<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 16, 1996
JONES INTERCABLE, INC.
----------------------
(Exact name of registrant as specified in its charter)
Colorado 1-9953 84-0613514
- ----------------------- ------ -------------------
(State of Organization) (Commission File No.) (IRS Employer
Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
- --------------------------------------------------- ------------------
(Address of principal executive office and Zip Code (Registrant's
telephone no.
including area code)
<PAGE>
Item 5. Other Events
------------
On August 16, 1996, Jones Intercable, Inc. (the "Company"), a Colorado
corporation, entered into (i) an Asset Purchase Agreement providing for the sale
by the Company to Century Communications Corp. of substantially all of the
assets, property and business of the Company relating to the cable television
system serving subscribers in the communities of Diamond Bar and Rowland
Heights, California and certain portions of unincorporated Los Angeles County,
California (the "Walnut System") for a sales price of $33,492,686, subject to
customary closing adjustments; and (ii) an Asset Purchase Agreement providing
for the sale by the Company to Century Communications Corp. of substantially all
of the assets, property and business of the Company relating to the cable
television system serving subscribers in the communities of Oxnard, Port
Hueneme, certain portions of unincorporated Ventura County, and the Port Hueneme
Naval Battalion Center, all in the State of California (the "Oxnard System") for
a sales price of $70,507,314, subject to customary closing adjustments.
The closings of the sales of the Walnut and the Oxnard Systems are not
contingent one upon the other and are expected to occur during the first half of
1997. Each sale is subject to a number of conditions, including the consent of
the governmental franchising authorities and other regulatory authorities having
jurisdiction, and other matters.
The Walnut System currently passes approximately 31,800 homes and
serves approximately 19,000 basic subscribers, and the Oxnard System currently
passes approximately 54,000 homes and serves approximately 40,000 basic
subscribers. The Company will pay Jones Financial Group, Ltd., an affiliate of
the Company, a fee upon completion of the sales of the Walnut and Oxnard Systems
as compensation to it for acting as the Company's financial advisor.
2
<PAGE>
Item 7. Financial Statements and Exhibits
---------------------------------
c. Exhibits.
---------
2.1 Asset Purchase Agreement (Walnut) dated August 16, 1996 between
Jones Intercable, Inc. and Century Communications Corp.
2.2 Asset Purchase Agreement (Oxnard) dated August 16, 1996 between
Jones Intercable, Inc. and Century Communications Corp.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JONES INTERCABLE, INC.,
a Colorado corporation
Dated: August 28, 1996 By: /s/ Elizabeth M. Steele
-----------------------
Elizabeth M. Steele
Vice President and Secretary
4
<PAGE>
Exhibit 2.1
Walnut
------
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT, dated August 16, 1996 (the "Agreement"), between
--
Jones Intercable, Inc., a Colorado corporation, having its principal offices at
9697 E. Mineral Ave., Englewood, CO 80112 ("Seller"); and Century Communications
Corp., a New Jersey corporation, having its principal offices at 50 Locust
Avenue, New Canaan, Connecticut 06840 ("Buyer").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Seller currently owns and operates certain cable television
systems serving subscribers in the communities of Diamond Bar, California and
certain portions of unincorporated Los Angeles (the "System"), which are
operated pursuant to the Franchises listed and described on Schedule 5.14(a)
hereto; and
WHEREAS, Seller desires to sell to Buyer, and Buyer, in reliance upon the
representations and warranties of Seller, desires to purchase from Seller, all
of Seller's right, title and interest in and to substantially all of the assets,
property and business of Seller relating to the System and the operation of the
System (the "CATV Business") on the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties agree as follows:
<PAGE>
ARTICLE I
---------
DEFINITIONS
-----------
As used in this Agreement, the following terms, whether used in singular or
plural forms, shall have the following meanings:
"Affiliated Company" shall have the meaning set forth in Section 10.5
herein.
"Assignment and Assumption Agreement" means the assignment and assumption
agreement in the form attached hereto as Exhibit 2.3-B.
"Assumed Contracts" means the Franchises set forth on Schedule 5.14(a) and
the leases, agreements and contracts so designated on Schedules 5.7, 5.10 and
5.11(b).
"Assumed Liabilities" shall have the meaning set forth in Section 3.2
herein
"Basic Service" shall have the meaning set forth in Section 5.16 herein and
is listed and described in Schedule 5.16 hereto.
"Basic Rate" shall have the meaning set forth in Section 5.16 herein and is
listed and described in Schedule 5.16 hereto.
"Basic Subscriber" means a bona fide residential or commercial cable
television subscriber, i.e., first connections, but not a Bulk Subscriber, (l)
----
to whom a System has rendered Basic Service for at least one calendar month as
of the Closing Date, as reflected on the books of the System for such period;
(2) who has paid for at least one month of Basic Service at the full Basic Rate;
and (3) who owes no part of any service charge then in effect that has been due
for more than 60 days from the first day of the period to which the service
charge relates as reflected on the books of the System
2
<PAGE>
(provided that a subscriber's account shall not be considered past due as a
result of unpaid amounts not exceeding $10.00 in respect of (A) customary late
charges imposed by the System and/or (B) bona fide disputed amounts).
"Bill of Sale" means the bill of sale in the form attached hereto as
Exhibit 2.3-A.
"Bulk Subscriber" means bulk commercial subscribers, such as apartment
houses, motels, nursing homes or hospitals, which are bona fide cable television
subscribers, i.e., first connections, (l) to whom a System has rendered Basic
----
Service for at least one calendar month as of the Closing Date, as reflected on
the books of the System for such period; (2) who have paid for at least one
month of Basic or Tier Service; and (3) who owe no part of any service charge
then in effect that has been due for more than 60 days from the first day of the
period to which the service charge relates as reflected on the books of the
System. The term "Bulk Subscriber" is used in this Agreement only in the
definition of Equivalent Basic Subscriber and, for purposes thereof, shall not
include any bulk commercial subscribers in respect of which a written agreement
between Seller and the owner thereof is in effect, which agreement requires the
consent of such owner for the assignment thereof and which consent is not
obtained prior to the Closing Date.
"Cable Act of 1984" means the Cable Communications Policy Act of 1984, and
the rules and regulations promulgated thereunder.
"Cable Act of 1992" means the Cable Television Consumer Protection and
Competition Act of 1992, and the rules and regulations promulgated thereunder.
"CATV Business" shall have the meaning set forth in the second recital of
this Agreement.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Article 4 hereof.
3
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Copyright Act" means Title 17 of the United States Code, as amended, and
the rules and regulations promulgated thereunder.
"Designated Franchises" shall have the meaning set forth in Section 7.4 of
this Agreement.
"Equivalent Basic Subscribers" means, with respect to the System, that
number determined by adding (A) the number of Basic Subscribers of the System,
and (B) with respect to Bulk Subscribers, the number which results from dividing
(x) the aggregate billings for the last full billing period prior to the Closing
Date to Bulk Subscribers of the System for Basic Service and Tier Service, by
(y) $23.21.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, rules and regulations promulgated thereunder and published
interpretations with respect thereto.
"ERISA Affiliate" means any corporation, trade or business, whether or not
incorporated, which is from time to time a member of a controlled group or a
group under common control with Seller within the meaning of Section 4001(b)(1)
of ERISA or Section 414(b) or Section 414(c) of the Code.
"Excluded Assets" shall have the meaning set forth in Section 2.2 herein.
"Excluded Liabilities" shall have the meaning set forth in Section 3.2
herein.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
4
<PAGE>
"Financial Statements" shall have the meaning set forth in Section 5.4
hereof.
"Franchises" shall have the meaning set forth in Section 5.14(a) herein and
are listed and described in Schedule 5.14(a) hereto.
"Franchising Authority" shall have the meaning set forth in Section 5.14(a)
herein.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Consents" are referred to in Section 5.3(a) and are listed
and described in Schedule 5.3(a) hereto.
"Legal Proceedings" shall have the meaning set forth in Section 5.8 herein.
"Lien" means all debts, liabilities, obligations, taxes, claims, liens,
encumbrances or exceptions to or defects in title or other ownership interests
(including but not limited to reservations, rights of entry, possibilities of
reverter, encroachments, easements, rights-of-way, restrictive covenants,
leases, and licenses) of any kind, character or description, whether accrued,
absolute, contingent or otherwise, and whether or not reflected or reserved
against in the balance sheets, books of account or records of Seller.
"Non-Governmental Consents" are referred to in Section 5.3(b) and are
listed and described in Schedule 5.3(b) hereto.
"Operating Site" shall have the meaning set forth in Section 5.25 herein.
"Pay or Premium Channels" shall have the meaning set forth in Section 5.16
herein and are listed and described on Schedule 5.16 hereto.
5
<PAGE>
"Pay Units" means the aggregate number of bona fide subscriptions to pay or
premium television services, i.e., Home Box Office, Cinemax, Showtime, etc., in
respect of which (1) the System has rendered such pay or premium television
services for at least one calendar month as of the Closing Date, as reflected on
the books of the System for such period; (2) the Seller has been paid for at
least one month for such pay or premium television services at the full rate for
such pay or premium television services; and (3) the subscriber owes no part of
any service charge then in effect that has been due for more than 60 days from
the first day of the period to which the service charge relates, as reflected on
the books of the System (provided that a subscriber's account shall not be
considered past due as a result of unpaid amounts not exceeding $10.00 in
respect of (A) customary late charges imposed by the System and/or (B) bona fide
disputed amounts).
"Permitted Liens" shall have the meaning set forth in Section 5.10 herein.
"Person" means any person or entity, whether an individual, trustee,
corporation, general or limited partnership, joint venture, trust, business
association, unincorporated organization of any kind, firm, or governmental
agency or authority.
"Post Agreement Statements" shall have the meaning set forth in Section 5.4
herein.
"Purchase Price" shall have the meaning set forth in Section 3.1 herein.
"Purchased Assets" shall have the meaning set forth in Section 2.1 herein.
"Required Consents" means the Governmental Consents and the Non-
Governmental Consents.
"Substances" shall have the meaning set forth in Section 5.25 herein.
"System" shall have the meaning set forth in the first recital of this
Agreement.
6
<PAGE>
"Telecommunications Act of 1996" means the Telecommunications Act of 1996,
and the rules and regulations promulgated thereunder.
"Tier Rate" shall have the meaning set forth in Section 5.16 herein and is
listed and described in Schedule 5.16 hereto.
"Tier Service" shall have the meaning set forth in Section 5.16 herein and
is listed and described in Schedule 5.16 hereto.
"Tier Subscriber" means a bona fide cable television subscriber to the
System who is a Basic Subscriber (1) who has subscribed to and to whom the
System has rendered service of one of the Tier Services for at least one
calendar month as of the Closing Date, as reflected on the books of the System
for such period; (2) has paid in full for at least one month for the particular
Tier Service at the full Tier Rate; and (3) owes no part of any service charge
then in effect that has been due for more than 60 days from the first day to
which the service charge relates, as reflected on the books of the System
(provided that a subscriber's account shall not be considered past due as a
result of unpaid amounts not exceeding $10.00 in respect of (A) customary late
charges imposed by the System and/or (B) bona fide disputed amounts).
ARTICLE 2
---------
PURCHASE AND SALE
-----------------
2.1 Purchase and Sale of Assets. Seller agrees to sell, assign,
---------------------------
transfer, convey, grant and deliver to Buys, and Buyer agrees to purchase from
Seller, (i) all of Sellers right, title and interest in and to the System and
the CATV Business as an ongoing concern, and (ii) all right, title, interest and
benefit, of whatever kind and nature, real, personal and mixed, tangible and
intangible, whether or not reflected on Seller's books and records, known or
unknown, accrued, absolute, contingent or otherwise, in and to the assets,
properties and rights with respect to the System and the operation thereof and
the CATV Business, wherever situated, all as the same exist on the Closing Date,
as set
7
<PAGE>
forth in this Agreement (which shall include all such assets as they presently
exist and are used in the normal operation of the System from the date hereof
through the Closing Date)(the "Purchased Assets"), including, without
limitation, (a) all subscriber records and other books and records relating to
or applicable to the operation of the System, (b) all franchises, permits,
filings with all governmental agencies, licenses, FCC radio station licenses and
microwave relay agreements relating to the System, (c) leases of real and
personal property, easements, rights-of-way, pole attachment agreements,
subscriber agreements including bulk subscriber agreements, retransmission
agreements and the other agreements relating to the System and specifically
assumed by Buyer hereunder and pursuant to the Assignment and Assumption
Agreement; (d) all plant, improvements, headends, towers, antennas, cable and
strand relating to the System; (e) all inventory and equipment associated with
receiving and distributing signals at the headend site and all other antenna and
down leads, all electronic equipment, towers, poles, head end amplifiers and
associated equipment, line amplifiers, aerial and underground trunk and feeder
line cable, housedrops, local origination equipment, test equipment, machinery,
converter boxes and other personal property relating to the System; (f) all
vehicles and all construction equipment relating to the System; (g) all drawings
and blueprints of or relating to the System; and (h) all real property and real
property interests relating to the System. The Purchased Assets shall be
delivered on the Closing Date, free and clear of and expressly excluding all
Liens (other than Permitted Liens and Liens for ad valorem taxes not yet due
-- -------
and payable).
2.2 Excluded Assets. Anything in the foregoing to the contrary
---------------
notwithstanding, there shall be excluded from the Purchased Assets (i) copies of
tax returns and other documents relating to the System which Seller is required
by law to keep in its possession, copies of which will be promptly furnished by
Seller to and at the reasonable request of the Buyer for a period of three years
after the Closing Date; (ii) all books or records of Seller which pertain to the
accounting and tax aspects of the Seller prior to the Closing Date, and which do
not relate to the operation of the system; (iii) Seller's cash on hand as of the
Closing Date and all other cash in any of Seller's bank deposits as well as
certificates of deposit with various banking institutions; (iv) all documents
relating to the legal existence and internal corporate matters of Seller, (v)
all agreements other than
8
<PAGE>
the Assumed Contracts; (vi) all assets, properties and rights of Seller not
related to the System (including but not limited to those assets, properties and
rights that are used or useful solely in connection with Seller's operation of
the cable television system serving communities in and around Yorba Linda,
California); (vii) any and all insurance policies, construction and performance
bonds, intercompany receivables with respect to any Affiliated Company, letters
of credit or other similar items and any cash surrender value in regard thereto;
(viii) all programming agreements except programming agreements that relate
solely to the System, all of which are set forth on Schedule 5.7 hereto; any
retransmission consent agreements relating to the broadcast signals carried by
the System (the "Broadcast Contracts") to the extent such Broadcast Contracts
also relate to broadcast signals that are carried by cable television systems
other than the System; (ix) any claims, rights and interests in and to any
refunds of federal, state or local franchise, income, property or other taxes or
fees and all other claims relating to periods prior to the Closing Date, except
to the extent such claims relate to the Assumed Liabilities; (x) the trademarks,
trade names, service marks and all other information and similar intangible
assets relating to Seller or the System, except that Seller shall grant to Buyer
a royalty free license to use such names and marks for a period of ninety (90)
days following the Closing; and (xi) the rights, assets and properties described
on Schedule 2.2, if any (collectively, the "Excluded Assets").
2.3 Instruments of Transfer,etc. At the Closing, Seller will deliver
----------------------------
to Buyer (i) such deeds, bills of sale, endorsements, assignments, and other
good and sufficient instruments of sale, transfer and conveyance as shall be
effective to vest in Buyer all right, title, interest and benefit, including all
of Seller's right, title, interest and benefit, in and to the Purchase Assets,
including, without limiting the generality of the foregoing, the Bill of Sale in
the form of Exhibit 2.3-A and the Assignment and Assumption Agreement in the
form of Exhibit 2.3-B hereto, (ii) the Assumed Contracts and all other
instruments, books, records (except the books and records described in Section
2.2(i), (ii) and (iv) hereof), and other data relating to the Purchased Assets
and the business and operations of the System and (iii) all instruments,
certificates and other documents as set forth in Section 8.1 hereof. Upon
Closing, Buyer shall be entitled to have actual possession and control of the
Purchased Assets and the System effective upon the close of business on the
Closing Date.
9
<PAGE>
ARTICLE 3
---------
PURCHASE PRICE; PAYMENTS; ADJUSTMENTS
-------------------------------------
3.1 Purchase Price. Subject to the terms and conditions of this
--------------
Agreement, Buyer shall pay to Seller for the Purchased Assets and the full
performance by Seller of all of its obligations hereunder and Seller shall
accept therefor, consideration in the sum of Thirty-Three Million Four Hundred
Ninety-Two Thousand Six Hundred Eighty-Six ($33,492,686) Dollars (the "Purchase
Price") payable as follows: Buyer shall deliver to Seller, in immediately
available funds, by wire transfer (in accordance with written wire transfer
instructions delivered to Buyer by Seller not less than three (3) business days
prior to the Closing) against delivery of all instruments required to be
delivered by Seller, the sum of Thirty-Three Million Four Hundred Ninety-Two
Thousand Six Hundred Eighty-Six ($33,492,686) Dollars, subject to adjustment
pursuant to Section 3.3.
3.2 Liabilities. On the Closing Date, Seller will assign, and Buyer will
-----------
assume, solely the following liabilities arising out of the operation of the
System: (i) all liabilities of Seller in respect of which a Purchase Price
adjustment in Buyer's favor is made pursuant to the prorations and adjustments
set forth in Section 3.3, (ii) all liabilities of Seller relating to the period
following the Closing under the Assumed Contracts, and (iii) liabilities,
obligations and commitments of Seller under contracts to provide service to
customers of the System; provided however, that the assumption by Buyer of
liabilities, obligations or commitments of Seller under clause (iii) shall not
include the satisfaction by Buyer of any liabilities, obligations or commitments
of Seller to the extent they relate to services, goods or other benefits
received by Seller prior to the Closing, other than the liabilities of Seller in
respect of which a Purchase Price adjustment in Buyer's favor is made pursuant
to Section 3.3 hereof (collectively, the "Assumed Liabilities"). Except as set
forth above, Buyer will not assume any liabilities or obligations of Seller (the
"Excluded Liabilities").
10
<PAGE>
3.3 Proration and Adjustments to Purchase Price.
-------------------------------------------
(a) The Purchase Price shall be reduced by the greater of the
Subscriber Adjustment Amount or the Revenue Adjustment Amount (if both are
positive numbers). The Subscriber Adjustment Amount shall be an amount equal to
$1,791 multiplied by the number, if any, of Equivalent Basic Subscribers of the
System less than 18,700 as of the Closing Date. The Revenue Adjustment shall be
an amount equal to 4.19 multiplied by the amount, if any, by which the System's
Annualized Gross Revenues as of the Closing Date are less than $8,000,000 and
shall be made in accordance with generally accepted accounting principles
applied on a consistent basis. The System's Annualized Gross Revenues shall be
an amount equal to the System's aggregate gross revenues for the three full
calendar months prior to the Closing Date (the "Revenue Measurement Period")
multiplied by four. If the aggregate number of Equivalent Basic Subscribers of
the System is less than 18,700 as of the Closing Date but the System's
Annualized Gross Revenues as of the Closing Date exceed $8,000,000, Seller shall
be entitled to offset, dollar for dollar, the Subscriber Adjustment Amount by
the amount of the revenue overage based on the same adjustment factors. For
example, if the number of Equivalent Basic Subscribers of the System is 18,500
as of the Closing Date and the System's Annualized Gross Revenues as of the
Closing Date are $8,050,000, Seller would be entitled to offset the Subscriber
Adjustment Amount of $358,200 (200 x $1,791) by $209,500 (4.19 x $50,000).
(b) Prorations shall be made to reflect the principle that all
liabilities, expenses and income attributable to the System and the Purchased
Assets for the period on and prior to the close of business on the Closing Date
are for the account of Seller, and all liabilities, expenses and income
attributable to the System and the Purchased Assets for the period subsequent to
the close of business on the Closing Date are for the account of the Buyer, all
as determined in accordance with GAAP. Items to be prorated shall include, but
shall not be limited to, prepaid assets for which Buyer will receive a benefit
following Closing, pole rents, franchise fees, taxes (other than income taxes or
those based on income, and other than corporate or partnership franchise taxes),
copyright royalty payments, fees and payments under cable service agreements,
power and utility fees and deposits, rentals and other payments under leases and
any payments or other incentives provided by
11
<PAGE>
programmers. Such items shall be prorated as of the close of business on the
Closing Date, and the amount of such adjustment to which Buyer or Seller is
entitled shall be deducted from or added to the amount payable to Seller
pursuant to Section 3.1 hereof.
(c) Additionally, the Purchase Price shall be (x) increased by an
amount equal to 95% of Seller's subscriber accounts receivable relating to the
System and (y) reduced by (i) an amount equal to the sum of all obligations and
liabilities in respect to customers (including, without limitation, prepayments,
credit balances, deposits, and unamortized deferred discounts) and (ii) any
liabilities or other obligations of Seller relating to the System which have
matured on or prior to the Closing Date including, without limitation, accrued
taxes, accrued employee vacation pay, severance pay, sick pay, and other fringe
benefits, which Buyer becomes obligated to pay or pays, after the Closing, same
being deemed pro-rated 100% as the liability of Seller.
(d) A complete and detailed list of all such prorations and
adjustments shall be prepared by Seller. Buyer's representatives shall be
permitted (but not obligated) to participate in the preparation of said list,
with access to all books, records and other documents used in the preparation
thereof. Said list shall be delivered to Buyer not later than five (5) days
prior to the Closing, and subject to the provisions hereof relating to
resolution of a dispute concerning items on such list, and the respective
amounts, the party thereby obligated to pay shall pay the items on the Closing
Date by way of the appropriate adjustment to the Purchase Price. Any amounts of
such prorations and adjustments which cannot be determined on the Closing Date
shall be estimated by Seller and Buyer based upon the best available
information. Within 90 days following the Closing Date, such prorations and
adjustments shall be adjusted by a cash payment by Buyer or Seller to the other,
as the case may be, reflecting transactions prior to the Closing Date which were
not included or which were estimated in the above proration and adjustment list.
In the event there is any dispute between Seller and Buyer's representatives
that cannot be resolved between them, such dispute shall be referred to an
independent accounting firm initially acceptable to Seller and Buyer, whose
decision shall be final, and whose fees and expenses shall be borne equally by
Seller and Buyer. Upon resolution, appropriate payment shall be made in
accordance with such resolution.
(e) If at any time after the date of this Agreement, but prior to
the Closing Date, Seller is ordered by any Franchising Authority, state or other
regulatory authority or the FCC (x) to
12
<PAGE>
rollback (i) the rates charged by the System for services (including, without
limitation, monthly service and equipment and installation charges) offered to
subscribers; or (ii) any other amounts charged to subscribers (including,
without limitation, late fees); and/or (y) to refund or rebate any charges for
services rendered to subscribers or any other amounts charged to subscribers
(including, without limitation, late fees) by the System (the aggregate amount
of any such refund or rebate as applied to such subscribers is hereinafter
referred to as the "Refund Amount"), then:
(i) the System's Annualized Gross Revenues shall be
calculated pursuant to Section 3.3(a) as if such reduced rate(s) had
been in effect during the entire Revenue Measurement Period; and
(ii) the Purchase Price shall be reduced by the Refund Amount
except to the extent the Refund Amount has been paid prior to
Closing.
Without the prior written consent of Buyer, which shall not be unreasonably
Withheld, Seller shall not settle or compromise any such action, claim, suit or
proceeding to the extent that such settlement or compromise would have an
adverse effect on Buyer or the System after the Closing Date.
3.4 Sales Taxes. Seller shall have the sole obligation for the payment
-----------
of any and all sales or other taxes due or which may become due in connection
with the transfer of the Purchased Assets to Buyer. Buyer shall reimburse Seller
for one-half of any such taxes paid.
3.5 Allocation of Purchase Price for Tax Purposes. Seller and Buyer
---------------------------------------------
agree to allocate the Purchase Price in accordance with the residual method
described in the regulations promulgated under Section 338(b)(5) of the Code.
