee hereby accepts, acknowledges and agrees to
perform all of the commitments, duties and obligations, present,
continuing and future, of the Franchisee and the Grantee as defined in
the Franchise Documents.
1.2 Compliance with Franchise. The Transferee agrees to comply fully
with all of the provisions, terms, and conditions set forth in the
Franchise Documents, the Transfer Ordinance, this Agreement, and all
applicable federal, state and local laws, including all amendments
thereto. The Transferee agrees to take all necessary steps to ensure
such compliance, notwithstanding conflicting provisions in any other
agreements to which the Transferee is or may be a party.
1.3 Filing of Documents. The Companies agree to file with the City Manager,
within thirty (30) days of the
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<PAGE> 5
transfer or assignment, executed copies of all bills of sale or similar
documents as required by Section 7.5-8 of the Cable Television
Regulations.
1.4 Assumption of Obligations. The Transferee agrees that all acts and
omissions of Transferor occurring before the effective date of the
Governing Body's consent to the Transfer and relating to the
obligations of the Transferor under the Franchise Documents shall be
deemed to be the acts and omissions of the Transferee. The Transferee
hereby assumes liability for all such acts and omissions, known and
unknown, and for all of the Transferor's previously accrued, but
unfulfilled, obligations to the City under the Franchise Documents.
The Companies acknowledge that each of them received a copy of the
letter from Mr. Frank McDonough, the City Manager, to Mr. R. Calvin
Sutliff, Jr., President of Cablevision of Manassas Park, Inc., and to
Mr. Samuel Eddy, General Manager of Cablevision of Manassas Park,
Inc., dated November 7, 1995 (the "Notice Letter"). A copy of the
Notice Letter is attached and incorporated as Attachment A. The items
described in the Notice Letter have been resolved to the satisfaction
of the City or have been addressed in paragraph 3.5 of this Agreement.
1.5 City's Reliance Upon Companies' Representations. The Companies
acknowledge and agree that the City consents to the Transfer of the
System and consents to the pledge, mortgage, hypothecation or transfer
of an interest in the System, in reliance upon the representations
made in the Transfer Application, in this Agreement, and in the
information provided by the Companies set forth in a list of
documents, which list is attached and incorporated as Attachment B.
The Companies' representations contained in the documents listed in
Attachment B are material to the Franchise and constitute a material
inducement to the City for the City's consent to the Transfer. The
Companies hereby covenant that the Companies' representations in the
documents listed in Attachment B are complete, true, and accurate. Any
material misrepresentations, fraud or deceit by the Companies upon the
City contained in Attachment B may result in the revocation of the
Franchise.
Section 2. No Waiver.
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2.1 Investigation of Transferee's Qualifications. The approval and consent
given by the Governing Body in this Agreement and in the Transfer
Ordinance are made without prejudice to, or waiver of, the City's
right to fully investigate and consider the Transferee's financial,
technical and legal qualifications and any other relevant
considerations during any franchise renewal process. The Transferee
acknowledges that it acquires no right to, or expectancy of, renewal
of the Franchise solely by virtue of this Agreement.
2.2 Transferor's Defaults. At no time after the Governing Body's approval
and consent to the Transfer, particularly during any franchise renewal
process, will the Companies contend, directly or indirectly, that the
City is barred, by reason of the Transfer, from considering or raising
claims based upon Transferor's defaults, its failure to provide
reasonable service in light of the community's needs, or its failure
to comply with the terms and conditions of the Franchise Documents or
with applicable law, provided, however, that the City shall reasonably
consider the extent to which the Transferee has corrected or improved
upon any such defaults, deficiencies, or failures of performance in
determining whether any default has been cured.
2.3 Transferee's Compliance. By entering into this Agreement, the City does
not waive any of its rights with respect to the Transferee's
compliance with the terms, conditions, requirements and obligations
set forth in the Franchise Documents and in the applicable law.
Section 3. Fees, Insurance, Bonds, and obligations.
3.1 Application and Acceptance Fees. The Transferor and the Transferee have
agreed that, upon execution of this Agreement, the Transferor shall
pay to the City on behalf of the Transferee the application and
acceptance fees required by Section 7.5-46 of the Cable Television
Regulations.
3.2 Performance and Bond. Upon execution of this Agreement, the Transferee
shall obtain, and shall maintain throughout the remainder of the
Franchise term, the liability and copyright infringement insurance
required by, and in strict accordance with, Section 7.5-47 of the
Cable Television Regulations.
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The policy or policies and certificates therefor shall be filed by the
Transferee with the City Manager within thirty (30) days after the
execution of this Agreement.
3.3 Security Fund. The security fund required by Section 7.5-48 of the
Cable Television Regulations, which has been deposited by the
Transferor, will remain on deposit with the City Treasurer for the
term of the Franchise. So long as such amount remains on deposit, the
Transferee will be deemed to have fulfilled its obligations under
Section 7.5-48 of the Cable Television Regulations to deposit such
security fund with the City Treasurer.
3.4 Obligation to Obtain Rights to Locate or Install Facilities. Transferee
agrees to enter into all necessary agreements in forms acceptable to
the City, not later than March 1, 1996, permitting the Transferee, its
successors and assigns, to construct, install, operate, maintain, and
remove cable television facilities in the designated easement in the
areas and at the locations described in Section 3 of Attachment A.
3.5. Transferee's Obligations.
A. The Transferee shall meet the provisions of Section 7.5-40 of the
Cable Television Regulations and all other provisions of the
Franchise Documents regarding service requirements. In addition,
the Transferee hereby agrees that the operation of the System
shall meet or exceed the FCC standards contained in 47 CFR Part
76.309, entitled Customer Service Obligations, and the
requirements of the Franchise Documents. Nothing in this paragraph
shall relieve the Transferee from meeting its
obligations under the Franchise Documents.
B. By January 1, 1997, the Transferee shall inspect all subscriber
drops in the City for compliance with the NEC and other applicable
laws and regulations. For all drops which do not meet such Code,
laws and regulations, the Transferee shall repair the drops, as
needed, and provide to the City Manager quarterly written reports
beginning on March 1, 1996, documenting such inspections and
repairs.
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C. The Transferee shall use employees of the Transferee, and not
independent contractors, to perform all System installation and
all System maintenance, which is a Franchise requirement. Without
waiving this requirement, upon a showing of business need and with
prior written approval of the City Manager, the Transferee shall
be permitted to use independent contractors on a limited basis,
provided that all individuals performing installation and
maintenance work on the System, whether employees of the
Transferee or independent contractors, shall be properly
supervised by the Transferee and shall have been certified, upon
successful completion of the Transferee's Qualified Installer
Program.
D. Upon receipt of a customer complaint or a request for service from
any person or entity indicating that any of the Transferee's
cables on such customer's, person's or entity's property are
buried at depths of less than 18 inches, the Transferee shall,
weather permitting and subject to the completion of customary
locating procedures, begin to bury the cable to a depth of at
least 18 inches as soon as practicable but in any event no later
than (i) within twenty four (24) hours after receipt of such
notice if the affected cable presents a safety risk or (ii)
otherwise within ten (10) business days after receipt of such
notice, and shall complete the rebury promptly.
E. The Transferee shall incorporate the customers of the System into
its centralized computer billing system, which billing system is
currently acceptable to the City. The City's acceptance of this
billing system does not constitute a waiver by the City of any
Franchise requirement.
F. The Transferee shall submit to the City Engineer as-installed plans
for System extensions within thirty (30) days after completion of
each such extension.
G. When the City approves plans for the construction of new public
streets or facilities or for the installation of new grades and
alignments of existing public streets or facilities, then the
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City will provide a copy of the approved plans to Transferee as
soon as possible, but in no event more than ten (10) working days
from the date of plan approval. At such time, the City shall also
provide the Transferee with a schedule for completion of the
relocation or placement of its facilities, which schedule shall
provide a minimum of ten (10) working days for commencement by the
Transferee of the relocation or placement of its facilities. The
Transferee shall commence work on the relocation or placement of
its facilities within ten (10) business days of receipt of the
schedule or, if greater, within the number of days specified in
the schedule, and shall complete construction promptly.
H. The Transferee shall keep accurate records and, upon request, shall
make available to the City for inspection, such records describing
complaints received by the Transferee from subscribers and
verifying the fact that each such complaint was investigated and
acted upon by the Transferee as soon as possible, but no later
than one business day after receipt, as required by Section
7.5-44(b) of the Cable Television Regulations.
I. For all facilities and cables which are located outside of the
boundaries of easements or in other locations where the Transferee
has not obtained the legal right to locate such facilities and
cable, the Transferee shall either obtain from the property owner
or owners the legal right to locate such facilities and cable on
such property, and promptly provide evidence of such legal right
to the City Engineer, or relocate the facilities to property
within which the Transferee has obtained the legal right to
install such facilities and cable and provide evidence of such
relocation to the City Engineer.
J. The Transferee acknowledges that the Franchise Documents obligate
the Franchisee to provide the following features or services. The
City does not waive these or any other Franchise requirements and
Transferee expressly binds itself to provide the following
franchise obligations at any time, upon demand by the City, and
during the period of time specified by the City:
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1. A System installed with full two-way operation, as described in
the Franchise Documents;
2. A System with two-way capability to allow the City School
system to originate programming from any of the schools or
administrative buildings, and a System with two outbound
channels dedicated to school system use and two additional
channels available for outbound use on a shared basis;
3. A System with harmonically-related channelization ("HRC") using
Scientific Atlanta equipment; and
4. A System with 15 channels individually processed FM service
using Catel equipment.
The City does not presently intend to enforce the foregoing
Franchise requirements during the remaining term of the Franchise.
The City intends to consider the desirability of these and other
requirements during the Franchise renewal process. Notwithstanding
the provisions of subsection 2.2, above, the City will not treat
as Franchise defaults any claim that the Transferor failed to
comply with these requirements before the effective date of the
transfer, nor will the City treat as Franchise defaults any claim
that the Transferee failed to comply with these requirements after
the effective date of the transfer for purposes of renewal
determination unless the City requests that the Transferee satisfy
such requirements during the remaining term of the Franchise and
the Transferee fails to comply with such request within a
reasonable time.
3.6 Franchise Fees through the Effective Date of Transfer. The
Transferor has paid to the City certain amounts in satisfaction of
the Transferor's obligation under the Franchise Documents to pay
franchise fees. The City and the Companies agree that no audit has
been conducted of the franchise fees paid by the Transferor to the
City and that, if such an audit were conducted, it may result in
either: A. a refund by the City to the Transferor of overpaid
franchise fees; B. a payment by the Transferor to the City of
underpaid
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franchise fees; or C. neither a refund by the City nor a payment by
the Transferor. In order to avoid any dispute about payment of these
franchise fees through the effective date of the transfer, and in
consideration of the covenants in this Agreement, the City and the
Companies agree that they shall each forego the conducting of audits
of the franchise fee payments through the effective date of the
transfer, which audits are otherwise permitted by the Franchise
Documents.
Section 4. Costs, No Adverse Effect on Rates.
4.1 Payment of Transfer Costs. Notwithstanding anything to the contrary
contained in the Franchise Documents, this Agreement or any previous
Agreement, upon execution of this Agreement, Transferor agrees to pay
to the City an amount not to exceed $65,000 inclusive of all
application and acceptance fees required by sec. 7.5-46 of the Cable
Television Regulations, which sum shall in addition defray all
Transfer Costs incurred by the City, as those Transfer Costs are
defined in a letter dated September 19, 1995 ("Letter Agreement"),
from General Manager of Transferor to City Manager, a copy of which
Letter Agreement is attached and incorporated as Attachment C. To the
extent this provision is inconsistent with the Letter Agreement, this
provision controls. In calculating the Transfer Costs to be paid by
the Transferor to City, the City shall credit payments previously
received from Transferor.
4.2 None of the expenses incurred or amounts expended by the Companies to
comply with this Agreement shall be passed through by the Companies to
system subscribers in any form, or itemized on any subscriber bills,
except as allowed under applicable federal law and regulations.
4.3 No Adverse Effect on Rates.
A. The Transferee hereby covenants and agrees that the Transfer of the
System shall not cause, justify or require any increase in the
rate base for the System allocable to basic service and/or
equipment, other than as permitted under Federal law. The
Transferee acknowledges that it is the
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intent of both Transferee and the City that all costs associated
with the requirements of this Transfer do not provide any basis
for increasing the amounts paid by subscribers through cost
pass-throughs, as so called "external costs," or as new franchise
requirements. Neither the consent process, nor any related
Governing Body actions, nor the provisions of this Agreement
provide any basis for increasing the rates or amounts paid by
subscribers in any other manner.
B. The Transferee agrees that the existing basic service rates shall
remain in effect through June 1, 1996. In consideration of the
covenants provided in this Agreement, the Transferee shall not
raise its basic service rates for the System until such time as
the Transferee is permitted (whether pursuant to the relevant
franchise documents, federal, state or local law, or otherwise) to
raise such rates and does in fact raise those rates, in the cable
television system it owns serving the City of Manassas, Virginia
(and any such increase in the basic service rates for the System
shall not be any higher percentage than the percentage increase to
the basic service rates for subscribers in the City of Manassas,
which is simultaneously being implemented), except for adjustments
for inflation or to reflect any change in the Transferee's
external costs as defined by the FCC, and subject to any
subsequent changes in the applicable laws or rules and regulations
of the FCC.
C. Consent herein granted for the Transfer is conditioned upon the
acknowledgment by the Transferee, as indicated by its execution of
this Agreement, that the existing interim "Cost-of-Service" Rules
of the FCC establish a presumption that the inclusion of the
acquisition costs and good will shall not be considered as
reasonable costs to be included in the rate base for any request
for rate increases.
D. The Transferee shall maintain, and shall make available for
inspection by the City in Transferee's offices, upon the City's
request, all appraisals, studies, reports, and records regarding
the allocation of the purchase price of
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the Transferor's System assets. Such appraisals, studies, reports and
records shall be maintained by the Transferee in such a manner so that
the City can determine the value of the Transferor's System assets
with, and without, the allocation of the purchase price above net book
value (allocation of the excess acquisition cost to the book value of
the assets being acquired). Such appraisals, studies, reports and
records shall be maintained so as to enable the City, at its sole
discretion, to determine that no recovery of the excess purchase price
is being sought in any cost of service showing.
Section 5. Representations and Warranties.
5.1 Representations and Warranties of the Transferor. The Transferor hereby
represents and warrants that: A. the execution and delivery of this
Agreement do not contravene, result in a breach of, or constitute a
default under, any contract or agreement to which Transferor is a
party or by which Transferor may be bound (nor would such execution
and delivery constitute such a default with the passage of time or the
giving of notice or both), and do not violate or contravene any law,
order, decree, rule, regulation or restriction to which the Transferor
is subject; B. the Transferor is a duly organized corporation, legally
existing under the laws of Commonwealth of Virginia and is a
corporation, in good standing, duly qualified to do business in the
Commonwealth of Virginia; C. this Agreement, the Purchase Agreement
and the Franchise Documents constitute legal, valid and binding
obligations of the Transferor, enforceable in accordance with their
terms; and D. the execution and delivery of, and performance under,
this Agreement, the Purchase Agreement, and the Franchise Documents
are within Transferor's power and authority without the joinder or
consent of any other party, and have been duly authorized by all
requisite action and are not in contravention of Transferor's charter,
bylaws or other corporate organizational documents or of any
indenture, agreement, or undertaking to which Transferor is a party or
by which it is bound. The Transferor hereby indemnities and holds
harmless the City, its elected and appointed officers, officials,
employees, agents, contractors, and consultants against any loss,
claim, damage, liability or expense (including, without
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limitation, reasonable attorneys' fees) incurred as a result of: A.
any representation or warranty made by Transferor in this Agreement
which proves to be untrue or inaccurate in any material respect; B.
the transfer of the Franchise from the Transferor to the Transferee,
except for fees and costs associated with this Agreement; or C. any
challenge to the validity of this Agreement by the Transferor.
5.2 Representations and Warranties of the Transferee. The Transferee hereby
represents and warrants that: A. the execution and delivery of this
Agreement do not contravene, result in a breach of, or constitute a
default under, any contract or agreement to which Transferee is a
party or by which Transferee may be bound (nor would such execution
and delivery constitute such a default with the passage of time or the
giving of notice or both), and do not violate or contravene any law,
order, decree, rule, regulation or restriction to which the Transferee
is subject; B. the Transferee is a duly organized corporation, and
legally existing under the laws of the State of Colorado and is a
corporation, in good standing, duly qualified to do business in the
Commonwealth of Virginia; C. this Agreement, the Purchase Agreement,
and the Franchise Documents constitute legal, valid and binding
obligations of Transferee enforceable in accordance with their terms;
and D. the execution and delivery of, and performance under, this
Agreement, the Purchase Agreement, and the Franchise Documents are
within Transferee's power and authority without the joinder or consent
of any other party, and have been duly authorized by all requisite
action and are not in contravention of Transferee's charter, bylaws or
other corporate organizational documents or of any indenture,
agreement, or undertaking to which Transferee is a party or by which
it is bound. The Transferee hereby indemnifies and holds harmless the
City, its elected and appointed officers, officials, employees,
agents, contractors, and consultants against any loss, claim, damage,
liability or expense (including, without limitation, reasonable
attorneys' fees) incurred as a result of: A. any representation or
warranty made by Transferee in this Agreement which proves to be
untrue or inaccurate in any material respect, or B. the transfer of
the Franchise from the Transferor to the Transferee (except for fees
and costs associated with this Agreement; C. Transferee's performance
and
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implementation of the terms and conditions of this Agreement, except
for fees and costs associated with this Agreement; or D. any challenge
to the validity of this Agreement by the Transferee.
Section 6. Covenants of Transferee.
6.1 Acceptance of Franchise. The Transferee covenants that it has carefully
read the terms and conditions of the Franchise Documents, this
Agreement and the Transfer Ordinance, and accepts all of such terms
and conditions imposed by such Documents, Agreement and Ordinance and
agrees to abide by the same. The Transferee further accepts the
Franchise, agrees to fully comply with the Franchise Documents, this
Agreement, and the Transfer Ordinance, agrees to assume the
obligations and liabilities of the Franchise, and agrees to exercise
the rights and privileges granted in the Franchise, upon and subject
to the terms, provisions, conditions and limitations set forth in the
documents described in this Subsection 6.1.
6.2 Future Transfers. All future transfers or assignments of the Franchise
and the System shall be subject to the review and approval of the
Governing Body in accordance with federal, state and local law, and
the Franchise Documents.
6.3 Encumbrances. Notwithstanding any language to the contrary contained in
the Purchase Agreement, Assignment and Assumption Agreement, and any
other agreements to which any of the signatories to this Agreement are
parties, the Transferee shall not further pledge, mortgage,
hypothecate or otherwise encumber the Franchise, the System or any
assets used in connection therewith without the prior written consent
of the Governing Body, to the extent that such is required under,
without limitation, Section 7.5-8 of the Cable Television Regulations.
6.4 The City's approval of the Transferee's pledging, mortgaging,
hypothecating or otherwise transferring an interest in an amount
exceeding seventy five percent (75%) of the fair market value of the
property of the System, is subject to the conditions that (A) the
lender comply with the Franchise Documents, including but not limited
to the lender's compliance with Section 7.5-8(c) of the Cable
Television Regulations; and (B)
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the Transferee submit to the City Manager, for the City's prior
approval, evidence satisfactory to the City that the lender has agreed
to comply with the Franchise Documents, this Agreement and the
Transfer Ordinance. The City's approval described in this section is
further conditioned upon the Transferee obtaining, and delivering to
the City Manager prior to the effective date of the Transfer, the
written agreement of any lender, under Section 7.5-8(c) of the Cable
Television Regulations, that it shall comply with the Franchise
Documents if the lender were to foreclose on, or otherwise take
control of, the System assets in the future. The failure of the
Transferee to submit such documents to the City, or the failure of the
lender to so agree, shall render null and void the City's consent to
the Transferee's request to pledge, mortgage or hypothecate property
of the System.
6.5 The Companies agree that any mortgage, pledge, hypothecation, or lease
of the System, or any portion thereof shall be subject and subordinate
to the rights of the City under the Franchise Documents and other
applicable law and that all documents regarding such mortgage, pledge,
hypothecation, or lease of the System shall so state. Copies of such
documents shall be delivered by the Transferee to the City upon the
City's request.
Section 7. Acceptance of this Agreement.
By accepting this Agreement A. the Transferee accepts, and agrees to comply
with each provision of this Agreement and of the Franchise Documents; B.
the Companies acknowledge, accept and will not challenge the City's right
to consent to the Transfer pursuant to the Franchise Documents, and to
enter into this Agreement; and C. the Companies agree that consent to the
Transfer has been or will be granted pursuant to processes and procedures
consistent with the applicable law, and that the Companies will not raise,
and hereby expressly waive, insofar as such waiver is consistent with
applicable law, all claims to the contrary and will indemnify and hold
harmless the City, its officials, employees, agents and contractors,
against all costs, claims, liability, judgments and expenses arising out
of such claims raised by persons or entities not a party to this
Agreement.
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Section 8. Effect of Failure to Satisfy This Agreement.
If either the Companies at any time fail to satisfy any of the conditions
in this Agreement, or if either of the Companies violate any provision of
this Agreement, then the City may, after giving the Companies fifteen (15)
days written notice, declare the Governing Body's consent to the Transfer
to be null and void and of no force and effect. If after the transfer, the
Transferee fails to satisfy the conditions set forth in Subsections 3.4
and 3.5 of this Agreement, then the City may, without further cause and in
its sole discretion, initiate the procedure to revoke the Franchise.
Section 9. Miscellaneous Provisions.
9.1 Binding Agreement. This Agreement shall bind and benefit the parties
hereto and their respective heirs, beneficiaries, administrators,
executors, receivers, trustees, successors and assigns, and the
promises and obligations herein shall survive the effective date
hereof.
9.2 Guarantee of Transferee's Performance. As of the effective date of this
Agreement and throughout its term, the Guarantor guarantees to the
City the full and complete performance of the Transferee under the
terms and conditions of this Agreement and the Franchise Documents. In
consideration of the City consenting to the Transfer and consenting to
the pledge, mortgage, hypothecation or lease of the System, the
Guarantor agrees:
A. To assure the prompt, satisfactory and continuous performance of
the Franchise by the Transferee in accordance with all the terms
and conditions of this Agreement and the Franchise Documents; and
B. To pay to the City all damages, costs and expenses, including
attorney's fees, that the City is entitled to recover from the
Transferee under or in connection with the Franchise and the
Franchise Documents by reason of Transferee's failure to perform
adequately its obligations under this Agreement or as a result of
any wrongful act; and
C. To maintain the aforementioned guarantee for the full duration of
the remainder of the Franchise Term under this Agreement, or until
all claims by
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the City against the Transferee have been finally settled or
resolved, whichever is later; and
D. To make the Guarantor's obligations hereunder binding regardless of
any modification, renewal, extension, waiver, or other change of
any kind which may hereafter be made in the Franchise or in the
Franchise Documents. Such guarantee shall not be affected by the
City's failure to give timely notice of a default or modification
under the Franchise to the Transferee or Guarantor.
9.3 Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Virginia and all
applicable federal and local laws.
9.4 Severability and Enforceability. A determination in any judicial or
administrative proceeding that any provision of this Agreement is
unenforceable or invalid shall not affect the enforceability or
validity of any other provision. Upon any such determination, the
parties shall enter into good faith negotiations with the intent of
reaching an agreement that would place the City, the Companies and the
subscribers substantially in the same position as if this
Agreement were fully enforceable.
9.5 Time of the Essence. In determining whether a party has complied with
this Agreement, the parties agree that time is of the essence. If the
Transfer of the Franchise and the System, as contemplated by this
Agreement, have not been completed by March 1, 1996, and written
notice thereof provided to the City by March 11, 1996, then this
Agreement, and the consent to transfer the Franchise and the System
shall be null and void and of no force and effect, except that the
Transferee's and Guarantor's indemnification of the City shall remain
in force and effect and shall survive the term of this Agreement.
9.6 Counterparts. This document may be executed in multiple counterparts,
and by the parties hereto on separate counterparts, and each
counterpart, when executed and delivered, shall constitute an original
agreement enforceable against all who signed it without production of,
or accounting for, any other
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counterpart, and all separate counterparts shall constitute the same
agreement.
9.7 Captions. The captions and headings of this Agreement are for
convenience and reference purposes only, and shall not affect in any
way the meaning and interpretations of any provisions of this
Agreement.
9.8 Recitals. The recitals are hereby incorporated into this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TRANSFEROR:
CABLEVISION OF MANASSAS PARK, INC.
By: /s/ R. CALVIN SUTLIFF
------------------------------------
Name: R. Calvin Sutliff
----------------------------------
Title: President
---------------------------------
Date: 12-19-95
----------------------------------
TRANSFEREE:
JONES COMMUNICATIONS OF VIRGINIA, INC.
By: /s/ ELIZABETH STEELE
------------------------------------
Name: Elizabeth Steele
----------------------------------
Title: Vice President
---------------------------------
Date: 12/18/95
----------------------------------
GUARANTOR:
JONES CABLE HOLDINGS, INC..
By: /s/ ELIZABETH STEELE
------------------------------------
Name: Elizabeth Steele
----------------------------------
Title: Vice President
---------------------------------
Date: 12/18/95
----------------------------------
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CITY OF MANASSAS PARK, VIRGINIA
By: /s/ ERNEST L. EVANS
--------------------------------
Name: Ernest L. Evans
------------------------------
Title: Mayor
-----------------------------
Date: December 19, 1995
------------------------------
ATTEST:
/s/ LANA A. CONNER
- -----------------------------
City Clerk
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COMMONWEALTH OF VIRGINIA
CITY OF PRINCE WILLIAM CO., TO WIT:
I, a Notary Public in and for the aforesaid jurisdiction hereby certify
that R. Calvin Sutliff, Jr. appeared before me in my jurisdiction and
acknowledged same this 19th day of December, 1995 on behalf of the Cablevision
of Manassas Park.
/s/ ANN MICHELLE REYNOLDS
--------------------------
Notary Public
My Commission Expires: .
COMMONWEALTH OF VIRGINIA
CITY OF MANASSAS PARK, TO WIT:
I, a Notary Public in and for the aforesaid jurisdiction hereby certify
that Ernest L. Evans appeared before me in my jurisdiction and acknowledged same
this 19th day of December, 1995 on behalf of the City of Manassas Park.
/s/ LANA A. CONNER
--------------------------
Notary Public
My Commission Expires: 6/30/96 .
STATE OF COLORADO
COUNTY OF ARAPAHOE, TO WIT:
I, a Notary Public in and for the aforesaid jurisdiction hereby certify
that Elizabeth Steele, Vice President appeared before me in my jurisdiction and
acknowledged same this 18th day of December, 1995 on behalf of Jones
Communiations of Virginia, Inc.
/s/ DOLORES M. GILLESPIE
--------------------------
Notary Public
My Commission Expires: 2/17/97 .
20
<PAGE> 22
STATE OF COLORADO
COUNTY OF ARAPAHOE, TO WIT:
I, a Notary Public in and for the aforesaid jurisdiction hereby certify
that Elizabeth Steele, Vice President appeared before me in my jurisdiction and
acknowledged same this 18th day of December, 1995 on behalf of Jones Cable
Holdings, Inc.
/s/ DOLORES M. GILLESPIE
-------------------------
Notary Public
My Commission Expires: 2/17/97 . Dolores M. Gillespie
21
<PAGE> 23
ATTACHMENT A
[CITY OF MANASSAS PARK LETTERHEAD]
November 7, 1995
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Mr. R. Calvin Sutliff, Jr.
Benchmark Communications
21545 Ridgetop Circle
Sterling, Virginia 20166
BY HAND
Mr. Samuel Eddy
General Manager
Cablevision of Manassas Park, Inc.
9540 Center Street
Manassas Park, Virginia 22110
Re: Notification of Non-Compliance With the Cable
Television Franchise (the "Franchise") Granted by the
City of Manassas Park, Virginia (the "City") to
Cablevision of Manassas Park, Inc. ("CMP")
Dear Messrs. Sutliff and Eddy:
In reviewing CMP's request to transfer the Franchise under Chapter 7.5 of
the City Code, the City has determined that CMP is not in compliance with
various requirements of the Franchise. The particulars of these Franchise
violations include:
1. Sections 7.5-29 and 7.5-34(a) of the Code of the City of Manassas Park
(the "City Code"): Failure to bury underground cable to proper depth at various
locations, including the main feed cable at the intersection of Manassas Drive
and Park Center Court; Belmont Station Subdivision behind lots 69-72; and behind
the lots on the north side of East Carondelet Drive.
2. Sections 7.5-33(a) and 7.5-34(a) of the City Code: Failure to construct,
install and maintain the cable television system in compliance with the National
Electric Code. An outside Plant Inspection Log listing the specific locations
and corresponding descriptions of deficiencies is attached to this letter
designated as Attachment A.
<PAGE> 24
November 3, 1995
Page 2
3. Section 7.5-55 of the City Code, Section 6 of the Franchise Agreement
between CMP and the City dated May 16, 1983, including amendments thereto dated
July 24, 1986 and November 1994 (the "Franchise Agreement") and the Franchise
Ordinance: Failure to obtain permission of the City to install cable television
lines in Brandy Station, Stoneridge, Outlook, Mosby Ridge and Blooms Crossing
subdivisions and in other locations in the City, resulting in unreasonable
interference with the public's use thereof. Such other locations include, but
are not limited to: Buried cable along Park Center Court, buried cable along
Manassas Drive between the Cablevision office and the railroad, lots 95 & 96 of
Blooms Crossing Subdivision is in the center of the driveway, and rear of lots
on East Carondelet Drive in Bloom's Crossing Subdivision.
4. Section 7.5-36 of the City Code: Failure to move existing facilities, in
a timely manner as reasonably directed by the City, resulting in the delay of
public improvements at the following locations: Parking lot improvements at
Manassas Elementary School, Widening of Manassas Drive between the railroad and
Signal View Drive (formerly Blooms Road) and widening of Euclid Avenue at
Manassas Drive.
5. Section 7 of the Franchise Agreement: Failure to furnish to the City
Manager, or to obtain a suspension of such requirement, copies of various
contracts within fifteen (15) days of execution thereof.
6. Section 10 of the Franchise Agreement: Failure to file with the City
Manager, or to obtain a suspension of such requirement, certain FCC statements
and documents within twenty (20) working days of such filings.
7. Section 4(b)(3) of the Franchise Agreement: Failure to operate a
computerized billing system at the studio facilities located in the City.
8. Section 7 of the Franchise Agreement and Exhibit C-1 of the Franchise
Application of CMP to the City dated September 27, 1982 (the "Proposal"):
Failure to provide a cable television system with two-way capacity/capability.
<PAGE> 25
November 3, 1995
Page 3
9. Section 7 of the Franchise Agreement and Exhibit C-2 of the Proposal:
Failure to provide a cable television system with harmonically-related
channelization ("HRC") using Scientific Atlanta equipment.
10. Section 7 of the Franchise Agreement and Exhibit C-2 of the Proposal:
Failure to provide a cable television system with 15-channel, individually
processed FM service using Catel equipment.
11. Section 7 of the Franchise Agreement and Exhibit C-4 of the Proposal:
Failure to have system installation and maintenance performed exclusively by CMP
personnel.
12. Section 7 of the Franchise Agreement and Exhibit C-4 of the Proposal:
Failure to use answering service to answer service complaints during non-office
hours.
13. Section 7 of the Franchise Agreement and Exhibit C-5 of the Proposal:
Failure to provide set-top terminals (converters) capable of handling up to 120
channels.
14. Section 7 of the Franchise Agreement and Exhibit P-3 of the Proposal:
Failure to provide a cable television system to permit the school system to
originate programming from any of the schools or administrative building.
15. Section 7 of the Franchise Agreement and Exhibit P-3 of the Proposal:
Failure to dedicate two out-bound channels to the school system use and two
additional channels for out-bound use on a shared basis.
16. Section 7 of the Franchise Agreement and Exhibits P-4 and P-7 of the
Proposal: Failure to provide a system with full 2-way operation to permit remote
origination of programs from any point in the community served by the system.
At a meeting on October 20, Sam Eddy and the City Attorney discussed all
these and other issues of noncompliance. This meeting helped resolve a number of
areas of concern and highlighted the changes and upgrades accomplished by CMP
over the
<PAGE> 26
November 3, 1995
Page 4
course of the present franchise term. As a result of these changes, we may find
it desirable to amend the Franchise Documents to address some of the areas cited
as technical noncompliance.
The City desires to continue working with CMP to reach a satisfactory
resolution of these violations at the earliest possible time. The City
anticipates that CMP will fully and diligently cooperate in a prompt and
complete correction or resolution of these issues. In the interest of
maintaining public safety and providing quality cable television service to City
residents, some of these items of noncompliance should be corrected immediately,
while others may be better addressed in the franchise transfer process.
Very truly yours,
Frank McDonough
BAK/red
<PAGE> 27
November 3, 1995
Page 5
cc: Certified Mail-Return Receipt Requested
Ms. Katherine A. LeVoy
Assistant Secretary/Counsel
Jones Intercable of Alexandria, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Certified Mail-Return Receipt Requested
Ms. Elizabeth M. Steele
Vice President/General Counsel
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Mayor and City Council
<PAGE> 28
ATTACHMENT B
List of Documents
1. FCC Form No. 394, dated September 22, 1995, Cablevision of Manassas Park,
Inc., Transferor/Assignor, Jones Communications of Virginia, Inc.,
Transferee/Assignee with exhibits.
2. Letter from Samuel Eddy, General Manager of Cablevision of Manassas Park,
Inc. to Frank McDonough, City Manager, dated August 28, 1995 with Attachment
A (including attachments and containing exhibits thereto), containing
responses to Items 1 through 16 listed in a letter dated August 16, 1995 from
Frank McDonough to Samuel Eddy and Katherine A. LeVoy.
3. Letter from Ruth E. Warren, Group Vice President/Operations of Jones
Intercable to Frank McDonough, dated August 25, 1995, (including exhibits),
containing responses to Questions 17 through 41 listed in a letter dated
August 16, 1995 from Frank McDonough to Samuel Eddy and Katherine A. LeVoy.
4. Letter from Samuel Eddy, General Manager of Cablevision of Manassas Park,
Inc. to Frank McDonough, City Manager, dated September 14, 1995 (including
attachments and exhibits), containing responses to Questions 13, 64, 66, 71,
74 through 77 and 81 to questions listed in a letter dated September 6, 1995
from Frank McDonough to Samuel Eddy and Katherine A. Levoy.
5. Letter from Katherine A. LeVoy, counsel, Jones Intercable to Frank McDonough,
City Manager, dated September 18, 1995 enclosing responses of Jones
Intercable, Inc. and Jones Communications of Virginia, Inc., (including
attachments and exhibits), containing responses to Questions 42 through 81 to
questions listed in a letter dated September 6, 1995 from Frank McDonough to
Samuel Eddy and Katherine A. Levoy.
6. Letter from Katherine A. LeVoy, counsel, Jones Intercable, Inc., and Jones
Intercable of Alexandria, Inc., to the City of Manassas Park dated November
7, 1995 enclosing responses of Jones Intercable, Inc. and Jones Intercable of
Alexandria, Inc. (including exhibits), to questions 81 through 94 listed in
letters from David J. Effron to Katherine A. LeVoy dated October 6 and
October 19, 1995.
7. Letter from Katherine A. LeVoy, counsel, Jones Intercable, to James A.
Hoffman, dated November 30, 1995.
8. Letter from Katherine A. LeVoy, counsel, Jones Intercable, to James A.
Hoffman, dated December 12, 1995.
<PAGE> 29
ATTACHMENT C
September 19, 1995
[LOGO]
Mr. Frank McDonough
City Manager
One Park Center Court
Manassas Park, VA 22111
Dear Mr. McDonough:
This letter offers to assist the City of Manassas Park ("City") in its review of
the proposed transfer of the City's cable television franchise. This offer
consists of an unqualified contribution from Cablevision of Manassas Park
("CMP") to the City in the amount of $25,000.00, to defray the City's cost of
consultants (experts, attorneys, engineers, etc.) and related administrative
expenses directly relative to CMP's application for consent to transfer the CATV
franchise ("Transfer Costs").
With consideration to City Code Section 7.5-34 (b), CMP agrees to pay the City
one-half of the "salary and cost" of any such consultants hired by the City. We
understand that the City estimates such Transfer Costs will not exceed
$50,000.00. Should the Transfer Costs exceed the estimated amount, CMP asks and
expects that the City shall provide reasonable explanation to CMP for the
increase. Moreover, CMP would like the opportunity to revisit with the City the
need for additional funds deemed necessary to the reasonable and prudent
evaluation of the CMP application for transfer consent.
CMP recognizes that, under City Code Section 7.5-8, the existing franchise held
by CMP cannot be transferred without the prior consent of the City Council. In
considering its consent, the City Council may evaluate the potential
transferee's ability to perform all of its obligations under the franchise,
including among other things its financial responsibility, its intent and
ability to correct all deficiencies in the franchise, and its technical and
legal qualifications.
CMP recognizes that the City retains these consultants at some expense and will
incur some financial risk, given that CMP and the transferee may determine not
to proceed with the transfer, even after the City has expended time, effort and
expense in reviewing the transfer requests. In order to allay the City's
concerns and to assist the City in conducting its review in a timely and
expeditious fashion, CMP makes the following offer.
CMP offers to create a fund to defray the City's Transfer Costs and such
other fees, costs and expenses directly related to the transfer request. CMP
will deposit with the City Treasure, no later than September 22, 1995, the sum
of $25,000.00 in cash. We request that this sum be placed by the City in an
interest-bearing account from which the City will pay its Transfer Costs. If the
Transfer Costs do not exceed $50,000.00 at the conclusion of the proposed
transfer, then the City will return to CMP any excess which remains in the
account, plus accrued interest. Should it appear that the Transfer Costs may
exceed the
<PAGE> 30
Mr. Frank McDonough
September 8, 1995
Page 2
initial estimate, the City agrees to provide CMP reasonable explanation for the
costs which exceed the original estimate, at which time the City and CMP agree
to discuss the continuation of the transfer process and the need for additional
funds.
We look forward to working with the City to complete the proposed transfer by
the date (8 December 1995) proposed in Mr. McDonough's letter dated 6 September
1995. This offer is unconditional and irrevocable. We make this offer with the
understanding that it does not obligate the City to approve the transfer
request. This offer reflects CMP's willingness to assist the City in the
franchise transfer review process.
Sincerely yours,
Cablevision of Manassas Park, Inc.