Any valuation of non-publicly traded assets shall be determined by an
independent third-party appraiser chosen by the Buyer and reasonably acceptable
to Seller. The expense of any such appraisal shall be borne by the Buyer.
Seller and Buyer further agree to comply with all filing, notice and reporting
requirements described in Section 1060 of the Code.
13
<PAGE>
ARTICLE 4
---------
CLOSING
-------
The Closing shall take place at 10:00 A.M. in the offices of Seller, or
such other place as the parties may agree, within 10 business days after the
date on which the parties have notified each other that the conditions set forth
in Sections 8.1 and 8.2 have been complied with (each party agreeing to notify
the other when such respective compliance has taken place) or such other date as
the parties shall mutually agree (the "Closing Date"). Notwithstanding the
foregoing, if the Closing shall not have occurred on or before April 30, 1997,
then the Closing shall take place at 10:00 A.M. in the offices of Seller, or
such other place as the parties may agree, on June 30, 1997 (or such other date
as the parties shall mutually agree), provided that all conditions set forth in
Sections 8.1 and 8.2 have been complied with or waived on such date. In any
event, the parties agree to use their best efforts to close on (or as of) the
last business day of a calendar month and as of the last calendar day of such
month, but in no event shall Closing take place later than June 30, 1997 (the
"Outside Closing Date").
ARTICLE 5
---------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby (and which representations and warranties
shall survive the Closing in accordance with the provisions of Section 9.1
hereof), Seller represents and warrants to Buyer, that:
5.1 0rganization; Qualification. Seller is a corporation duly organized,
---------------------------
validly existing and in good standing under the laws of the State of Colorado,
and is duly qualified to do business and in good standing in the State of
California. Seller has the requisite corporate power and authority to own, lease
and operate the Purchased Assets and to carry on the CATV Business as now being
conducted.
14
<PAGE>
5.2 Authority Relative to this Agreement. Seller has the power and
------------------------------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by Seller and no other corporate proceedings on the part of
Seller are necessary to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Seller and,
assuming due and valid execution and delivery by Buyer, constitutes Seller's
legal, valid and binding agreement, enforceable in accordance with its terms,
except as such enforcement (a) may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally and (b) is
subject to the availability of equitable remedies as determined in the
discretion of the court before which a proceeding may be brought.
5.3 Consents and Approvals: No Violation.
------------------------------------
(a) Except as set forth in Schedule 5.3(a) hereto (the
"Governmental Consents"), there is no requirement applicable to Seller to make
any filing with or to obtain any permit, authorization, consent or approval of,
any governmental, regulatory or franchising authority as a condition to the
lawful consummation by Seller of the sale of the System and the CATV Business,
including without limitation, the Purchased Assets, to Buyer pursuant to this
Agreement.
(b) Except as set forth in Schedule 5.3(b) hereto (the "Non-
Governmental Consents"), and except for the Governmental Consents referenced in
Schedule 5.3(a) hereto, neither the execution, delivery nor performance of this
Agreement by Seller will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of Seller; (ii) result in
a violation of or a default (or give rise to any right of termination,
cancellation or acceleration) under or require the consent of any third party
under any of the terms, conditions or provisions of any note, bond, mortgage
indenture, agreements relating to indebtedness, pole agreement, programming
agreement, real property,lease, contract, or other instrument or obligation to
which Seller is a party or by which it or any of its properties or assets are
bound, (iii) violate any order, writ, injunction or decree applicable to Seller
or any of the properties, assets, or business of Seller, including without
limitation, the System, or (iv) violate any law or regulation of any
jurisdiction as such law or
15
<PAGE>
regulation relates to Seller or any of the properties, assets or business of
Seller, including, without limitation, the System.
5.4 Financial Statements. Seller has delivered to Buyer the following:
--------------------
(a) income statements and balance sheets for the System as of December 31, 1995,
as at and for the seven months then ended, on which Arthur Andersen LLP has
performed (or will perform, as described below) certain agreed upon procedures
reconciling the income statements and balance sheets for the System to the
consolidated income statement and balance sheet for Seller (the "1995 Financial
Statements"), and (b) income statements and balance sheets for the System as of
May 31, 1996, each as at and for the five months then ended, prepared by the
chief financial officer of Seller ("Interim Financial Statements"). The 1995
Financial Statements and the Interim Financial Statements are together referred
to as the "Financial Statements". The Financial Statements are complete in all
material respects and present fairly the results of operations and financial
condition of Seller and the System for the periods and as of the dates reflected
thereby, in accordance with GAAP, consistently applied with prior periods, with
no material difference between such statements and the financial records
maintained. Seller shall also deliver to Buyer, or cause to be delivered to
Buyer, (i) the financial statements (balance sheet and income statements) for
each full calendar month subsequent to May 31, 1996 and prior to the Closing,
(ii) within ninety (90) days following the date hereof, a report by Arthur
Andersen LLP with respect to the revenues of the System as at, and for the
periods covered by the 1995 Financial Statements and the Interim Financial
Statements, and (iii) a capital budget analysis of the System as at, and for,
the periods covered by the 1995 Financial Statements and the Interim Financial
Statements and for each calendar month subsequent to May 31, 1996 and prior to
Closing (collectively, the "Post Agreement Statements") and the financial
statements referenced in Section 7.9, and when delivered, these financial
statements will be complete in all material respects and present fairly the
results of operations and financial condition of the System for the periods and
as of the dates reflected thereby, in accordance with GAAP, consistently applied
with prior periods, with no material difference between such statements and the
financial records maintained.
16
<PAGE>
5.5 UNDISCLOSED LIABILITIES.
-----------------------
(a) All material liabilities and obligations of Seller relating to
the System which were incurred on or prior to December 31, 1995 and which under
GAAP were required to be reflected, accrued or reserved against in the Financial
Statements or notes thereto, are in fact so reflected, accrued or reserved
against therein. Except as set forth in Schedule 5.5 hereto, or otherwise
disclosed in this Agreement or reflected in the Financial Statements, Seller
does not have any liability or obligation relating to the System of any kind or
nature, secured or unsecured (whether absolute, accrued, contingent or
otherwise, and whether due or to become due and whether or not required under
GAAP to be reflected, accrued or reserved against in any of the Financial
Statements or notes thereto), other than liabilities and obligations which were
incurred after December 31, 1995 in the ordinary course of business and which
are not material to the business or financial condition of the System. Since
December 31, 1995, there has been no material adverse change in the business,
results of operations or financial condition of the System. The Post Agreement
Statements shall similarly reflect all liabilities and obligations of Seller
relating to the System required by GAAP to be set forth therein as of the dates
stated and as of the periods ending thereon.
(b) Since December 31, 1995, Seller has operated the System in the
ordinary course, consistent with past practice and with the budget for such
period previously delivered to Buyer, and has not entered into any transaction,
contract or commitment relating to the System other than in the ordinary course
of its business. Without limiting the foregoing, since December 31, 1995, Seller
has not, with respect to the System:
(1) sold, transferred, leased or otherwise disposed of any
assets except for inventory and/or services sold in the ordinary course of
business; canceled or compromised any debt or claim except in the ordinary
course of business consistent with past practices; or waived, compromised or
released any right except in the ordinary course of business consistent with
past practices;
(2) suffered any damage, destruction or loss (whether or not
covered by insurance) that has materially affected the assets of the System, or
the CATV Business;
(3) had any actual or threatened employee strike, work
stoppage, slowdown or lockout;
17
<PAGE>
(4) failed to replenish Seller's inventories and supplies in
a normal and customary manner consistent with prudent business practices
prevailing in the cable television industry, nor made any purchase commitments
in excess of the normal, ordinary and usual requirements of Seller's business;
(5) except as disclosed in the Schedules to this Agreement,
suffered any change, event or condition which has materially and adversely
affected the condition of the System (financial or otherwise), or the
properties, assets, liabilities or business of the System;
(6) except as disclosed in the Schedules to this Agreement,
incurred any obligation or liability, absolute, contingent or otherwise, whether
due or to become due, except liabilities for trade or business obligations
incurred in the ordinary course of the System's business;
(7) created or assumed any mortgage, pledge, lien or
encumbrance upon any of the Purchased Assets that will survive the Closing
(8) made any significant writedown of the value of any of the
Purchased Assets; nor
(9) made any general uniform increase in the compensation of
the employees of Seller or any increase in compensation payable to any
consultant or agent of Seller, other than in the ordinary course of business
consistent with past practices and other than to incent employees of the System
to remain employees of the System through the Closing Date (provided that Buyer
shall have no obligation to make or continue to make any incentives or similar
payments after the Closing Date).
5.6 Tax Returns and Payment of Taxes.
--------------------------------
(a) Seller has properly prepared and timely filed all tax returns
and reports which it has been required to file with respect to the System, and
all taxes, interest and penalties of any kind shown as due thereon or required
to be paid with respect to any period covered by such returns, have been paid.
As of December 31, 1995, Seller had set up an adequate reserve on its books for,
or had fully paid and discharged, all taxes imposed on it with respect to the
System, which are due and payable and/or had accrued to December 31, 1995, and
Seller will continue to maintain adequate reserves for or pay and discharge all
taxes imposed on it with respect to the System, which are due and payable and/or
accruable through the Closing Date.
18
<PAGE>
(b) Proper and accurate amounts have been withheld by Seller from
employees of the System for tax purposes in compliance with applicable laws and
paid over to the appropriate authorities.
(c) Except as set forth in Schedule 5.6, no claims are pending or,
to the Seller's knowledge, threatened against Seller for taxes, interest or
penalties, whether federal, state, local or foreign relating to the System or
the CATV Business; no tax examination of Seller is being conducted by federal,
state, local or foreign agents relating to the System or the CATV Business; and
there have been no extensions of any statutes of limitations with respect to any
federal, state, local or foreign tax relating to the System or the CATV
Business.
5.7 Certain Contracts and Arrangements. All contracts, agreements and
----------------------------------
employment agreements (written or oral) to which Seller is a party and which
relate solely to the System, other than those listed on Schedules 5.10, 5.11(b),
5.14(a) and 5.14(c) and other than (i) subscription agreements with individual
residential subscribers that may be canceled by Seller without penalty on not
more than 30 days notice, and (ii) other contracts and agreements not involving
either aggregate liabilities under all such contracts exceeding $15,000 or any
material non-monetary obligation, are listed in Schedule 5.7 hereto. Seller is
in possession of all pole attachment agreements necessary to operate the System,
and such pole attachment agreements are listed on Schedule 5.7, together with
the current rate of pole attachment fees in effect thereunder (which Seller
shall update prior to the Closing in the event such fees are modified). There is
not, under any of the agreements listed in Schedule 5.7, any violation, existing
default, event of default or other event which, with or without due notice or
lapse of time or both, would constitute a material default or event of default.
The contracts and agreements which are included in the Assumed Contracts are so
designated on such Schedule.
5.8 Litigation. Except as set forth in Schedule 5.8 hereto, there are no
----------
legal, administrative, arbitration or other proceedings or governmental
investigations pending or, to Seller's knowledge, threatened, which may affect
the System or Seller's ability to consume the transactions contemplated by this
Agreement. Included in the foregoing is any judgment, order, injunction, decree
or award (whether rendered by a court, administrative agency, or by arbitration
pursuant to a grievance or other procedure) that may affect the System or
Seller's ability to consummate the transactions
19
<PAGE>
contemplated by this Agreement and which is unsatisfied or requires continuing
compliance therewith (such suits, actions, etc., and judgments, orders, etc.,
are hereinafter referred to as "Legal Proceedings").
5.9 Employee Benefit Plans: ERISA: Labor Relations.
----------------------------------------------
(a) Except as set forth in Schedule 5.9(a) hereto, Seller has
complied, with respect to the System, in all material respects, with all
applicable laws relating to the employment of labor, including, without
limitation, ERISA, and those relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity and
the payment and withholding of taxes, including income and social security
taxes.
(b) With respect to the System, Seller (i) is not a party to any
contract, agreement or other commitment with any labor organization, and has not
agreed to recognize any union or other collective bargaining unit, nor has any
union or other collective bargaining unit been certified as representing any of
the System's employees, nor to the Seller's knowledge, has there been any effort
by the employees of the System to seek recognition of any union as the
collective bargaining agent, and (ii) has not experienced any strikes, work
stoppages, significant grievance proceedings or claims of unfair labor practices
filed, or to the knowledge of Seller threatened to be filed against Seller.
(c) Except as set forth in Schedule 5.9(c), Seller does not
maintain or sponsor, nor is it required to make any contribution to, any formal
or informal pension, profit-sharing, thrift or other retirement plan, medical,
hospitalization, vision, dental, life, disability or other insurance or benefit
plan, deferred compensation, bonus, fringe benefit, savings or other incentive
plan, severance plan or other similar plan, agreement, arrangement or
understanding, whether or not such plan is or is intended to be subject to the
provisions of ERISA or qualified under Section 401(a) of the Code, including,
without limitation, an "employee benefit plan" within the meaning of Section
3(3) of ERISA, or any "multi-employer plan" within the meaning of Section 3(37)
of ERISA. Each employee pension benefit plan (as defined in Section 3(2) of
ERISA) maintained or sponsored by Seller, or to which Seller is required to
contribute, and which is intended to be qualified under Section 401(a) of the
Code, complies in all material respects, both as to form and operation, with the
applicable provisions of the Code and all other applicable laws, rules and
regulations. A favorable determination letter has been issued by the Internal
Revenue Service with respect to each such plan.
20
<PAGE>
(d) Neither Seller nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") or any employee
benefit plan on account of any failure to meet the contribution requirements of
any such plan, minimum funding requirements or prohibited transactions under
applicable laws, termination of a single employer plan, partial or complete
withdrawal from a multi-employer plan, or the insolvency, reorganization or
termination of any multi-employer plan, and no event has occurred or conditions
exist which present a risk that any of such entities will incur any liabilities
on account of the foregoing circumstances.
5.10 Real Property. Schedule 5.10 hereto contains a description of the
-------------
real property owned by Seller and used in connection with the System (including
all buildings, improvements or structures located thereon, and interests in real
property such as easements, rights-of-way or similar authorizations which
require further payment or are otherwise material). Except as set forth in
Schedule 5.10, Seller has good and marketable fee simple title to all of the
real property owned by it and listed as such in Schedule 5.10, free and clear of
all Liens, other than for (a) taxes not yet due and payable, (b) easements,
rights-of-way, mineral rights reservations or other reservations and
restrictions which are either set forth in the deeds to such real property or
incurred in the ordinary course of business and which do not materially
interfere with the ordinary use of the property, (c) zoning restrictions,
prohibitions, and other requirements imposed by any governmental authority
having jurisdiction over the property, and (d) public utility easements of
record (collectively, the "Permitted Liens"). The real property is served by
utilities and services necessary for the normal and intended use of the real
property by Seller and none of the improvements encroaches upon the property of
others. Schedule 5.10 sets forth all easements, highway, railroad and canal
crossing permits and other rights of ingress and egress ("Permits") relating to
the System. To the best of Seller's knowledge, Seller is not in violation or
default of any Permit. Seller is not aware of any easement or other real
property interest, other than those described on Schedule 5.10, that is
required, or that has been asserted by a governmental unit or a third party to
be required, to conduct the business or operations of the System as presently
conducted. Except as set forth in Schedule 5.10, the buildings and other
structures located on such real property are owned by Seller. The buildings and
other structures located on such real property owned by Seller, and the
operation thereof as now operated and maintained, comply in all material
respects with all applicable laws, rules or regulations. To Seller's
21
<PAGE>
knowledge, said buildings and other structures are in good operating condition
and repair, ordinary wear and tear excepted, given the age of such properties
and the uses to which they are put. Except as set forth in Schedule 5.10, no
condemnation of any such real property has occurred, is pending or, to the
Seller's knowledge, threatened.
5.11 Title to Personal Property and Leases.
-------------------------------------
(a) Schedule 5.11(a) lists all material items of tangible personal
property and assets (including all vehicles and a general description of the
physical plant, including head and trunk line and feeder cable, transmitting and
receiving equipment and other electronic equipment) owned by Seller and included
in the Purchased Assets. Except as set forth in Schedule 5.1l(a), Seller has
good and valid title to such properties owned by it, free and clear of all
Liens, except ad valorem taxes not yet due and payable. Said tangible personal
properties are in good operating condition and repair, ordinary wear and tear
excepted, given the age of such properties and the use to which they are put.
(b) Schedule 5.11(b) contains a true and accurate description of
all real and all personal property leased by Seller and included in the
Purchased Assets setting forth (i) the names of the parties to the leases, (ii)
the expiration date of the leases, and (iii) a description of the property
leased. With respect to leases under which Seller is lessee, the property
described in such leases is presently used by Seller as lessee under the terms
of such leases, and such leases are in full force and effect. There is not,
under any of the agreements listed in Schedule 5.1l(b), any violation, existing
default, event of default or other event which, with or without due notice or
lapse of time or both, would constitute a material default or event of default.
The leases which are included in the Assumed Contracts are so designated on such
Schedule.
5.12 [Intentionally Omitted].
---------------------
5.13 Corporate and Personnel Data. Schedule 5.13 lists the names, current
----------------------------
annual salary or hourly rates and brief description or title of each person
employed by Seller in connection with the operation of the System.
22
<PAGE>
5.14 Franchises and Licenses: Compliance with Legal Requirements,
-----------------------
(a) Schedule 5.14(a) lists (a) all of the franchises applicable to
and pursuant to which Seller operates the System and that are required to be
obtained in order to operate the System (the "Franchises") and, with respect to
each Franchise, the relevant franchising authority (collectively, the
"Franchising Authorities") and the remaining term or duration of such Franchise;
(b) all licenses, permits and authorizations (other than the Franchises) granted
by any governmental unit or regulatory authority that are required to be
obtained in order to operate the System (the "Licenses"), all of which are
currently held by Seller; and (c) all fees required to be paid by Seller under
the Franchises and the Licenses. Seller is in compliance in all material
respects with the Franchises and the Licenses, and to Seller's knowledge is
otherwise in compliance with the Franchises and Licenses, and such Franchises
and Licenses are in full force and effect. Seller has not received any notice of
any violation by Seller or the System of any law, rule, regulation, ordinance,
order or judgment in effect.
(b) The operation of the System as currently conducted does not
violate or infringe any applicable law or regulation, including but not limited
to the Cable Act of 1984, the Cable Act of 1992 or the Telecommunications Act of
1996, other than violation(s) or infringement(s) which, individually or in the
aggregate, would not have a material adverse effect on the System, and to
Seller's knowledge the operation of the System does not otherwise violate or
infringe any such applicable law or regulation.
(c) Seller is permitted under the Franchises and FCC rules,
regulations and orders and any other applicable law, rule or regulation to
distribute the transmissions (whether television, satellite, radio or otherwise)
of video programming or other information that the Seller makes available to
subcribers of the System and to utilize all carrier frequencies generated by the
operations of the System, and is licensed to operate all the facilities required
by law to be licensed, including without limitation any business radio and any
cable television relay service system being operated as part of the System.
Other than requests for network nonduplication and syndex protection and as
described on Schedule 5.14, no written requests have been received by Seller
during the three years preceding the date of this Agreement from the FCC, the
United States Copyright Office or any other Person challenging or questioning
the right of Sellers operation of the System and of any FCC-licensed or
registered facility used in conjunction with Seller's operation of the System.
23
<PAGE>
(d) Seller has conducted all system and microwave performance tests
and all Cumulative Leakage Index ("CLI") related tests applicable to the System.
Seller has (i) maintained appropriate log books and other record keeping which
accurately and completely reflect in all material respects all results required
to be shown thereon; (ii) to the extent required by the rules and regulations of
the FCC, corrected any radiation leakage of the System required to be corrected
in connection with Seller's monitoring obligations under the rules and
regulations of the FCC or otherwise; and (iii) otherwise complied in all
material respects with all applicable CLI rules and regulations in connection
with the operation of the System.
(e) Seller has delivered or will deliver promptly after the date
hereof to Buyer complete and correct copies of all reports and filings for the
past three years made or filed pursuant to the 1984 Cable Act, the 1992 Cable
Act or FCC rules or regulations with respect.to the System, including, without
limitation, FCC Forms 320, 328, 329, 393,395A, 1200, 1205, 1210, 1215, 1220,
1225, 1230 and 1240, including but not limited to copies of any complaints filed
with the FCC with respect to Seller's rates charged to such subscribers (to the
extent available to Seller), any other documentation supporting an exemption
from rate regulation and copies of any responses or requests for supplemental
information received from the FCC or any Franchising Authority. A request for
renewal has been timely filed under Section 626(a) of the 1984 Cable Act with
the proper governmental unit with respect to each Franchise of the System
expiring within 36 months of the date of this Agreement and true and correct
copies of such requests have been delivered to Buyer.
(f) The System is being operated in compliance with the rules and
regulations of the FAA. Without limiting the generality of the foregoing, the
existing towers of the System are obstruction marked and lighted in accordance
with the rules and regulations of the FAA and FCC or are exempt from such
requirements. All required authorizations, including, but not limited to, Hazard
to Air Navigation determinations, for such towers have been issued by and
pursuant to the rules and regulations of the FAA.
24
<PAGE>
5.15 System and Signal Carriage.
--------------------------
(a) The System provides cable television service for the cities and
surrounding communities as set forth on Schedule 5.14(a). Except as described in
Schedule 5.15(a), (i) no person or entity has engaged or is presently engaging
in, or to the knowledge of Seller, threatened to engage in, any overbuild of any
of the System, (ii) to the knowledge of Seller, after independent inquiry having
been made, there has not been any grant by any governmental authority of a
franchise or license to any person or entity to operate or maintain a cable
television system, or what is known as and by an MMDS System in any of the
geographic areas covered by the Franchises, (iii) to the knowledge of Seller no
governmental authority is considering or contemplating any such grant, (iv) to
the knowledge of Seller, after independent inquiry having been made, no
application by any person or entity has been made to any governmental authority
to operate or maintain a cable television service in any of the geographic areas
covered by the Franchises, and (v) to the knowledge of Seller, no application of
any person or entity has been made to any governmental authority to operate or
maintain an MMDS System in any of the geographic areas covered by the
Franchises.
(b) The channel capacity of the System and the signals carried and
delivered by the System and their respective positioning, are listed in Schedule
5.15(b). Seller has the legal right and authority, including, without limitation
all necessary authorizations and licenses from the FCC, to carry and to continue
to carry and use in the conduct of the business of the System all signals now
being carried by the System. Except as disclosed in Schedule 5.15(b), no written
notices or demands have been received by Seller from the FCC, any television
station, or any other person, company, station, governmental agency or unit
claiming to have a claim or objection challenging the right of Seller to carry
or deliver any signal now carried or delivered by Seller. As of the date hereof,
no administrative or judicial proceeding involving the right to carry and
deliver such signals has been commenced and, to the knowledge of Seller, no such
proceeding has been threatened, except for proceedings affecting the cable
television industry generally.
(c) Except as set forth in Schedule 5.15(c), all of the broadcast
signals carried by the System are carried pursuant to the must-carry provisions
of Section 614 of the Cable Act of 1992 and the regulations promulgated
thereunder and no broadcasting station has requested its consent to the re-
transmission of its signal by the System in accordance with Section 325 of the
Communications Act of 1934, as amended, and the regulations promulgated
thereunder. Schedule 5.15(c) shall describe
25
<PAGE>
the parties to the retransmission consent agreements, if any. All of the
broadcast television signals entitled to be carried pursuant to said must-carry
provisions are in fact carried by the System. All such signals are positioned as
required by applicable law and regulation.
5.16 Additional Information Regarding the System.
-------------------------------------------
(a) As of the date hereof, the System consists of approximately 258
linear miles of plant and there are no fewer than 31,800 single family houses
and residential dwelling units (each of which can be serviced by the System by
using no more than 150 feet of drop cable) passed by the System. To the extent
any provisions of the Franchises require the extension or building of additional
cable plant, Seller is in compliance in all material respects with such
provisions and will continue to be in compliance in all material respects
through the Closing Date.
(b) Schedule 5.16(b) sets forth, with respect to the System, as of
the date hereof, a description of the basic cable service ("Basic Service") and
all tiers of Cable Programming Service, as defined in the Cable Act of 1992
(each a "Tier Service"), all a la carte services and all video programming
offered by the System on a per channel basis ("Pay or Premium Channels"), the
regular basic monthly subscription rate for Basic Service to a single household
subscriber (the "Basic Rate") the regular monthly subscription rate for each of
the Tier Services (the "Tier Rates", or individually, a "Tier Rate"), and a list
of the regular monthly subscription rates for each Pay or Premium Channel, and
the installation rates and charges for equipment and services other than those
specified in this subsection.
(c) As of May 31, 1996, the number of Equivalent Basic Subscribers
is approximately 18,398.
(d) As of May 31, 1996, the number of Tier Subscribers is
approximately: 17,729. The aggregate of the number of subscribers to the Tier
Services constitutes the Tier Units. No Cable Programming Service which was
offered as part of a tier of programming services on October 5, 1992 is
currently being offered other than as part of Basic Service or a Tier Service.
(e) As of May 31, 1996, the number of Pay Units is approximately
12,702. No Pay Unit was heretofore offered as part of a tier of cable
programming.
(f) The rates presently being charged for Basic Service and for
each of the Tier Services set forth in Schedule 5.16(b), to the best of Seller's
knowledge (after review and
26
<PAGE>
consideration of all applicable FCC rules and regulations, reasonable inquiry
and due care in calculating such rates and diligent review and good faith
consideration of any notices received from any Franchising Authority, state or
other regulatory authority or the FCC), are in compliance with and do not exceed
rates for such services permitted by the Cable Act of 1992 and the Report and
Order and Further Notice of Proposed Rulemaking adopted by the FCC on April 1,
1993 and released on May 3, 1993, and by subsequent reports and orders and/or
notices of further rulemaking of the FCC adopted after April 1, 1993. Except as
set forth in Schedule 5.16, Seller has not received any notice that it has any
obligation or liability to rollback the rates charged by the System for any
services offered to subscribers or refund any portion of the revenue received by
it from the subscribers of the System.
(g) The rates charged subscribers for equipment, installation and
other services other than for Basic Service, Tier Service or for any Pay Service
set forth in Schedule 5.16(b), to the best of Seller's knowledge after review
and consideration of all applicable FCC rules and regulations, reasonable
inquiry and due care in calculating such rates and diligent review and good
faith consideration of any notices received from any Franchising Authority,
state or other regulatory authority or the FCC), are not in excess of that
permitted by the Cable Act of 1992 and all applicable rules and regulations of
the FCC. Except as set forth in Schedule 5.16, Seller has not received any
notice that it has any obligation or liability to rollback the rates charged by
the System for any services offered to subscribers or refund any portion of the
revenue received by it from the subscribers of the System.
5.17 Copyright Filings.
-----------------
(a) Except as set forth in Schedule 5.17, Seller has recorded or
deposited with and paid to the United States Copyright Office all notices,
statements of account, royalty fees, supplemental royalties and other documents,
instruments and sums required under the Copyright Act with respect to the System
for all periods prior to the Closing Date including, without limitation, all
copyright fees which may be required in respect of events occurring or for
periods of time prior to the Closing Date in accordance with the decision in
Cablevision vs. M.P.A.A., and Seller is otherwise in compliance in all material
- ------------------------
respects with the Copyright Act and all applicable rules and regulations of
27
<PAGE>
the Copyright Office. True and correct copies of filings with the United States
Copyright Office for periods from January 1, 1993 to the date hereof have been
delivered to Buyer.
(b) The System complies in all material respects with the Copyright
Act. In connection with the System, the Seller is entitled to hold and does now
hold the compulsory copyright license described in Section 111 of the Copyright
Act, which compulsory copyright license is in full force and effect and has not
been revoked, cancelled, encumbered or materially adversely affected in any
manner.
(c) The carriage, transmission or use of the signals of the System
has not subjected and does not subject the System or the Seller to any FCC or
other sanctions or any suits or actions, including, without limitation, suits or
actions for copyright infringement, except those that may be applicable to the
cable television industry generally.
5.18 Franchise Fees Certifications. Seller has paid all required
-----------------------------
franchise fees relating to the System. The current franchise fees are as set
forth in the Franchises. Schedule 5.18 lists each of the Franchising Authorities
which have filed the requisite certification with the FCC under Section 623
(a)(3) of the Cable Act of 1992 enabling it to regulate the rates for Basic
Service and Seller has no knowledge that any other of the Franchising
Authorities intend to commence such a proceeding or so file.
5.19 Pole Attachment Fees. Seller has paid all required pole attachment
--------------------
fees relating to the System. The current rates for such fees are as set forth in
Schedule 5.19 hereto.
5.20 Intangible Property. Seller possesses or has the right to use all
-------------------
intangible property necessary for use in the operation and conduct of the CATV
Business as presently conducted without any known conflict with the rights of
others. All licenses to use the intangible property of others are in full force
and effect and there is no default thereunder.
5.21 Insurance. Schedule 5.21 is a true and complete list of all
---------
performance bonds and letters of credit in force with respect to the System.
Seller has outstanding and in full force and effect on the date hereof, such
insurance as is customary and prudent for companies engaged in similar
businesses
28
<PAGE>
or required by any franchise, license, permit, contract, lease or other
arrangement or any applicable law or regulation. Schedule 5.21 sets forth an
accurate and complete list of all unresolved claims made against Seller and
relating to the System, or claims that Seller has reason to believe may be made
against it, with respect to matters believed by Seller to be insured against or
covered by any insurance or benefit policy or plan.
5.22 Finders' and Brokers' Fees. Seller has engaged Jones Financial
--------------------------
Group, Ltd. (the "Group") as its sole broker in connection with the transactions
contemplated by this Agreement. Seller acknowledges that it shall be solely
responsible for and shall hold Buyer harmless from and against the fees of the
Group and any other claim for finder's or brokerage commissions or fees incident
to or in connection with this transaction from any party claiming to have been
retained or promised payment by Seller or anyone on behalf of Seller.
5.23 Free Services and Discounts. Set forth on Schedule 5.24 is a list of
---------------------------
all free services and discounts provided by Seller in relation to the System and
the persons to whom such services or discounts are provided. If such free
service or discount is given pursuant to a written or oral agreement, specific
reference to such agreement is set forth on such Schedule 5.24 and such
agreement or a description thereof shall have been delivered to Buyer.
5.24 Environmental Matters.
---------------------
(a) For purposes of this Section 5.24, "Substances" are defined as
any pollutants; contaminants; and/or toxic or hazardous wastes, substances,
products, and chemicals of any kind (including, without limitation,
polychlorinated biphenyls (PCBs), petroleum and petroleum products, natural gas,
liquified natural, petroleum, and synthetic gas, asbestos, flammables,
explosives, radioactive materials and, radon) which are regulated or defined by
any Environmental Law, as hereinafter defined. An "Operating Site" is defined as
any real property, location or facility owned, operated, or leased at any time
by Seller or any predecessor or other Person on behalf of Seller in connection
with the operation of any of the Systems or the CATV Business. To the best of
Seller's knowledge after inquiry of Seller's employees responsible for
Environmental Law and Environmental Permit matters associated with the Seller,
the Operating Sites, the Systems and the CATV Business,
29
<PAGE>
except as set forth in Schedule 5.24(a):(i) there is and has been no treatment,
storage, disposal, handling, or release by Seller or any other Person of any
Substances at, on, under, or from any Operating Site except in compliance with
Environmental Laws; (ii) there is and has been no presence of Substances at, on
or under any Operating Site regardless of how the Substance or Substances came
to rest there except in compliance with Environmental Laws; (iii) no aboveground
or underground tanks, PCBs, urea formaldehyde, paint containing lead or mercury,
or asbestos-containing materials are or have been located at, on or under any
Operating Site which is a Purchased Asset; (iv) Seller has no notice of any
formal or informal action, demand, claim, notice, investigation, proceeding or
assertion by any governmental or regulatory agency or other Person
(collectively, "Claims") that Seller or a predecessor business, operator,
landowner or occupant may have any liability under any Environmental Laws or may
be a potentially responsible party in connection with the handling, treatment,
storage, release or disposal of any Substance at an Operating Site, or in
connection with the operation of the Systems or the CATV Business (or any
predecessor business thereof), and there are no pending or threatened Claims
related to any operating Site, the operation of the Systems or the CATV Business
(or predecessor business thereof), nor any reasonable basis for any Claims
against Seller or any predecessor owner of an Operating Site under any
Environmental Law arising from or related to any Operating Site, the operation
of the Systems or the CATV Business or predecessor business, (v) neither Seller
(or any predecessor to Seller) nor any Person acting on behalf of Seller (or any
predecessor to Seller) has released any other Person from any claims Seller or
any predecessor of Seller might have, or have had, for any matter relating to
the presence, handling, treatment, storage, disposal, or release of Substances
on any Operating Site or in connection with the Systems or the CATV Business;
(vi) no claim, lien or other encumbrance has been, or is, imposed on any of the
Purchased Assets, of any Operating Site, under any Environmental Laws; and (vii)
Seller has obtained all Environmental Permits, as hereinafter defined, and has
made all reports and notifications required under any Environmental laws and any
Environmental Permits in connection with the Systems, the CATV Business and
every Operating Site, and is in compliance in all respects with all applicable
Environmental Laws and Environmental Permits applying to the Systems, the CATV
Business or the Operating Sites. For the purposes of this Section 5.24, the
following definitions shall have the following meanings: (i) "Environmental Law"
shall mean any federal, state or local law, and any regulation, code, order and
requirement entered, promulgated or approved thereunder, relating to the
30
<PAGE>
environment, human health or safety, including, without limitation, emissions,
discharges, releases or threatened releases of Substances into the environment
or any activity involving Substances; and (ii) "Environmental Permits" shall
mean collectively permits, consents, licenses, approvals, registrations,
certifications and authorizations required under Environmental Laws.
(b) With respect to the Systems, Schedule 5.24(b) hereto contains a
list of all Environmental Permits and filings by Seller with, notifications and
reportings by Seller to, notices, requests for information, orders, directives
or correspondence to Seller from, complaints received by or asserted by, orders
issued by, agreements with, and reports to or by all governmental authorities
administering Environmental Laws, within three years prior to the date hereof,
including, without limitation, notice letters, inspection and investigation
reports, notices of exceedance or violation or possible or probable exceedance
or violation, notices of deficiency, audit reports, filings made, corrective or
response actions ordered or taken, and citations received by Seller.
(c) Schedule 5.24(c) contains a list of all external and internal
audits, investigations, and assessments which Seller has notice of regarding
actual or potential environmental conditions, obligations, liability and
Environmental Law or Environmental Permit compliance regarding or in connection
with the Seller, the Systems, and any Operating Site, including, but not limited
to any documents or material related to all samples taken, including the results
of analyses performed, at, on, under, or surrounding any Operating Site.
(d) Seller has provided Buyer with copies of all documents,
materials, information and reports listed in Schedules 5.24(b) and (c) in
Seller's possession or control.
5.25 Disclosure. None of this Agreement, the Financial Statements, the
----------
Post Agreement Financial Statements or other financial statements referred to
herein and reports of Seller referred to herein or in the Schedules hereto nor
any other document, schedule, certificate or instrument delivered to Buyer by or
on behalf of Seller in connection with the transactions contemplated by this
Agreement, contains any untrue statement of a material fact or any statement
which is misleading in any material respect, or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact (other than facts affecting the cable industry
generally) known to Seller which is materially adverse to the System or the CATV
Business, which has not been set forth or reflected in this Agreement, such
financial statements, reports, the Schedules hereto or in
31
<PAGE>
the other documents, certificates and instruments referred to herein and
delivered to Buyer by or on behalf of Seller in connection with the transactions
contemplated by this Agreement.
5.26 Marketing and Promotions Set forth on Schedule 5.26 is a complete
------------------------
and accurate description of(a) the marketing and promotional program(s)
currently in effect for the System and (b) the marketing and promotional
program(s) which Seller intends to implement with respect to the System during
the period from the date of this Agreement to the Outside Closing Date.
5.27 Purchased Assets. The Purchased Assets shall be in the same
----------------
condition at the Closing as at the date they were examined by Buyer, normal wear
and tear excepted. Risk of loss shall be upon Seller until the date of Closing.
The Purchased Assets to be conveyed, transferred and delivered hereunder
constitute all the assets (including but not limited to real property) of Seller
relating to the System, except for the Excluded Assets, and constitute all of
the assets necessary for, and used by Seller in, the operation of the System and
the CATV Business, except for replacement of assets and additions to and
subtractions of assets and substitutions therefor, all of which have occurred in
the ordinary course of business. Since their acquisition by Seller, the System
and the CATV Business have been operated in the ordinary course. Upon the sale,
assignment, transfer and delivery of the Purchased Assets to Buyer hereunder,
there will be vested in Buyer good and marketable title to the Purchased Assets,
free and clear of all Liens, except Liens for ad valorem taxes not yet due and
-- -------
payable and Permitted Liens.
ARTICLE 6
---------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller, as an inducement to Seller to
enter into this Agreement and to consummate the transactions contemplated hereby
and which representations and warranties shall survive the Closing, that:
32
<PAGE>
6.1 Organization. Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of New Jersey and has
all requisite power and authority to execute and deliver this Agreement and to
perform its obligations contemplated hereby.
6.2 Agreement. This Agreement constitutes the valid and binding
---------
obligation of Buyer enforceable against Buyer in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or similar laws from time to time in effect which
affect creditors' rights generally). The execution, delivery and performance of
this Agreement and the instruments to be delivered hereunder by Buyer have been
duly authorized by all necessary corporate action; and neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (a) violate any provisions of the Articles of Incorporation or By-
Laws of Buyer or (b) violate any judgment, order, injunction, decree or award
against or binding upon Buyer.
6.3 Litigation. There are no judgments entered against Buyer and no
----------
litigation is pending or, to the best of Buyer's knowledge, has been threatened
against Buyer which would prohibit Buyer from proceeding with the Closing of the
within transactions or would impede the performance of any obligation of Buyer
contemplated hereby.
6.4 No Brokers. All negotiations relating to this Agreement and the
----------
transactions contemplated hereby have been carried out without the intervention
of any person acting on behalf of Buyer in such manner as to give rise to any
valid claim for any commission or other fee against Buyer. Buyer acknowledges
that it shall be solely responsible for and shall hold Seller harmless from and
against any claim for finder's or brokerage commissions or fees incident to or
in connection with this transaction from any party claiming to have been
retained or promised payment by Buyer or anyone on behalf of Buyer.
33
<PAGE>
ARTILCE 7
---------
COVENANTS
---------
7.1 Access. Between the date hereof and the Closing Date, Seller shall
------
give Buyer's representatives, including without limitation, such advisors,
accountants, and attorneys as may be designated by Buyer, full access, during
normal business hours and upon reasonable notice, to all of the assets,
properties, books, records, agreements, and commitments of Seller relating to
the System, furnish Buyer's representatives during such period with all such
information concerning the affairs of the System as Buyer may reasonably
request; and cause its employees to cooperate with Buyer's representatives in
connection with their investigation of the Seller's assets, properties, books,
records, agreements, and commitments and other information concerning the
System; provided, however, that Buyer will hold in strict confidence any
documents or information concerning Seller so furnished, and, if the
transactions contemplated by this Agreement shall not be consummated, such
confidence shall be maintained and all such documents shall immediately
thereafter be returned to Seller. No such investigation by the representatives
of Buyer of the assets and other information concerning Seller's affairs shall
affect the continuing validity or effect of the representations and warranties
of Seller contained in the Agreement.
7.2 Non-disclosure. Except as required in connection with any
--------------
governmental or administrative proceedings relating to the transfer of the
Franchises, or except as otherwise required by law, both Seller and Buyer shall
not make any public disclosure of the terms and conditions of this Agreement.
The term "public disclosure" as used herein shall not mean any disclosure made
to Seller's or Buyer's lenders, directors, officers, shareholders or partners
and the financial and legal advisors of Buyer and Seller nor any disclosure made
for the purposes of obtaining any Required Consent nor any disclosure required
under the securities laws or by a governmental authority.
7.3 Conduct of Business. Between the date hereof and the Closing Date,
-------------------
(i) Seller shall conduct the business and operations of the System in the
ordinary course consistent with Seller's past practices and consistent in all
material respects with Seller's budget for such period delivered to Buyer, and
maintain all the Purchased Assets between the date hereof and the Closing Date
in a
34
<PAGE>
manner consistent with the continued accuracy, in all material respects, of the
representations and warranties of Seller contained in this Agreement from the
date hereof through the Closing Date (except for those representations and
warranties of Seller which are made as of a specific date); (ii) Seller shall
conduct the business and operations of the System in such manner that there
shall be no material degradation or deterioration in the quality of the System's
television channels or signals being transmitted; (iii) Seller shall not sell,
transfer, license, lease, assign or otherwise dispose of any of the Purchased
Assets without the prior written consent of Buyer other than in the ordinary
course of business in a manner consistent with the continued accuracy, in all
material respects, of the representations and warranties of Seller set forth
herein (except for those representations and warranties of Seller which are made
as of a specific date); (iv) Seller shall conduct the business and operations of
the System in such manner that there shall be no promotional activities,
rebates, free or discounted services or payments made on behalf of or to any
subscriber other than as set forth in Schedules 5.23 and 5.26 or as approved by
Buyer; (v) Seller will use commercially reasonable efforts to renew all Assumed
Contracts in the ordinary course on terms reasonably acceptable to Buyer; (vi)
Seller will not, without the consent of Buyer which will not be unreasonably
withheld or delayed, implement any rate change, retiering or repackaging of
cable television programming offered by the System; and (vii) Seller will not,
without the consent of Buyer, agree to carry any new television channel on the
System unless required to do so by applicable law.
7.4 Transfer, Renewal and Extension of Franchises and FCC Licenses.
--------------------------------------------------------------
(a) Promptly after the execution of this Agreement, Seller shall
use commercially reasonable efforts, and the Buyer shall cooperate with and
assist the Seller in all reasonable respects (including, without limitation,
attendance at Town, City and/or County Council or similar meetings and hearings
before local and state administrative bodies and filing and signing any and all
applications, statements or documents required), to obtain all requisite
consents, approvals and authorizations required to be received by or on the
part of Seller and Buyer for the transfer of the Franchises including, without
limitation, the Required Consents (or the issuance directly to Buyer of new
Franchises and new permits and licenses containing the same terms as the
existing Franchises). As used in this Agreement, the phrase "commercially
reasonable efforts" shall not be deemed to require a party to undertake
extraordinary measures, including the initiation or prosecution of legal
35
<PAGE>
proceedings or the payment of amounts in excess of normal and usual filing fees
and processing fees, if any; provided, however, that any action or payment
required by a Franchising Authority in connection with any consent, approval or
authorization required for the transfer of any Franchise, which action or
payment relates to Compliance with the terms of such Franchise, shall be taken
or made, as the case may be, by Seller. In respect of each Franchise which, as
of the date of this Agreement, has a remaining term of less than two years (the
"Designated Franchises"), Seller shall use its commercially reasonable efforts
and all due diligence, and the Buyer shall cooperate with and assist the Seller
in all reasonable respects, to have such Franchise renewed or extended for a
term of at least ten years on terms and conditions reasonably satisfactory to
Buyer and Seller, which terms and conditions shall be evaluated by Buyer and
Seller in the context of a ten year renewal of a typical, similarly situated
franchise.
(b) Seller agrees to keep Buyer informed of all meetings and
hearings (including, without limitation, Town, City and/or County Council or
similar meetings and hearings before local and state administrative bodies)
related to obtaining any consent, approval or authorization required to be
received by or on the part of Seller and Buyer for the transfer of any Franchise
or for the renewal or extension of any Designated Franchise, and Seller
acknowledges and agrees that Buyer shall have the right to participate in any
such meetings or hearings. Seller further agrees to furnish Buyer with prior
notice and copies of any filings or submissions related to the System made with
local, state or federal regulatory authorities.
(c) Without limiting any of the foregoing, promptly after the
execution of this Agreement, Seller will cooperate with Buyer with respect to
the signing and filing of any necessary applications with the FCC for approval
by the FCC of the transfer of any transferable licenses used in connection with
the operation of the System.
7.5 Other Agreements. Seller shall use commercially reasonable efforts
----------------
prior to the Closing Date to obtain assignments to Buyer of all Assumed
Contracts and other agreements, including without limitation, the Required
Consents (or the issuance of new such agreements directly with Buyer on terms at
least as favorable to Buyer as the present terms of said agreements and leases
as the same relate to Seller). Buyer shall have the right, with Seller's prior
approval, not to be unreasonably withheld, to communicate directly with the
contracting parties (other than Seller) to each
36
<PAGE>
of said agreements and leases, but the foregoing right of Buyer and the exercise
thereof shall not diminish Sellers obligation under this Section 7.5.
7.6 Capital Expenditures; Commitments. Between the date hereof and the
---------------------------------
Closing Date, without the prior written consent of Buyer, Seller shall not make
or enter into any agreement or other commitment relating to the System (i) other
than in the ordinary course of its business, and in any event (ii) that extends
beyond the Closing Date and provides an obligation on behalf of Seller in excess
of $25,000 for any one agreement or a commitment of $100,000 for all such
agreements and commitments in the aggregate.
7.7 Employees; Retirement Plans.
---------------------------
(a) Any employee benefit retirement plan for employees of any of
the System, including, without limitation, any plan which is subject to Title
IV or Part 3 of Subtitle B of Title 1 of ERISA (whether pension, profit sharing,
bonus, stock purchase or other plan) shall be the sole responsibility of Seller
without any liability of any kind to Buyer.
(b) As of the point in time immediately preceding the Closing Date,
Seller will terminate all of its employees engaged in the business or operations
of the System and Seller will advise such employees that in the event such
employees are hired by Buyer, Buyer shall have no responsibility for, and such
employees shall not be entitled to receive from Buyer, any sick leave, bonus,
severance, vacation time or other benefits which might have accrued or relate to
any period prior to the Closing Date, such obligations being and remaining
solely with Seller. At least 45 days prior to the Closing Date, Seller shall
provide Buyer with an updated Schedule 5.13 listing the names, current annual
salary or hourly rates and brief description or title of all employees of the
System. Buyer shall give Seller notice at least 30 days prior to the Closing
Date of the names of any such employees to whom Buyer does not plan to offer
employment as of the Closing Date; provided, however, that failure to timely
give such notice shall not give rise to any obligation of Buyer to offer
employment to any employee of the System and nothing set forth in this Section
7.7 shall be deemed to confer any rights on any third parties or create any
third party beneficiaries hereof.
37
<PAGE>
7.8 Further Assurances. Each of the parties hereto, subject to the
------------------
fulfillment at or before the Closing Date of each of the conditions to its
performance set forth herein or the waiver thereof, shall perform such further
acts and execute such documents as reasonably may be required to effectuate the
transactions contemplated hereby. Each of the parties hereto shall use
commercially reasonable efforts expeditiously to fulfill or to obtain the
fulfillment of the conditions set forth in Article 8 hereof.
7.9 Financial Statements. Within 60 days after the Closing Date, Seller
--------------------
shall deliver to Buyer unaudited financial statements (balance sheets and
statements of earnings) for the System covering the period up to and including
the Closing Date, certified as true and correct by the chief financial officer
of Seller.
7.10 Hart-Scott-Rodino. Within 30 days after the date of this Agreement,
-----------------
Seller and Buyer shall prepare and file proper premerger notification forms and
affidavits in compliance with the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "HSR Act"). If, following the filing of such forms, any
governmental authority shall challenge the transaction contemplated hereby, or
request additional filings or information, Seller and Buyer shall take all
reasonable steps to attempt to ascertain the nature of the challenge and, unless
otherwise agreed by the parties, to contest such challenge and to make or
provide such filings or information as may be required to permit the
transactions contemplated by this Agreement to be consummated.