/s/ SAMUEL EDDY
Samuel Eddy
General Manager
ACCEPTED:
THE CITY OF MANASSAS PARK, VIRGINIA
BY:
-------------------------------
Ernest L. Evans
Mayor
<PAGE> 31
SECOND AMENDMENT TO FRANCHISE AGREEMENT
THIS SECOND AMENDMENT TO FRANCHISE AGREEMENT ("Second Amendment") is made
this first day of November, 1994, by and between CABLEVISION OF MANASSAS PARK,
INC. ("CMP"), and the CITY OF MANASSAS PARK ("City").
R E C I T A L S:
R-1. On May 3, 1983, the City Council for the City of Manassas Park adopted
an ordinance codifying Chapter 7.5 of the city code of the City of Manassas
Park, Virginia ("Ordinance"), which awarded a non-exclusive franchise to CMP for
the operation of a cable television system within the corporate limits of the
City; and
R-2. On May 16, 1983, CMP and the City entered into a Franchise Agreement
by which the parties agreed to the terms, provisions, conditions and limitations
by which CMP would operate the cable television franchise in the City; and
R-3. By Amendment to Franchise Agreement, dated June 1986, the City agreed
to permit CMP to relocate its local origination studio facilities for the cable
television system from within the corporate limits of the City to a new location
in the City of Manassas, Virginia and, in exchange, CMP agreed to other changes
to the Franchise Agreement, including CMP's agreement "to impose and collect
reasonable rates, fees and charges" for the use of the facilities located within
the City; and
R-4. A dispute arose between CMP and the City about CMP's authority to
collect rates, fees and charges from subscribers outside the City for facilities
located within the City; and
<PAGE> 32
R-5. CMP now desires to eliminate the requirement for CMP to impose and
collect fees and charges from subscribers outside the City for the use of
facilities located within the City; and
R-6. Both parties agree to accept the revisions of the franchise agreement
as described in this Second Amendment.
NOW THEREFORE, in consideration of the mutual promises and obligations
contained in this Second Amendment and conditioned upon full payment of the
amounts set forth in paragraph 5, below, the parties agree to the following
revisions to the Franchise Agreement:
1. Amend paragraph 4(b), by deleting the language "to a location at
9324 N. Main Street in the City of Manassas, Virginia for a period of three (3)
years from the date hereof, which time may be extended upon written request
from CMP and approval by the Council."
2. Delete paragraph 4(b)(7).
3. Amend paragraph 11 by deleting the following sentence: "In the
event that CMP uses facilities located within the City to serve subscribers
outside the City, CMP agrees to impose and collect reasonable rates, fees and
charges for the use of such facilities."
4. Amend the portion of paragraph 20 providing for the address for
notices to CMP to read as follows:
To CMP:
R. Calvin Sutliff, Jr.
Benchmark Communications
21545 Ridgetop Circle
Sterling, Virginia 20166
2
<PAGE> 33
5. In exchange for these revisions to the Franchise Agreement, CMP
agrees to pay the City $200,000.00. CMP will pay $100,000.00 to the City upon
execution and delivery of this Second Amendment and will pay an additional
$100,000.00 to the City no later than May 1, 1995. CMP agrees that this
provision shall be binding on its successors and assigns.
6. All of the provisions of the Franchise Agreement not expressly
amended by this Second Amendment shall remain in full force and effect.
WITNESS the following signatures and seals.
CABLEVISION OF MANASSAS PARK, INC.
By: /s/ R. CALVIN SUTLIFF, JR.
-------------------------------
R. Calvin Sutliff, Jr.
President
STATE OF VIRGINIA )
COUNTY OF FAIRFAX ) to-wit:
R. Calvin Sutliff, Jr. personally appeared before me, the undersigned
Notary Public this 15th day of November, 1994, to sign this Second Amendment to
Franchise Agreement.
/s/ KIM A. BROWN
-------------------------------
Notary Public
My Commission Expires: November 30, 1995
3
<PAGE> 34
ATTEST: CITY OF MANASSAS PARK
/s/ LANA A. CONNER By: /s/ ERNEST L. EVANS
- ------------------------------- ------------------------
Lana A. Conner Ernest L. Evans,
City Clerk Mayor
4
<PAGE> 35
AMENDMENT TO FRANCHISE AGREEMENT
THIS AMENDMENT TO FRANCHISE AGREEMENT, made this 24th day of July 1986, by
and between CABLEVISION OF MANASSAS PARK, INC., a corporation organized under
the laws of the Commonwealth of Virginia (hereinafter referred to as "CMP"), and
the CITY OF MANASSAS PARK, a municipal corporation organized under the laws of
the Commonwealth of Virginia (hereinafter referred to as the "City").
RECITALS:
R-1. On May 3, 1983, the Council for the City, of Manassas Park
(hereinafter referred to as "the Council") adopted an ordinance to the City
Code, known as Chapter 7.5 (hereinafter the "ordinance") which awarded a
non-exclusive franchise to CMP for the operation of a cable television system
within the corporate limits of the City; and
R-2. On May 16, 1983, CMP and the City entered into a FRANCHISE AGREEMENT
whereby the parties agreed to the terms, provisions, conditions and limitations
by which CMP would operate the franchise; and
R-3. CMP now desires to relocate its local origination studio facilities
for the cable television system from within the corporate limits of the City to
a new location in the City of Manassas, Virginia; and
R-4. On May 20, 1986 the Council adopted certain revisions to the terms of
the cable television ordinance; and
R-5. The City now desires to amend the franchise fee paid by CMP to the
City for the operation of the franchise; and
R-6. Both parties agree hereby to accept the revisions of the Franchise
Agreement as described hereinafter.
<PAGE> 36
NOW, THEREFORE, in consideration of the mutual promises and obligations
contained hereinafter, the parties do agree to the following revisions to the
Franchise Agreement:
1. Amend paragraph 4 to read as follows:
4. Non-exclusive right to use streets, alleys and other public places:
(a) The City covenants and agrees that CMP has the non-exclusive franchise and
rights to use the streets, alleys and other public places of the City and to
acquire, erect, maintain and use, and if now erected or installed, to maintain
and use, posts, poles, wires, manholes, ducts, cables, conduits, electrical
conductors, fixtures, appliances, appurtenances and all other necessary
apparatus in, under, over and along the streets, alleys and public places of
the City for the purpose of providing a cable television service and system to
the residents of the City as the same now exists or may be hereafter extended
or altered, under the terms and conditions specified herein. CMP accepts such
franchise and rights and agrees and covenants that it shall exercise such
franchise and rights only in strict accordance with, and upon the conditions
contained in, the terms of this Agreement and the laws, ordinances and
regulations of the United States, the Commonwealth of Virginia, and the City
which are now in existence or which may be adopted hereafter, including but not
limited to Chapter 7.5 of the City Code.
(b) The City and CMP agree that CMP may relocate its local origination
studio facilities for the cable television system from its location in the City
to a location at 9324 N. Main Street in the City of Manassas, Virginia for a
period of three (3) years from the date hereof, which time may be extended upon
written request by CMP and approval by the Council. The City and CMP agree that
CMP may combine the local origination
-2-
<PAGE> 37
studio facilities that service the residents of the City with the studio
facilities that service residents of Manassas provided as agreed upon by CMP
that:
(1) CMP will provide an additional studio facility and an extra
channel for local origination for the cable system serving the City should, in
the sole decision of the Council, the time demand for use of the studio or its
facilities by residents of the City exceed the time made available to meet
demands of residents of the City.
(2) CMP agrees that if an additional studio is needed to meet the
demands of the City, said studio facilities will be provided at the original
location in the City within one year.
(3) CMP agrees to install approximately ONE HUNDRED THOUSAND
DOLLARS ($100,000) worth of electronic equipment and a computer billing system
capable of handling CMP's billing. Said computerized billing system shall be
operated out of CMP's current studio facilities located within the corporate
limits of the City.
(4) CMP agrees to continue to garage all of its business vehicles
in the City.
(5) CMP agrees to apportion in its report made to the City the
operational costs of the new, relocated studio facilities on a pro rata basis
between the subscribers to be served in Manassas or in other areas outside the
City and those in the City, as follows:
(a) For the first year after relocation, the costs shall be
apportioned on a pro rata basis based on the number of homes passed in the City
and those outside of the City.
(b) For the succeeding years, the costs shall be apportioned on
a pro rata basis based on the number of
-3-
<PAGE> 38
subscribers within the City and those outside of the City at the end of the
preceding fiscal year.
(6) CMP agrees to apportion in its reports to the City the
financing costs for the system in the City versus the system outside of the
City, on a reasonable basis, that takes into account the financing required for
the construction of each, the parties hereby agreeing that of the total loan
outstanding as of December 31, 1985, one million dollars ($1,000,000.00) was
allocable to the City system.
(7) CMP agrees to add eleven (11) additional channels to its
current service and four (4) additional optional services.
(8) CMP agrees to make available to the City, on a first-call
basis, a minimum of ten (10) hours per week of local origination time in the
studio to the located in the City of Manassas.
3. Amend paragraph 9 to read as follows:
9. Franchise fee: CMP covenants and agrees to pay as further
consideration for the use of the said streets, alley and public places, the
franchise fee described in Section 7.5-45 of the City Code, as amended.
Payments of the franchise fee shall not be considered in the nature of
a tax or assessment, but shall be in addition to any and all taxes and
assessments which are now or hereafter required to be paid by law to any taxing
body, and nothing in this Agreement shall be construed to limit CMP's liability
for all applicable federal, state and local taxes.
4. Amend paragraph 11 to read as follows;
11. Franchise area: CMP covenants and agrees to serve the entire area
of the City, as described in Section 7.5-19 of the City Code, subject to the
limitations contained therein.
-4-
<PAGE> 39
The office and headend for the cable television system shall be located on
1.6919 acres of land in the City on Manassas Drive in the Conner Center. (Phase
I). In the event that CMP uses facilities located within the City to serve
subscribers outside the City, CMP agrees to impose and collect reasonable
rates, fees and charges for the use of such facilities. CMP shall maintain ail
office at its present location in the City.
5. Amend the portion of paragraph 20 providing for the address for notices
to CMP to read as follows:
TO CMP:
R. Calvin Sutliff, Jr.
Benchmark Communications
2164 Wisconsin Ave., N.W.
Washington, D.C. 20007
6. The parties acknowledge that Chapter 7.5 of the City Code was amended on
May 20, 1986 and that such amendments are hereby incorporated as part of the
Franchise Documents. All other provisions of the Franchise Agreement not
expressly amended herein shall remain in full force and effect.
WITNESS the following signatures and seals:
CABLEVISION OF MANASSAS PARK, INC.
By: R. CALVIN SUTLIFF, JR. (SEAL)
------------------------------
R. Calvin Sutliff, Jr.
President
ATTEST: THE CITY OF MANASSAS PARK
LANA A. CONNER By: G. ROBERT MAITLAND (SEAL)
- ----------------------------- ------------------------------
Lana A. Conner G. Robert Maitland, Mayor
Clerk of the City
-5-
<PAGE> 40
District of Columbia
, to-wit:
The foregoing instrument was acknowledged before me this 24th day of July
1986 by R. Calvin Sutliff, Jr., of Cablevision of Manassas Park, Inc., a
Virginia corporation, on behalf of the corporation.
/s/ BARBARA J. STRAUB
------------------------------------
Notary Public
My Commission expires: 1-31-91
STATE OF VIRGINIA
COUNTY OF, PRINCE WILLIAM to-wit:
The foregoing instrument was acknowledged before me this 26th day of August
1986 by G. Robert Maitland, Mayor of the City of Manassas Park, a municipal
corporation, on behalf of the City.
/s/ FRANCIS T. EMBROY
------------------------------------
Notary Public
My Commission expires: January 15, 1990
-6-
<PAGE> 41
FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT, made this 16th day of May, 1983, by and between
CABLEVISION OF MANASSAS PARK, INC., a corporation organized under law of the
Commonwealth of Virginia, (hereinafter referred to as "CMP"), party of the first
part, and the CITY OF MANASSAS PARK, a municipal corporation organized under the
law of the Commonwealth of Virginia (hereinafter referred to as the "City"),
party of the second part.
W I T N E S S E T H:
WHEREAS, on May 3, the Council of the City of Manassas Park (hereinafter
referred to as the Council) adopted an ordinance awarding a non-exclusive
franchise to CMP for the construction, operation, maintenance and use of a cable
television service and system within the corporate limits of the City; and
WHEREAS, the award of a non-exclusive franchise is subject to certain
terms, provisions, conditions and limitations, which are described hereinafter;
and
WHEREAS, CMP wishes hereby to accept, and by this Agreement does hereby
accept, the award of this franchise subject to the terms, provisions, conditions
and limitations described hereinafter.
NOW, THEREFORE, in consideration of the mutual promises and obligations
contained hereinafter, the parties do agree as follows:
1. Definitions:
(a) The Franchise Application shall mean CMP's "Application For Cable
Television System Franchise Rights For the City of Manassas Park," dated
September 27, 1982, consisting of
<PAGE> 42
thirty-five pages and all attachments and exhibits thereto, as submitted to the
Council by CMP as its application for the cable television system franchise for
the City.
(b) The Franchising Ordinance shall mean the ordinance adopted by the
Council on May 3, 1983 announcing the grant of a non-exclusive franchise for
constructing and maintaining a cable television system to CMP.
(c) Franchise Documents shall mean Chapter 7.5 of the City Code, the
Franchising Ordinance, the Franchise Application, and this Agreement.
(d) Unless the context of this Agreement clearly indicates that a
different meaning is intended herein, all terms used herein shall have the same
meanings given in the City Code.
2. Term of franchise: The initial term of this franchise shall be for a
period of fifteen (15) years beginning on the date of this Agreement as set
forth on page 1 hereof; provided, however, that the City reserves the right to
revoke this franchise at any time pursuant to Section 7.5-4 of the City Code in
the event that CMP violates any of the material provisions of the Franchise
Documents or is found to have practiced any fraud or deceit upon the City or the
public. Any extension of the initial franchise term which shall be granted by
the Council shall be accomplished in accordance with Chapter 7.5 of the City
Code.
3. Documents incorporated herein: The City and CMP agree that the following
documents are hereby incorporated herein by reference and made a part hereof.
a. Chapter 7.5 of the City Code, which is attached hereto as Exhibit
"A".
b. The Franchising Ordinance, which is attached hereto as Exhibit "B".
-2-
<PAGE> 43
c. The Franchise Application, which is attached hereto as Exhibit "C".
In the event that any of the provisions contained in any of the documents
listed above and this Agreement are conflicting, the documents shall take
precedence in the order listed above, and this Agreement shall be last in order
of precedence.
4. Non-exclusive right to use streets, alleys and other public places: The
City covenants and agrees that CMP has the non-exclusive franchise and rights to
use the streets, alleys and other public places of the City and to acquire,
erect, maintain and use, and if now erected or installed, to maintain and use,
posts, poles, wires, manholes, ducts, cables, conduits, electrical conductors,
fixtures, appliances, appurtenances and all other necessary apparatus in, under,
over and along the streets, alleys and public places of the City for the purpose
of providing a cable television service and system within the corporate limits
of the City as the same now exist or may be hereafter extended or altered, under
the terms and conditions specified herein. CMP accepts such franchise and rights
and agrees and covenants that it shall exercise such franchise and rights only
in strict accordance with, and upon the conditions contained in, the terms of
this Agreement and the laws, ordinances and regulations of the United States,
the Commonwealth of Virginia, and the City which are now in existence or which
may be adopted hereafter, including but not limited to Chapter 7.5 of the City
Code.
5. Funding: CMP covenants that within one hundred twenty (120) days of the
execution of this Agreement it will obtain, and have available for use at its
demand if necessary, the sum of Eight Hundred Thousand Dollars ($800,000) in a
combination of equity and debt financing of which not less than
-3-
<PAGE> 44
$250,000 shall be unrestricted equity capital and the balance shall be debt
financing available on short notice to CMP. CMP shall present evidence
satisfactory to City of its compliance with the requirement on or before the
expiration of said one hundred twenty (120) day period.
6. Non-interferences with public use: CMP covenants and agrees that it
shall not exercise the rights granted hereby in such a way as to unreasonably
interfere with the City's or the public's use of the said streets, alleys and
public places of the city.
7. Performance by CMP and security therefor: CMP covenants and agrees to
furnish all necessary material, labor, and equipment necessary for the cable
television system and to construct and install the cable television system, as
more particularly defined in the Franchise Application as in existence as of
this date or as may be amended or supplemented as provided herein, all at its
own risk and expense, within twenty-four months of the date of this Agreement.
CMP shall furnish the City a copy of its contracts (and amendments thereto) for
the furnishing of material, labor and program and services support necessary for
the construction, installation, and maintenance of the cable television system,
other than a personal service contract, within fifteen (15) days of the
execution of such contract or amendment. The City Manager may suspend the
requirement to file copies of the aforesaid contracts and contract amendments.
CMP will make no charge or claim to the City or the Council for hindrance or
delay of the construction or installation of the cable television system. The
City shall assist CMP in obtaining all necessary permits for such construction
or installation from the City and its agencies. CMP shall furnish the Council
with monthly progress reports indicating whether or not it is complying with the
construction schedule and specifying the reasons for any
-4-
<PAGE> 45
delay. CMP agrees to maintain a performance corporate surety bond in the penal
sum of $100,000 as described in Section 7.5-47 of the City Code. This fully
executed faithful performance corporate surety bond from CMP is attached hereto
and incorporated herein as Exhibit "D."
8. Additional franchises: Nothing in this Agreement shall preclude the City
from issuing further non-exclusive franchises in accordance with Section 7.5-4
of the City Code or VA. CODE sec. 15.1-23.1, as the same now exists or may
hereafter be amended, nor from enacting or amending any ordinance regulating
cable television within the City.
9. Franchise fee: CMP covenants and agrees to pay as further consideration
for the use of the said streets, alley and public places, the franchise fee
described on Section 7.5-45 of the City Code. In the event that the franchise
fee is in excess of three percent (3%) of CMP's gross revenues from all cable
services in the City, CMP covenants and agrees to apply to the Federal
Communications Commission (hereinafter the FCC) for a waiver of the fee
limitation as provided in 47 C.F.R. sec. 76.31. The City shall cooperate with
CMP in applying for such waiver. CMP and the City agree that a franchise fee of
five percent (5%) of CMP's gross revenues will not interfere with the
effectuation of federal regulatory goals in the field of cable television and is
appropriate in light of the planned local regulatory program.
Payments of the franchise fee shall not be considered in the nature of a
tax or assessment, but shall be in addition to any and all taxes and assessments
which are now or hereafter required to be paid by law to any taxing body, and
nothing in this Agreement shall be construed to limit CMP's liability for all
applicable federal, state and local taxes.
10. FCC filings: CMP covenants and agrees to file a registration statement
and any other required document with the
-5-
<PAGE> 46
FCC in accordance with the rules and regulations promulgated by the FCC as such
rules and regulations may be amended from time to time. CMP further covenants
and agrees to file with the City a copy of any document it files with the FCC or
any other regulatory agency pertaining to cable television systems within twenty
(20) working days of such filing. To the extent that such documents contain, to
the satisfaction of the City Manager, the information specified by other reports
required to be filed with the City pursuant to the Franchise Documents, the City
Manager may suspend the requirement to file such copies of documents filed with
the FCC or of other reports with the City so as to avoid duplication and the
administrative costs attendant thereto.