7.11 Advertising Sales Accounts Receivable. On the Closing Date, Seller
-------------------------------------
will assign to Buyer, for purposes of collection only, all of Seller's accounts
receivable arising from the sale of advertising time on the System (the "Ad
Sales Accounts Receivable"). Buyer will collect the Ad Sales Accounts Receivable
as Seller's agent in the same manner and with the same diligence that Buyer uses
to collect its own accounts receivable for a period of 90 days from the Closing
Date (the "Collection Period"). Within ten (10) business days after the Closing
Date, Seller shall deliver to Buyer a complete and detailed statement of each Ad
Sales Account Receivable (the "Receivable Statement"). On the tenth business day
following the end of each monthly billing cycle during the Collection Period,
and on the tenth business day following the end of the Collection Period, Buyer
will remit to
38
<PAGE>
Seller collections received on account of the Ad Sales Accounts Receivable
during the preceding monthly billing cycle (net of commissions, if any, payable
to employees of the System with respect to such Ad Sales Accounts Receivable,
which shall be paid by Buyer from the amounts so collected) and will deliver to
Seller a monthly accounting of Ad Sales Accounts Receivable collected and
commissions paid. All amounts received by Buyer from any account debtor included
among the Ad Sales Accounts Receivable shall be applied first to the Ad Sales
Accounts Receivable. If, during the Collection Period, a dispute arises between
Buyer and an account debtor with respect to an account included among the Ad
Sales Accounts Receivable, Buyer may return that account to Seller for
collection. Buyer shall not have any obligation to make any claim or institute
any litigation or other proceeding against any account debtor for the collection
of any Ad Sales Accounts Receivable. At the conclusion of the Collection Period,
any remaining Ad Sales Accounts Receivable shall be reassigned to Seller and
thereafter Buyer shall have no further obligation with respect to the Ad Sales
Accounts Receivable.
7.12 Grant of License: Management Agreement. If the Closing shall occur
--------------------------------------
prior to the closing of the transaction contemplated by that certain Asset
Purchase Agreement of even date herewith among Buyer, Seller and Jones Growth
Partners II, L.P. (the "Yorba Linda Transaction"), Buyer shall grant to
Seller a license, on terms and conditions reasonably acceptable to Buyer and
Seller, to maintain and have reasonable access to the tangible personal property
of Seller included in the Excluded Assets at the real property included in the
Purchased Assets for a period not to exceed 90 days after the Closing Date. If
the Closing of the Yorba Linda Transaction shall occur prior to the Closing of
the transaction contemplated by this Agreement, then (I) Seller shall grant to
Buyer a license, on terms and conditions reasonably acceptable to Buyer and
Seller, to maintain and have reasonable access to the tangible personal property
included in the assets conveyed to Buyer in the Yorba Linda Transaction that are
located at the Real Property, and (ii) at Buyer's option, Seller shall continue
to operate the cable television system serving the communities in and around
Yorba Linda, California for Buyer's account, on terms and conditions reasonably
acceptable to Buyer and Seller .
7.13 Transitional Billing Services. Seller shall provide to Buyer, upon
-----------------------------
written request and at the cost of Buyer (which shall not exceed Seller's actual
costs), subscriber billing services
39
<PAGE>
("Transitional Billing Services") in connection with the System for a period of
up to 90 days following Closing to allow for conversion of existing billing
arrangements. Buyer shall notify Seller in writing at least 30 days prior to
Closing as to whether it desires Seller to provide Transitional Billing
Services. Each party shall cooperate with all reasonable requests by the other
in connection with the first billing cycle following Closing and the transition
of billing services to Buyer's billing provider.
7.14 Buyer Environmental Review.
--------------------------
(a) For the purposes of this Section 7.14, "Environmental Costs"
means the reasonably foreseeable costs to correct or amounts needed to reserve
for potential liability with respect to the Environmental Conditions identified
pursuant to this Section "Environmental Condition" means (i) the lack of any
Environmental Permits required for compliance with applicable Environmental
Laws, (ii) non-compliance with any applicable Environmental Laws, (iii) any
contamination of the environment (soil, sediments, air, surface water or
groundwater) or building materials with any Substances for which the Seller is
legally responsible under applicable Environmental Laws, (iv) the requirement to
compensate any Person injured by such contamination to the extent required by
applicable Environmental Law, and (v) any condition or circumstance indicating
that any of the matter represented and warranted in Section 5.24 hereof are not
true, accurate and correct or that it would no longer be possible for any such
warranties or representations to be given. "Environmental Costs" includes the
fees and expenses of professionals and consultants whose services are reasonably
required in connection with the foregoing. "Environmental Law", "Environmental
Permits" and "Substances" shall have the meanings set forth in Section 5.24(a).
(B) Buyer shall have the right within 90 days of the date hereof to
(i) conduct an assessment of the environmental, health and safety
characteristics, risks, compliance status and liabilities associated with the
Seller with respect to the Operating Sites (including surrounding areas), the
Systems and the CATV Business (Phase I), which Phase I shall be in form, scope,
substance, and depth reasonably satisfactory to Buyer, and be carried out by an
environmental consultant satisfactory to Buyer, and (ii) conduct such additional
Assessment as Buyer deems reasonably necessary including, without limitation,
through the collection and analysis of air, soil, water, and building materials
samples (Phase II).
40
<PAGE>
(c) Buyer shall arrange for the Phase I work and any Phase II work.
Promptly (within 5 business days) upon receipt of the written reports, Buyer
shall deliver copies to Seller. All costs, expenses and fees for the Phase I
work shall be shared equally between Buyer and Seller. All costs, expenses and
fees for any Phase II work shall be paid entirely by Buyer.
(d) The Seller shall cooperate with Buyer, the consultants and
their respective authorized representatives so that the Phase I work and any
Phase II work can be completed in an expeditious and efficient manner, by Seller
providing, among other things, access at reasonable times and upon reasonable
advance notice to Sites, files, records, and employees.
(e) Within ten business days following completion of the Phase I
work and any Phase II work and receipt of the last of the reports, Buyer shall
have the option of notifying Seller in writing of each Environmental Condition
and the corresponding estimated Environmental Costs. Within ten business days of
receiving such notice, Seller may dispute such Environmental Costs by notifying
Buyer in writing of such dispute detailing each area of dispute and the basis
for same. Should Seller in good faith dispute the Environmental Costs in Buyers
written notice, the parties shall urgently negotiate in good faith to resolve
the dispute, including through the use of an independent mutually agreed upon
environmental consultant. The costs, expenses and fees of any such consultant
shall be shared equally between Buyer and Seller.
(f) Buyer shall have the right to adjourn the Closing Date in order
to accommodate the time frames herein.
(g) If total aggregate Environmental Costs determined pursuant to
Section 7.14(e) are $50,000 or less, Seller shall remediate, correct or
otherwise address to Buyers satisfaction (such as through the establishment of
an escrow fund) all of the corresponding Environmental Conditions identified in
Buyer's notice pursuant to Section 7.14(e) prior to the Closing Date.
Notwithstanding the foregoing, Seller shall have no obligation under this
Section 7.14(g) to spend in excess of $50,000 to remediate, correct or otherwise
address any Environmental Conditions.
41
<PAGE>
ARTICLE 8
---------
CONDITIONS
----------
8.1 Buyer's Conditions. The obligations of Buyer to consummate the
------------------
transactions contemplated by this Agreement are subject to the fulfillment on or
before the Closing Date of the following conditions, any of which may be waived
in writing by Buyer:
(a) All Required Consents designated as material on Schedules
5.3(a) and 5.3(b) shall have been obtained. Each of the Designated Franchises
shall have been renewed for a term of not less than ten (10) years on terms
which are customary for renewals of similarly situated franchises of the same
duration in the southern California area.
(b) Seller shall have delivered all necessary instruments of
transfer, in form and substance reasonably satisfactory to Buyer, including,
without limitation, the Bill of Sale annexed hereto as Exhibit 2.3-A and the
Assignment and Assumption Agreement annexed hereto as Exhibit 2.3-B.
(c) All of the representations and warranties of Seller contained
in this Agreement or in any written statement, deed, exhibit, certificate,
schedule or other documents delivered pursuant hereto or in connection with the
transactions contemplated hereby (including, without limitation, the financial
statements referred to herein and the Schedules annexed hereto) shall be true
and correct in all material respects both on this date and, additionally, on and
as of the Closing Date, as if then made, except to the extent waived hereunder.
Seller shall have performed and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by it on or prior to the Closing Date, and Seller shall have
tendered to Buyer a certificate executed by a Vice President of Seller dated the
Closing Date, representing and certifying that the foregoing conditions have
been fulfilled.
(d) All documents required to be delivered by Seller hereunder,
including without limitation all conveyance documents and instruments delivered
by Seller, in connection with the transactions contemplated hereby shall be in
form and substance reasonably acceptable to Buyer's counsel, Leavy Rosensweig &
Hyman, 11 East 44th Street, New York, New York 10017.
(e) Seller shall have tendered to Buyer the opinion of Elizabeth M.
Steele, General Counsel for Seller, dated the Closing Date, in the form of
Exhibit 8.1 (e)-A hereto and the opinion of
42
<PAGE>
Cole Raywid & Braverman, FCC counsel for Seller, dated the Closing Date, in the
form of Exhibit 8.1(e)-B hereto.
(f) Seller shall have tendered all such additional instruments and
other documents as shall be reasonably necessary to consummate the transactions
contemplated by this Agreement.
(g) No action or proceeding shall be pending or, to the knowledge
of Seller or Buyer, threatened, against Seller before any court, governmental or
arbitration body seeking to restrain or prohibit or seeking damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby; and there shall be no Legal Proceedings (as defined in
Section 5.8 hereof), other than as described on Schedule 5.8, pending or
threatened which, either individually or in the aggregate, could materially
adversely affect the business, operations or financial condition of the System.
(h) Seller shall have executed and delivered to Buyer an agreement
not to compete with Buyer, in the form of Exhibit 8.1(h) hereto.
(i) Seller shall have tendered to Buyer duly executed satisfactions
of any and all liens, pledges, mortgages, security interests, or other
encumbrances and (but not in limitation) termination statements of any financing
statements with respect to the Purchased Assets.
(j) Between the date of this Agreement and the Closing Date, there
shall have been (i) no material adverse change in the System or their financial
condition, taken as a whole, other than (A) changes arising out of matters of a
general economic nature, (B) matters affecting the cable television industry
generally (including, without limitation, (y) competition arising from direct
broadcast satellite, MMDS or SMATV systems and (z) legislation, rulemaking or
regulation), or (C) the granting of a franchise to GTE by one or more of the
Franchising Authorities; and (ii) no material loss, damage, impairment,
confiscation or condemnation of any of the Purchased Assets that has not been
repaired or replaced to Buyer's reasonable satisfaction.
(k) All waiting periods under the HSR Act applicable to this
Agreement or the transaction contemplated hereby shall have expired or been
terminated.
(l) The downward adjustments to the Purchase Price made pursuant to
Section 3.3(a) of this Agreement, if any, shall not be greater than $1,674,634.
43
<PAGE>
(m) The closing of the Yorba Linda Transaction shall have occurred;
provided, however, that this condition shall expire (whether or not satisfied)
and shall no longer be a condition to Buyer's obligations hereunder after April
30, 1997.
(n) Buyer shall have received the Phase I report and any Phase II
report prepared pursuant to Sections 7.14(b) and (c).
(o) All Environmental Conditions identified in Buyer's notice
pursuant to Section 7.14(e) shall have been remediated, corrected or otherwise
addressed to Buyer's satisfaction (such as through the establishment of an
escrow fund) prior to the Closing Date. If Buyer shall waive the foregoing
condition and Closing shall occur, Seller shall spend, or pay to Buyer, a total
of $50,000 toward the Environmental Costs prior to or at the Closing, and Buyer
may pursue all of its rights against Seller, including under Sections 9.2(b) and
(c) of this Agreement, with respect to the costs, expenses and liabilities
associated with the balance of such Environmental Costs. No additional Assumed
Liabilities of Buyer shall be deemed or construed to have been created by any
waiver of the condition in this subsection (o), nor shall any such waiver alter
any rights or obligations of the parties provided for elsewhere in this
Agreement or otherwise.
8.2 Seller's Conditions. The obligations of Seller to consummate the
-------------------
transactions contemplated by this Agreement are subject to the fulfillment at or
before the Closing Date of the following conditions, any of which may be waived
in writing by Seller:
(a) All of the representations and warranties of Buyer contained in
this Agreement or in any written statement, certificate, schedule or other
document delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be true and correct in all material respects both on
this date and on the Closing Date as if then made except as and to the extent
waived hereunder. Buyer shall have performed and complied in all material
respects with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by Buyer prior to or on the Closing
Date, and Buyer shall have tendered to Seller a certificate executed by a duly
authorized officer of Buyer, dated the Closing Date, representing and certifying
to the fulfillment of the foregoing conditions.
44
<PAGE>
(b) Buyer shall have delivered to Seller the opinion of Leavy
Rosenweig & Hyman, Esqs., counsel for Buyer, dated the Closing Date, in the form
of Exhibit 8.2(b) hereto.
(c) Buyer shall have delivered to Seller the Purchase Price (as
adjusted) and shall have executed and delivered all closing documents required
hereunder.
(d) All documents of Buyer in connection with the transaction
contemplated hereby shall be in form and substance reasonably acceptable to
counsel for Seller.
(e) No action or proceeding shall be pending or, to the knowledge
of Seller or Buyer, threatened, against Buyer before any court, governmental or
arbitration body seeking to restrain or prohibit or seeking damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
(f) All waiting periods under the HSR Act applicable to this
Agreement or the transaction contemplated hereby shall have expired or been
terminated.
(g) The downward adjustment to the Purchase Price made pursuant to
Section 3.3(a) of this Agreement, if any, shall not be greater than $1,674,634.
(h) The closing of the Yorba Linda Transaction shall have occurred;
provided, however, that this condition shall expire (whether or not satisfied)
and shall no longer be a condition to Buyer's obligations hereunder after April
30, 1997.
ARTICLE 9
---------
INDEMNIFICATION
---------------
9.1 Survival of Representations. Warranties and Covenants. Subject
-----------------------------------------------------
only to the limitations set forth in the next sentence, all representations,
warranties, covenants and agreements contained in this Agreement and in any
document delivered in connection herewith shall be deemed continuing
representations, warranties, covenants and agreements. All representations and
warranties shall survive the Closing Date for a period ending on the date which
is one year after the Closing Date, except for representations and warranties
set forth in Sections 5.1 (Organization and Qualification of Seller) and 5.2
(Authorization of Seller), which shall survive indefinitely, and the
representations and warranties set forth in Sections 5.6 (Tax Matters), 5.9
(Employee Benefit Matters), 5.14 (Compliance
45
<PAGE>
with Legal Requirements), and 5.24 (Environmental Matters), which shall survive
for the period of the applicable statutes of limitations. If Closing occurs,
neither party shall have liability to the other (for indemnification or
otherwise) with respect to any representation or warranty unless, on or prior to
the end of the applicable survival period, such party is given notice of a claim
with respect thereto and specifying the factual basis of that claim in
reasonable detail to the extent then known to the claiming party.
9.2. Seller's Indemnity. Notwithstanding the Closing, and regardless of
------------------
any investigation made at any time by or on behalf of Buyer or any information
Buyer may have, Seller shall indemnify and hold Buyer, its affiliates, officers,
directors, employees, agents, and representatives, and any Person claiming by or
through any of them, as the case may be, harmless from and against any claims,
losses, liabilities, damages, Liens, penalties, costs, and expenses, including
but not limited to interest which may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and the cost to any Person making a claim or seeking
indemnification under this Agreement with respect to funds expended by such
Person by reason of the occurrence of any event with respect to which
indemnification is sought (collectively, "Losses"), arising out of or resulting
from:
(a) all actual or purported liabilities and obligations of Seller,
and all claims and demands made in respect thereof whether or not known or
asserted at or prior to the Closing (except the Assumed Liabilities), relating
to the System including, without limitation, the Excluded Liabilities;
(b) the operation of the System prior to the Closing Date;
(c) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Seller under this Agreement or any
document delivered in connection herewith; and
(d) any potential copyright liability arising from the performance,
exhibition or carriage of any music on the System prior to the Closing Date,
which indemnity shall survive for the applicable statute of limitations and
shall not be subject to the limitation set forth in Section 9.5; and
46
<PAGE>
(e) any order by any Franchising Authority, state or other
regulatory authority or the FCC, to refund or rebate any charges for services
rendered to subscribers prior to the Closing Date or any other amounts charged
to subscribers (including, without limitation, late fees) by the System prior to
the Closing Date, which indemnity shall survive for the applicable statute of
limitations and shall not be subject to the limitations set forth in Section
9.5.
If, by reason of the claim of any third party relating to any of the
matters subject to such indemnification, a Lien, attachment, garnishment, or
execution is placed or made upon any of the properties or assets owned or leased
by Buyer or any other indemnitee under this Section, in addition to any
indemnity obligation of Seller under this Section, Seller shall furnish a bond
sufficient to obtain the prompt release thereof within five days from receipt of
notice relating thereto.
9.3. Buyer's Indemnity. Notwithstanding the Closing, and regardless of
-----------------
any investigation made at any time by or on behalf of Seller or any information
Seller may have, Buyer shall indemnify and hold Seller, its affiliates,
officers, directors, employees, agents, and representatives, and any Person
claiming by or through any of them, as the case may be, from and against any
Losses arising out of or resulting from:
(a) the Assumed Liabilities; and
(b) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Buyer under this Agreement or any
Transaction Document.
9.4. Procedure for Indemnified Third Party Claim. Promptly after receipt
-------------------------------------------
by a party entitled to indemnification under this Agreement (the "Indemnitee")
of written notice of the assertion of any claim or the commencement of any
litigation or other legal proceeding ("Litigation") with respect to any matter
referred to in Sections 9.2 and 9.3, the Indemnitee shall give written notice
thereof to the party from whom indemnification is sought pursuant hereto (the
"Indemnitor") and thereafter shall keep the Indemnitor reasonably informed with
respect thereto. Failure of the Indemnitee to give the Indemnitor notice as
provided herein shall not relieve the Indemnitor of its obligations hereunder
unless the Indemnitee's failure to give the Indemnitor timely notice materially
limits or prejudices the Indemnitor's ability to defend, in which case such
failure of the Indemnitee to give the Indemnitor notice shall relieve the
Indemnitor of its indemnification obligations. In case any Litigation shall be
brought against any Indemnitee, the Indemnitor shall be entitled to
participate in such Litigation, such
47
<PAGE>
Litigation may not be settled by the Indemnitee without the consent of the
Indemnitor, and, at the request of the Indemnitee, the Indemnitor shall assume
the defense thereof with counsel mutually satisfactory to the Indemnitor and the
Indemnitee, at the Indemnitor's sole expense. If the Indemnitor and the
Indemnitee cannot agree on the choice of a single counsel, both the Indemnitor
and the lndemnitee shall have separate counsel at the Indemnitor's sole expense.
If the Indemnitor shall assume the defense of any Litigation, it shall not
settle the Litigation unless the settlement shall include as an unconditional
term thereof the giving by the claimant or the plaintiff a release of the
Indemnitee, satisfactory to the Indemnitee, from all liability with respect to
such Litigation.
9.5. Limitation on Indemnification. Notwithstanding anything else
-----------------------------
contained in this Section 9, Buyer shall not make a claim for indemnification
hereunder until the date on which Buyer's indemnification claims equal or exceed
$25,000 (the "Initial Indemnification Claim Date"). On and after the Initial
Indemnification Claim Date, Buyer may make a claim for indemnification with
respect to all claims then outstanding or thereafter arising.
9.6. Determination of Indemnification Amounts and Related Matters.
------------------------------------------------------------
(a) Amounts payable by the Indemnitor to the Indemnitee in respect
of any Losses under this Section 9 shall be payable by the Indemnitor as
incurred by the Indemnitee.
(b) In calculating amounts payable to an Indemnitee under this
Agreement, the amount of the indemnified Losses shall be "grossed-up" by the
amount of any increase in the Indemnitee's liability for Taxes resulting from
indemnification by the Indemnitor under this Agreement.
ARTICLE 10
----------
MISCELLANEOUS
-------------
10.1 Termination. This Agreement may be terminated and the transactions
-----------
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of Seller and Buyer;
48
<PAGE>
(b) at any time, by either Buyer or Seller if the other is in
material breach or default of its respective covenants, agreements, or other
obligations in this Agreement, or if any of the other's representations in this
Agreement are not true and accurate in all material respects when made or when
otherwise required by this Agreement to be true and accurate, except that the
party in breach or default shall be given notice by the other party and an
opportunity to begin and a reasonable period of time to diligently pursue a cure
before the other party shall terminate this Agreement;
(c) by either Buyer or Seller, upon written notice to the other, if
any of the conditions to its obligations set forth in Sections 8.1 and 8.2,
respectively, shall not have been satisfied on or before the Outside Closing
Date for any reason other than a material breach or default by such party of its
respective covenants, agreements, or other obligations hereunder, or any of its
representations herein not being true and accurate in all material respects when
made or when otherwise required by this Agreement to be true and accurate in all
material respects; or
(d) Without limitation, if on or prior to the Closing Date the
Purchased Assets shall suffer material loss or damage by fire or other casualty,
Buyer shall have the fight, at its election, to terminate this Agreement without
further liability on its part, or to waive such fight to terminate (but with
Buyer to receive all insurance proceeds paid or payable in connection therewith)
and to close under this Agreement.
1.02 Effect of Termination.
---------------------
(a) If the transactions contemplated by this Agreement are
terminated and abandoned as provided herein: (i) each party shall pay the costs
and expenses incurred by it in connection with this Agreement, and no party (or
any of its officers, directors, employees, agents, representatives, partners or
shareholders) shall be liable to any other party for any costs, expenses or
damages except as expressly specified herein; (ii) each party shall redeliver
all documents, work papers and other materials of the other party relating to
the transaction contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same; and (iii) neither party
hereto shall have any liability or further obligation to the other party to this
Agreement except (A) as stated in paragraph (ii) of this subsection, and (B) to
the extent applicable, as set forth in Section 10.2(b) below.
49
<PAGE>
(b) If both (i) this Agreement is terminated by one party pursuant
to subsection (b) of Section 10.1, and (ii) the other party shall be in breach
in a material respect of any of its representations and warranties made herein
or its covenants or agreements made herein, then the terminating party shall
have as its sole and exclusive remedy the right to seek monetary damages from
the other party.
10.3 Notices. All notices given hereunder shall be in writing and shall
-------
be effective if personally delivered or if sent by overnight mail or telecopier
(during business hours) followed by overnight mail, postage prepaid, addressed
to the appropriate party at the following addresses:
(a) If to Buyer to:
Century Communications Corp.
50 Locust Avenue
New Canaan, Connecticut 06840
Attention: Office of the President
Telecopier No.: (203) 966-9228
with a copy to:
David Z. Rosensweig, Esq.
Leavy Rosensweig & Hyman
11 East 44th Street
New York, New York 10017
Telecopier No.: (212) 983-2537
(b) If to Seller to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, CO 80112
Attention: President
Telecopier No.: (303) 790-0533
with a copy to:
Legal Department
Jones Intercable, INC.
9697 East Mineral Avenue
Englewood, CO 80112
Telecopier No.: (303) 799-1644
50
<PAGE>
(c) Any party hereto may change the address to which any notice
hereunder is to be sent to him by giving notice of such change of address as
provided in this Article.
10.4 Expenses. Buyer and Seller each shall pay their respective expenses
--------
and costs incurred or to be incurred by them in negotiating and preparing this
Agreement and in closing and carrying out the transaction contemplated by this
Agreement, including, without limitation, all of their attorneys' fees.
10.5 Assignability. This Agreement shall be personal to Seller and Buyer
-------------
and may not be assigned by either party without the written consent of the
other, except that Buyer may assign this Agreement and delegate its obligations
herein to a wholly-owned subsidiary or an entity in which it has a fifty (50%)
percent equity interest (all referred to as an "Affiliated Company") or to a
joint venture in which Buyer or an Affiliated Company is a joint venture or to
an entity acquiring all or substantially all of its assets or with or into which
it shall merge or consolidate. Except as otherwise expressly provided, the
provisions of this Agreement and any instruments related thereto shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns. No assignments of any rights as
permitted hereunder shall relieve the assignor of responsibility for any of its
obligations hereunder.
10.6 Pronouns, Plurals. All pronouns and any variations thereof shall be
----------------
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person, firm, or corporation may require. Plurals shall include
the singular.
10.7 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof; it
supersedes all written agreements and negotiations and oral understandings, if
any; and it may not be amended, supplemented, waived, discharged or terminated,
except by performance or by an instrument in writing signed by all of the
parties hereto.
51
<PAGE>
10.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Captions. The captions contained in this Agreement are for
--------
convenience of reference only and are not part of this Agreement.
10.10 Construction. No provision of this Agreement shall be interpreted
------------
against any party because such party or such party's representative drafted such
provision.
10.11 Reliance Upon Representation and Warranties. The delivery of
-------------------------------------------
documents, books and records by Seller to Buyer pursuant hereto or Schedules
annexed hereto or otherwise shall in no way diminish the effect of Buyers
reliance upon the representations and warranties made by Seller herein in
respect of Seller and the System. Seller hereby acknowledges and agrees that
Buyer is relying solely on such representations and warranties in purchasing the
assets of Seller pursuant hereto notwithstanding investigations or attempts to
verify the accuracy of such representations and warranties made by Buyer.
10.12 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
10.13 Waiver. Either Buyer or Seller may waive any provision, breach or
------
default of this Agreement, provided, however, no waiver of any provision, breach
or default hereunder shall be considered valid unless in writing and signed
the party giving such waiver, and no such waiver shall be deemed a waiver of
any other provision or any subsequent breach or default of the same or similar
nature.
[the remainder of this page has intentionally been left blank]
52
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the date first above written.
JONES INTERCABLE, INC.
By: /s/James B. O'Brien
--------------------
Name:
Title:
CENTURY COMMUNICATIONS CORP.
By:/s/Scott N. Schneider
---------------------
Name: Scott N. Schneider
Title: Senior Vice President and Treasurer
53
<PAGE>
Exhibit 2.2
Oxnard
------
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT, dated August 16, 1996 (the "Agreement"), between
Jones Intercable, Inc., a Colorado corporation, having its principal offices at
9697 E. Mineral Ave., Englewood, CO 80112 ("Seller"); and Century Communications
Corp., a New Jersey corporation, having its principal offices at 50 Locust
Avenue, New Canaan, Connecticut 06840 ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller currently owns and operates certain cable television
systems serving subscribers in the communities of Oxnard, Port Hueneme, certain
portions of unincorporated Ventura County, and the Port Hueneme Naval Battalion
(the "System"), which are operated pursuant to the Franchises listed and
described on Schedule 5.14(a) hereto; and
WHEREAS, Seller desires to sell to Buyer, and Buyer, in reliance upon the
representations and warranties of Seller, desires to purchase from Seller, all
of Seller's right, title and interest in and to substantially all of the assets,
property and business of Seller relating to the System and the operation of the
System (the "CATV Business") on the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties agree as follows:
<PAGE>
ARTICLE I
---------
DEFINITIONS
-----------
As used in this Agreement, the following terms, whether used in singular or
plural forms, shall have the following meanings:
"Affiliated Company" shall have the meaning set forth in Section 10.5
herein.
"Assignment and Assumption Agreement" means the assignment and assumption
agreement in the form attached hereto as Exhibit 2.3-B.
"Assumed Contracts" means the Franchises set forth on Schedule 5.14(a) and
the leases, agreements and contracts so designated on Schedules 5.7, 5.10 and
5.11(b).
"Assumed Liabilities" shall have the meaning set forth in Section 3.2
herein
"Basic Service" shall have the meaning set forth in Section 5.16 herein and
is listed and described in Schedule 5.16 hereto.
"Basic Rate" shall have the meaning set forth in Section 5.16 herein and is
listed and described in Schedule 5.16 hereto.
"Basic Subscriber" means a bona fide residential or commercial cable
television subscriber, i.e., first connections, but not a Bulk Subscriber, (l)
---
to whom a System has rendered Basic Service for at least one calendar month as
of the Closing Date, as reflected on the books of the System for such period;
(2) who has paid for at least one month of Basic Service at the full Basic Rate;
and (3) who owes no part of any service charge then in effect that has been due
for more than 60 days from the first day of the period to which the service
charge relates as reflected on the books of the System
2
<PAGE>
(provided that a subscriber's account shall not be considered past due as a
result of unpaid amounts not exceeding $10.00 in respect of(A) customary late
charges imposed by the System and/or (B) bona fide disputed amounts).
"Bill of Sale" means the bill of sale in the form attached hereto as
Exhibit 2.3-A.
"Bulk Subscriber' means bulk commercial subscribers, such as apartment
houses, motels, nursing homes or hospitals, which are bona fide cable television
subscribers, i.e., first connections, (l) to whom a System has rendered Basic
---
Service for at least one calendar month as of the Closing Date, as reflected on
the books of the System for such period; (2) who have paid for at least one
month of Basic or Tier Service; and (3) who owe no part of any service charge
then in effect that has been due for more than 60 days from the first day of the
period to which the service charge relates as reflected on the books of the
System. The term "Bulk Subscriber" is used in this Agreement only in the
definition of Equivalent Basic Subscriber and, for purposes thereof, shall not
include any bulk commercial subscribers in respect of which a written agreement
between Seller and the owner thereof is in effect, which agreement requires the
consent of such owner for the assignment thereof and which consent is not
obtained prior to the Closing Date.
"Cable Act of 1984" means the Cable Communications Policy Act of 1984, and
the rules and regulations promulgated thereunder.
"Cable Act of 1992" means the Cable Television Consumer Protection and
Competition Act of 1992, and the rules and regulations promulgated thereunder.
"CATV Business" shall have the meaning set forth in the second recital of
this Agreement.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Article 4 hereof.
3
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Copyright Act" means Title 17 of the United States Code, as amended, and
the rules and regulations promulgated thereunder.
"Designated Franchises" shall have the meaning set forth in Section 7.4 of
this Agreement.
"Equivalent Basic Subscribers" means, with respect to the System, that
number determined by adding (A) the number of Basic Subscribers of the System,
and (B) with respect to Bulk Subscribers, the number which results from dividing
(x) the aggregate billings for the last full billing period prior to the Closing
Date to Bulk Subscribers of the System for Basic Service and Tier Service, by
(y) $27.32.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, rules and regulations promulgated thereunder and published
interpretations with respect thereto.
"ERISA Affiliate" means any corporation, trade or business, whether or not
incorporated, which is from time to time a member of a controlled group or a
group under common control with Seller within the meaning of Section 4001(b)(1)
of ERISA or Section 414(b) or Section 414(c) of the Code.
"Excluded Assets" shall have the meaning set forth in Section 2.2 herein.
"Excluded Liabilities" shall have the meaning set forth in Section 3.2
herein.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
4
<PAGE>
"Financial Statements" shall have the meaning set forth in Section 5.4
hereof.
"Franchises" shall have the meaning set forth in Section 5.14(a) herein and
are listed and described in Schedule 5.14(a) hereto.
"Franchising Authority" shall have the meaning set forth in Section 5.14(a)
herein.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Consents" are referred to in Section 5.3(a) and are listed
and described in Schedule 5.3(a) hereto.
"Legal Proceedings" shall have the meaning set forth in Section 5.8 herein.
"Lien" means all debts, liabilities, obligations, taxes, claims, liens,
encumbrances or exceptions to or defects in title or other ownership interests
(including but not limited to reservations, rights of entry, possibilities of
reverter, encroachments, easements, rights-of-way, restrictive covenants,
leases, and licenses) of any kind, character or description, whether accrued,
absolute, contingent or otherwise, and whether or not reflected or reserved
against in the balance sheets, books of account or records of Seller.
"Non-Governmental Consents" are referred to in Section 5.3(b) and are
listed and described in Schedule 5.3(b) hereto.
"Operating Site" shall have the meaning set forth in Section 5.25 herein.
"Pay or Premium Channels" shall have the meaning set forth in Section 5.16
herein and are listed and described on Schedule 5.16 hereto.
5
<PAGE>
"Pay Units" means the aggregate number of bona fide subscriptions to pay or
premium television services, i.e., Home Box Office, Cinemax, Showtime, etc., in
respect of which (1) the System has rendered such pay or premium television
services for at least one calendar month as of the Closing Date, as reflected on
the books of the System for such period; (2) the Seller has been paid for at
least one month for such pay or premium television services at the full rate for
such pay or premium television services; and (3) the subscriber owes no part of
any service charge then in effect that has been due for more than 60 days from
the first day of the period to which the service charge relates, as reflected on
the books of the System (provided that a subscriber's account shall not be
considered past due as a result of unpaid amounts not exceeding $10.00 in
respect of (A) customary late charges imposed by the System and/or (B) bona fide
disputed amounts).
"Permitted Liens" shall have the meaning set forth in Section 5.10 herein.
"Person" means any person or entity, whether an individual, trustee,
corporation, general or limited partnership, joint venture, trust, business
association, unincorporated organization of any kind, firm, or governmental
agency or authority.
"Post Agreement Statements" shall have the meaning set forth in Section 5.4
herein.
"Purchase Price" shall have the meaning set forth in Section 3.1 herein.
"Purchased Assets" shall have the meaning set forth in Section 2.1 herein.
"Required Consents" means the Governmental Consents and the Non-
Governmental Consents.
"Substances" shall have the meaning set forth in Section 5.25 herein.
"System" shall have the meaning set forth in the first recital of this
Agreement.
6
<PAGE>
"Telecommunications Act of 1996" means the Telecommunications Act of 1996,
and the rules and regulations promulgated thereunder.
"Tier Rate" shall have the meaning set forth in Section 5.16 herein and is
listed and described in Schedule 5.16 hereto.
"Tier Service" shall have the meaning set forth in Section 5.16 herein and
is listed and described in Schedule 5.16 hereto.
"Tier Subscriber" means a bona fide cable television subscriber to the
System who is a Basic Subscriber (1) who has subscribed to and to whom the
System has rendered service of one of the Tier Services for at least one
calendar month as of the Closing Date, as reflected on the books of the System
for such period; (2) has paid in full for at least one month for the particular
Tier Service at the full Tier Rate; and (3) owes no part of any service charge
then in effect that has been due for more than 60 days from the first day to
which the service charge relates, as reflected on the books of the System
(provided that a subscriber's account shall not be considered past due as a
result of unpaid amounts not exceeding $10.00 in respect of (A) customary late
charges imposed by the System and/or (B) bona fide disputed amounts).
7
<PAGE>
ARTICLE 2
---------
PURCHASE AND SALE
-----------------
2.1 Purchase and Sale of Assets. Seller agrees to sell, assign, transfer,
---------------------------
convey, grant and deliver to Buyer, and Buyer agrees to purchase from Seller,
(i) all of Sellers right, title and interest in and to the System and the CATV
Business as an ongoing concern, and (ii) all right, rifle, interest and benefit,
of whatever kind and nature, real, personal and mixed, tangible and intangible,
whether or not reflected on Seller's books and records, known or unknown,
accrued, absolute, contingent or otherwise, in and to the assets, properties and
fights with respect to the System and the operation thereof and the CATV
Business, wherever situated, all as the same exist on the Closing Date, as set
forth in this Agreement (which shall include all such assets as they presently
exist and are used in the normal operation of the System from the date hereof
through the Closing Date)(the "Purchased Assets"), including, without
limitation, (a) all subscriber records and other books and records relating to
or applicable to the operation of the System, (b) all franchises, permits,
filings with all governmental agencies, licenses, FCC radio station licenses and
microwave relay agreements relating to the System, (c) leases of real and
personal property, easements, rights-of-way, pole attachment agreements,
subscriber agreements including bulk subscriber agreements, retransmission
agreements and the other agreements relating to the System and specifically
assumed by Buyer hereunder and pursuant to the Assignment and Assumption
Agreement; (d) all plant, improvements, headends, towers, antennas, cable and
strand relating to the System; (e) all inventory and equipment associated with
receiving and distributing signals at the headend site and all other antenna and
down leads, all electronic equipment, towers, poles, head end amplifiers and
associated equipment, line amplifiers, aerial and underground trunk and feeder
line cable, housedrops, local origination equipment, test equipment, machinery,
converter boxes and other personal property relating to the System; (f) all
vehicles and all construction equipment relating to the System; (g) all drawings
and blueprints of or relating to the System; and (h) all real property and real
property interests relating to the System. The Purchased Assets shall be
delivered on the Closing Date, free and clear of and
8
<PAGE>
expressly excluding all Liens (other than Permitted Liens and Liens for ad
--
valorem taxes not yet due and payable).
- -------
2.2 Excluded Assets. Anything in the foregoing to the contrary
---------------
notwithstanding, there shall be excluded from the Purchased Assets (i) copies of
tax returns and other documents relating to the System which Seller is required
by law to keep in its possession, copies of which will be promptly furnished by
Seller to and at the reasonable request of the Buyer for a period of three years
after the Closing Date; (ii) all books or records of Seller which pertain to the
accounting and tax aspects of the Seller prior to the Closing Date, and which do
not relate to the operation of the System; (iii) Seller's cash on hand as of the
Closing Date and all other cash in any of Seller's bank deposits as well as
certificates of deposit with various banking institutions; (iv) all documents
relating to the legal existence and internal corporate matters of Seller, (v)
all agreements other than the Assumed Contracts; (vi) all assets, properties and
rights of Seller not related to the System; (vii) any and all insurance
policies, construction and performance bonds, intercompany receivables with
respect to any Affiliated Company, letters of credit or other similar items and
any cash surrender value in regard thereto; (viii) all programming agreements
except programming agreements that relate solely to the System, all of which are
set forth on Schedule 5.7 hereto; any retransmission consent agreements relating
to the broadcast signals carried by the System (the "Broadcast Contracts") to
the extent such Broadcast Contracts also relate to broadcast signals that are
carried by cable television systems other than the System; (ix) any claims,
rights and interests in and to any refunds of federal, state or local franchise,
income, property or other taxes or fees and all other claims relating to periods
prior to the Closing Date, except to the extent such claims relate to the
Assumed Liabilities; (x) the trademarks, trade names, service marks and all
other information and similar intangible assets relating to Seller or the
System, except that Seller shall grant to Buyer a royalty free license to use
such names and marks for a period of ninety (90) days following the Closing; and
(xi) the rights, assets and properties described on Schedule 2.2, if any
(collectively, the "Excluded Assets").
9
<PAGE>
2.3 Instruments of Transfer. etc . At the Closing, Seller will deliver to
-----------------------
Buyer (i) such deeds, bills of sale, endorsements, assignments, and other good
and sufficient instruments of sale, transfer and conveyance as shall be
effective to vest in Buyer all right, title, interest and benefit, including all
of Sellers right, title, interest and benefit, in and to the Purchase Assets,
including, without limiting the generality of the foregoing, the Bill of Sale in
the form of Exhibit 2.3-A and the Assignment and Assumption Agreement in the
form of Exhibit 2.3-B hereto, (ii) the Assumed Contracts and all other
instruments, books, records (except the books and records described in Section
2.2(i), (ii) and (iv) hereof), and other data relating to the Purchased Assets
and the business and operations of the System and (iii) all instruments,
certificates and other documents as set forth in Section 8.1 hereof. Upon
Closing, Buyer shall be entitled to have actual possession and control of the
Purchased Assets and the System effective upon the close of business on the
Closing Date.
ARTICLE 3
---------
PURCHASE PRICE: PAYMENTS: ADJUSTMENTS
-------------------------------------
3.1 Purchase Price. Subject to the terms and conditions of this Agreement,
--------------
Buyer shall pay to Seller for the Purchased Assets and the full performance by
Seller of all of its obligations hereunder and Seller shall accept therefor,
consideration in the sum of Seventy Million Five Hundred Seven Thousand Three
Hundred Fourteen ($70,507,314) Dollars (the "Purchase Price") payable as
follows: Buyer shall deliver to Seller, in immediately available funds, by wire
transfer (in accordance with written wire transfer instructions delivered to
Buyer by Seller not less than three (3) business days prior to the Closing)
against delivery of all instruments required to be delivered by Seller, the sum
of Seventy Million Five Hundred Seven Thousand Three Hundred Fourteen
($70,507,314) Dollars, subject to adjustment pursuant to Section 3.3.
3.2 Liabilities. On the Closing Date, Seller will assign, and Buyer will
-----------
assume, solely the following liabilities arising out of the operation of the
System: (i) all liabilities of Seller in respect of which a Purchase Price
adjustment in Buyer's favor is made pursuant to the prorations and adjustments
set forth in Section 3.3, (ii) all liabilities of Seller relating to the period
following the
10
<PAGE>
Closing under the Assumed Contracts, and (iii) liabilities, obligations and
commitments of Seller under contracts to provide service to customers of the
System; provided however, that the assumption by Buyer of liabilities,
obligations or commitments of Seller under clause (iii) shall not include the
satisfaction by Buyer of any liabilities, obligations or commitments of Seller
to the extent they relate to services, goods or other benefits received by
Seller prior to the Closing, other than the liabilities of Seller in respect of
which a Purchase Price adjustment in Buyer's favor is made pursuant to Section
3.3 hereof (collectively, the "Assumed Liabilities"). Except as set forth above,
Buyer will not assume any liabilities or obligations of Seller (the "Excluded
Liabilities").
3.3 Proration and Adjustments to Purchase Price.
-------------------------------------------
(a) The Purchase Price shall be reduced by the greater of the
Subscriber Adjustment Amount or the Revenue Adjustment Amount (if both are
positive numbers). The Subscriber Adjustment Amount shall be an amount equal to
$1,808 multiplied by the number, if any, of Equivalent Basic Subscribers of the
System less than 39,000 as of the Closing Date. The Revenue Adjustment shall be
an amount equal to 4.15 multiplied by the amount, if any, by which the System's
Annualized Gross Revenues as of the Closing Date are less than $17,000,000 and
shall be made in accordance with generally accepted accounting principles
applied on a consistent basis. The System's Annualized Gross Revenues shall be
an amount equal to the System's aggregate gross revenues for the three full
calendar months prior to the Closing Date (the "Revenue Measurement Period")
multiplied by four. If the aggregate number of Equivalent Basic Subscribers of
the System is less than 39,000 as of the Closing Date but the System's
Annualized Gross Revenues as of the Closing Date exceed $17,000,000, Seller
shall be entitled to offset, dollar for dollar, the Subscriber Adjustment Amount
by the amount of the revenue overage based on the same adjustment factors. For
example, if the number of Equivalent Basic Subscribers of the System is 38,700
as of the Closing Date and the System's Annualized Gross Revenues as of the
Closing Date are $17,100,000, Seller would be entitled to offset the Subscriber
Adjustment Amount of $542,400 (300 x $1,808) by $415,000 (4.15 x $100,000).
(b) Prorations shall be made to reflect the principle that all
liabilities, expenses and income attributable to the System and the Purchased
Assets for the period on and prior to the close
11
<PAGE>
of business on the Closing Date are for the account of Seller, and all
liabilities, expenses and income attributable to the System and the Purchased
Assets for the period subsequent to the close of business on the Closing Date
are for the account of the Buyer, all as determined in accordance with GAAP.
Items to be prorated shall include, but shall not be limited to, prepaid assets
for which Buyer will receive a benefit following Closing, pole rents, franchise
fees, taxes (other than income taxes or those based on income, and other than
corporate or partnership franchise taxes), copyright royalty payments, fees and
payments under cable service agreements, power and utility fees and deposits,
rentals and other payments under leases and any payments or other incentives
provided by programmers. Such items shall be prorated as of the close of
business on the Closing Date, and the amount of such adjustment to which Buyer
or Seller is entitled shall be deducted from or added to the amount payable to
Seller pursuant to Section 3.1 hereof.
(c) Additionally, the Purchase Price shall be (x) increased by an
amount equal to 95% of Seller's subscriber accounts receivable relating to the
System and (y) reduced by (i) an amount equal to the sum of all obligations and
liabilities in respect to customers (including, without limitation, prepayments,
credit balances, deposits, and unamortized deferred discounts) and (ii) any
liabilities or other obligations of Seller relating to the System which have
matured on or prior to the Closing Date including, without limitation, accrued
taxes, accrued employee vacation pay, severance pay, sick pay, and other fringe
benefits, which Buyer becomes obligated to pay or pays, after the Closing, same
being deemed pro-rated 100% as the liability of Seller.
(d) A complete and detailed list of all such prorations and
adjustments shall be prepared by Seller. Buyer's representatives shall be
permitted (but not obligated) to participate in the preparation of said list,
with access to all books, records and other documents used in the preparation
thereof. Said list shall be delivered to Buyer not later than five (5) days
prior to the Closing, and subject to the provisions hereof relating to
resolution of a dispute concerning items on such list, and the respective
amounts, the party thereby obligated to pay shall pay the items on the Closing
Date by way of the appropriate adjustment to the Purchase Price. Any amounts of
such prorations and adjustments which cannot be determined on the Closing Date
shall be estimated by Seller and Buyer based upon the best available
information. Within 90 days following the Closing
12
<PAGE>
Date, such prorations and adjustments shall be adjusted by a cash payment by
Buyer or Seller to the other, as the case may be, reflecting transactions prior
to the Closing Date which were not included or which were estimated in the above
proration and adjustment list. In the event there is any dispute between Seller
and Buyer's representatives that cannot be resolved between them, such dispute
shall be referred to an independent accounting firm initially acceptable to
Seller and Buyer, whose decision shall be final, and whose fees and expenses
shall be borne equally by Seller and Buyer. Upon resolution, appropriate payment
shall be made in accordance with such resolution.
(e) If at any time after the date of this Agreement, but prior to the
Closing Date, Seller is ordered by any Franchising Authority, state or other
regulatory authority or the FCC (x) to rollback (i) the rates charged by the
System for services (including, without limitation, monthly service and
equipment and installation charges) offered to subscribers; or (ii) any other
amounts charged to subscribers (including, without limitation, late fees);
and/or (y) to refund or rebate any charges for services rendered to subscribers
or any other amounts charged to subscribers (including, without limitation, late
fees) by the System (the aggregate amount of any such refund or rebate as
applied to such subscribers is hereinafter referred to as the "Refund Amount"),
then:
(i) the System's Annualized Gross Revenues shall be calculated
pursuant to Section 3.3(a) as if such reduced rate(s) had been in
effect during the entire Revenue Measurement Period; and
(ii) the Purchase Price shall be reduced by the Refund Amount
except to the extent the Refund Amount has been paid prior to Closing.
Without the prior written consent of Buyer, which shall not be unreasonably
withheld, Seller shall not settle or compromise any such action, claim, suit or
proceeding to the extent that such settlement or compromise would have an
adverse effect on Buyer or the System after the Closing Date; provided, however,
that Seller shall not settle any such claim, suit or proceeding by agreeing to
reduce late fee charges below $4.50 or by giving credits to subscribers on a
prospective basis.
13
<PAGE>
3.4 Sales Taxes. Seller shall have the sole obligation for the payment of
-----------
any and all sales or other taxes due or which may become due in connection with
the transfer of the Purchased Assets to Buyer. Buyer shall reimburse Seller for
one-half of any such taxes paid.
3.5 Allocation of Purchase Price for Tax Purposes. Seller and Buyer agree
---------------------------------------------
to allocate the Purchase Price in accordance with the residual method described
in the regulations promulgated under Section 338(b)(5) of the Code. Any
valuation of non-publicly traded assets shall be determined by an independent
third-party appraiser chosen by the Buyer and reasonably acceptable to Seller.
The expense of any such appraisal shall be borne by the Buyer. Seller and Buyer
further agree to comply with all filing, notice and reporting requirements
described in Section 1060 of the Code.