11. Franchise area: CMP covenants and agrees to serve the entire area of
the City, as described in Chapter 7.5 of the City Code, subject to the
limitations contained therein. The office and headend for the cable television
system shall be located on 1.6919 acres of land now owned by the City on
Manassas Drive in the Conner Center (Phase I). CMP has agreed by separate
written contract to purchase said land from the City for $22,500 in cash paid at
settlement. In the event that CMP extends cable television service to residents
outside the franchise territory, the monthly rate for basic service and special
service to customers outside the franchise territory shall contain a $1.00
surcharge per individual viewing customer or subscriber which surcharge CMP
shall pass directly through to the City as a direct reimbursement for costs of
the City's administration and regulation as provided in Section 7.5-59 of the
City Code; provided, however, that the City Council may reduce this surcharge
for customers served outside the franchise territory through other cable
television systems in which CMP or its stockholders have no direct or indirect
interest and where the Council is satisfied no direct service by CMP is
practical and
-6-
<PAGE> 47
further provided that no such surcharge shall be collected or payable to the
City for customers served for which service a franchise fee is payable to
another county, city or town under the authority contained in sec. 15.1-23.1 of
the Virginia Code. The revenue raised by CMP from such service outside the
franchise territory shall not be considered as a portion of "gross revenue" in
determining the franchise fee required in Paragraph 9 above.
12. Complaints: CMP covenants and agrees to employ an operator or maintain
a telephone answering device twenty-four (24) hours per day, every day, to
receive subscriber complaints, and to maintain a repair service capable of
acting upon service requests within twenty-four (24) hours of receipt thereof.
13. Indemnification: This Agreement shall not be deemed to give any rights
to any parties other than the City and CMP, and neither the City, the Council,
nor the agents, employees and representatives thereof shall be liable because of
this Agreement for any injury or damage to any person or property arising from
the granting of the franchise or construction, use or maintenance of the cable
television system. CMP covenants and agrees to indemnify and hold harmless the
City, the Council and the agents, employees and representatives thereof from any
and all damages and penalties contained in Section 7.5-47 of the City Code. CMP
further covenants and agrees to maintain the liability insurance in the minimum
limits as described in Section 7.5-47 of the City Code during the term of this
Agreement. The certificate for such liability insurance policy is attached
hereto and incorporated herein as Exhibit "E."
14. Copyright: Nothing herein shall be construed to render the City or the
Council liable for the failure of CMP or any user of the public access
facilities to secure and protect whatever right CMP or the user of the public
access facilities
-7-
<PAGE> 48
may have in intellectual property, including, but not limited to, securing
copyright protection. CMP agrees to maintain, during the term of this Agreement,
copyright infringement insurance with a minimum liability of $1,000,000 as
described in Section 7.5-47 of the City Code. The certificate of such policy is
attached hereto and incorporated herein as Exhibit "F."
15. City's Cost: As further consideration for the nonexclusive right of CMP
to use the streets, alleys and public places of the City, CMP covenants and
agrees to pay to the City, upon the execution of this Agreement, the sum of Ten
Thousand Dollars ($10,000.00) to offset the City's direct costs of the
investigation of the franchise application process as provided in Section 7.5-46
of the City Code.
16. Performance Escrow: CMP has deposited and does hereby covenant and
agree to maintain on deposit, as specified in Section 7.5-48 of the City Code,
during the lifetime of this franchise, Five Thousand Dollars ($5,000) in an
escrow account with the City Treasurer to provide security for the faithful
performance by CMP any of CMP's obligations under the Franchise Documents. A
receipt of the initial deposit of said Five Thousand Dollars ($5,000.00) in
escrow is attached hereto and incorporated herein as Exhibit "G." In the event
that the City should have to expend funds for the costs of investigation or for
resolution by litigation or otherwise of alleged franchise or ordinance
violations, or for rate adjustment determinations, such costs are assessable
upon notice to CMP in addition to fees paid under Paragraph 9 of this Agreement,
and may be withdrawn by the City from the performance escrow. Costs assessable
under this paragraph may include, but are not limited. to, legal fees,
engineering fees and economic consultant's fees. Interest, if any on the
escrowed account, shall inure to the benefit of CMP
-8-
<PAGE> 49
but the City shall have no obligation to keep such funds in an interest bearing
account.
17. Emergency removal of property of franchisee: If, at any time, in case
of fire, disaster, or emergency in the franchise area it shall become necessary
in the judgment of the City, the Council, or the agents and employees thereof,
to cut or move any of the wires, cables, amplifiers, appliances, or
appurtenances thereto of CMP, none of the Council, the City, or the agents or
employees thereof shall be liable for such cutting or moving.
18. No limitation on liability: None of the provisions in this Agreement,
nor any insurance policy required by this Agreement or Chapter 7.5 of the City
Code nor any penalties assessed by Section 7.5-49 of Chapter 7.5 of the City
Code, nor any damages recovered by the City thereunder, shall be construed to
excuse the faithful performance by or limit the liability of CMP under Chapter
7.5 of the City Code or this Agreement, or the liability for damages to the
limits of such policies or otherwise.
19. No abrogation of police powers: Nothing in this Agreement shall be
construed as an abrogation or limitation by the City, or the Council, of any of
its police powers.
20. Service of notice: All notices required to be given to the City shall
be deemed served when delivered in writing by hand or mailed postage prepaid to
the City Manager at the address specified below. All notices required to be
given to CMP shall be deemed served when delivered in writing by hand or when
mailed, postage prepaid, to CMP at the last known principal office of CMP in the
City. Until establishment of said office in the City, notices to CMP shall be
addressed as specified below.
-9-
<PAGE> 50
To the City:
City of Manassas Park
103 Manassas Drive
Manassas Park, Virginia 22111,
or such other address or person of which CMP may be notified in writing by the
City.
To CMP:
R. Calvin Sutliff, Jr.
2367 49th Street, N. W.
Washington, D. C. 20007
or such other address or person of which the City may be notified in writing by
CMP.
21. Change in personnel: CMP covenants and agrees to give the City thirty
(30) days prior written notice of any change in the principals, or their
successors, listed on Page 18 of the Franchise Application, namely, R. Calvin
Sutliff, Jr., Jeffrey Waggoner, and Stephen P. Robin.
22. Cable Television Advisory Committee: The Council may appoint up to five
(5) persons to serve as a Cable Television Advisory Committee, which Committee
shall assist the City Manager, as he shall request and prescribe, in the
performance of his authority and responsibilities under Section 7.5-51 of the
City Code. CMP hereby covenants and agrees to assist and cooperate with the
Cable Television Advisory Committee as a representative of the Council and the
City Manager if and when such Committee shall be so appointed.
23. Equipment for public access station: CMP covenants and agrees to
provide, as a part of its public use studio facilities, the equipment listed in
Exhibit P-9 of the Franchise Application or equipment substantially equivalent
in use or performance, with total minimum acquisition expenses of $50,000,
within ninety (90) days from the date that CMP commences its cable television
service in the City.
-10-
<PAGE> 51
24. Remedies:
(a) All rights and remedies belonging to the City are cumulative and
shall be in addition to and not in derogation of any other rights or remedies
which the City may have.
(b) Specific mention of the materiality of any of the provisions in
the Franchise Documents is not intended to be exclusive of any other for the
purpose of determining whether any failure of compliance thereunder is
material.
25. Successors: CMP covenants and agrees that this Agreement shall be
binding on its successors and assigns.
26. Severability: CMP and the City covenant and agree that if any part or
section of this Agreement is held invalid or unconstitutional by any court of
competent jurisdiction, such decision shall not affect the validity of the
remaining part or section hereof.
27. Time of the essence: Time is of the essence in this Agreement.
28. Status of CMP and governing law: CMP represents and warrants that it is
a Virginia corporation in good standing; that it has the authority to enter into
this Agreement; and that the execution of this Agreement has been authorized by
a resolution of CMP's Board of Directors or other appropriate corporate action.
This Agreement shall be governed by the laws of the Commonwealth of Virginia and
the Ordinances and Resolutions of the City now in effect or as may be hereafter
amended.
29. Whole agreement: The parties covenant and agree that this Agreement and
the documents incorporated by reference herein constitute the entire agreement
between the parties, and each party further covenants and agrees that there are
no other understandings or conditions, written or oral, relating to this
franchise.
-11-
<PAGE> 52
30. Acceptance: CMP hereby accepts the award of this franchise and hereby
expressly covenants and agrees that it has carefully read the terms of the
Franchise Documents, that it fully understands the meaning of each of the
Franchise Documents, and that it shall faithfully comply in all respects with
every provision, obligation and requirement of the Franchise Documents as in
effect now or as may be hereafter amended or supplemented. Nothing in this
Agreement shall preclude the City or the Council from enacting its legislative
powers to enact, amend, or supplement any law regulating cable television within
the franchise area, provided, however, that no change shall be made in any of
the Franchise Documents which shall materially affect the obligations of CMP to
operate and maintain a cable television system in the franchise area, and that
CMP shall make no changes in the Franchise Application or the obligations,
commitments or representations made therein without the City's prior written
approval. The City may delegate its right to make such written approvals to its
City Manager.
WITNESS the following signatures and seals.
Approved by: CABLEVISION OF MANASSAS PARK, INC.
By: /s/ R. CALVIN SUTLIFF, JR. (SEAL)
------------------------------------
R. Calvin Sutliff Jr.,
President
THE CITY OF MANASSAS PARK
ATTEST: /s/ LANA A. CONNER By: /s/ WENDALL R. HITE, II (SEAL)
-------------------------- ------------------------------------
Clerk Wendall R. Hite, II, Mayor
-12-
<PAGE> 53
STATE OF VIRGINIA
COUNTY OF FAIRFAX
The foregoing instrument was acknowledged before me this 17 day of May,
1983, by R. Calvin Sutliff, Jr., of Cablevision of Manassas Park, Inc., a
Virginia corporation, on behalf of the corporation.
JUDY A. AXEL
--------------------------
Notary Public
My Commission Expires: 2/13/87
STATE OF VIRGINIA
COUNTY OF PRINCE WILLIAM
The foregoing instrument was acknowledged before me this 16th day of
August, 1983, by Wendall R. Hite, II, Mayor of The City of Manassas Park, a
municipal corporation, on behalf of the corporation.
KAREN L. BARTON
--------------------------
Notary Public
My Commission Expires: March 18, 1987
-13-
<PAGE> 54
Exhibit B to Franchise Agreement
dated May 16, 1993 between
Cablevision of Manassas Park, Inc.
and the City of
CITY OF MANASSAS PARK, VIRGINIA Manassas Park
PRESENTED May 3, 1993
--------------------
ORDINANCE NO. 83-1700-219 ADOPTED May 3, 1993
---------------- ----------------------
AN ORDINANCE: GRANTING TO CABLEVISION OF MANASSAS PARK, INC., ITS SUCCESSORS
AND ASSIGNS, THE NON-EXCLUSIVE FRANCHISE, RIGHT AND PRIVILEGE,
UPON CERTAIN CONDITIONS, TO USE THE STREETS, ALLEYS AND OTHER
PUBLIC PLACES OF THE CITY OF MANASSAS PARK, VIRGINIA, WITHIN ITS
CORPORATE LIMITS, AS THE SAME NOW EXIST OR MAY BE HEREAFTER
EXTENDED OR ALTERED, FOR THE PURPOSE OF PROVIDING A CABLE
TELEVISION SERVICE AND SYSTEM WITHIN SAID CORPORATE LIMITS.
ORDAINED by the Council of the City of Manassas Park, Virginia, as follows:
SECTION I. The non-exclusive right is hereby granted to Cablevision of
Manassas Park, Inc., hereinafter referred to as "Grantee," its successors and
assigns, for the term and subject to the terms, provisions, conditions and
limitations hereinafter stated, to use the streets, alleys and other public
places of the City of Manassas Park, Virginia, hereinafter referred to as
"City," and to acquire, erect, maintain and use, and if now erected or
installed, to maintain and use posts, poles, wires, manholes, ducts, cables,
conduits, electrical conductors, fixtures, appliances, appurtenances and all
other necessary apparatus in,, under, over and along the streets, alleys and
public places of the City for the purpose of providing a cable television
service and system within the corporate limits of the City as the same now exist
or may be hereafter extended or altered.
SECTION II. The Grantee shall have the non-exclusive right to use, maintain
and operate, subject to the provisions, terms, conditions and limitations
prescribed in this franchise
<PAGE> 55
and subject to all the terms and provisions of the Cable Television Rules and
Regulations, Chapter 7.5 of the City Code, and subject to the lawful exercise of
the police power of the City, the posts, poles, wires, manholes, ducts, cables,
conduits, electrical conductors, fixtures, appliances, appurtenances and all
other necessary apparatus erected, maintained and used in, under, over and along
the streets, alleys and other public places of the City on the day this
franchise becomes in force and effect for the purpose of so providing a cable
television service and system.
SECTION III. The Grantee shall have the non-exclusive right to erect,
maintain and use such posts. poles, wires, manholes, ducts, cables, conduits,
electrical conductors, fixtures, appliances, appurtenances and all other
necessary apparatus in, under, over and along the streets, alleys and other
public places of the City at such locations as are reasonably suitable and
convenient for the purpose of the Grantee and the City subject to the terms,
provisions, conditions and limitations hereinafter stated and the lawful
exercise of the police power of the City.
SECTION IV. The City reserves and shall have the right to require the
Grantee to obtain the specific permission of the City to locate, construct or
erect any micro-wave tower, radio corelay installation, television relay
installation and all other apparatus and appliances appurtenant thereto in, on,
under, over, above and along the streets, alleys and other public places of the
City and the City further reserves and shall have the right to attach reasonable
conditions to the granting of any such
<PAGE> 56
specific permission. The City reserves and hall have the right to require the
Grantee to obtain the specific permission of the City to locate, construct or
erect any of its property, including but not limited to posts, poles, wires,
manholes, ducts, cables, conduits, electrical conductors, fixtures, appliances
and appurtenances that exceed in height or size that which are now in common use
throughout the City in, on, under, over, above and along the streets, alleys and
other public places of the City and the City further reserves and shall have the
right to attach reasonable conditions to the granting of any such specific
permission.
SECTION V. Nothing contained in this franchise shall be construed to exempt
the Grantee from any tax, levy or assessment which is now or which may be
hereafter authorized by law.
SECTION VI. The Grantee will maintain its property, including but not
limited to posts, poles, wires, manholes, ducts, cables, conduits, electrical
conductors, fixtures, appliances and appurtenances, in good order and operating
condition throughout the term of this franchise, and the Grantee by accepting
this franchise agrees that the City or its successors has jurisdiction, to the
full extent and in the manner now or hereafter provided by law, during the term
of this franchise to require the Grantee to render efficient cable television
service at reasonable rates, and that the Circuit Court of Prince William County
or its successor has jurisdiction to enforce compliance with all of the terms,
provisions, conditions and limitations of this franchise to the full extent
<PAGE> 57
and in the manner now or hereafter provided by law during the term of this
franchise.
SECTION VII. The Grantee agrees and binds itself to indemnify, keep and
hold the City and its officers, employees and agents free and harmless from
liability on account of injury or damage to persons, firms or corporations or
property growing out of the erection, installation, maintenance, repair,
operation and use of any of the Grantee's property, including but not limited to
posts, poles, wires, manholes, ducts, cables, conduits, electrical conductors,
fixtures, appliances and appurtenances on the streets, alleys and other public
places of the City, and to maintain throughout the term of its franchise,
liability insurance in companies acceptable to the City sufficient to cover such
indemnification, all in accordance with the provisions of Sec. 7.5-47 of the
City Code.
SECTION VIII. The rights granted to the Grantee by this franchise may be
exercised by any successor or successors, assignee or assignees of the Grantee
with the consent of the City Council 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 Chapter 7.5 of the City Code and this
franchise.
SECTION IX. The rights and privileges granted by this franchise shall
continue for a term of fifteen (15) years from the date of franchise agreement
unless sooner voluntarily surrendered by the Grantee, with the consent of the
City Council, or forfeited, or extended as provided by law. Upon the expiration
of the term of this franchise or surrender or
<PAGE> 58
forfeiture of the rights and privileges granted by this franchise, the Grantee,
if required by the City Council, shall remove all of its property, including but
not limited to posts, poles, wires, manholes, ducts, cables, conduits,
electrical conductors, fixtures, appliances and appurtenances from the streets,
alleys and other public places of the City, and shall repair, restore or replace
any street, alley or other public place and any sewer or water, electric, fire
alarm, civil defense system, police communication or traffic control facility or
tree, or any part thereof, which may be damaged, disturbed or destroyed by or as
a direct or indirect result of the removal of such property.
SECTION X. This franchise and the rights and privileges granted thereby are
not exclusive and nothing in this ordinance shall be construed to prevent a
grant by the City of a similar franchise and rights and privileges to other
persons or corporations.
SECTION XI. This ordinance shall become effective when the Grantee (a)
accepts this franchise and agrees to exercise the rights and privileges granted
by this franchise and upon and subject to the terms, provisions, conditions and
limitations set forth in this franchise, which acceptance and agreement shall be
in writing and in accordance with the terms of Section 7.5-64 and (b) at the
same time files with the City the performance bond and security deposit required
by Sec. 7.5-47 and Sec. 7.5-48 of the City Code. Such written acceptance and
bond shall be filed as provided in this section before the 3rd day of June,
1983.
<PAGE> 59
EXHIBIT D,
PAGE 1
[UNITED STATES FIDELITY GUARANTY COMPANY LOGO]
PERFORMANCE BOND
Approved by the American Institute of Architects
A.I.A. Document No. A-311 (February 1970 Edition)
BOND NUMBER
--------------------------
KNOW ALL MEN BY THESE PRESENTS:
That Cablevision of Manassas Park, Inc.
------------------------------------------------------------------------
as Principal,
- ------------------------------------------------------------------
hereinafter called Contractor, and UNITED STATES FIDELITY AND GUARANTY COMPANY,
a corporation organized and existing under the laws of the State of Maryland,
Baltimore, Maryland, as Surety, hereinafter called Surety, are held and firmly
bound unto City of Manassas Park, Va.
---------------------------------------------------------------------
as Obligee, hereinafter called Owner, in the amount of One hundred thousand
----------------------
& 00/100------------------------------------Dollars ($ 100,000.00--), for
- -------------------------------------------- --------------------
the payment whereof Contractor and Surety bind themselves, their heirs,
executors, administrators, successors and assigns, jointly and severally,
firmly by these presents.
WHEREAS, Contractor has by written agreement dated 4/15/83 19 ,
--------------- ----
entered into a contract with Owner for construction and operation of cable
television system in accordance with drawings and specifications prepared by
- -----------------------------------------------, which contract is by reference
(Here insert full name, title and address)
made a part hereof, and is hereinafter referred to as the Contract.
NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION is such that, if Contractor
shall promptly and faithfully perform said Contract, then this obligation shall
be null and void; otherwise it shall remain in full force and effect.
The Surety hereby waives notice of any alteration or extension of time made
by the Owner.
Whenever Contractor shall be, and declared by Owner to be in default under
the Contract, the Owner having performed Owner's obligations thereunder, the
Surety may promptly remedy the default, or shall promptly
(1) Complete the Contract in accordance with its terms and conditions, or
(2) Obtain a bid or bids for completing the Contract in accordance with its
terms and conditions, and upon determination by Surety of the lowest
responsible bidder, or, if the Owner elects, upon determination by the
Owner and the Surety jointly of the lowest responsible bidder, arrange
for a contract between such bidder and Owner, and make available as Work
progresses (even though there should be a default or a succession of
defaults under the contract or contracts of completion arranged under
this paragraph) sufficient funds to pay the cost of completion less the
balance of the contract price; but not exceeding, including other costs
and damages for which the Surety may be liable hereunder, the amount set
forth in the first paragraph hereof. The term "balance of the contract
price," as used in this paragraph, shall mean the total amount payable
by Owner to Contractor under the Contract and any amendments thereto,
less the amount properly paid by Owner to Contractor.
Any suit under this bond must be instituted before the expiration of two (2)
years from the date on which final payment under the Contract falls due.
No right of action shall accrue on this bond to or for the use of any person
or corporation other than the Owner named herein or the heirs, executors,
administrators or successors of the Owner.
Signed and sealed this 15 day of April , 1983
--------------- ------------------------ ----
CABLEVISION OF MANASSAS PARK, INC.
----------------------------------
In the presence of:
/s/ DANIEL E. SMITH By /s/ R. CALVIN SUTLIFF (Seal)
- -------------------------------------------- -------------------------------
(Witness) Principal
UNITED STATES FIDELITY AND
GUARANTY COMPANY
/s/ LENO E. KINGTON By /s/ YANCEY E. LOVELACE (Seal)
- -------------------------------------------- -------------------------------
(Witness) YANCEY E. LOVELACE
<PAGE> 60
EXHIBIT D,
Page 2
CERTIFIED COPY
GENERAL POWER OF ATTORNEY
No. 90191
KNOW ALL MEN BY THESE PRESENTS
That UNITED STATES FIDELITY AND GUARANTY COMPANY, a corporation organized
and existing under the laws of the State of Maryland, and having its principal
office at the City of Baltimore, in the State of Maryland, does hereby
constitute and appoint
Yancey Lovelace
of the City of Brewton, State of Alabama, its true and lawful attorney in and
for the State of Alabama
for the following purposes, to wit:
To sign its name as surety to, and to execute, seal and acknowledge any and
all bonds, and to respectively do and perform any and all acts and things set
forth in the resolution of the Board of Directors of the said UNITED STATES
FIDELITY AND GUARANTY COMPANY, a certified copy of which is hereto annexed and
made a part of this Power of Attorney; and the said UNITED STATES FIDELITY AND
GUARANTY COMPANY, through us, its Board of Directors, hereby ratifies and
confirms all and whatsoever the said
Yancey Lovelace
may lawfully do in the premises by virtue of these presents.
In Witness Whereof, the said UNITED STATES FIDELITY AND GUARANTY COMPANY has
caused this instrument to be sealed with its corporate seal, duly attested by
the signatures of its Vice-President and Assistant Secretary, this 4th day of
January, A.D. 1980
UNITED STATES FIDELITY AND GUARANTY
COMPANY
(Signed) By /s/ JOHN HAMILTON
---------------------------------
Vice-President.
(SEAL)
(Signed) By /s/ WILLIAM J. PHELAN
---------------------------------
Assistant Secretary.
STATE OF MARYLAND,
ss:
BALTIMORE CITY,
On this 4th day of January, A.D. 1980, before me personally came JOHN
HAMILTON, Vice-President of the UNITED STATES FIDELITY AND GUARANTY COMPANY and
WILLIAM J. PHELAN, Assistant Secretary of said Company, with both of whom I am
personally acquainted, who being by me severally duly sworn, said that they, the
said JOHN HAMILTON and WILLIAM J. PHELAN were respectively the Vice-President
and the Assistant Secretary of the said UNITED STATES FIDELITY AND GUARANTY
COMPANY, the corporation described in and which executed the foregoing Power of
Attorney; that they each knew the seal of said corporation; that the seal
affixed to said Power of Attorney was such corporate seal, that it was so fixed
by order of the Board of Directors of said corporation, and that they signed
their names thereto by like order as Vice-President and Assistant Secretary,
respectively, of the Company.
My commission expires the first day in July, A.D. 1982
(SEAL)
(Signed) /s/ MARGARET M. HURST
----------------------------------
Notary Public.
STATE OF MARYLAND,
ss:
BALTIMORE CITY,
I, WILLIAM ALLEN, Clerk of the Superior Court of Baltimore City, which Court
is a Court of Record, and has a seal, do hereby certify that MARGARET M. HURST,
Esquire, before whom the annexed affidavits were made, and who has thereto
subscribed his name, was at the time of so doing a Notary Public of the State of
Maryland, in and for the City of Baltimore, duly commissioned and sworn and
authorized by law to administer oaths and take acknowledgments, or proof of
deeds to be recorede therein. I further certify that I am acquainted with the
handwriting of the said Notary, and verily believe the signature to be his
genuine signature.
In Testimony Whereof, I hereto set my hand and affix the seal of the
Superior Court of Baltimore City, the same being a Court of Record, this 4th day
of January, A.D. 1980
(SEAL)
(Signed) /s/ WILLIAM ALLEN
------------------------------------
Clerk of the Superior Court of
Baltimore City.
<PAGE> 61
INSURANCE BINDER
THIS BINDER IS A TEMPORARY INSURANCE CONTRACT, SUBJECT
TO THE CONDITIONS SHOWN ON THE REVERSE SIDE OF THIS FORM
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF AGENCY COMPANY
Employers Reinsurance
Escambia Insurance Agency, Inc. -----------------------------------------------------------------------
P.O. Box 366 Effective 12:01 a m 5-3 , 1983
Brewton, AL 36427 *Expires [X] 12:01 am [ ] Noon 5-3 , 1984
-----------------------------------------------------------------------
[ ] This binder is issued to extend coverage in the above named company
per expiring policy # (except as noted below)
- -----------------------------------------------------------------------------------------------------------------------------------
NAME AND MAILING ADDRESS OF INSURED Description of Operation/Vehicles/Property
Cablevision of Manassas Park, Inc. etal *until repalced by issued policy
2367 49th St., N.W.
Washington, D.C. 20007
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Type and Location of Property Coverage/Perils/Forms Amt of Insurance Ded. Coins.
%
- ----------------------------------------------------------------------------------------------------------------------------------
P
R
O
P
E
R
T
Y
- ----------------------------------------------------------------------------------------------------------------------------------
Type of Insurance Coverage/Forms Limits of Liability
-------------------------------------------------
Each Occurrence Aggregate
L -----------------------------------------------------------------------------------------------------------------------------
I
A [ ] Scheduled Form [ ] Comprehensive Form Bodily Injury $ $
B [ ] Premises/Operations Property
I [ ] Products/Completed Operations Damage $ $
L [ ] Contractual -------------------------------------------------
I [ ] Other (specify below) Bodily Injury &
T [ ] Med. Pay. $ Per $ Per Property Damage
Y [ ] Personal Injury Person Accident Combined $ $
------------------------------------------------
[ ] A [ ] B [ ] C Personal Injury $
- ---------------------------------------------------------------------------------------------------------------------------------
A Limits of Liability
U ------------------------------------------------
T [ ] Liability [ ] Non-owned [ ] Hired Bodily Injury (Each Person) $
O [ ] Comprehensive-Deductible $ Bodily Injury (Each Accident) $
M [ ] Collision-Deductible $ ------------------------------------------------
O [ ] Medical Payments $ Property Damage $
B [ ] Uninsured Motorist $ ------------------------------------------------
I [ ] No Fault (specify): Bodily Injury & Property Damage
L [ ] Other (specify): Combined $
E
- ----------------------------------------------------------------------------------------------------------------------------------
[ ] WORKERS' COMPENSATION - Statutory Limits (specify states below) [ ] EMPLOYERS' LIABILITY - Limit $
- ----------------------------------------------------------------------------------------------------------------------------------
SPECIAL CONDITIONS/OTHER COVERAGES
Libel & Allied Torts
$1,000,000 Limit 1,000 Retention
Annual Premium: $627 Minimum & Deposit
==================================================================================================================================
NAME AND ADDRESS OF [ ] MORTGAGEE [ ] LOSS PAYEE [ ] ADD'L INSURED CRC INSURANCE WHOLESALERS
P. O. BOX 7673A
------------------------ Birmingham, AL 35253
LOAN NUMBER
/s/ [ILLEGIBLE] 5/3/83
-------------------------------------- ------
Signature of Authorized Representative Date
- ------------------------------------------------------------------------
</TABLE>
<PAGE> 62
CERTIFICATE OF INSURANCE
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO
RIGHTS UPON THE CERTIFICATE HOLDER.
THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE
POLICIES LISTED BELOW.
- -------------------------------------------------------------------------------
NAME AND ADDRESS OF AGENCY COMPANIES AFFORDING COVERAGES
-------------------------------------------
Escambia Insurance Agency COMPANY
P. O. Box 366 LETTER A Bituminous Casualty Corp.
Newton, Al. 36427 -------------------------------------------
COMPANY
LETTER B Employers Reinsurance
- -------------------------------------------------------------------------------
NAME AND ADDRESS OF INSURED COMPANY
LETTER C
Cablevision of Manassas Park -------------------------------------------
c/o R. Calvin Sutliff COMPANY
2367 49th St. NW LETTER D
Washington, D. C. 20007 -------------------------------------------
COMPANY
LETTER E
- -------------------------------------------------------------------------------
This is to certify that policies of insurance listed below have been issued to
the insured named above and are in force at this time. Notwithstanding any
requirement, term or condition of any contract or other document with respect
to which this certificate may be issued or may pertain, the insurance afforded
by the policies described herein is subject to all the terms, exclusions and
conditions of such policies.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITS OF LIABILITY IN THOUSANDS (000)
-----------------------------------------
COMPANY POLICY EACH
LETTER TYPE OF INSURANCE POLICY NUMBER EXPIRATION DATE OCCURRENCE AGGREGATE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GENERAL LIABILITY
BODILY INJURY $ $
A [X] COMPREHENSIVE FORM Being Issued 4/15/84
[X] PREMISES-OPERATIONS PROPERTY DAMAGE $ $
[ ] EXPLOSION AND
COLLAPSE HAZARD -----------------------------------------
[X] UNDERGROUND HAZARD BODILY INJURY AND
[X] PRODUCTS/COMPLETED PROPERTY DAMAGE $ 500 $ 500
OPERATIONS HAZARD COMBINED
[X] CONTRACTUAL INSURANCE -----------------------------------------
[X] BROAD FORM PROPERTY PERSONAL INJURY $ 500
DAMAGE
[X] INDEPENDENT CONTRACTORS
[X] PERSONAL INJURY
- --------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY BODILY INJURY $
(EACH PERSON)
A [ ] COMPREHENSIVE FORM Being Issued 4/15/84
[ ] OWNED BODILY INJURY $
[ ] HIRED (EACH ACCIDENT)
[X] NON-OWNED -----------------------------------------
PROPERTY DAMAGE $
-----------------------------------------
BODILY INJURY AND
PROPERTY DAMAGE $ 500
COMBINED
- --------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY
BODILY INJURY AND
A [X] UMBRELLA FORM Being Issued 4/15/84 PROPERTY DAMAGE $ 2,000 $ 2,000
[ ] OTHER THAN COMBINED
UMBRELLA FORM
- --------------------------------------------------------------------------------------------------------------------
WORKERS' COMPENSATION STATUTORY
A AND Being Issued 4/15/84
EMPLOYERS' LIABILITY $100, (EACH ACCIDENT)
- --------------------------------------------------------------------------------------------------------------------
OTHER
B Copyright Infringement Being Issued 5/3/84 $ 1,000,
====================================================================================================================
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES
30 Days Notice of Cancellation or Non-Renewal
Additional Insured: City of Manassas Park, Va.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CANCELLATION: Should any of the above described policies be cancelled before
the expiration date thereof, the issuing company will endeavor
to mail 30 days written notice to the below named certificate
holder, but failure to mail such notice shall impose no
obligation or liability of any kind upon the company.
- --------------------------------------- DATE ISSUED: 6/3/83
NAME AND ADDRESS OF CERTIFICATE HOLDER: ------------------------
ESCAMBIA INSURANCE AGENCY, INC.
City of Manassas Park
Manassas Park, Virginia /s/ YANCEY E. LOVELACE
---------------------------------
AUTHORIZED REPRESENTATIVE
Yancey E. Lovelace
- ---------------------------------------
<PAGE> 63
PASSED THIS 3 day of May, 1983.
/s/ ERNEST L. EVANS
-----------------------------------
Ernest L. Evans, Mayor
City of Manassas Park
ATTEST:
/s/ LANA A. CONNER
- --------------------------------
Clerk of Council
True Certified Copy
/s/ LANA A. CONNER
- --------------------------------
Lana A. Conner
City Clerk
<PAGE> 64
COPY OF RESOLUTION
------------------------
THAT WHEREAS, it is necessary for the effectual transaction of business
that this Company appoint agents and attorneys with power and authority to act
for it and in its name in States other than Maryland, and in the Territories of
the United States and in the Provinces of the Dominion of Canada and in the
Colony of Newfoundland.
THEREFORE, BE IT RESOLVED, that this Company do, and it hereby does,
authorize and empower its President or either of its Vice-Presidents in
conjunction with its Secretary or one of its Assistant Secretaries, under its
corporate seal, to appoint any person or persons as attorney or
attorneys-in-fact, or agent or agents of said Company, in its name and as its
act, to execute and deliver any and all contracts guaranteeing the fidelity of
persons holding positions of public or private trust, guaranteeing the
performances of contracts other than insurance policies and executing or
guaranteeing bonds and undertakings, required or permitted in all actions or
proceedings, or by law allowed, and
ALSO, in its name and as its attorney or attorneys-in-fact, or agent or
agents to execute and guarantee the conditions of any and all bonds,
recognizances, obligations, stipulations, undertakings or anything in the nature
of either of the same, which are or may by law, municipal or otherwise, or by
any Statute of the United States or of any State or Territory of the United
States or of the Provinces of the Dominion of Canada or of the Colony of
Newfoundland, or by the rules, regulations, orders, customs, practice or
discretion of any board, body, organization, office or officer, local, municipal
or otherwise, be allowed, required or permitted to be executed, made, taken,
given, tendered, accepted, filed or recorded for the security or protection of,
by or for any person or persons, corporation, body, office, interest,
municipality or other association or organization whatsoever, in any and all
capacities whatsoever, conditioned for the doing or not doing of anything or any
conditions which may be provided for in any such bond, recognizance, obligation,
stipulation, or undertaking, or anything in the nature of either of the same.
I, T. Hartley Marshall, an Assistant Secretary of the UNITED STATES
FIDELITY AND GUARANTY COMPANY, do hereby certify that the foregoing is a full,
true and correct copy of the original power of attorney given by said Company to
Yancey Lovelace
of Brewton, Alabama, authorizing and empowering him to sign bonds as therein set
forth, which power of attorney has never been revoked and is still in full force
and effect.
And I do further certify that said Power of Attorney was given in pursuance
of a resolution adopted at a regular meeting of the Board of Directors of said
Company, duly called and held at the office of the Company in the City of
Baltimore, on the 11th day of July, 1910, at which meeting a quorum of the Board
of Directors was present, and that the foregoing is a true and correct copy of
said resolution, and the whole thereof as recorded in the minutes of said
meeting.
IN TESTIMONY WHEREOF, I have hereunto set my hand and the seal of the
UNITED STATES FIDELITY AND GUARANTY COMPANY on 4/15/83.
/s/ T. HARTLEY MARSHALL
---------------------------------
Assistant Secretary.
<PAGE> 1
EXHIBIT 10.6.67
PRINCE WILLIAM CO.
CABLEVISION OF MANASSAS
MOTION: READING October 7, 1986
Regular Meeting
SECOND: PFITZNER ORD No. 86-143
RE: GRANT OF CABLE TELEVISION LICENSE --
CABLEVISION OF MANASSAS, LTD
WHEREAS, by Ordinance effective January 1, 1986, all persons constructing,
installing, maintaining, expanding, enlarging, or otherwise increasing or
operating a cable television system through, on, over, or under any public way
in an incorporated area of the County, beyond that which may already have
existed on the effective date of the cable television ordinance, must apply for,
be granted and accepted a license to do so; and
WHEREAS, Cablevision of Manassas, Ltd. has submitted an application for a
cable television license subject to the terms, conditions and provisions of
Chapter 5.5 of the Prince William County Code; and
WHEREAS, Cablevision of Manasses, Ltd. will provide service in the area of
the County described in its application attached hereto and incorporated herein
by reference; and
WHEREAS, the Board of County Supervisors has conducted extensive inquiry
into the award of a license to more than one operator to provide cable
television services in Prince William County, and public hearing has been
conducted on this ordinance and the question whether multiple providers of such
service enhances the public welfare, with consideration given to economic
effects, the impact on private property rights, public convenience, public need
and potential benefit; and
WHEREAS, public hearing was held on October 7, 1986, on the grant of a
license to Cablevision of Manassas, Ltd. following notice thereof published in a
newspaper of general circulation in Prince William County on September 23, 1986,
and September 30, 1986; and
WHEREAS, the Board of County Supervisors is advised that the application is
complete and proper in all respects, and that a cable television license should
be granted;
NOW, THEREFORE, BE IT ORDAINED that the Board of County Supervisors does
hereby determine that the best interests of Prince William County are served and
enhanced by licensing more than one cable television service provided; and it is
FURTHER ORDAINED, that Cablevision of Manassas, Ltd. is hereby granted a
cable television license subject to the terms, conditions and provisions of
Chapter 5.5 of the Prince William County Code to serve the area described herein
as such service may be extended or expanded, such license to be effective,
unless otherwise revoked or terminated, for 15 years from the date upon which
Cablevision of Manassas, Ltd. files a formal instrument of license acceptance
with the County; and
<PAGE> 2
October 7, 1986
Regular Meeting
ORD No. 86-143
Page Two
BE IT STILL FURTHER ORDAINED that such license shall be transferrable
without prior approval of the County, provided that any transferree shall amend
the transferor's license application to reflect such information as to ownership
and other particulars required under Chapter 5.5 of the Prince William County
Code, sufficient to determine the character, ownership and business
responsibility of the transferee in accordance with Section 5.5-4(4) and (5) of
the Code of Prince William County.
ATTACHMENT
VOTE:
Ayes: Guiffre, Kidwell, King, Pfitzner, Reading, Seefeldt
Nays: None
Absent from Vote: Jenkins
Absent from Meeting: None
For information:
County Attorney
CERTIFIED COPY /s/ CATHERINE CLEMEN ROLLINS
---------------------------------
Clerk to the Board
<PAGE> 3
Mr. Doug Bourne
Cable Television Administrator
Office of Consumer Affairs
15960 Cardinal Drive
Woodbridge, Virginia 22191
RE: CABLEVISION OF MANASSAS LTD.
GRANT OF CABLE TELEVISION LICENSE
Dear Mr. Bourne:
Pursuant to the provisions of sec.5.5-1 et seq. of the Prince William
County Code's cable television ordinance, the Board of County Supervisors of
Prince William County adopted an ordinance granting a nonexclusive license to
operate a cable television system to Cablevision of Manassas Ltd., on October 7,
1986. This letter, filed within thirty days after the grant of such license, is
for the purpose of formally accepting the license as required by sec.5.5-6(a) of
the Prince William County Code. The undersigned, as owner/agent of the company,
and authorized to act on its behalf, has carefully read and clearly understands
the terms and conditions of sec.5.5-1 et seq. of the Prince William County Code
and of the license ordinance adopted by the Board, and agrees to strictly comply
with both their terms. The undersigned further acknowledges and concedes the
validity of the terms and conditions of the cable television ordinance and of
the license ordinance in their entirety. Notwithstanding the terms of the
license ordinance, the company hereby acknowledges and concedes that it is at
all times subject to the lawful exercise of the County's police power, and
acknowledges the Board of County Supervisors' right to adopt such other
ordinances or amendments as it deems necessary to protect the public health,
safety and welfare. The undersigned fully understands that failure to comply
with any section of the cable television ordinance or of the license ordinance
may be grounds for revocation of the license.