ARTICLE 4
---------
CLOSING
-------
The Closing shall take place at 10:00 A.M. in the offices of Seller, or
such other place as the parties may agree, within 10 business days after the
date on which the parties have notified each other that the conditions set forth
in Sections 8.1 and 8.2 have been complied with (each party agreeing to notify
the other when such respective compliance has taken place) or such other date as
the parties shall mutually agree (the "Closing Date"). Notwithstanding the
foregoing, the parties agree to use their best efforts to close on (or as of)
the last business day of a calendar month and as of the last calendar day of
such month. In no event shall Closing take place later than June 30, 1997 (the
"Outside Closing Date").
14
<PAGE>
ARTICLE 5
---------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby (and which representations and warranties
shall survive the Closing in accordance with the provisions of Section 9.1
hereof), Seller represents and warrants to Buyer, that:
5.1 0rganization: Qualification. Seller is a corporation duly organized,
---------------------------
validly existing and in good standing under the laws of the State of Colorado,
and is duly qualified to do business and in good standing in the State of
California Seller has the requisite corporate power and authority to own, lease
and operate the Purchased Assets and to carry on the CATV Business as now being
conducted.
5.2 Authority Relative to this Agreement. Seller has the power and
------------------------------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by Seller and no other corporate proceedings on the part of
Seller are necessary to consummate the transactions so contemplated. Tiffs
Agreement has been duly and validly executed and delivered by Seller and,
assuming due and valid execution and delivery by Buyer, constitutes Seller's
legal, valid and binding agreement, enforceable in accordance with its terms,
except as such enforcement (a) may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally and (b) is
subject to the availability of equitable remedies as determined in the
discretion of the court before which a proceeding may be brought.
5.3 Consents and Approvals: No Violation.
------------------------------------
(a) Except as set forth in Schedule 5.3(a) hereto (the "Governmental
Consents"), there is no requirement applicable to Seller to make any filing with
or to obtain any permit, authorization, consent or approval of, any
governmental, regulatory or franchising authority as a
15
<PAGE>
condition to the lawful consummation by Seller of the sale of the System and the
CATV Business, including without limitation, the Purchased Assets, to Buyer
pursuant to this Agreement.
(b) Except as set forth in Schedule 5.3(b) hereto (the "Non-
Governmental Consents), and except for the Governmental Consents referenced in
Schedule 5.3(a) hereto, neither the execution, delivery nor performance of this
Agreement by Seller will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of Seller;, (ii) result in
a violation of or a default (or give rise to any right of termination,
cancellation or acceleration) under or require the consent of any third party
under any of the terms, conditions or provisions of any note, bond, mortgage
indenture, agreements relating to indebtedness, pole agreement, programming
agreement, real property, lease, contract, or other instrument or obligation to
which Seller is a party or by which it or any of its properties or assets are
bound, (iii) violate any order, writ, injunction or decree applicable to Seller
or any of the properties, assets, or business of Seller, including without
limitation, the System, or (iv) violate any law or regulation of any
jurisdiction as such law or regulation relates to Seller or any of the
properties, assets or business of Seller, including, without limitation, the
System.
5.4 Financial Statements. Seller has delivered to Buyer the following: (a)
--------------------
income statements and balance sheets for the System as of December 31, 1995, as
at and for the seven months then ended, on which Arthur Andersen LLP has
performed (or will perform, as described below) certain agreed upon procedures
reconciling the income statements and balance sheets for the System to the
consolidated income statement and balance sheet for Seller (the "1995 Financial
Statements"), and (b) income statements and balance sheets for the System as of
May 31, 1996, each as at and for the five months then ended, prepared by the
chief financial officer of Seller ("Interim Financial Statements"). The 1995
Financial Statements and the Interim Financial Statements are together referred
to as the "Financial Statements". The Financial Statements are complete in all
material respects and present fairly the results of operations and financial
condition of Seller and the System for the periods and as of the dates reflected
thereby, in accordance with GAAP, consistently applied with prior periods, with
no material difference between such statements and the financial records
maintained. Seller shall also deliver to Buyer, or cause to be delivered to
Buyer, (i) the
16
<PAGE>
financial statements (balance sheet and income statements) for each full
calendar month subsequent to May 31, 1996 and prior to the Closing, (ii) within
ninety (90) days following the date hereof, a report by Arthur Andersen LLP with
respect to the revenues of the System as at, and for the periods covered by the
1995 Financial Statements and the Interim Financial Statements, and (iii) a
capital budget analysis of the System as at, and for, the periods covered by the
1995 Financial Statements and the Interim Financial Statements and for each
calendar month subsequent to May 31, 1996 and prior to Closing (collectively,
the "Post Agreement Statements") and the financial statements referenced in
Section 7.9, and when delivered, these financial statements will be complete in
all material respects and present fairly the results of operations and financial
condition of the System for the periods and as of the dates reflected thereby,
in accordance with GAAP, consistently applied with prior periods, with no
material difference between such statements and the financial records
maintained.
5.5 Undisclosed Liabilities.
-----------------------
(a) All material liabilities and obligations of Seller relating to
the System which were incurred on or prior to December 31, 1995 and which under
GAAP were required to be reflected, accrued or reserved against in the Financial
Statements or notes thereto, are in fact so reflected, accrued or reserved
against therein. Except as set forth in Schedule 5.5 hereto, or otherwise
disclosed in this Agreement or reflected in the Financial Statements, Seller
does not have any liability or obligation relating to the System of any kind or
nature, secured or unsecured (whether absolute, accrued, contingent or
otherwise, and whether due or to become due and whether or not required under
GAAP to be reflected, accrued or reserved against in any of the Financial
Statements or notes thereto), other than liabilities and obligations which were
incurred after December 31, 1995 in the ordinary course of business and which
are not material to the business or financial condition of the System. Since
December 31, 1995, there has been no material adverse change in the business,
results of operations or financial condition of the System. The Post Agreement
Statements shall similarly reflect all liabilities and obligations of Seller
relating to the System required by GAAP to be set forth therein as of the dates
stated and as of the periods ending thereon.
(b) Since December 31, 1995, Seller has operated the System in the
ordinary course, consistent with past practice and with the budget for such
period previously delivered to Buyer, and
17
<PAGE>
has not entered into any transaction, contract or commitment relating to the
System other than in the ordinary course of its business. Without limiting the
foregoing, since December 31, 1995, Seller has not, with respect to the System:
(1) sold, transferred, leased or otherwise disposed of any
assets except for inventory and/or services sold in the ordinary course of
business; canceled or compromised any debt or claim except in the ordinary
course of business consistent with past practices; or waived, compromised or
released any right except in the ordinary course of business consistent with
past practices;
(2) suffered any damage, destruction or loss (whether or not
covered by insurance) that has materially affected the assets of the System, or
the CATV Business;
(3) had any actual or threatened employee strike, work stoppage,
slowdown or lockout;
(4) failed to replenish Seller's inventories and supplies in a
normal and customary manner consistent with prudent business practices
prevailing in the cable television industry, nor made any purchase, commitments
in excess of the normal, ordinary and usual requirements of Seller's business;
(5) except as disclosed in the Schedules to this Agreement,
suffered any change, event or condition which has materially and adversely
affected the condition of the System (financial or otherwise), or the
properties, assets, liabilities or business of the System;
(6) except as disclosed in the Schedules to this Agreement,
incurred any obligation or liability, absolute, contingent or otherwise, whether
due or to become due, except liabilities for trade or business obligations
incurred in the ordinary course of the System's business;
(7) created or assumed any mortgage, pledge, lien or encumbrance
upon any of the Purchased Assets that will survive the Closing;
(8) made any significant writedown of the value of any of the
Purchased Assets; nor
(9) made any general uniform increase in the compensation of the
employees of Seller or any increase in compensation payable to any consultant or
agent of Seller, other than in the ordinary course of business consistent with
past practices and other than to incent employees of the
18
<PAGE>
System to remain employees of the System through the Closing Date (provided that
Buyer shall have no obligation to make or continue to make any incentives or
similar payments after the Closing Date).
5.6 Tax Returns and Payment of Taxes.
--------------------------------
(a) Seller has properly prepared and timely filed all tax returns and
reports which it has been required to file with respect to the System, and all
taxes, interest and penalties of any kind shown as due thereon or required to be
paid with respect to any period covered by such returns, have been paid. As of
December 31, 1995, Seller had set up an adequate reserve on its books for, or
had fully paid and discharged, all taxes imposed on it with respect to the
System, which are due and payable and/or had accrued to December 31, 1995, and
Seller will continue to maintain adequate reserves for or pay and discharge all
taxes imposed on it with respect to the System, which are due and payable and/or
accruable through the Closing Date.
(b) Proper and accurate amounts have been withheld by Seller from
employees of the System for tax purposes in compliance with applicable laws and
paid over to the appropriate authorities.
(c) Except as set forth in Schedule 5.6, no claims are pending or, to
the Seller's knowledge, threatened against Seller for taxes, interest or
penalties, whether federal, state, local or foreign relating to the System or
the CATV Business; no tax examination of Seller is being conducted by federal,
state, local or foreign agents relating to the System or the CATV Business; and
there have been no extensions of any statutes of limitations with respect to any
federal, state, local or foreign tax relating to the System or the CATV
Business.
5.7 Certain Contracts and Arrangements. All contracts, agreements and
----------------------------------
employment agreements (written or oral) to which Seller is a party and which
relate solely to the System, other than those listed on Schedules 5.10, 5.11(b),
5.14(a) and 5.14(c) and other than (i) subscription agreements with individual
residential subscribers that may be canceled by Seller without penalty on not
more than 30 days notice, and (ii) other contracts and agreements not involving
either aggregate liabilities under all such contracts exceeding $15,000 or any
material non-monetary obligation, are listed in Schedule 5.7 hereto. Seller is
in possession of all pole attachment agreements necessary to operate the System,
and such pole attachment agreements are listed on Schedule 5.7, together with
the
19
<PAGE>
current rate of pole attachment fees in effect thereunder (which Seller shall
update prior to the Closing in the event such fees are modified). There is not,
under any of the agreements listed in Schedule 5.7, any violation, existing
default, event of default or other event which, with or without due notice or
lapse of time or both, would constitute a material default or event of default.
The contracts and agreements which are included in the Assumed Contracts are so
designated on such Schedule.
5.8 Litigation. Except as set forth in Schedule 5.8 hereto, there are no
----------
legal, administrative, arbitration or other proceedings or governmental
investigations pending or, to Seller's knowledge, threatened, which may affect
the System or Seller's ability to consume the transactions contemplated by this
Agreement. Included in the foregoing is any judgment, order, injunction, decree
or award (whether rendered by a court, administrative agency, or by arbitration
pursuant to a grievance or other procedure) that may affect the System or
Seller's ability to consummate the transactions contemplated by this Agreement
and which is unsatisfied or requires continuing compliance therewith (such
suits, actions, etc., and judgments, orders, etc., are hereinafter referred to
as "Legal Proceedings").
5.9 Employee Benefit Plans; ERISA; Labor Relations.
----------------------------------------------
(a) Except as set forth in Schedule 5.9(a) hereto, Seller has
complied, with respect to the System, in all material respects, with all
applicable laws relating to the employment of labor, including, without
limitation, ERISA, and those relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity and
the payment and withholding of taxes, including income and social security
taxes.
(b) With respect to the System, Seller (i) is not a party to any
contract, agreement or other commitment with any labor organization, and has not
agreed to recognize any union or other collective bargaining unit, nor has any
union or other collective bargaining unit been certified as representing any of
the System's employees, nor to the Seller's knowledge, has there been any effort
by the employees of the System to seek recognition of any union as the
collective bargaining agent, and (ii) has not experienced any strikes, work
stoppages, significant grievance proceedings or claims of unfair labor practices
filed, or to the knowledge of Seller threatened to be filed against Seller.
20
<PAGE>
(c) Except as set forth in Schedule 5.9(c), Seller does not maintain
or sponsor, nor is it required to make any contribution to, any formal or
informal pension, profit-sharing, thrift or other retirement plan, medical,
hospitalization, vision, dental, life, disability or other insurance or benefit
plan, deferred compensation, bonus, fringe benefit, savings or other incentive
plan, severance plan or other similar plan, agreement, arrangement or
understanding, whether or not such plan is or is intended to be subject to the
provisions of ERISA or qualified under Section 401(a) of the Code, including,
without limitation, an "employee benefit plan" within the meaning of Section
3(3) of ERISA, or any "multi-employer plan" within the meaning of Section 3(37)
of ERISA. Each employee pension benefit plan (as defined in Section 3(2) of
ERISA) maintained or sponsored by Seller, or to which Seller is required to
contribute, and which is intended to be qualified under Section 401(a) of the
Code, complies in all material respects, both as to form and operation, with the
applicable provisions of the Code and all other applicable laws, rules and
regulations. A favorable determination letter has been issued by the Internal
Revenue Service with respect to each such plan.
(d) Neither Seller nor any ERISA Affiliate has incurred any liability
to the Pension Benefit Guaranty Corporation ("PBGC") or any employee benefit
plan on account of any failure to meet the contribution requirements of any such
plan, minimum funding requirements or prohibited transactions under applicable
laws, termination of a single employer plan, partial or complete withdrawal
from a multi-employer plan, or the insolvency, reorganization or termination of
any multi-employer plan, and no event has occurred or conditions exist which
present a risk that any of such entities will incur any liabilities on account
of the foregoing circumstances.
5.10 Real Property. Schedule 5.10 hereto contains a description of the real
-------------
property owned by Seller and used in connection with the System (including all
buildings, improvements or structures located thereon, and interests in real
property such as easements, rights-of-way or similar authorizations which
require further payment or are otherwise material). Except as set forth in
Schedule 5.10, Seller has good and marketable fee simple title to all of the
real property owned by it and listed as such in Schedule 5.10, free and clear of
all Liens, other than for (a) taxes not yet due and payable, (b) easements,
rights-of-way, mineral rights reservations or other reservations and
restrictions which are either set forth in the deeds to such real property or
incurred in the ordinary course of business and which do not materially
interfere with the ordinary use of the property, (c) zoning
21
<PAGE>
restrictions, prohibitions, and other requirements imposed by any governmental
authority having jurisdiction over the property, and (d) public utility
easements of record (collectively, the "Permitted Liens"). The real property is
served by utilities and services necessary for the normal and intended use of
the real property by Seller and none of the improvements encroaches upon the
property of others. Schedule 5.10 sets forth all easements, highway, railroad
and canal crossing permits and other rights of ingress and egress ("Permits")
relating to the System. To the best of Seller's knowledge, Seller is not in
violation or default of any Permit. Seller is not aware of any easement or other
real property interest, other than those described on Schedule 5.10, that is
required, or that has been asserted by a governmental unit or a third party to
be required, to conduct the business or operations of the System as presently
conducted. Except as set forth in Schedule 5.10, the buildings and other
structures located on such real property are owned by Seller. The buildings and
other structures located on such real property owned by Seller, and the
operation thereof as now operated and maintained, comply in all material
respects with all applicable laws, rules or regulations. To Seller's knowledge,
said buildings and other structures are in good operating condition and repair,
ordinary wear and tear excepted, given the age of such properties and the uses
to which they are put. Except as set forth in Schedule 5.10, no condemnation of
any such real property has occurred, is pending or, to the Seller's knowledge,
threatened.
5.11 Title to Personal Property and Leases.
-------------------------------------
(a) Schedule 5.11 (a) lists all material items of tangible personal
property and assets (including all vehicles and a general description of the
physical plant, including head and trunk line and feeder cable, transmitting and
receiving equipment and other electronic equipment) owned by Seller and included
in the Purchased Assets. Except as set forth in Schedule 5.1l(a), Seller has
good and valid title to such properties owned by it, free and clear of all
Liens, except ad valorem taxes not yet due and payable. Said tangible personal
----------
properties are in good operating condition and repair, ordinary wear and tear
excepted, given the age of such properties and the use to which they are put.
(b) Schedule 5. 11 (b) contains a true and accurate description of
all real and all personal property leased by Seller and included in the
Purchased Assets setting forth (i) the names of the parties to the leases, (ii)
the expiration date of the leases, and (iii) a description of the property
leased. With respect to leases under which Seller is lessee, the property
described in such leases is
22
<PAGE>
presently used by Seller as lessee under the terms of such leases, and such
leases are in full force and effect. There is not, under any of the agreements
listed in Schedule 5.11(b), any violation, existing default, event of default or
other event which, with or without due notice or lapse of time or both, would
constitute a material default or event of default. The leases which are included
in the Assumed Contracts are so designated on such Schedule.
5.12 [Intentionally Omitted].
---------------------
5.13 Corporate and Personnel Data. Schedule 5.13 lists the names, current
----------------------------
annual salary or hourly rates and brief description or title of each person
employed by Seller within the System.
5.14 Franchises and Licenses; Compliance with Legal Requirements.
-----------------------------------------------------------
(a) Schedule 5.14(a) lists (a) all of the franchises applicable
to and pursuant to which Seller operates the System and that are required to be
obtained in order to operate the System (the "Franchises") and, with respect to
each Franchise, the relevant franchising authority (collectively, the
"Franchising Authorities") and the remaining term or duration of such Franchise;
(b) all licenses, permits and authorizations (other than the Franchises) granted
by any governmental unit or regulatory authority that are required to be
obtained in order to operate the System (the "Licenses"), all of which are
currently held by Seller; and (c) all fees required to be paid by Seller under
the Franchises and the Licenses. Seller is in compliance in all material
respects with the Franchises and the Licenses, and to Seller's knowledge is
otherwise in compliance with the Franchises and Licenses, and such Franchises
and Licenses are in full force and effect. Seller has not received any notice of
any violation by Seller or the System of any law, rule, regulation, ordinance,
order or judgment in effect.
(b) The operation of the System as currently conducted does not
violate or infringe any applicable law or regulation, including but not limited
to the Cable Act of 1984, the Cable Act of 1992 or the Telecommunications Act of
1996, other than violation(s) or infringement(s) which, individually or in the
aggregate, would not have a material adverse effect on the System, and to
Seller's knowledge the operation of the System does not otherwise violate or
infringe any such applicable law or regulation.
23
<PAGE>
(c) Seller is permitted under the Franchises and FCC rules,
regulations and orders and any other applicable law, rule or regulation to
distribute the transmissions (whether television, satellite, radio or otherwise)
of video programming or other information that the Seller makes available to
subscribers of the System and to utilize all carrier frequencies generated by
the operations of the System, and is licensed to operate all the facilities
required by law to be licensed, including without limitation any business radio
and any cable television relay service system being operated as part of the
System. Other than requests for network nonduplication and syndex protection and
as described on Schedule 5.14, no written requests have been received by Seller
during the three years preceding the date of this Agreement from the FCC, the
United States Copyright Office or any other Person challenging or questioning
the right of Seller's operation of the System and of any FCC-licensed or
registered facility used in conjunction with Seller's operation of the System.
(d) Seller has conducted all system and microwave performance
tests and all Cumulative Leakage Index ("CLI") related tests applicable to the
System. Seller has (i) maintained appropriate log books and other record keeping
which accurately and completely reflect in all material respects all results
required to be shown thereon; (ii) to the extent required by the rules and
regulations of the FCC, corrected any radiation leakage of the System required
to be corrected in connection with Seller's monitoring obligations under the
rules and regulations of the FCC or otherwise; and (iii) otherwise complied in
all material respects with all applicable CLI rules and regulations in
connection with the operation of the System.
(e) Seller has delivered or will deliver promptly after the date
hereof to Buyer complete and correct copies of all reports and filings for the
past three years made or filed pursuant to the 1984 Cable Act, the 1992 Cable
Act or FCC rules or regulations with respect to the System, including, without
limitation, FCC Forms 320, 328, 329, 393,395A, 1200, 1205, 1210, 1215, 1220,
1225, 1230 and 1240, including but not limited to copies of any complaints filed
with the FCC with respect to Seller's rates charged to such subscribers (to the
extent available to Seller), any other documentation supporting an exemption
from rate regulation and copies of any responses or requests for supplemental
information received from the FCC or any Franchising Authority. A request for
renewal has been timely filed under Section 626(a) of the 1984 Cable Act with
the proper governmental unit with respect to each Franchise of the System
expiring within 36 months of the date of this Agreement and true and correct
copies of such requests have been delivered to Buyer.
24
<PAGE>
(f) The System is being operated in compliance with the rules and
regulations of the FAA. Without limiting the generality of the foregoing, the
existing towers of the System are obstruction marked and lighted in accordance
with the rules and regulations of the FAA and FCC or are exempt from such
requirements. All required authorizations, including, but not limited to, Hazard
to Air Navigation determinations, for such towers have been issued by and
pursuant to the rules and regulations of the FAA.
5.15 System and Signal Carriage.
--------------------------
(a) The System provides cable television service for the cities
and surrounding communities as set forth on Schedule 5.14(a). Except as
described in Schedule 5.15(a), (i) no person or entity has engaged or is
presently engaging in, or to the knowledge of Seller, threatened to engage in,
any overbuild of any of the System, (ii) to the knowledge of Seller, after
independent inquiry having been made, there has not been any grant by any
governmental authority of a franchise or license to any person or entity to
operate or maintain a cable television system, or what is known as and by an
MMDS System in any of the geographic areas covered by the Franchises, (iii) to
the knowledge of Seller no governmental authority is considering or
contemplating any such grant, (iv) to the knowledge of Seller, after independent
inquiry having been made, no application by any person or entity has been made
to any governmental authority to operate or maintain a cable television service
in any of the geographic areas covered by the Franchises, and (v) to the
knowledge of Seller, no application of any person or entity has been made to any
governmental authority to operate or maintain an MMDS System in any of the
geographic areas covered by the Franchises.
(b) The channel capacity of the System and the signals carried
and delivered by the System and their respective positioning, are listed in
Schedule 5.15(b). Seller has the legal right and authority, including, without
limitation all necessary authorizations and licenses from the FCC, to carry and
to continue to carry and use in the conduct of the business of the System all
signals now being carried by the System. Except as disclosed in Schedule
5.15(b), no written notices or demands have been received by Seller from the
FCC, any television station, or any other person, company, station, governmental
agency or unit claiming to have a claim or objection challenging the right of
Seller to carry or deliver any signal now carried or delivered by Seller. As of
the date hereof, no administrative or judicial proceeding involving the right to
carry and deliver such signals has been
25
<PAGE>
commenced and, to the knowledge of Seller, no such proceeding has been
threatened, except for proceedings affecting the cable television industry
generally.
(c) Except as set forth in Schedule 5.15(c), all of the
broadcast signals carried by the System are carried pursuant to the must-carry
provisions of Section 614 of the Cable Act of 1992 and the regulations
promulgated thereunder and no broadcasting station has requested its consent to
the re-transmission of its signal by the System in accordance with Section 325
of the Communications Act of 1934, as amended, and the regulations promulgated
thereunder. Schedule 5.15(c) shall describe the parties to the retransmission
consent agreements, if any. All of the broadcast television signals entitled to
be carried pursuant to said must-carry provisions are in fact carried by the
System. All such signals are positioned as required by applicable law and
regulation.
5.16 Additional Information Regarding the System.
-------------------------------------------
(a) As of the date hereof, the System consists of approximately
385 linear miles of plant and there are no fewer than 54,000 single family
houses and residential dwelling units (each of which can be serviced by the
System by using no more than 150 feet of drop cable) passed by the System. To
the extent any provisions of the Franchises require the extension or building of
additional cable plant, Seller is in compliance in all material respects with
such provisions and will continue to be in compliance in all material respects
through the Closing Date.
(b) Schedule 5.16(b) sets forth, with respect to the System, as
of the date hereof, a description of the basic cable service ("Basic Service")
and all tiers of Cable Programming Service, as defined in the Cable Act of 1992
(each a "Tier Service"), all a la carte services and all video programming
offered by the System on a per channel basis ("Pay or Premium Channels"), the
regular basic monthly subscription rate for Basic Service to a single household
subscriber (the "Basic Rate") the regular monthly subscription rate for each of
the Tier Services (the "Tier Rates", or individually, a "Tier Rate"), and a list
of the regular monthly subscription rates for each Pay or Premium Channel, and
the installation rates and charges for equipment and services other than those
specified in this subsection.