<PAGE> 4
Doug Bourne
Page Two
A certified check payable to the order of Prince William County in the
amount of $1,000.00 is enclosed herewith as a nonrefundable license acceptance
fee.
Sincerely,
CABLEVISION OF MANASSAS LTD.
By: /s/ R. Calvin Sutliff
---------------------------------
Position: General Partner
---------------------------
Date: 10-16-96
-------------------------------
<PAGE> 5
[COUNTY OF PRINCE WILLIAM LETTERHEAD]
October 29, 1986
TO: CASHIERS OFFICE, FINANCE DEPARTMENT
FROM: DOUGLAS N. BOURNE, CABLE TV COORDINATOR
I am enclosing a cashiers check in the amount of $1,000. This is Cablevision of
Manassas LTD.'s payment, in full, of the acceptance fee for a cable tv license.
It should be recorded and deposited in the County's General Fund. This check
should be coded 120030-0390.
If you should have any questions regarding this check, please do not hesitate to
contact me.
Enclosure
DNB/lcw
[COPY OF CASHIER'S CHECK]
<PAGE> 6
PRINCE WILLIAM COUNTY FRANCHISE
RECEIVED JUN 10 1985
MOTION: GUIFFRE June 4, 1985
Regular Meeting
SECOND: READING Ord. No. 85-62
SUBJECT: GRANT OF CABLE TELEVISION LICENSE --
CABLEVISION OF MANASSAS PARK, INC.
WHEREAS, by Ordinance effective January 1, 1985, all persons constructing,
installing, maintaining, expanding, enlarging, or otherwise increasing or
operating a cable television system through, on, over, or under any public way
in an incorporated area of the County, beyond that which may already have
existed on the effective date of the cable television ordinance, must apply for,
be granted and accept a license to do so; and
WHEREAS, Cablevision of Manassas Park, Inc. operated a cable television
system prior to the effective date of the cable television ordinance and intends
to extend service beyond that which existed on January 1, 1985; and
WHEREAS, Cablevision of Manassas Park, Inc. has submitted an application
for a cable television license subject to the terms, conditions and provisions
of Chapter 5.5 of the Prince William County Code; and
WHEREAS, Cablevision of Manassas Park, Inc. will provide service in the
area of the County described in the exhibit attached hereto and incorporated
herein by reference; and
WHEREAS, the Board of County Supervisors has conducted extensive inquiry
into the award of a license to more than one operator to provide cable
television services in Prince William County, and public hearing has been
conducted on this ordinance and the question whether multiple providers of such
service enhances the public welfare, with consideration given to economic
effects, the impact on private property rights, public convenience, public need
and potential benefit; and
WHEREAS, public hearing was held on June 4, 1985 on the grant of a license
to Cablevision of Manassas Park, Inc., following notice thereof published in a
newspaper of general circulation in Prince William County on May 21, 1985 and
May 28, 1985; and
WHEREAS, the Board of County Supervisors is advised that the application is
complete and proper in all respects, and that a cable television license should
be granted;
NOW, THEREFORE, BE IT ORDAINED that the Board of County Supervisors does
hereby determine that the best interests of Prince William County are served and
enhanced by licensing more than one cable television service provider; and it is
<PAGE> 7
June 4, 1985
Ord. No. 85-62
Page Two
FURTHER ORDAINED, that Cablevision of Manassas Park, Inc. is hereby granted
a cable television license subject to the terms, conditions and provisions of
Chapter 5.5 of the Prince William County Code to serve the area described herein
as such service may be extended or expanded, such license to be effective,
unless otherwise revoked or terminated, for 15 years from the date upon which
Cablevision of Manassas Park, Inc. files a formal instrument of license
acceptance with the County; and
BE IT STILL FURTHER ORDAINED that such license shall be transferrable
without prior approval of the County, provided that any transferee shall amend
the transferor's license application to reflect such information as to ownership
and other particulars required under Chapter 5.5 of the Prince William County
Code, sufficient to determine the character, ownership and business
responsibility for the transferee in accordance with sec.5.5-4(4) and (5) of the
Code of Prince William County.
ATTACHMENT
VOTE:
Ayes: Guiffre, Jenkins, Kidwell, King, Pfitzner, Reading, Seefeldt
Nays: None
Absent from Vote: None
Absent from Meeting: None
FI:
County Attorney
Consumer Affairs Director
CERTIFIED COPY: [ILLEGIBLE COPY]
-------------------------
Clerk to the Board
<PAGE> 8
[COUNTY OF PRINCE WILLIAM LETTERHEAD]
June 10, 1985
TO: Cashiers Office, Finance Department
FROM: Douglas N. Bourne, Cable TV Coordinator
RE: Cable TV License Acceptance Fee
Cablevision of Manassas Park, Inc.
I am enclosing herewith a cashiers check in the amount of $1,000.00. This is
Cablevision of Manassas Park, Inc.'s payment, in full, of the acceptance fee for
a cable tv license. It should be recorded and deposited in the County's General
Fund. This check should be coded 120030-0390.
If you should have any questions regarding this check, please do not hesitate to
call me.
Enclosure
DNB/lcw
[COPY OF CASHIER'S CHECK]
<PAGE> 9
[Cablevision of Manassas Park, Inc. Letterhead]
Mr. Doug Bourne
Cable Television Administrator
Office of Consumer Affairs
15960 Cardinal Drive
Woodbridge, Virginia 22191
Re: CABLEVISION OF MANASSAS PARK, INC.
GRANT OF CABLE TELEVISION LICENSE
Dear Mr. Bourne:
Pursuant to the provisions of sec.5.5-1 et seq. of the Prince William
County Code's cable television ordinance, the Board of County Supervisors of
Prince William County adopted an ordinance granting a nonexclusive license to
operate a cable television system to Cablevision of Manassas Park, Inc., on June
4, 1985. This letter, filed within thirty days after the grant of such license,
is for the purpose of formally accepting the license as required by sec.5.5-6(a)
of the Prince William County Code. The undersigned, as owner/agent of the
company, and authorized to act on its behalf, has carefully read and clearly
understands the terms and conditions of sec.5.5-1 et seq. of the Prince William
County Code and of the license ordinance adopted by the Board, and agrees to
strictly comply with both their terms. The undersigned further acknowledges and
concedes the validity of the terms and conditions of the cable television
ordinance and of the license ordinance in their entirety. Notwithstanding the
terms of the license ordinance, the company hereby acknowledges and concedes
that it is at all times subject to the lawful exercise of the County's police
power, and acknowledges the Board of County Supervisors' right to adopt such
other ordinances or amendments as it deems necessary to protect the public
health, safety and welfare. The undersigned fully understands that failure to
comply with any section of the cable television ordinance or of the license
ordinance may be grounds for revocation of the license.
A certified check payable to the order of Prince William County in the
amount of $1,000.00 is enclosed herewith as a nonrefundable license acceptance
fee.
Sincerely,
CABLEVISION OF MANASSAS PARK, INC.
BY: [ILLEGIBLE]
---------------------------------
POSITION: President
---------------------------
<PAGE> 10
[COUNTY OF PRINCE WILLIAM LETTERHEAD]
November 23, 1993
VIA CERTIFIED MAIL #P 260-353-661
Sam Eddy, General Manager
Cablevision of Manassas
9540 Center Street
Manassas, Virginia 22110
RE: Notification of customer service amendments/Prince William County
Dear Mr. Eddy:
On November 16, 1993 the Board of County Supervisors, during a public hearing
session, passed proposed customer service amendments to the Prince William
County Cable TV Ordinance. These amendments essentially incorporated those
sections of the Federal Communications Commission's (FCC) Report and Order,
released on April 7, 1993, implementing Section 8 of the Cable Television
Consumer Protection Act of 1992 that addressed federal customer service
standards.
Paragraph (C) of the Report and Order establishes federal customer service
standards. Paragraph (a) of the new rule provides that a franchising authority
may enforce the federal standards; but in order to do so, the franchising
authority must provide affected cable operators 90 days' written notice of its
intent to enforce the standards. This letter constitutes Prince William
County's notice of its intent to enforce the federal standards
<PAGE> 11
Page Two
November 23, 1993
which were adopted by the Board of Supervisors on November 16, 1993 by way of
the customer service amendments to Article IV of the Prince William County Cable
TV Ordinance. Therefore, the effective enforcement date is February 22, 1994. A
copy of these amendments is attached for your review.
Sincerely,
/s/ DOUGLAS N. BOURNE
Douglas N. Bourne
Cable TV Coordinator
cc: Jim Mullen, County Executive
Susan Matthews, Public Information Officer
Rob Dickerson, Assistant County Attorney
Enclosure(s): As Stated
<PAGE> 12
PROPOSED AMENDMENTS TO CHAPTER 5.5
Chapter 5.5
CABLE TELEVISION
***
ARTICLE I. IN GENERAL
***
Sec. 5.5-2. Definitions.
As used in this chapter, the following words and phrases shall have the
meanings herein specified, except where the context is clearly to the contrary.
Consistent with context, words used in the plural contemplate and include the
singular, and words used in the singular contemplate and include the plural.
Context notwithstanding, the word "shall" is mandatory, never directory.
Basic subscriber service shall means the distribution to subscribers of
signals over a cable television system on all channels except:
(1) Those for which a per-program of per-channel is made;
(2) Those intended for reception by equipment other than a television
broadcast receiver;
(3) Two-way services;
(4) Services, the delivery of which are regulated or pre-empted by the
Federal Communications Commission; and
(5) Emergency services.
Board shall mean the board of county supervisors of Prince William County,
Virginia.
Cable televisions system shall mean a cable television system as defined by
section 15.1-23.1, Virginia Code Annotated.
County shall mean Prince William County, Virginia.
County Executive shall mean the chief executive officer of the county,
appointed by the board, or his designee so indicated in writing.
Fair market value shall mean the price that property will command when sold
by one who is under no need to sell, a willing seller, and bought by one who is
under no need to buy, a willing buyer.
Federal Communications Commission, shall mean the federal agency
established under the Communications Act of 1934, as amended, or any successor
agency.
<PAGE> 13
2
Gross revenues shall mean any and all revenues derived from the operation
of a cable television system in the county, including but not limited to monthly
or periodic charges for service, installation fees and reconnect fees, revenues
derived from per-program or per-channel charges, studio and equipment rentals,
and subscriber and advertising revenues.
License shall mean the nonexclusive right granted hereunder to construct,
install, maintain, and operate a cable television system or systems in any
unincorporated area of the county. It does not include any other license or
permit for the privilege of conducting a business in the county, as may be
required by other county ordinances.
License ordinance shall mean an ordinance adopted pursuant to section 5.5-4
of this chapter, formally granting a license to construct, install, maintain, or
operate a cable television system in the county.
License service area shall mean the geographical area within the
unincorporated area of the county for which a nonexclusive right has been
granted hereunder to construct, install, maintain, and operate a cable
television system.
License shall mean a person granted a license hereunder.
Normal Business Hours shall mean those hours during which most similar
businesses in the community are open to serve customers. In all cases, normal
business hours must include some evening hours at least one night per week
and/or some weekend hours.
Normal Operating Conditions shall mean those service conditions which are
within the control of the cable operator. Those conditions which are not within
the control of the cable operator include, but are not limited to, natural
disasters, civil disturbances, power outages, telephone network outages, and
severe or unusual weather conditions. Those conditions which are ordinarily
within the control of the cable operator include, but are not limited to,
special promotions, pay-per-view events, rate increases, regular peak or
seasonal demand periods, and maintenance or upgrade of the cable television
system.
Person shall mean and include any individual, firm, partnership,
cooperative, nonprofit membership corporation, joint venture, association,
corporation, estate, trust, business trust, trustee in bankruptcy, receiver,
auctioneer, syndicate, assignee, club, society, or any other group or
combination acting as a unit.
Public way shall mean any highway, street, road, alley, way, easement,
right-of-way, place, or other right or interest in real property, belonging to
any public body, including the county, the commonwealth, or any subdivision,
agency, department, or authority of either.
Service Interruption shall mean the loss of picture or sound on one or more
cable channels.
Subscriber shall mean any person who receives, or contracts with a licensee
to receive, basic subscriber service, or one (1) or more of such other services
as may be offered by the licensee's cable television system, or both.
* * *
<PAGE> 14
3
ARTICLE IV. CONSUMER PROTECTION AND SUBSCRIBER PRIVACY
* * *
Sec. 5.5-9. Maintenance; repairs.
(a) The licensee shall establish maintenance service capability enabling
the prompt location and correction of system malfunctions. The licensee shall
maintain adequate records of all complaints and requests for repairs, and their
resolution, which records shall be open for public inspection.
(b) Under normal operating conditions, each of the following four standards
will be met no less than ninety-five (95) percent of the time measured on a
quarterly basis:
(1) Standard installations will be performed within seven (7) business
days after an order has been placed. Standard installations are those that are
located up to 125 feet from the existing distribution system.
(2) Excluding conditions beyond the control of the licensee, the
licensee will begin working on service interruptions promptly and in no event
later than 24 hours after the interruption becomes known. Licensee must begin
actions to correct other service problems the next business day after
notification of the service problem.
(3) For all installations, service calls, and other installation
activities, licensee shall provide its customer either a specific appointment
time or, at maximum, a four-hour time block during business hours. Licensee may
schedule service calls and other installation activities outside of normal
business hours for the express convenience of the customer.
(4) A licensee may not cancel an appointment with a customer after the
close of business on the business day prior to the scheduled appointment.
(c) If a representative of licensee is running late for an appointment with
a customer and will not be able to keep the appointment as scheduled, the
customer will be contacted. The appointment will be rescheduled, as necessary,
at a time which is convenient for the customer.
Sec. 5.5-10. Local office hours; telephone availability; complaints; notice
of procedures.
(a) The licensee shall maintain an office and bill payment location within
the license service area, or in the Cities of Manassas or Manassas Park, which
shall be open and accessible to the public during normal business hours. The
licensee shall provide a local, toll-free or collect call telephone access line
which will be available to its subscribers 24 hours a day, seven days a week for
recording of subscriber complaints, including, but not limited to, billing
errors, service disconnections, service interruptions, and equipment failure.
Complaints other than those related to a system malfunction or service
interruption addressed by section 5.5-9 shall be answered not later than the
next business day after the complaint has been received, and corrective action
shall be completed as soon as practical. Adequate records shall be made of all
subscriber complaints, describing the nature of each complaint and showing when
<PAGE> 15
4
and what corrective action was completed. Such records shall be available to the
public or to representatives of the board, during normal business hours, and
shall be retained in the licensee's files for not less than three (3) years.
Annual summaries of complaints shall be filed with the office of consumer
affairs, not later than June thirtieth of each year.
(b) Unresolved complaints, if any, shall be reported to the office of
consumer affairs, in writing, within thirty (30) days after the end of each
calendar year quarter. The nature and number of any unresolved complaints shall
be taken into account by the board in considering whether to renew or to revoke
a license.
(c) Each licensee shall, at any time of entering into an agreement to
provide cable service of any kind, inform every subscriber of the provisions of
this article.
(d) Licensees serving more than one (1) license service area need provide a
local office in only one (1) such area, or in either of the two (2) cities
above.
(e) Trained representatives of licensee will be available to respond to
customer telephone inquiries during normal business hours.
(f) After normal business hours, the telephone access line may be answered
by a service or an automated response system, including an answering machine.
Inquiries received after normal business hours must be responded to by a trained
representative of licensee on the next business day.
(g) Under normal operating conditions, telephone answer time by a
representative of licensee, including wait time, shall not exceed thirty (30)
seconds when the connection is made. If the call needs to be transferred,
transfer time shall not exceed thirty (30) seconds. Under normal operating
conditions, the customer will receive a busy signal less than three (3) percent
of the time. These standards shall be met no less than ninety (90) percent of
the time under normal operating conditions, measured on a quarterly basis.
(h) The licensee will not be required to acquire equipment or perform
surveys to measure compliance with the telephone answering standards of section
5.5-10(g) unless an historical record of complaints indicates a clear failure to
comply.
Section 5.5-11. Notification to subscribers: billing; refunds; and credits.
(a) The licensee shall provide written information on each of the following
areas at the time of installation of service, at least annually to all
subscribers, and at any time upon request:
(1) Products and services offered;
(2) Prices and options for programming services and conditions of
subscription to programming and other services:
<PAGE> 16
5
(3) Installation and service maintenance policies;
(4) Instructions on how to use the cable service;
(5) Channel positions of programming carried on the system; and
(6) Procedures which may be used to make complaints, requests for
repairs and to contest alleged billing errors, including the address and
telephone number of the county's cable office.
(b) Customers will be notified of any changes in rates, programming
services or channel positions as soon as possible through announcements on the
cable system and in writing. Notice must be given to subscribers a minimum of
thirty (30) days in advance of such changes if the change is within the control
of the licensee. Increases made without such prior notice shall be void. In
addition, the licensee shall notify subscribers thirty (30) days in advance of
any significant changes in the other information required by Section 5.5-11(a).
(c) Bills will be clear, concise and understandable. Bills must be fully
itemized, with itemizations including, but not limited to, basic and premium
service charges and equipment charges. Bills will also clearly delineate all
activity during the billing period, including optional charges, rebates and
credits.
(d) In case of a billing dispute, the licensee must respond to a written
complaint from a subscriber within thirty (30) days.
(e) Refund checks will be issued promptly by licensee, but no later than
either:
(1) The customer's next billing cycle following resolution of the
request or thirty (30) days, whichever is earlier; or
(2) The return of the equipment supplied by the licensee if service is
terminated.
(f) Credits for service will be issued no later than the customer's next
billing cycle following the determination that a credit is warranted.
***
<PAGE> 17
PRINCE WILLIAM COUNTY CODE
CONSUMER AFFAIRS AND CABLE TV
<PAGE> 18
Chapter 5.5
CABLE TELEVISION*
ART. I. IN GENERAL, SECTIONS 5.5-1--5.5-3
ART. II APPLICATION FOR LICENSE, SECTION 5.5-4
ART. III. GRANT OF LICENSE, SECTIONS 5.5-5--5.5-7
ART. IV. CONSUMER PROTECTION AND SUBSCRIBER PRIVACY, SECTIONS 5.5-8--5.5-15
ART. V. LICENSE FEE, SECTION 5.5-16
ART. VI. ADMINISTRATION AND ENFORCEMENT, SECTIONS 5.5-17--5.5-21
ART. VII. RENEWAL AND REVOCATION OF LICENSES, SECTIONS 5.5-22--5.5-24
ART. VIII. CREATION OF LICENSE SERVICE AREA, SECTION 5.5-25
ART. IX. MISCELLANEOUS, SECTIONS 5.5-26--5.5-28
ARTICLE I. IN GENERAL
SEC. 5.5-1. SHORT TITLE; PURPOSE; AUTHORITY.
(a) This chapter shall be known and may be cited as the "Prince William
County Cable Television Ordinance."
(b) This chapter is intended to provide for the licensing and regulation of
one (1) or more cable television systems, and to impose a fee on the privilege
of operating such system or systems, in the unincorporated area of Prince
William County, Virginia.