(c) As of May 31, 1996, the number of Equivalent Basic
Subscribers is approximately 38,993.
26
<PAGE>
(d) As of May 31, 1996, the number of Tier Subscribers is
approximately:
(i) to Tier 1 Service: 31,226
(ii) to Tier 2 Service: 26,417,
The aggregate of the number of subscribers to the Tier Services constitutes the
Tier Units. No Cable Programming Service which was offered as part of a tier of
programming services on October 5, 1992 is currently being offered other than as
part of Basic Service or a Tier Service.
(e) As of May 31, 1996, The number of Pay Units is approximately
27,237. No Pay Unit was heretofore offered as part of a tier of cable
programming.
(f) The rates presently being charged for Basic Service and for
each of the Tier Services set forth in Schedule 5.16(b), to the best of Seller's
knowledge (after review and consideration of all applicable FCC rules and
regulations, reasonable inquiry and due care in calculating such rates and
diligent review and good faith consideration of any notices received from any
Franchising Authority, state or other regulatory authority or the FCC), are in
compliance with and do not exceed rates for such services permitted by the Cable
Act of 1992 and the Report and Order and Further Notice of Proposed Rulemaking
adopted by the FCC on April 1, 1993 and released on May 3, 1993, and by
subsequent reports and orders and/or notices of further rulemaking of the FCC
adopted after April 1, 1993. Except as set forth in Schedule 5.16, Seller has
not received any notice that it has any obligation or liability to rollback the
rates charged by the System for any services offered to subscribers or refund
any portion of the revenue received by it from the subscribers of the System.
(g) The rates charged subscribers for equipment, installation
and other services other than for Basic Service, Tier Service or for any Pay
Service set forth in Schedule 5.16(b), to the best of Seller's knowledge (after
review and consideration of all applicable FCC rules and regulations, reasonable
inquiry and due care in calculating such rates and diligent review and good
faith consideration of any notices received from any Franchising Authority,
state or other regulatory authority or the Fcc), are not in excess of that
permitted by the Cable Act of 1992 and all applicable rules and regulations of
the FCC. Except as set forth in Schedule 5.16, Seller has not received any
notice that it has any obligation or liability to rollback the rates charged by
the System for any services offered to subscribers or refund any portion of the
revenue received by it from the subscribers of the System.
27
<PAGE>
5.17 Copyright Filings
-----------------
(a) Except as set forth in Schedule 5.17, Seller has recorded or
deposited with and paid to the United States Copyright Office all notices,
statements of account, royalty fees, supplemental royalties and other documents,
instruments and sums required under the Copyright Act with respect to the System
for all periods prior to the Closing Date including, without limitation, all
copyright fees which may be required in respect of events occurring or for
periods of time prior to the Closing Date in accordance with the decision in
Cablevision vs. M.P.A.A., and Seller is otherwise in compliance in all material
- ------------------------
respects with the Copyright Act and all applicable rules and regulations of the
Copyright Office. True and correct copies of filings with the United States
Copyright Office for periods from January 1, 1993 to the date hereof have been
delivered to Buyer.
(b) The System complies in all material respects with the
Copyright Act. In connection with the System, the Seller is entitled to hold and
does now hold the compulsory copyright license described in Section 111 of the
Copyright Act, which compulsory copyright license is in full force and effect
and has not been revoked, cancelled, encumbered or materially adversely affected
in any manner.
(c) The carriage, transmission or use of the signals of the
System has not subjected and does not subject the System or the Seller to any
FCC or other sanctions or any suits or actions, including, without limitation,
suits or actions for copyright infringement, except those that may be applicable
to the cable television industry generally.
5.18 Franchise Fees Certifications. Seller has paid all required
-----------------------------
franchise fees relating to the System. The current franchise fees are as set
forth in the Franchises. Schedule 5.18 lists each of the Franchising Authorities
which have filed the requisite certification with the FCC under Section 623
(a)(3) of the Cable Act of 1992 enabling it to regulate the rates for Basic
Service and Seller has no knowledge that any other of the Franchising
Authorities intend to commence such a proceeding or so file.
5.19 Pole Attachment Fees. Seller has paid all required pole attachment
--------------------
fees relating to the System. The current rates for such fees are as set forth in
Schedule 5.19 hereto.
28
<PAGE>
5.20 Intangible Property. Seller possesses or has the right to use all
-------------------
intangible property necessary for use in the operation and conduct of the CATV
Business as presently conducted without any known conflict with the rights of
others. All licenses to use the intangible property of others are in full force
and effect and there is no default thereunder.
5.21 Insurance. Schedule 5.21 is a true and complete list of all
---------
performance bonds and letters of credit in force with respect to the System.
Seller has outstanding and in full force and effect on the date hereof, such
insurance as is customary and prudent for companies engaged in similar
businesses or required by any franchise, license, permit, contract, lease or
other arrangement or any applicable law or regulation. Schedule 5.21 sets forth
an accurate and complete list of all unresolved claims made against Seller and
relating to the System, or claims that Seller has reason to believe may be made
against it, with respect to matters believed by Seller to be insured against or
covered by any insurance or benefit policy or plan.
5.22 Finders' and Brokers' Fees. Seller has engaged Jones Financial
--------------------------
Group, Ltd. (the "Group") as its sole broker in connection with the transactions
contemplated by this Agreement. Seller acknowledges that it shall be solely
responsible for and shall hold Buyer harmless from and against the fees of the
Group and any other claim for finder's or brokerage commissions or fees incident
to or in connection with this transaction from any party claiming to have been
retained or promised payment by Seller or anyone on behalf of Seller.
5.23 Free Services and Discounts. Set forth on Schedule 5.23 is a list of
---------------------------
all free services and discounts provided by Seller in relation to the System and
the persons to whom such services or discounts are provided. If such free
service or discount is given pursuant to a written or oral agreement, specific
reference to such agreement is set forth on such Schedule 5.23 and such
agreement or a description thereof shall have been delivered to Buyer.
5.24 Environmental Matters.
---------------------
(a) For purposes of this Section 5.24, "Substances" are deemed
as any pollutants; contaminants; and/or toxic or hazardous wastes, substances,
products, and chemicals of any kind
29
<PAGE>
(including, without limitation, polychlorinated biphenyls (PCBs), petroleum and
petroleum products, natural gas, liquified natural, petroleum, and synthetic
gas, asbestos, flammables, explosives, radioactive materials and radon) which
are regulated or defined by any Environmental Law, as hereinafter defined. An
"Operating Site" is defined as any real property, location or facility owned,
operated, or leased at any time by Seller or any predecessor or other Person on
behalf of Seller in connection with the operation of any of the Systems or the
CATV Business. To the best of Seller's knowledge after inquiry of Seller's
employees responsible for Environmental Law and Environmental Permit matters
associated with the Seller, the Operating Sites, the Systems and the CATV
Business, except as set forth in Schedule 5.24(a):(i) there is and has been no
treatment, storage, disposal, handling, or release by Seller or any other Person
of any Substances at, on, under, or from any Operating Site except in compliance
with Environmental Laws; (ii) there is and has been no presence of Substances
at, on or under any Operating Site regardless of how the Substance or Substances
came to rest there except in compliance with Environmental Laws; (iii) no
aboveground or underground tanks, PCBs, urea formaldehyde, paint containing lead
or mercury, or asbestos-containing materials are or have been located at, on or
under any Operating Site which is a Purchased Asset; (iv) Seller has no notice
of any formal or informal action, demand, claim, notice, investigation,
proceeding or assertion by any governmental or regulatory agency or other Person
(collectively, "Claims") that Seller or a predecessor business, operator,
landowner or occupant may have any liability under any Environmental Laws or may
be a potentially responsible party in connection with the handling, treatment,
storage, release or disposal of any Substance at an Operating Site, or in
connection with the operation of the Systems or the CATV Business (or any
predecessor business thereof), and there are no pending or threatened Claims
related to any Operating Site, the operation of the Systems or the CATV Business
(or predecessor business thereof), nor any reasonable basis for any Claims
against Seller or any predecessor owner of an Operating Site under any
Environmental Law arising from or related to any Operating Site, the operation
of the Systems or the CATV Business or predecessor business, (v) neither Seller
(or any predecessor to Seller) nor any Person acting on behalf of Seller (or any
predecessor to Seller) has released any other Person from any claims Seller or
any predecessor of Seller might have, or have had, for any matter relating to
the presence, handling, treatment, storage, disposal, or release of Substances
on any Operating Site or in connection with the Systems or the CATV Business;
(vi) no claim, lien or other encumbrance has been, or is, imposed on any of the
30
<PAGE>
Purchased Assets, or any Operating Site, under any Environmental Laws; and (vii)
Seller has obtained all Environmental Permits, as hereinafter defined, and has
made all reports and notifications required under any Environmental Laws and any
Environmental Permits in connection with the Systems, the CATV Business and
every Operating Site, and is in compliance in all respects with all applicable
Environmental Laws and Environmental Permits applying to the Systems, the CATV
Business or the Operating Sites. For the purposes of this Section 5.24, the
following definitions shall have the following meanings: (i) "Environmental Law"
shall mean any federal, state or local law, and any regulation, code, order and
requirement entered, promulgated or approved thereunder, relating to the
environment, human health or safety, including, without limitation, emissions,
discharges, releases or threatened releases of Substances into the environment
or any activity involving Substances; and (ii) "Environmental Permits" shall
mean collectively permits, consents, licenses, approvals, registrations,
certifications and authorizations required under Environmental Laws.
(b) With respect to the Systems, Schedule 5.24(b) hereto contains a
list of all Environmental Permits and filings by Seller with, notifications and
reportings by Seller to, notices, requests for information, orders, directives
or correspondence to Seller from, complaints received by or asserted by, orders
issued by, agreements with, and reports to or by all governmental authorities
administering Environmental Laws, within three years prior to the date hereof,
including, without limitation, notice letters, inspection and investigation
reports, notices of exceedance or violation or possible or probable exceedance
or violation, notices of deficiency, audit reports, filings made, corrective or
response actions ordered or taken, and citations received by Seller.
(c) Schedule 5.24(c) contains a list of all external and
internal audits, investigations, and assessments which Seller has notice of
regarding actual or potential environmental conditions, obligations, liability
and Environmental Law or Environmental Permit compliance regarding or in
connection with the Seller, the Systems, and any Operating Site, including, but
not limited to any documents or material related to all samples taken, including
the results of analyses performed, at, on, under, or surrounding any Operating
Site.
(d) Seller has provided Buyer with copies of all documents,
materials, information and reports listed in Schedules 5.24(b) and (c) in
Sellers possession or control.
31
<PAGE>
5.25 Disclosure. None of this Agreement, the Financial Statements, the
----------
Post Agreement Financial Statements or other financial statements referred to
herein and reports of Seller referred to herein or in the Schedules hereto nor
any other document, schedule, certificate or instrument delivered to Buyer by or
on behalf of Seller in connection with the transactions contemplated by this
Agreement, contains any untrue statement of a material fact or any statement
which is misleading in any material respect, or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact (other than facts affecting the cable industry
generally) known to Seller which is materially adverse to the System or the CATV
Business, which has not been set forth or reflected in this Agreement, such
financial statements, reports, the Schedules hereto or in the other documents,
certificates and instruments referred to herein and delivered to Buyer by or on
behalf of Seller in connection with the transactions contemplated by this
Agreement.
5.26 Marketing and Promotions. Set forth on Schedule 5.26 is a complete
------------------------
and accurate description of(a) the marketing and promotional program(s)
currently in effect for the System and (b) the marketing and promotional
program(s) which Seller intends to implement with respect to the System during
the period from the date of this Agreement to the Outside Closing Date.
5.27 Purchased Assets. The Purchased Assets shall be in the same
----------------
condition at the Closing as at the date they were examined by Buyer, normal wear
and tear excepted. Risk of loss shall be upon Seller until the date of Closing.
The Purchased Assets to be conveyed, transferred and delivered hereunder
constitute all the assets (including but not limited to real property) of Seller
relating to the System, except for the Excluded Assets, and constitute all of
the assets necessary for, and used by Seller in, the operation of the System and
the CATV Business, except for replacement of assets and additions to and,
subtractions of assets and substitutions therefor, all of which have occurred in
the ordinary course of business. Since their acquisition by Seller, the System
and the CATV Business have been operated in the ordinary course. Upon the sale,
assignment, transfer and delivery of the Purchased Assets to Buyer hereunder,
there will be vested in Buyer good and marketable title to the Purchased Assets,
free and clear of all Liens, except Liens for ad valorem taxes not yet due and
-- -------
payable and Permitted Liens.
32
<PAGE>
ARTICLE 6
---------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller, as an inducement to Seller to
enter into this Agreement and to consummate the transactions contemplated
hereby and which representations and warranties shall survive the Closing, that:
6.1 Organization. Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of New Jersey and has
all requisite power and authority to execute and deliver this Agreement and to
perform its obligations contemplated hereby.
6.2 Agreement. This Agreement constitutes the valid and binding
---------
obligation of Buyer enforceable against Buyer in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or similar laws from time to time in effect which
affect creditors' rights generally). The execution, delivery and performance of
this Agreement and the instruments to be delivered hereunder by Buyer have been
duly authorized by all necessary corporate action; and neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (a) violate any provisions of the Articles of Incorporation or By-
Laws of Buyer or (b) violate any judgment, order, injunction, decree or award
against or binding upon Buyer.
6.3 Litigation. There are no judgments entered against Buyer and no
----------
litigation is pending or, to the best of Buyer's knowledge, has been threatened
against Buyer which would prohibit Buyer from proceeding with the Closing of the
within transactions or would impede the performance of any obligation of Buyer
contemplated hereby.
6.4 No Brokers. All negotiations relating to this Agreement and the
----------
transactions contemplated hereby have been carried out without the intervention
of any person acting on behalf of Buyer in such manner as to give rise to any
valid claim for any commission or other fee against Buyer. Buyer acknowledges
that it shall be solely responsible for and shall hold Seller harmless from
33
<PAGE>
and against any claim for finder's or brokerage commissions or fees incident to
or in connection with this transaction from any party claiming to have been
retained or promised payment by Buyer or anyone on behalf of Buyer.
ARTICLE 7
---------
COVENANTS
---------
7.1 Access. Between the date hereof and the Closing Date, Seller shall
------
give Buyer's representatives, including without limitation, such advisors,
accountants, and attorneys as may be designated by Buyer, full access, during
normal business hours and upon reasonable notice, to all of the assets,
properties, books, records, agreements, and commitments of Seller relating to
the System, furnish Buyer's representatives during such period with all such
information concerning the affairs of the System as Buyer may reasonably
request; and cause its employees to cooperate with Buyer's representatives in
connection with their investigation of the Seller's assets, properties, books,
records, agreements, and commitments and other information concerning the
System; provided, however, that Buyer will hold in strict confidence any
documents or information concerning Seller so furnished, and, if the
transactions contemplated by this Agreement shall not be consummated, such
confidence shall be maintained and all such documents shall immediately
thereafter be returned to Seller. No such investigation by the representatives
of Buyer of the assets and other information concerning Seller's affairs shall
affect the continuing validity or effect of the representations and warranties
of Seller contained in the Agreement.
7.2 Non-disclosure. Except as required in connection with any
--------------
governmental or administrative proceedings relating to the transfer of the
Franchises, or except as otherwise required by law, both Seller and Buyer shall
not make any public disclosure of the terms and conditions of this Agreement.
The term "public disclosure" as used herein shall not mean any disclosure made
to Seller's or Buyer's lenders, directors, officers, shareholders or partners
and the financial and legal advisors of Buyer and Seller nor any disclosure made
for the purposes of obtaining any Required Consent nor any disclosure required
under the securities laws or by a governmental authority.
34
<PAGE>
7.3 Conduct of Business. Between the date hereof and the Closing Date,
-------------------
(i) Seller shall conduct the business and operations of the System in the
ordinary course consistent with Seller's past practices and consistent in all
material respects with Seller's budget for such period delivered to Buyer, and
maintain all the Purchased Assets between the date hereof and the Closing Date
in a manner consistent with the continued accuracy, in all material respects, of
the representations and warranties of Seller contained in this Agreement from
the date hereof through the Closing Date (except for those representations and
warranties of Seller which are made as of a specific date); (ii) Seller shall
conduct the business and operations of the System in such manner that there
shall be no material degradation or deterioration in the quality of the System's
television channels or signals being transmitted; (iii) Seller shall not sell,
transfer, license, lease, assign or otherwise dispose of any of the Purchased
Assets without the prior written consent of Buyer other than in the ordinary
course of business in a manner consistent with the continued accuracy, in all
material respects, of the representations and warranties of Seller set forth
herein (except for those representations and warranties of Seller which are made
as of a specific date); (iv) Seller shall conduct the business and operations of
the System in such manner that there shall be no promotional activities,
rebates, free or discounted services or payments made on behalf of or to any
subscriber other than as set forth in Schedules 5.23 and 5.26 or as approved by
Buyer, (v) Seller will use commercially reasonable efforts to renew all Assumed
Contracts in the ordinary course on terms reasonably acceptable to Buyer; (vi)
Seller will not, without the consent of Buyer which will not be unreasonably
withheld or delayed, implement any rate change, retiering or repackaging of
cable television programming offered by the System; and (vii) Seller will not,
without the consent of Buyer, agree to carry any new television channel on the
System unless required to do so by applicable law.
7.4 Transfer. Renewal and Extension of Franchises and FCC Licenses.
--------------------------------------------------------------
(a) Promptly after the execution of this Agreement, Seller shall
use commercially reasonable efforts, and the Buyer shall cooperate with and
assist the Seller in all reasonable respects (including, without limitation,
attendance at Town, City and/or County Council or similar meetings and hearings
before local and state administrative bodies and filing and signing any and all
applications, statements or documents required), to obtain all requisite
consents, approvals and authorizations required to be received by or on the part
of Seller and Buyer for the transfer of the
35
<PAGE>
Franchises including, without limitation, the Required Consents (or the issuance
directly to Buyer of new Franchises and new permits and licenses containing the
same terms as the existing Franchises). As used in this Agreement, the phrase
"commercially reasonable efforts" shall not be deemed to require a party to
undertake extraordinary measures, including the initiation or prosecution of
legal proceedings or the payment of amounts in excess of normal and usual filing
fees and processing fees, if any; provided, however, that any action or payment
required by a Franchising Authority in connection with any consent, approval or
authorization required for the transfer of any Franchise, which action or
payment relates to compliance with the terms of such Franchise, shall be taken
or made, as the case may be, by Seller. In respect of each Franchise which, as
of the date of this Agreement, has a remaining term of less than two years (the
"Designated Franchises"), Seller shall use its commercially reasonable efforts
and all due diligence, and the Buyer shall cooperate with and assist the Seller
in all reasonable respects, to have such Franchise renewed or extended for a
term of at least ten years on terms and conditions reasonably satisfactory to
Buyer and Seller, which terms and conditions shall be evaluated by Buyer and
Seller in the context of a ten year renewal of a typical, similarly situated
franchise.
(b) Seller agrees to keep Buyer informed of all meetings and
hearings (including, without limitation, Town, City and/or County Council or
similar meetings and hearings before local and state administrative bodies)
related to obtaining any consent, approval or authorization required to be
received by or on the part of Seller and Buyer for the transfer of any Franchise
or for the renewal or extension of any Designated Franchise, and Seller
acknowledges and agrees that Buyer shall have the right to participate in any
such meetings or hearings. Seller further agrees to furnish Buyer with prior
notice and copies of any filings or submissions related to the System made with
local, state or federal regulatory authorities.
(C) Without limiting any of the foregoing, promptly after the
execution of this Agreement, Seller will cooperate with Buyer with respect to
the signing and filing of any necessary applications with the FCC for approval
by the FCC of the transfer of any transferable licenses used in connection with
the operation of the System.
7.5 Other Agreements. Seller shall use commercially reasonable efforts
----------------
prior to the Closing Date to obtain assignments to Buyer of all Assumed
Contracts and other agreements,
36
<PAGE>
including without limitation, the Required Consents (or the issuance of new such
agreements directly with Buyer on terms at least as favorable to Buyer as the
present terms of said agreements and leases as the same relate to Seller). Buyer
shall have the right, with Seller's prior approval, not to be unreasonably
withheld, to communicate directly with the contracting parties (other than
Seller) to each of said agreements and leases, but the foregoing right of Buyer
and the exercise thereof shall not diminish Seller's obligation under this
Section 7.5.
7.6 Capital Expenditures: Commitments. Between the date hereof and the
--------------------
Closing Date, without the prior written consent of Buyer, Seller shall not make
or enter into any agreement or other commitment relating to the System (i) other
than in the ordinary course of its business, and in any event (ii) that extends
beyond the Closing Date and provides an obligation on behalf of Seller in excess
of $25,000 for any one agreement or a commitment of $100,000 for all such
agreements and commitments in the aggregate.
7.7 Employees: Retirement Plans.
---------------------------
(a) Any employee benefit retirement plan for employees of any of
the System, including, without limitation, any plan which is subject to Title IV
or Part 3 of Subtitle B of Title 1 of ERISA (whether pension, profit sharing,
bonus, stock purchase or other plan) shall be the sole responsibility of Seller
without any liability of any kind to Buyer.
(b) As of the point in time immediately preceding the Closing Date,
Seller will terminate all of its employees engaged in the business or operations
of the System and Seller will advise such employees that in the event such
employees are hired by Buyer, Buyer shall have no responsibility for, and such
employees shall not be entitled to receive from Buyer, any sick leave, bonus,
severance, vacation time or other benefits which might have accrued or relate to
any period prior to the Closing Date, such obligations being and remaining
solely with Seller. At least 45 days prior to the Closing Date, Seller shall
provide Buyer with an updated Schedule 5.13 listing the names, current annual
salary or hourly rates and brief description or title of all employees of the
System. Buyer shall give Seller notice at least 30 days prior to the Closing
Date of the names of any such employees to whom Buyer does not plan to offer
employment as of the Closing Date; provided, however, that failure to timely
give such notice shall not give rise to any obligation of Buyer to offer
37
<PAGE>
employment to any employee of the System and nothing set forth in this Section
7.7 shall be deemed to confer any rights on any third parties or create any
third party beneficiaries hereof.
7.8 Further Assurances. Each of the parties hereto, subject to the
------------------
fulfillment at or before the Closing Date of each of the conditions to its
performance set forth herein or the waiver thereof, shall perform such further
acts and execute such documents as reasonably may be required to effectuate the
transactions contemplated hereby. Each of the parties hereto shall use
commercially reasonable efforts expeditiously to fulfill or to obtain the
fulfillment of the conditions set forth in Article 8 hereof.
7.9 Financial Statements. Within 60 days after the Closing Date, Seller
--------------------
shall deliver to Buyer unaudited financial statements (balance sheets and
statements of earnings) for the System covering the period up to and including
the Closing Date, certified as true and correct by the chief financial officer
of Seller.
7.10 Hart-Scott-Rodino. Within 30 days after the date of this Agreement,
-----------------
Seller and Buyer shall prepare and file proper premerger notification forms and
affidavits in compliance with the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "HSR Act"). If, following the filing of such forms, any
governmental authority shall challenge the transaction contemplated hereby, or
request additional filings or information, Seller and Buyer shall take all
reasonable steps to attempt to ascertain the nature of the challenge and, unless
otherwise agreed by the parties, to contest such challenge and to make or
provide such filings or information as may be required to permit the
transactions contemplated by this Agreement to be consummated.