(c) This chapter is enacted pursuant to sections 15.1-23.1 and 15.1-512.1,
Virginia Code Annotated. (No. 84-829, 10-23-84)
SEC. 5.5-2. DEFINITIONS.
As used in this chapter, the following words and phrases shall have the
meanings herein specified, except where the context is clearly to the contrary.
Consistent with context, words used in the plural contemplate and include the
singular, and words used in the singular contemplate and include the plural.
Context notwithstanding, the word "shall" is mandatory, never directory.
Basic subscriber service shall mean the distribution to subscribers of
signals over a cable television system on all channels except:
(1) Those for which a per-program or per-channel charge is made;
(2) Those intended for reception by equipment other than a television
broadcast receiver;
- ---------------
*EDITOR'S NOTE--Res. No. 84-829, enacted Oct. 23, 1984, amended the Code by
adding thereto a new Ch. 5.1, sec.sec. 5.1-1--5.1-28. In order to provide for
the future addition of chapters, Ch. 5.1 was redesignated by the editor as Ch.
5.5, and the sections were also redesignated accordingly; otherwise, the chapter
is included herein substantially as enacted.
CROSS REFERENCES--Consumer protection, Ch. 6; emergency services, Ch. 7;
licenses generally, Ch. 11; taxation, Ch. 26; telephones, Ch. 28
267
<PAGE> 19
sec. 5.5-2 PRINCE WILLIAM COUNTY CODE
(3) Two-way services;
(4) Services, the delivery of which are regulated or pre-empted by the
Federal Communications Commission; and
(5) Emergency services.
Board shall mean the board of county supervisors of Prince William County,
Virginia.
Cable televisions system shall mean a cable television system as defined by
section 15.1-23.1, Virginia Code Annotated.
County shall mean Prince William County, Virginia.
County executive shall mean the chief executive officer of the county,
appointed by the board, or his designee so indicated in writing.
Fair market value shall mean the price that property will command when sold
by one who is under no need to sell, a willing seller, and bought by one who is
under no need to buy, a willing buyer.
Federal Communications Commission shall mean the federal agency established
under the Communications Act of 1934, as amended, or any successor agency.
Gross revenues shall mean any and all revenues derived from the operation
of a cable television system in the county, including but not limited to monthly
or periodic charges for service, installation fees and reconnect fees, revenues
derived from per-program or per-channel charges, studio and equipment rentals,
and subscriber and advertising revenues.
License shall mean the nonexclusive right granted hereunder to construct,
install, maintain, and operate a cable television system or systems in any
unincorporated area of the county. It does not include any other license or
permit for the privilege of conducting a business in the county, as may be
required by other county ordinances.
License ordinance shall mean an ordinance adopted pursuant to section 5.5-4
of this chapter, formally granting a license to construct, install, maintain, or
operate a cable television system in the county.
License service area shall mean the geographical area within the
unincorporated area of the county for which a nonexclusive right has been
granted hereunder to construct, install, maintain, and operate a cable
television system.
Licensee shall mean a person granted license hereunder.
Person shall mean and include any individual, firm, partnership,
cooperative, nonprofit membership corporation, joint venture, association,
corporation, estate, trust, business trust, trustee in bankruptcy, receiver,
auctioneer, syndicate, assignee, club, society, or any other group or
combination acting as a unit.
Public way shall man any highway, street, road, alley, way, easement,
right-of-way, place, or other right or interest in real property, belonging to
any public body, including the county, the commonwealth, or any subdivision,
agency, department, or authority of either.
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CABLE TELEVISION sec. 5.5-4
Subscriber shall mean any person who receives, or contracts with a licensee
to receive, basic subscriber service, or one (1) or more of such other services
as may be offered by the licensee's cable television system, or both. (No.
84-829, 10-23-84; No. 86-123, 8-5-86)
SEC. 5.5-3. REQUIREMENT OF LICENSE; PROHIBITION ON EXPANSION.
(a) No person shall construct, install, maintain, expand, enlarge, or
otherwise increase, or operate a cable television system through, on, over, or
under any public way in the unincorporated area of the county without first
having applied for, been granted, and accepted a license under the provisions
hereof; provided, however, that any person operating a cable television system
in the county on the effective date of this chapter may continue operating such
existing system as it is then constituted, without further extension of service
to any additional subscriber if such extension of service requires the crossing
or use of any public way.
(b) Notwithstanding the permission granted hereby to continue operation of
existing systems, board of supervisors Resolution No. 83-696, dated August 2,
1983, is expressly repealed upon the adoption of this chapter, and the
permission granted thereby for the use of the public ways of the county for the
purpose of providing cable television service is revoked, except as to those
portions of existing systems grandfathered under the provisions of subsection
(a) of this section. (No. 84-829, 10-23-84)
ARTICLE II. APPLICATION FOR LICENSE
SEC. 5.5-4. APPLICATION; FEE; CONTENTS.
(a) The board shall, by resolution, establish procedures and forms
governing the invitation for, and submission, review, and evaluation of, written
applications for a license. Each person applying for a license shall pay, by
certified check to the order of "Prince William County," a nonrefundable fee in
the amount of five hundred dollars ($500.00) to defray expenses incurred by the
county in processing applications. In addition to such other information as the
board may deem necessary or appropriate to include in the aforesaid resolution,
all applications shall include, at a minimum, unless otherwise determined by the
board:
(1) A map delineating all areas to which cable service must be
provided in accordance with the service extensions required by
section 5.5-14 hereof.
(2) A detailed statement of services proposed to be offered, including
public, civic, or community services.
(3) A schedule of initial rates, fees, and other charges to be
established by the applicant.
(4) Information sufficient to determine the character and business
responsibility of the applicant, its financial, technical and
other qualifications.
(5) Full and true disclosure of the actual ownership of the applicant,
including the identity of all principals and ultimate beneficial
owners, however designated, specifi-
269
<PAGE> 21
SEC. 5.5-4 PRINCE WILLIAM COUNTY CODE
cally including all stockholders of corporations (nominal and
beneficial) owning more than one (1) percent of the issued and
outstanding stock, and all partners of any general or limited
partnership.
(b) Submitted applications shall be amended only with the consent of the
board.
(c) Applications shall be signed by the applicant, or by a duly authorized
representative of the applicant, evidence of whose authority shall be supplied
with the application. (No. 84-829, 10-23-84)
ARTICLE III. GRANT OF LICENSE
SEC. 5.5-5. FORM; NONEXCLUSIVE TERM.
(a) The board may, by individual ordinance adopted for the purpose, grant
one (1) or more nonexclusive licenses, subject to the terms, conditions, and
other provisions of this chapter. Such licenses shall be for a term of fifteen
(15) years beginning with the date a written instrument accepting the license is
filed with the county pursuant to this chapter.
(b) Nothing in this chapter shall be deemed, construed, or applied to
require the board to grant any license. Any decision or decisions of the board
concerning the granting, or the refusal to grant, one or more licenses shall be
final.
(c) The license ordinance shall constitute the license, and shall include
at a minimum a description of the area or areas to be served, the terms of any
agreements which may be made between the county and licensee beyond the
requirements of this chapter, and such other terms and conditions as shall be
lawful and appropriate. (No. 84-829, 10-23-84)
SEC. 5.5-6. ACCEPTANCE OF LICENSE; POLICE POWER; FEE.
(a) A license granted pursuant to this chapter shall not become effective
unless and until accepted by written instrument filed with the county within
thirty (30) days after the license ordinance has been adopted. Such instrument
shall state that the licensee has carefully read and clearly understands the
terms and conditions of this chapter and of the license ordinance, and agrees to
strict compliance with both. By accepting a license, the licensee acknowledges
and concedes the validity of the terms and conditions of this chapter and of the
license ordinance in their entireties, at the time of adoption of the license
ordinance.
(b) By accepting a license granted pursuant to this chapter, the licensee
acknowledges and concedes that, notwithstanding the terms of the license, it is
at all times subject to the lawful exercise of the county's police power. The
board hereby expressly reserves the right to adopt, in addition to this chapter
and to the license ordinance, such other ordinances as it deems necessary to
protect the public health, safety, or welfare, provided that such other
ordinances are consistent with state and federal law and authorized by said
police power. The board may adopt amendments to this chapter, provided that such
amendments shall not deprive any licensee of rights which have vested during the
license period.
270
<PAGE> 22
CABLE TELEVISION SEC. 5.5-10
(c) Upon accepting a license, the licensee shall pay to the county a fee in
an amount set by resolution of the board, not to exceed one thousand dollars
($1,000.00). Such fee shall be nonrefundable, and shall be paid by a certified
check to the order of "PRINCE WILLIAM COUNTY." (NO. 84-829, 10-23-84)
SEC. 5.5-7. FILING WITH COUNTY.
Unless otherwise expressly provided by resolution of the board, all
materials herein required to be filed with the county shall be filed at and with
the office of consumer affairs. (No. 84-829, 10-23-84)
ARTICLE IV. CONSUMER PROTECTION AND SUBSCRIBER PRIVACY
SEC. 5.5-8. CONTINUOUS, EFFICIENT SERVICE; PRO RATA REFUNDS OR CREDITS.
(a) The licensee shall provide continuous, efficient service, on a
nondiscriminatory basis, in return for payment of its rates, fees, and other
charges for service. Interruptions of service shall be for good cause only and
for the shortest time possible. Planned interruptions of thirty (30) minutes or
more shall be preceded by at least twenty-four (24) hours' advance notice to all
subscribers and, to the extent feasible, shall occur during periods of minimum
use of the cable television system.
(b) In the event service to one-fourth ( 1/4) or more of the subscribers of
any licensee is interrupted for more than twenty-four (24) consecutive hours,
whether pre-planned or not, the licensee shall provide each such subscriber
subject to such interruption with a pro rata credit or refund for the entire
period of such interruption. (No. 84-829, 10-23-84)
SEC. 5.5-9. MAINTENANCE; COMPLAINT ANSWERING SERVICE; REPAIRS.
The licensee shall establish maintenance service capability enabling the
prompt location and correction of system malfunctions, and shall make repairs
promptly within twenty-four (24) hours of receipt of notification of the need
therefor. The licensee shall provide a twenty-four-hour complaint answering
service, and shall maintain adequate records of all complaints and requests for
repairs, and their resolution, which records shall be open for public
inspection. (No. 84-829, 10-23-84)
SEC. 5.5-10. LOCAL OFFICE; COMPLAINTS; NOTICE OF PROCEDURES.
(a) The licensee shall maintain an office within the license service area,
or in the Cities of Manassas or Manassas Park, which shall be open and
accessible to the public during normal business hours and which shall provide
twenty-four-hour recording of subscriber complaints, including, but not limited
to, billing errors, service disconnections, service loss, and equipment failure.
Complaints other than those related to system malfunction addressed by section
5.5-9 shall be answered not later than the next business day after the complaint
has been received, and corrective action shall be completed as soon as
practical. Adequate records shall be made of all subscriber complaints,
describing the nature of each complaint and showing
271
<PAGE> 23
sec. 5.5-10 PRINCE WILLIAM COUNTY CODE
when and what corrective action was completed. Such records shall be available
to the public or to representatives of the board, during normal business hours,
and shall be retained in the licensee's files for not less than three (3) years.
Annual summaries of complaints shall be filed with the office of consumer
affairs, not later than June thirtieth of each year.
(b) Unresolved complaints, if any, shall be reported to the office of
consumer affairs, in writing, within thirty (30) days after the end of each
calendar year quarter. The nature and number of any unresolved complaints shall
be taken into account by the board in considering whether to renew or to revoke
a license.
(c) Each license shall, at the time of entering into an agreement to
provide cable service of any kind, inform every subscriber of the provisions of
this article, and of the procedures which may be used to make complaints,
requests for repairs, and to contest alleged billing errors.
(d) Licensees serving more than one (1) license service area need provide a
local office in only one (1) such area, or in either of the two (2) cities
above. (No. 84-829, 10-23-84)
SEC. 5.5-11. NOTICE OF RATE CHANGES.
Licensees shall give not less than thirty (30) nor more than ninety (90)
days' prior written notice to each subscriber of any prospective increase in any
rate, fee, or charge subject to local regulation. Increases made without such
prior notice shall be void. (No. 84-829, 10-23-84)
SEC. 5.5-12. PROTECTION OF SUBSCRIBER INFORMATION.
(A) (1) At the time of entering into an agreement to provide any cable
service or other service to a subscriber, and at least once a year
thereafter, a cable operator shall provide notice in the form of a
separate, written statement to such subscriber which clearly and
conspicuously informs the subscriber of:
(a) The nature of personally identifiable information collected or
to be collected with respect to the subscriber and the nature
of the use of such information;
(b) The nature, frequency, and purpose of any disclosure which may
be made of such information, including an identification of
the types of persons to whom the disclosure may be made;
(c) The period during which such information will be maintained by
the licensee;
(d) The times and place at which the subscriber may have access to
such information in accordance with subsection (d); and
(e) The limitations provided by this section with respect to the
collection and disclosure of information by a licensee and the
right of the subscriber under subsections (f) and (h) to
enforce such limitations.
In the case of subscribers who have entered into such an
agreement before the effective date of this chapter, such notice
shall be provided within one hundred eighty (180) days of such
date, and at least once a year thereafter.
(2) For purposes of this section, the term "personally identifiable
information" does not include any record of aggregate data which
does not identify particular persons.
272
<PAGE> 24
CABLE TELEVISION sec. 5.5-12
(B) (1) Except as provided in paragraph (B)(2) of this subsection, no
licensee shall use the cable system to collect personally
identifiable information concerning any subscriber, without the
prior written or electronic consent of the subscriber concerned.
(2) A licensee may use the cable system to collect such information
in order to:
(a) Obtain information necessary to render a cable service or
other service provided by the licensee to the subscriber; or
(b) Detect unauthorized reception of cable communications.
(C) (1) Except as provided in paragraph (C)(2), a licensee shall not
disclose personally identifiable information concerning any
subscriber without the prior written or electronic consent of the
subscriber concerned.
(2) A licensee may disclose such information if the disclosure is:
(a) Necessary to render, or conduct, a legitimate business
activity related to, cable service or other service provided
by the licensee to the subscriber;
(b) Subject to subsection (h), made pursuant to a court order
authorizing such disclosure, if the subscriber is notified of
such order by the person to whom the order is directed; or
(c) A disclosure of the names and addresses of subscribers to any
cable service or other service, if:
1. The licensee has provided the subscriber the opportunity to
prohibit or limit such disclosure, and
2. The disclosure does not reveal, directly or indirectly, the:
a. Extent of any viewing or other use by the subscriber of
a cable service or other service provided by the
licensee; or
b. The nature of any transaction made by the subscriber
over the cable system of the licensee.
(D) A cable subscriber shall be provided access to all personally
identifiable information regarding that subscriber which is collected and
maintained by a licensee. Such information shall be made available to the
subscriber at reasonable times and at a convenient place designated by such
licensee. A cable subscriber shall be provided reasonable opportunity to correct
any error in such information.
(E) A licensee shall destroy personally identifiable information if the
information is no longer necessary for the purpose for which it was collected
and there are no pending requests or orders for access to such information under
subsection (D) or pursuant to a court order.
(F) Any person aggrieved by any act of a licensee in violation of this
section may bring a civil action in accordance with the provisions of section
631 of the Cable Franchise Policy and Communications Act of 1984.
(G) Nothing in this chapter shall be construed to prohibit the board from
enacting or enforcing laws consistent with federal law for the protection of
subscriber privacy.
273
<PAGE> 25
sec. 5.5-12 PRINCE WILLIAM COUNTY CODE
(H) A governmental entity may obtain personally identifiable information
concerning a cable subscriber pursuant to a court order only if, in the court
proceeding relevant to such court order:
(1) The entity offers clear and convincing evidence that the subject
of the information is reasonably suspected of engaging in
criminal activity and that the information sought would be
material evidence in the case; and
(2) The subject of the information is afforded the opportunity to
appear and contest such entity's claim. (No. 84-829, 10-23-84)
SEC. 5.5-13. CONSUMER ACCESS TO CABLE SERVICE.
(a) The owner of any multiple-unit residential or commercial building or
manufactured home park may not prevent or interfere with the construction or
installation of facilities necessary for a cable system, consistent with this
section, if cable service has been requested by a lessee or owner (including a
person legally entitled to occupy a unit in a cooperative project) of a unit in
such building or park, provided that the owner of such property is justly
compensated for any physical invasion of his property to provide such service,
in accordance with this section.
(b) The county executive is authorized to prescribe regulations to
implement this section which provide:
(1) That the safety, functioning, and appearance of premises and
convenience and safety of other persons shall not be adversely
affected by the installation or construction of the facilities
necessary for extension of a licensee's cable system;
(2) That the reasonable and just cost of the installation,
construction, operation, or removal of such facilities be borne
by the licensee or subscriber, or a combination of both;
(3) That the owner be justly compensated by the licensee for any
taking or damage caused by the installation, construction,
operation or removal of such facilities by the licensee; and
(4) That methods be developed for determining just compensation under
this section. In the event that a property owner declines to
accept just compensation as established in accordance with
regulations promulgated hereunder, and the county executive
determines that it is necessary to effect the provisions of this
section by other means, he is hereby authorized to initiate
condemnation proceedings for the purposes hereof, and to request
the county attorney to assist, or to retain qualified counsel
approved by the county attorney for the purpose of conducting
such proceedings, and to compensate such counsel from the
proceeds of any license fee required under this chapter.
(c) Any owner of such a multiple-unit building or park may not demand or
accept payment from any licensee in exchange for permitting construction or
installation necessary for a cable system on or within the premises in excess of
any amount which constitutes just compensation as determined in accordance with
regulations promulgated hereunder.
274
<PAGE> 26
CABLE TELEVISION sec. 5.5-14
(d) In prescribing methods under subsection (b) for determining just
compensation, the county executive shall give consideration to:
(1) The extent to which the cable system facilities actually occupy
the premises;
(2) The actual long-term damage which the cable system facilitates may
cost to the premises;
(3) The extent to which the cable system facilities would interfere
with the normal use and enjoyment of the premises; and
(4) The enhancement in value of the premises resulting from the
availability of cable service.
(e) This section shall not apply to units which are customarily leased to a
person for a period of less than thirty (30) days, or to units in a hospital.
(f) This section shall not apply to any owner of a multiple unit
residential or commercial building or manufactured home park who, in the opinion
of the county executive, makes available to residents a diversity of information
sources and services equivalent to those offered by the cable system authorized
to provide cable service in the area in which such dwelling is located in
accordance with regulations prescribed by the county executive. (No. 84-829,
10-23-84)
SEC. 5.5-14. SERVICE EXTENSIONS REQUIRED.
(a) Except as may be otherwise authorized in the license ordinance, each
licensee shall provide service to all continuous and contiguous areas where the
number of occupied dwelling units meets or exceeds a density of fifty (50)
dwelling units per mile of cable, such areas to be measured linearly from any
point of existing service. Such service shall be extended as soon as practicable
after the adoption of this chapter, and in any event upon request of any person
residing within any area where the aforesaid density conditions exist.
(b) In areas not meeting the aforementioned density of fifty (50) occupied
dwellings per mile in which mandatory extension of service is provided, upon the
request of fifty (50) percent of the owners of occupied dwelling units per mile
along the shortest and most direct feasible route from the nearest termination
point of licensee's existing service to the dwelling of the last person
requesting such nonmandatory extension, and within two hundred fifty (250) feet
on either side of such route, the licensee shall extend service to any such
subscriber(s) upon their payment to the licensee of an amount equal to the
proportional cost of such extension by such route, determined by multiplying the
cost of such extension by a fraction with the denominator of fifty (50) per mile
and a numerator equal to fifty (50) per mile less the density of occupied
dwelling units along the route of such extension, and occupied dwellings within
five hundred (500) feet of such route.