7.11 Advertising Sales Accounts Receivable. On the Closing Date, Seller
-------------------------------------
will assign to Buyer, for purposes of collection only, all of Sellers accounts
receivable arising from the sale of advertising time on the System (the "Ad
Sales Accounts Receivable"). Buyer will collect the Ad Sales Accounts Receivable
as Seller's agent in the same manner and with the same diligence that Buyer uses
to collect its own accounts receivable for a period of 90 days from the Closing
Date (the "Collection Period"). Within ten (10) business days after the Closing
Date, Seller shall deliver to Buyer a
38
<PAGE>
complete and detailed statement of each Ad Sales Account Receivable (the
"Receivable Statement"). On the tenth business day following the end of each
monthly billing cycle during the Collection Period, and on the tenth business
day following the end of the Collection Period, Buyer will remit to Seller
collections received on account of the Ad Sales Accounts Receivable during the
preceding monthly billing cycle(net of commissions, if any, payable to employees
of the System with respect to such Ad Sales Accounts Receivable, which shall be
paid by Buyer from the amounts so collected) and will deliver to Seller a
monthly accounting of Ad Sales Accounts Receivable collected and commissions
paid. All amounts received by Buyer from any account debtor included among the
Ad Sales Accounts Receivable shall be applied first to the Ad Sales Accounts
Receivable. If, during the Collection Period, a dispute arises between Buyer and
an account debtor with respect to an account included among the Ad Sales
Accounts Receivable, Buyer may return that account to Seller for collection.
Buyer shall not have any obligation to make any claim or institute any
litigation or other proceeding against any account debtor for the collection of
any Ad Sales Accounts Receivable. At the conclusion of the Collection Period,
any remaining Ad Sales Accounts Receivable shall be reassigned to Seller and
thereafter Buyer shall have no further obligation with respect to the Ad Sales
Accounts Receivable.
7.12 Transitional Billing Services. Seller shall provide to Buyer, upon
-----------------------------
written request and at the cost of Buyer (which shall not exceed Seller's actual
costs), subscriber billing services ("Transitional Billing Services") in
connection with the System for a period of up to 90 days following Closing to
allow for conversion of existing billing arrangements. Buyer shall notify Seller
in writing at least 30 days prior to Closing as to whether it desires Seller to
provide Transitional Billing Services. Each party shall cooperate with all
reasonable requests by the other in connection with the first billing cycle
following Closing and the transition of billing services to Buyer's billing
provider.
7.13 Buyer Environmental Review.
--------------------------
(a) For the purposes of this Section 7.13, "Environmental Costs"
means the reasonably foreseeable costs to correct or amounts needed to reserve
for potential liability with respect to the Environmental Conditions identified
pursuant to this Section. "Environmental Condition" means (i) the lack of any
Environmental Permits required for compliance with applicable
39
<PAGE>
Environmental Laws, (ii) non-compliance with any applicable Environmental Laws,
(iii) any contamination of the environment (soil, sediments, air, surface water
or groundwater) or building materials with any Substances for which the Seller
is legally responsible under applicable Environmental Laws, (iv) the requirement
to compensate any Person injured by such contamination to the extent required by
applicable Environmental Law, and (v) any condition or circumstance indicating
that any of the matters represented and warranted in Section 5.24 hereof are not
true, accurate and correct or that it would no longer be possible for any such
warranties or representations to be given. "Environmental Costs" includes the
fees and expenses of professionals and consultants whose services are reasonably
required in connection with the foregoing. "Environmental Law", "Environmental
Permits" and "Substances" shall have the meanings set forth in Section 5.24(a).
(b) Buyer shall have the right within 90 days of the date hereof to
(i) conduct an assessment of the environmental, health and safety
characteristics, risks, compliance status and liabilities associated with the
Seller with respect to the Operating Sites (including surrounding areas), the
Systems and the CATV Business (Phase I), which Phase I shall be in form, scope,
substance, and depth reasonably satisfactory to Buyer, and be carried out by an
environmental consultant satisfactory to Buyer, and (ii) conduct such additional
assessment as Buyer deems reasonably necessary including, without limitation,
through the collection and analysis of air, soil, water, and building materials
samples (Phase II).
(c) Buyer shall arrange for the Phase I work and any Phase II work.
Promptly (within 5 business days) upon receipt of the written reports, Buyer
shall deliver copies to Seller. All costs, expenses and fees for the Phase I
work shall be shared equally between Buyer and Seller. All costs, expenses and
fees for any Phase II work shall be paid entirely by Buyer.
(d) The Seller shall cooperate with Buyer, the consultants and
their respective authorized representatives so that the Phase I work and any
Phase II work can be completed in an expeditious and efficient manner, by Seller
providing, among other things, access at reasonable times and upon reasonable
advance notice to sites, files, records, and employees.
(e) Within ten business days following completion of the Phase I
work and any Phase II work and receipt of the last of the reports, Buyer shall
have the option of notifying Seller in writing of each Environmental Condition
and the corresponding estimated Environmental Costs. Within ten business days of
receiving such notice, Seller may dispute such Environmental Costs by notifying
40
<PAGE>
Buyer in writing of such dispute detailing each area of dispute and the basis
for same. Should Seller in good faith dispute the Environmental Costs in Buyer's
written notice, the parties shall urgently negotiate in good faith to resolve
the dispute, including through the use of an independent mutually agreed upon
environmental consultant. The costs, expenses and fees of any such consultant
shall be shared equally between Buyer and Seller.
(f) Buyer shall have the right to adjourn the Closing Date in order
to accommodate the time frames herein.
(g) If the total aggregate Environmental Costs determined pursuant
to Section 7.13(e) are $50,000 or less, Seller shall remediate, correct or
otherwise address to Buyer's satisfaction (such as through the establishment of
an escrow fund) all of the corresponding Environmental Conditions identified in
Buyer's notice pursuant to Section 7.13(e) prior to the Closing Date.
Notwithstanding the foregoing, Seller shall have no obligation under this
Section 7.13(g) to spend in excess of $50,000 to remediate, correct or otherwise
address any Environmental Conditions.
ARTICLE 8
--------
CONDITIONS
----------
8.1 Buyer's Conditions. The obligations of Buyer to consummate the
------------------
transactions contemplated by this Agreement are subject to the fulfillment on or
before the Closing Date of the following conditions, any of which may be waived
in writing by Buyer:
(a) All Required Consents designated as material on Schedules
5.3(a) and 5.3(b) shall have been obtained. Each of the Designated Franchises
shall have been renewed for a term of not less than ten (10) years on terms
which are customary for renewals of similarly situated franchises of the same
duration in the southern California area.
(b) Seller shall have delivered all necessary instruments of
transfer, in form and substance reasonably satisfactory to Buyer, including,
without limitation, the Bill of Sale annexed hereto as Exhibit 2.3-A and the
Assignment and Assumption Agreement annexed hereto as Exhibit 2.3-B.
(c) All of the representations and warranties of Seller contained
in this Agreement or in any written statement, deed, exhibit, certificate,
schedule or other documents delivered pursuant
41
<PAGE>
hereto or in connection with the transactions contemplated hereby (including,
without limitation, the financial statements referred to herein and the
Schedules annexed hereto) shall be true and correct in all material respects
both on this date and, additionally, on and as of the Closing Date, as if then
made, except to the extent waived hereunder. Seller shall have performed and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing Date, and Seller shall have tendered to Buyer a certificate executed
by a Vice President of Seller dated the Closing Date, representing and
certifying that the foregoing conditions have been fulfilled.
(d) All documents required to be delivered by Seller hereunder,
including without limitation all conveyance documents and instruments delivered
by Seller, in connection with the transactions contemplated hereby shall be in
form and substance reasonably acceptable to Buyer's counsel, Leavy Rosensweig &
Hyman, 11 East 44th Street, New York, New York 10017.
(e) Seller shall have tendered to Buyer the opinion of Elizabeth M.
Steele, General Counsel for Seller, dated the Closing Date, in the form of
Exhibit 8.1 (e)-A hereto and the opinion of Cole Raywid & Braverman, FCC Counsel
for Seller, dated the Closing Date, in the form of Exhibit 8. 1(e)-B hereto.
(f) Seller shall have tendered all such additional instruments and
other documents as shall be reasonably necessary to consummate the transactions
contemplated by this Agreement.
(g) No action or proceeding shall be pending or, to the knowledge
of Seller or Buyer, threatened, against Seller before any court, governmental or
arbitration body seeking to restrain or prohibit or seeking damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby; and there shall be no Legal Proceedings (as defined in
Section 5.8 hereof), other than as described on Schedule 5.8, pending or
threatened which, either individually or in the aggregate, could materially
adversely affect the business, operations or financial condition of the System.
(h) Seller shall have executed and delivered to Buyer an agreement
not to compete with Buyer, in the form of Exhibit 8.1(h) hereto.
(i) Seller shall have tendered to Buyer duly executed satisfactions
of any and all liens, pledges, mortgages, security interests, or other
encumbrances and (but not in limitation) termination statements of any financing
statements with respect to the Purchased Assets.
42
<PAGE>
(j) Between the date of this Agreement and the Closing Date, there
shall have been (i) no material adverse change in the System or their financial
condition, taken as a whole, other than (A) changes arising out of matters of a
general economic nature, (B) matters affecting the cable television industry
generally (including, without limitation, (y) competition arising from direct
broadcast satellite, MMDS or SMATV systems and (z) legislation, rulemaking or
regulation), or (c) the granting of a franchise to GTE by one or more of the
Franchising Authorities; and (ii) no material loss, damage, impairment,
confiscation or condemnation of any of the Purchased Assets that has not been
repaired or replaced to Buyer's reasonable satisfaction.
(k) All waiting periods under the HSR Act applicable to this
Agreement or the transaction contemplated hereby shall have expired or been
terminated.
(l) The downward adjustments to the Purchase Price made pursuant to
Section 3.3(a) of this Agreement, if any, shall not be greater than $3,525,366.
(m) Buyer shall have received the Phase I report and any Phase II
report prepared pursuant to Sections 7.13(b) and (c).
(n) All Environmental Conditions identified in Buyer's notice
pursuant to Section 7.13(e) shall have been remediated, corrected or otherwise
addressed to Buyer's satisfaction (such as through the establishment of an
escrow fund) prior to the Closing Date. If Buyer shall waive the foregoing
condition and Closing shall occur, Seller shall spend, or pay to Buyer, a total
of $50,000 toward the Environmental Costs prior to or at the Closing, and Buyer
may pursue all of its rights against Seller, including under Sections 9.2(b) and
(c) of this Agreement, with respect to the costs, expenses and liabilities
associated with the balance of such Environmental Costs. No additional Assumed
Liabilities of Buyer shall be deemed or construed to have been created by any
waiver of the condition in this subsection (n), nor shall any such waiver alter
any rights or obligations of the parties provided for elsewhere in this
Agreement or otherwise.
8.2 Seller's Conditions. The obligations of Seller to consummate the
-------------------
transactions contemplated by this Agreement are subject to the fulfillment at or
before the Closing Date of the following conditions, any of which may be waived
in writing by Seller:
(a) All of the representations and warranties of Buyer contained in
this Agreement or in any written statement, certificate, schedule or other
document delivered pursuant hereto or in
43
<PAGE>
connection with the transactions contemplated hereby shall be true and correct
in all material respects both on this date and on the Closing Date as if then
made except as and to the extent waived hereunder. Buyer shall have performed
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by Buyer
prior to or on the Closing Date, and Buyer shall have tendered to Seller a
certificate executed by a duly authorized Officer of Buyer, dated the Closing
Date, representing and certifying to the fulfillment of the foregoing
conditions.
(b) Buyer shall have delivered to Seller the opinion of Leavy
Rosensweig & Hyman, Esqs., counsel for Buyer, dated the Closing Date, in the
form of Exhibit 8.2(b) hereto.
(c) Buyer shall have delivered to Seller the Purchase Price (as
adjusted) and shall have executed and delivered all closing documents required
hereunder.
(d) All documents of Buyer in connection with the transaction
contemplated hereby shall be in form and substance reasonably acceptable to
counsel for Seller.
(e) No action or proceeding shall be pending or, to the knowledge
of Seller or Buyer, threatened, against Buyer before any court, governmental or
arbitration body seeking to restrain or prohibit or seeking damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
(f) All waiting periods under the HSR Act applicable to this
Agreement or the transaction contemplated hereby shall have expired or been
terminated.
(g) The downward adjustment to the Purchase Price made pursuant to
Section 3.3(a) of this Agreement, if any, shall not be greater than $3,525,366.
ARTICLE 9
---------
INDEMNIFICATION
---------------
9.1 Survival of Representations. Warranties and Covenants. Subject
-----------------------------------------------------
only to the limitations set forth in the next sentence, all representations,
warranties, covenants and agreements contained in this Agreement and in any
document delivered in connection herewith shall be deemed continuing
representations, warranties, covenants and agreements. All representations and
warranties shall survive the Closing Date for a period ending on the date which
is one year after the Closing Date,
44
<PAGE>
except for representations and warranties set forth in Sections 5.1
(Organization and Qualification of Seller) and 5.2 (Authorization of Seller),
which shall survive indefinitely, and the representations and warranties set
forth in Sections 5.6 (Tax Matters), 5.9 (Employee Benefit Matters), 5.14
(Compliance with Legal Requirements), and 5.24 (Environmental Matters), which
shall survive for the period of the applicable statutes of limitations. If
Closing occurs, neither party shall have liability to the other (for
indemnification or otherwise) with respect to any representation or warranty
unless, on or prior to the end of the applicable survival period, such party is
given notice of a claim with respect thereto and specifying the factual basis of
that claim in reasonable detail to the extent then known to the claiming party.
9.2. Seller's Indemnity. Notwithstanding the Closing, and regardless of
------------------
any investigation made at any time by or on behalf Buyer or any information
Buyer may have, Seller shall indemnify and hold Buyer, its affiliates, officers,
directors, employees, agents, and representatives, and any Person claiming by or
through any of them, as the case may be, harmless from and against any claims,
losses, liabilities, damages, Liens, penalties, costs, and expenses, including
but not limited to interest which may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and the cost to any Person making a claim or seeking
indemnification under this Agreement with respect to funds expended by such
Person by reason of the occurrence of any event with respect to which
indemnification is sought (collectively, "Losses"), arising out of or resulting
from :
(a) all actual or purported liabilities and obligations of Seller,
and all claims and demands made in respect thereof whether or not known or
asserted at or prior to the Closing (except the Assumed Liabilities), relating
to the System including, without limitation, the Excluded Liabilities;
(b) the operation of the System prior to the Closing Date;
(c) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Seller under this Agreement or any
document delivered in connection herewith;
45
<PAGE>
(d) any potential copyright liability arising from the performance,
exhibition or carriage of any music on the System prior to the Closing Date,
which indemnity shall survive for the applicable statute of limitations and
shall not be subject to the limitation set forth in Section 9.5; and
(e) any order by any Franchising Authority, state or other
regulatory authority or the FCC, to refund or rebate any charges for services
rendered to subscribers prior to the Closing Date or any other amounts charged
to subscribers (including, without limitation, late fees) by the System prior to
the Closing Date, which indemnity shall survive for the applicable statute of
limitations and shall not be subject to the limitations set forth in Section
9.5. If, by reason of the claim of any third party relating to any of the
matters subject to such indemnification, a Lien, attachment, garnishment, or
execution is placed or made upon any of the properties or assets owned or leased
by Buyer or any other indemnitee under this Section, in addition to any
indemnity obligation of Seller under this Section, Seller shall furnish a bond
sufficient to obtain the prompt release thereof within five days from receipt of
notice relating thereto.
9.3. Buyer's Indemnity. Notwithstanding the Closing, and regardless of
-----------------
any investigation made at any time by or on behalf Seller or any information
Seller may have, Buyer shall indemnify and hold Seller, its affiliates,
officers, directors, employees, agents, and representatives, and any Person
claiming by or through any of them, as the case may be, from and against any
Losses arising out of or resulting from:
(a) the Assumed Liabilities; and
(b) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Buyer under this Agreement or any
Transaction Document.
9.4. Procedure for Indemnified Third Party Claim. Promptly after receipt
-------------------------------------------
by a party entitled to indemnification under this Agreement (the "Indemnitee")
of written notice of the assertion of any claim or the commencement of any
litigation or other legal proceeding ("Litigation") with respect to any matter
referred to in Sections 9.2 and 9.3, the indemnitee shall give written notice
thereof to the party from whom indemnification is sought pursuant hereto (the
"Indemnitor") and thereafter shall keep the Indemnitor reasonably informed with
respect thereto. Failure of the Indemnitee to give the Indemnitor notice as
provided herein shall not relieve the Indemnitor of its obligations hereunder
46
<PAGE>
unless the Indemnitee's failure to give the Indemnitor timely notice materially
limits or prejudices the Indemnitor's ability to defend, in which case such
failure of the Indemnitee to give the Indemnitor notice shall relieve the
Indemnitor of its indemnification obligations. In case any Litigation shall be
brought against any Indemnitee, the Indemnitor shall be entitled to participate
in such Litigation, such Litigation may not be settled by the Indemnitee without
the consent of the Indemnitor, and, at the request of the Indemnitee, the
Indemnitor shall assume the defense thereof with counsel mutually satisfactory
to the Indemnitor and the Indemnitee, at the Indemnitor's sole expense. If the
Indemnitor and the Indemnitee cannot agree on the choice of a single counsel,
both the Indemnitor and the Indemnitee shall have separate counsel at the
Indemnitor's sole expense. If the Indemnitor shall assume the defense of any
Litigation, it shall not settle the Litigation unless the settlement shall
include as an unconditional term thereof the giving by the claimant or the
plaintiff of a release of the Indemnitee, satisfactory to the Indemnitee, from
all liability with respect to such Litigation.
9.5. Limitation on Indemnification. Notwithstanding anything else
-----------------------------
contained in this Section 9, Buyer shall not make a claim for indemnification
hereunder until the date on which Buyer's indemnification claims equal or exceed
$25,000 (the "Initial Indemnification Claim Date"). On and after the Initial
Indemnification Claim Date, Buyer may make a claim for indemnification with
respect to all claims then outstanding or thereafter arising.
9.6. Determination of Indemnification Amounts and Related Matters.
------------------------------------------------------------
(a) Amounts payable by the Indemnitor to the Indemnitee in respect
of any Losses under this Section 9 shall be payable by the Indemnitor as
incurred by the Indemnitee.
(b) In calculating amounts payable to an Indemnitee under this
Agreement, the amount of the indemnified Losses shall be "grossed-up" by the
amount of any increase in the Indenmitee's liability for Taxes resulting from
indemnification by the Indemnitor under this Agreement.
47
<PAGE>
ARTICLE 10
----------
MISCELLANEOUS
-------------
10.1 Termination. This Agreement may be terminated and the transactions
-----------
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of Seller and Buyer;
(b) at any time, by either Buyer or Seller if the other is in
material breach or default of its respective covenants, agreements, or other
obligations in this Agreement, or if any of the other's representations in this
Agreement are not true and accurate in all material respects when made or when
otherwise required by this Agreement to be true and accurate, except that the
party in breach or default shall be given notice by the other party and an
opportunity to begin and a reasonable period of time to diligently pursue a cure
before the other party shall terminate this Agreement;
(c) by either Buyer or Seller, upon written notice to the other, if
any of the conditions to its obligations set forth in Sections 8.1 and 8.2,
respectively, shall not have been satisfied on or before the Outside Closing
Date for any reason other than a material breach or default by such party of its
respective covenants, agreements, or other obligations hereunder, or any of its
representations herein not being true and accurate in all material respects when
made or when otherwise required by this Agreement to be true and accurate in all
material respects; or
(d) Without limitation, if on or prior to the Closing Date the
Purchased Assets shall suffer material loss or damage by fire or other casualty,
Buyer shall have the right, at its election, to terminate this Agreement without
further liability on its part, or to waive such right to terminate (but with
Buyer to receive all insurance proceeds paid or payable in connection therewith)
and to close under this Agreement.
10.2 Effect of Termination.
---------------------
(a) If the transactions contemplated by this Agreement are
terminated and abandoned as provided herein: (i) each party shall pay the costs
and expenses incurred by it in connection with this Agreement, and no party (or
any of its officers, directors, employees, agents, representatives, partners or
shareholders) shall be liable to any other party for any costs, expenses or
damages except
48
<PAGE>
as expressly specified herein; (ii) each party shall redeliver all documents,
work papers and other materials of the other party relating to the transaction
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same; and (iii) neither party hereto shall have any
liability or further obligation to the other party to this Agreement except (A)
as stated in paragraph (ii) of this subsection, and (B) to the extent
applicable, as set forth in Section 10.2(b) below.
(b) If both (i) this Agreement is terminated by one party pursuant
to subsection (b) of Section 10.1, and (ii) the other party shall be in breach
in a material respect of any of its representations and warranties made herein
or its covenants or agreements made herein, then the terminating party shall
have as its sole and exclusive remedy the right to seek monetary damages from
the other party.
10.3 Notices. All notices given hereunder shall be in writing and shall
-------
be effective if personally delivered or if sent by overnight mail or telecopier
(during business hours) followed by overnight mail, postage prepaid, addressed
to the appropriate party at the following addresses:
(a) If to Buyer to:
Century Communications Corp.
50 Locust Avenue
New Canaan, Connecticut 06840 Attention: Office of the
President
Telecopier No.: (203) 966-9228
with a copy to:
David Z. Rosensweig, Esq.
Leavy Rosensweig & Hyman
11 East 44th Street
New York, New York 10017
Telecopier No.: (212) 983-2537
49
<PAGE>
(b) If to Seller to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, CO 80112
Attention: President
Telecopier No.: (303) 790-0533
with a copy to:
Legal Department
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, CO 80112
Telecopier No.: (303) 799-1644
(c) Any party hereto may change the address to which any notice
hereunder is to be sent to him by giving notice of such change of address as
provided in this Article.
10.4 Expenses. Buyer and Seller each shall pay their respective expenses
--------
and costs incurred or to be incurred by them in negotiating and preparing this
Agreement and in closing and carrying out the transaction contemplated by this
Agreement, including, without limitation, all of their attorneys' fees.
10.5 Assignability. This Agreement shall be personal to Seller and Buyer
-------------
and may not be assigned by either party without the written consent of the
other, except that Buyer may assign this Agreement and delegate its obligations
herein to a wholly-owned subsidiary or an entity in which it has a fifty (50%)
percent equity interest (all referred to as an "Affiliated Company") or to a
joint venture in which Buyer or an Affiliated Company is a joint venturer or to
an entity acquiring all or substantially all of its assets or with or into which
it shall merge or consolidate. Except as otherwise expressly provided, the
provisions of this Agreement and any instruments related thereto shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns. No assignments of any rights as
permitted hereunder shall relieve the assignor of responsibility for any of its
obligations hereunder.
50
<PAGE>
10.6 Pronouns, Plurals. All pronouns and any variations thereof shall be
-----------------
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person, firm, or corporation may require. Plurals shall include
the singular.
10.7 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof; it
supersedes all written agreements and negotiations and oral understandings, if
any; and it may not be amended, supplemented, waived, discharged or terminated,
except by performance or by an instrument in writing signed by all of the
parties hereto.
10.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Captions. The captions contained in this Agreement are for
--------
convenience of reference only and are not part of this Agreement.
10.10 Construction. No provision of this Agreement shall be interpreted
------------
against any party because such party or such party's representative drafted such
provision.
10.11 Reliance Upon Representation and Warranties. The delivery of
-------------------------------------------
documents, books and records by Seller to Buyer pursuant hereto or Schedules
annexed hereto or otherwise shall in no way diminish the effect of Buyer's
reliance upon the representations and warranties made by Seller herein in
respect of Seller and the System. Seller hereby acknowledges and agrees that
Buyer is relying solely on such representations and warranties in purchasing the
assets of Seller pursuant hereto notwithstanding investigations or attempts to
verify the accuracy of such representations and warranties made by Buyer.
10.12 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
51
<PAGE>
10.13 Waiver. Either Buyer or Seller may waive any provision, breach or
------
default of this Agreement, provided, however, no waiver of any provision, breach
or default hereunder shall be considered valid unless in writing and signed by
the party giving such waiver, and no such waiver shall be deemed a waiver of any
other provision or any subsequent breach or default of the same or similar
nature.
[the remainder of this page has intentionally been left blank]
52
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the date first above written.
JONES INTERCABLE, INC.
By: /s/James B. O'Brien
____________________
Name:
Title:
CENTURY COMMUNICATIONS CORP.
By: /s/Scott N. Schneider
_____________________
Name: Scott N. Schneider
Title: Senior Vice President and Treasurer
53