(c) Nothing contained in this section shall be construed to require
licensees to overbuild in any portion of a service area, and either mandatory or
nonmandatory service extensions required hereby shall be provided by the
licensee whose existing service terminates nearest to any occupied dwelling
subject to either extension requirement. Nor shall this section be construed to
preclude any person or group of persons from requesting nonmandatory connec-
275
<PAGE> 27
sec. 5.5-14 PRINCE WILLIAM COUNTY CODE
tion from any other licensee in the service area other than the nearest
licensee, nor be construed to preclude voluntary overbuild in any area for which
a license is held. (No. 84-829, 10-23-84; No. 85-81, 7-9-85)
SEC. 5.5-15. SYSTEM DESIGN; CAPACITY.
The licensee shall design, install, construct, operate and maintain the
cable television system:
(1) So as to provide high quality service, to meet or exceed the
technical standards set forth in rules and regulations
promulgated by the Federal Communications Commission regarding
cable television, as such rules and regulations may from time to
time be amended, or, in the absence of such rules and
regulations, or federal pre-emption of the area, in full
compliance with such technical standards as the board may, by
ordinance, adopt, and the board hereby expressly reserves the
right to adopt such standards;
(2) So that signals are at all times within the limitations imposed by
the technical standards established, and delivered to subscribers
without material degradation in quality; and
(3) For an audio override of all channels simultaneously, for use in
case of public emergencies, or disasters. (No. 84-829, 10-23-84)
ARTICLE V. LICENSE FEE
SEC. 5.5-16. REQUIRED.
(a) The licensee shall pay to the county for the duration of the license a
license fee which shall be the sum of one dollar ($1.00) per year per basic
subscriber to that licensee's system; provided, that in no event may such fee
exceed five (5) percent of the annual gross revenues of the licensee. The number
of subscribers upon which such fee shall be calculated shall be the number of
basic subscribers to each system as of December 31st of each year. The fee shall
be payable to the county in a single payment made not later than January 31st of
each year. In the event that any license is granted to any cable operator after
January 1, 1985, but before December 31, 1985, the licensee shall pay such
license fee based on the number of basic subscribers to its system on December
31, 1984, and such fee shall be paid to the county within thirty (30) days of
the grant of the license.
(b) Notwithstanding subsection (a) of this section, the board reserves the
right, at any time during which any license is in effect, to establish a
different license fee in an amount then to be established by ordinance of the
board, such license fee not to exceed five (5) percent of the licensee's gross
revenues. The board may establish a lesser percentage without prejudice to its
right to change the fee at any time, provided that the said fee does not exceed
the foregoing five (5) percent limitation. Any such fee based on a percentage
shall be paid quarterly within thirty (30) days after the expiration of the
calendar year quarters ending
276
<PAGE> 28
CABLE TELEVISION sec. 5.5-17
March 31, June 30, September 30, and December 31, at which time the licensee
shall file with the county a financial statement clearly showing the gross
revenues received by the licensee during the preceding quarter. In the event any
quarterly payment of the license fee is not made within thirty (30) days
specified herein, interest shall be charged from the thirty-first day at the
interest rate permitted on judgments by general law.
(c) Acceptance of any fee payment shall not constitute, and shall not be
deemed, construed, or applied as, an admission or an agreement by the county
that the amount paid is in fact correct, or as a waiver of its rights, hereby
expressly reserved to audit the licensee's financial records at any time, and to
recompute the amount of fee payable hereunder. Any additional amounts found to
be due as a result of such audit shall be paid, upon demand, together with
interest at the rate permitted on judgments by general law computed from the
date upon which the correct fee was due.
(d) In the event a license is revoked prior to its expiration date, and in
the event that a percentage license fee has been imposed, the licensee shall,
within thirty (30) days of the date of revocation:
(1) File with the county a financial statement clearly showing the
gross revenues received by the licensee since the expiration of
the immediately preceding calendar year quarter; and
(2) Pay the license fee accrued as of the date of revocation.
(e) Nothing in this section shall be deemed construed, or applied to exempt
the licensee from the payment of any taxes, fees, or charges lawfully imposed.
(No. 84-829, 10-23-84)
ARTICLE VI. ADMINISTRATION AND ENFORCEMENT
SEC. 5.5-17. BOOKS AND RECORDS.
(a) The licensee shall keep and maintain such books and records of its
operations within the county as may be specified by the county executive, which
he deems reasonably necessary to enable the county to properly determine the
amount of any license fee due to it, and to otherwise enforce the provisions of
this chapter.
The licensee shall retain such books and records, in any reasonable form,
for not less than five (5) years. The county shall have the right to extend the
retention period through the term of any renewed license, and shall have the
right to inspect, copy, or audit the licensee's books and records at any
reasonable time, upon twenty-four (24) hours' written notice to the licensee.
(b) At the request of the county executive, within one hundred twenty (120)
days following the conclusion of its fiscal year, the licensee shall, at its
sole cost and expense, file with the county its financial statements for that
year, examined and reported on by an independent public accountant. The licensee
shall advise the office of consumer affairs of the period of its fiscal year.
277
<PAGE> 29
sec. 5.5-18 PRINCE WILLIAM COUNTY CODE
SEC. 5.5-18. INSURANCE.
(a) Not later than thirty (30) days after accepting a license, and at all
times during the term of the license, the license shall obtain, pay all premiums
for, and file with the county executive written evidence of payment of premiums
for and executed duplicate copies of the following:
(1) A general comprehensive public liability insurance policy
indemnifying, defending, and holding harmless the county, its
officers, boards, commissions, agents, or employees from any and
all claims by any person whatsoever on account of injury to or
death of a person or persons caused by the operations of the
licensee under the license herein granted, or alleged to have
been so caused, with a minimum liability of one million dollars
($1,000,000.00) for personal injury or death of all persons so
injured or killed in any one (1) occurrence.
(2) A property damage insurance policy indemnifying, defending, and
holding harmless the county, its officers, boards, commissions,
agents, or employees from any and all claims by any person
whatsoever for property damage caused by the operations of the
licensee under the license herein granted, or alleged to have
been so caused, with a minimum liability of one million dollars
($1,000,000.00) for damage to such property in any one
occurrence.
(b) Each of the foregoing insurance policies shall be in a form acceptable
to the county and each shall require thirty (30) calendar days' notice of any
cancellations to both the county and the licensee. Within thirty (30) days
following receipt by the county or licensee of any cancellation notice, the
licensee shall obtain, pay all premiums for, and file with the county written
evidence of payment of premiums for and executed duplicate copies of a
replacement policy in the same minimum amount as the canceled policy. (No.
84-829, 10-23-84)
SEC. 5.5-19. INDEMNITY.
(a) The licensee shall, at its sole cost and expense, indemnify, defend,
and hold harmless the county, its officials, boards, commissions, agents, and
employees against any and all claims, suits, causes of action, proceedings, and
judgments for damages or relief, of any kind, arising out of:
(1) The grant of a license to the licensee of the licensee's
acceptance thereof:
(2) The operations of the licensee under such license, specifically
including antitrust actions under state or federal law.
Indemnified expenses shall include, but not be limited to, all
out-of-pocket expenses, court costs, attorneys' fees, and the
reasonable value of any services rendered by county employees.
(b) The foregoing indemnity is conditioned upon the county's giving the
licensee prompt notice of the making of any claim or the commencement of any
suit, action, or other proceeding covered by this section. Nothing in this
section shall be deemed, construed, or applied to prevent the county from
cooperating with the licensee and participating in the defense of any litigation
by its own counsel at its sole cost and expense. (No. 84-829, 10-23-84)
278
<PAGE> 30
CABLE TELEVISION sec. 5.5-22
SEC. 5.5-20. FAILURE TO ENFORCE LICENSE.
The licensee shall not be excused from complying with any of the terms and
conditions of this chapter or of the license ordinance by any delay or failure
of the county, upon any one (1) or more occasions, to insist upon the licensee's
performance or to seek the licensee's compliance with any one (1) or more of
such terms or conditions. (No. 84-829, 10-23-84)
SEC. 5.5-21. ADMINISTRATION AND ENFORCEMENT RESPONSIBILITIES.
(a) The administration and enforcement of this chapter and any license
granted and accepted pursuant to this chapter shall be vested in the office of
consumer affairs, under the supervision and control of the county executive.
(b) The county executive is hereby authorized to promulgate such rules,
regulations, and orders as he shall deem necessary and appropriate to enforce,
administer, and interpret, this chapter; provided that he shall cause reasonable
notice of the proposed adoption of any rules or regulations to be published in a
newspaper or general circulation in the county, and shall conduct at least one
(1) public hearing on the adoption thereof. The county executive may not
delegate this responsibility.
(c) The county executive may enforce this chapter, the terms and conditions
of any license, and any rules, regulations, or orders issued in the
interpretation and administration thereof, by any appropriate action at law or
cause in chancery. The county attorney is authorized to file and prosecute such
proceedings in the name of the board, upon the written request of the county
executive. This authority may not be delegated by the county executive. (No.
84-829, 10-23-84)
ARTICLE VII. RENEWAL AND REVOCATION OF LICENSES
SEC. 5.5-22. RENEWAL OF LICENSES.
(A) Licenses may be renewed in accordance with this section, and shall
terminate unless so renewed.
(B) During the six-month period which begins with the thirty-sixth month
before license expiration, the board may, on its own initiative, and shall upon
application of the licensee, commence proceedings for the purpose of:
(1) Identifying the future cable-related community needs and interests
of the county; and
(2) Reviewing the performance of the licensee under the license during
the then-current license term.
(C) (1) Upon completion of a proceeding under subsection (B), above, a
licensee seeking renewal of a license may, on its own initiative
or at the request of the board, submit a proposal for renewal
thereof.
(2) Subject to the applicable provisions of federal law and
regulation, any such proposal shall contain such material as the
board may require, including proposals for an upgrade of the cable
system.
279
<PAGE> 31
sec. 5.5-22 PRINCE WILLIAM COUNTY CODE
(3) The board may establish a date by which such proposals shall be
submitted.
(D)(1) Upon submittal by a licensee of a proposal for renewal of a license,
the board shall provide prompt public notice of such proposal and,
during the four-month period which begins on the completion of any
proceedings under subsection (B), either renew the license or issue
a preliminary assessment that the license should not be renewed, and
at the request of the operator, or on its own initiative, commence
an administrative proceeding, after providing prompt public notice
of such proceeding in accordance with paragraph (D)(2) to consider
whether:
(a) The licensee has substantially complied with the material
terms of the existing license and with the applicable law;
(b) The quality of the licensee's service, including signal
quality, response to consumer complaints, and billing
practices, but without regard to the mix, quality, or level of
cable services or other services provided over the system, has
been reasonable in light of community needs;
(c) The license has the financial, legal and technical ability to
provide the services, facilities, and equipment as set forth
in the licensee's proposal; and
(d) The licensee's proposal is reasonable to meet the future
cable-related community needs and interests, taking into
account the costs of meeting such needs and interests.
(2) In any proceeding under paragraph (D)(1), the licensee shall be
afforded adequate notice, and both the licensee and the board, or
its designee, shall be afforded fair opportunity for full
participation therein, including the right to introduce evidence
(including evidence related to issues raised in the proceedings
under subsection (b)), to require the production of evidence, and
to question witnesses. A transcript shall be made of any such
proceeding.
(3) At the completion of a proceeding under this subsection, the board
shall issue a written decision granting or denying the proposal for
renewal based upon the record of such proceeding, and transmit a
copy of such decision to the licensee. Such decision shall state
the reasons therefor.
(E) Any denial of a proposal for renewal shall be based on one or more
adverse findings made with respect to the factors described in subparagraphs (a)
through (d) of subsection (D)(1), pursuant to and based upon the record of the
proceeding under subsection (D). The board may not base a denial of renewal on a
failure to substantially comply with the material terms of the license under
subsection (D)(1)(a) or on events considered under subsection (D)(1)(b) in any
case in which a violation of the license or the events considered under
subsection (D)(1)(b) occur after the effective date of the Cable Franchise
Policy and Communications Act of 1984, unless the board has provided the
licensee with notice and the opportunity to cure, or in any case in which it is
documented that the board has waived its right to object, or has effectively
acquiesced.
(F) Any licensee whose proposal for renewal has been denied by final
decision of the board made pursuant to this section, or has been adversely
affected by a failure of the board to act in accordance with the procedural
requirements of this section, may appeal such final
280
<PAGE> 32
CABLE TELEVISION sec. 5.5-23
decision or failure pursuant to the provisions of sections 626 and 636 of the
Cable Franchise Policy and Communications Act of 1984.
(G) Notwithstanding the provisions of subsections (A) through (F) of this
section, a licensee may submit a proposal for renewal of a license at any time,
and the board may grant or deny such proposal at any time (including after
proceedings pursuant to this section have commenced). The provisions of
subsections (A) through (F) shall not apply to a decision to grant or deny a
proposal under this section. The denial of a renewal under this subsection shall
not affect on a renewal proposal that is submitted in accordance with
subsections (A) through (F). (No. 84-829, 10-23-94)
SEC. 5.5-23. REVOCATION OF LICENSE.
(a) In addition to other rights and powers provided by this chapter, or
general law, the county hereby expressly reserves the right to revoke any
license granted under this chapter on any one (1) or more of the following
grounds:
(1) The licensee's material misrepresentation of fact in an
application submitted pursuant to this chapter.
(2) The licensee's willful or negligent failure or refusal to
construct, install, maintain, or operate its cable television
system in compliance with any term or condition of this chapter
or of the license ordinance.
(3) The licensee's insolvency, or its seeking relief under the
bankruptcy laws or having been adjudged bankrupt.
(4) Foreclosure or other judicial sale of all or a substantial part of
licensee's cable television system, or
(5) The licensee's repeated or substantial violation of any provision
of the Virginia Consumer Protection Act of 1977, as amended.
(6) The licensee's repeated failure to provide efficient, continuous
service, or to maintain the system in good repair, or to
satisfactorily resolve bona fide subscriber complaints.
(b) The board may revoke a license pursuant to this section, by ordinance,
only after it has given the licensee notice of its intention to adopt such an
ordinance and the grounds therefor, and has afforded the licensee a reasonable
opportunity to prove in a hearing before the board that the proposed grounds for
revocation never existed or do not warrant revocation. The board shall give at
least the same notice of such hearing as required for the adoption of
ordinances.
(c) A license shall not be revoked pursuant to this section for any act or
omission beyond the licensee's control; provided, however, that an act or
omission shall not be deemed or construed to be beyond the licensee's control
because of financial difficulties of any sort.
(d) In the event that a license is revoked by the board, the county shall
have the option to acquire the assets of the licensee's cable television at
their then fair market value, or to select a successor licensee, consistent with
the provisions of this chapter, and to permit such
281
<PAGE> 33
sec. 5.5-23 PRINCE WILLIAM COUNTY CODE
successor to acquire said assets at their then fair market value. Such option
must be exercised within one (1) year of the date of revocation.
(e) In the event that a license is revoked by the board, and until such
time as the licensee transfer to the county or to a successor licensee
possession and title to the assets of its cable television system, the licensee
shall, as trustee for its successor in interest, continue to operate the cable
television system under the terms and conditions of this chapter and of the
license ordinance. During such interim period, the licensee shall not make any
material administrative or operational change that would tend to:
(1) Degrade the quality of service to subscribers;
(2) Decrease income; or
(3) Materially increase expenses without the express permission, in
writing, of the county.
For its management services during this period of trusteeship, the licensee
shall be entitled to receive, as compensation, the net profit generated from the
operation of its cable television system during such period. Such management
services shall not be continued without the licensee's consent for more than
twelve (12) months. (No. 84-829, 10-23-84)
SEC. 5.5-24. REMOVAL OF MATERIALS UPON TERMINATION OF LICENSE.
In the event a license is revoked, or otherwise terminated for any lawful
reason, the licensee shall, if the system is not sold to a successor licensee,
or acquired by the board within the period for exercise of its option to acquire
or after said option shall have been declined, remove all supporting structures,
poles, transmission and distribution systems, and other appurtenances, owned by
it, from all public ways in, over, under, through, and along which installed,
and restore such areas to their original condition. If not done within six (6)
months from notice by the board to restore, such property shall be deemed
abandoned. (No. 84-829, 10-23-84)
ARTICLE VII. CREATION OF LICENSE SERVICE AREAS
SEC. 5.5-25. LICENSE SERVICE AREAS.
The board may, by ordinance, establish one or more license service areas
within which it may grant licenses as provided in this chapter. Unless and until
the board determines to create other license service areas, the entire
geographical area of Prince William County shall constitute the license service
area for purposes of this chapter. (No. 84-829, 10-23-84)
ARTICLE IX. MISCELLANEOUS
SEC. 5.5-26. TIME OF THE ESSENCE.
Whenever this chapter or the license ordinance specified any time for any
act to be performed by or on the behalf of a licensee, such time shall be deemed
to be of the essence and
282
<PAGE> 34
CABLE TELEVISION
SEC. 5.5-28
the licensee's failure to perform within the time specified shall, in all cases,
be sufficient grounds for the county to invoke the remedies available under the
terms and conditions of this chapter and of the license ordinance. (No. 84-829,
10-23-84)
SEC. 5.5-27. SEVERABILITY.
If any provision of this chapter or of the license ordinance is held
invalid or unconstitutional by any court or administrative agency of competent
jurisdiction, such holding shall not affect the validity of the remaining
provisions thereof. (No. 84-829, 10-23-84)
SEC. 5.5-28. EFFECT OF STATE OR FEDERAL REGULATION OR LAW.
The provisions of this chapter, any resolution adopted by the board
hereunder, and any license ordinance or agreement entered into shall be deemed
amended pro tanto to comply with any requirement of state or federal law or
regulation which is applicable thereto, which has been, or shall be adopted, and
which is inconsistent with provisions of this chapter, and this chapter shall be
deemed to include mandatory and self-effectuating provisions of such law or
regulation. Nothing shall preclude the board from adopting express amendments to
this chapter, and any resolution, other ordinance, or agreement to conform local
law, regulation, and agreements to such federal or state law or regulation. (No.
84-829, 10-23-84)
283
<PAGE> 1
EXHIBIT 21
JONES INTERCABLE, INC.
LIST OF SUBSIDIARIES
Evergreen Intercable, Inc.
International Aviation, Ltd.
Jones Cable Corporation
Jones Cable Holdings, Inc.
Jones Communications of Colorado, Inc.
Jones Communications of Virginia, Inc.
Jones Electronic Manufacturing Services, Inc.
Jones Futurex, Inc.
Jones Galactic Radio, Inc.
Jones Galactic Radio Partners, Inc.
The Jones Group, Ltd.
Jones Intercable Funds, 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 Panorama 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 Telecommunications of Virginia, Inc.
Jones Tri-City Intercable, Inc.
Jones U.K. Holdings, Inc.
Saturn Cable T.V., 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-3, File Nos.
33-62537 and 33-62539 and on Form S-8, File Nos. 33-3087, 33-25577, 33-54596
and 33-52813.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 13, 1996
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 12,084
<SECURITIES> 0
<RECEIVABLES> 19,332
<ALLOWANCES> 1,056
<INVENTORY> 0
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<PP&E> 475,436
<DEPRECIATION> (171,948)
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0
0
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