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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): January 31, 1997
JONES INTERCABLE, INC.
----------------------
(Exact name of registrant as specified in its charter)
Colorado 1-9953 84-0613514
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(State of Organization) (Commission File No.) (IRS Employer
Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
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(Address of principal executive office and Zip Code) (Registrant's
telephone no.
including area code)
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Item 2. Acquisition of Assets
---------------------
On January 31, 1997, Jones Communications of Maryland, Inc., a wholly-
owned subsidiary of Jones Cable Holdings, Inc., a wholly owned subsidiary of
Jones Intercable, Inc. (all collectively referred to as the "Company"), acquired
the cable television system serving the communities of Berwyn Heights,
Bladensburg, Bowie, Brentwood, Cheverly, College Park, Colmar Manor, Cottage
City, Edmonston, Glenarden, Greenbelt, Hyattsville, Landover Hills, Laurel, Mt.
Ranier, New Carrollton, North Brentwood, Riverdale, Takoma Park, University Park
and portions of Prince George's County, all in the State of Maryland (the "North
Prince George's County System"). The purchase price for the North Prince
George's County System was approximately $231,400,000, subject to working
capital adjustments. The purchase was funded by borrowings under the Company's
revolving credit facility. The North Prince George's County System passes
approximately 150,000 homes and serves approximately 85,700 equivalent basic
subscribers. The Company will pay Jones Financial Group, Ltd., an affiliate of
the Company, a fee of approximately $2,100,000 for acting as the Company's
financial advisor in connection with this transaction. The fee to be paid to
Jones Financial Group, Ltd. is based upon 90% of the estimated commercial rate
charged by unaffiliated financial advisors. The North Prince George's County
System is contiguous to the Company's South Prince George's County System. The
acquisition of the North Prince George's County System will allow the Company to
serve approximately 160,000 subscribers in Prince George's County and bring the
Company's total subscriber count in the Washington, D.C. area to approximately
400,000 subscribers.
2
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Item 7. Financial Statements and Exhibits
---------------------------------
a. Financial statements of businesses acquired. Audited financial
-------------------------------------------
statements of the North Prince George's County System are not presently
available and will be filed by amendment to this Form 8-K as soon as practicable
and no later than April 15, 1997.
b. Pro forma financial information. Pro forma financial statements of
-------------------------------
Jones Intercable, Inc. reflecting the acquisition of the North Prince George's
County System are not presently available and will be filed by amendment to this
Form 8-K as soon as practicable and no later than April15, 1997.
c. Exhibits.
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2.1. Asset Purchase Agreement dated July 30, 1996 between
Maryland Cable Partners, L.P. and Jones Communications of Maryland, Inc.
2.2 First Amendment to Purchase Agreement dated January 30, 1997
between Maryland Cable Partners L.P. and Jones Communications of Maryland, Inc.
3
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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: February 7, 1997 By: /s/ Elizabeth M. Steele
------------------------
Elizabeth M. Steele
Vice President and Secretary
4
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ASSET PURCHASE AGREEMENT
DATED JULY 30, 1996
BETWEEN
MARYLAND CABLE PARTNERS, L.P.
AND
JONES COMMUNICATIONS OF MARYLAND, INC.
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TABLE OF CONTENTS
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SECTION 1: DEFINED TERMS...................................................................... 1
1.1 Terms Defined in this Section......................................................... 1
"ACCOUNTS RECEIVABLE"....................................................................... 1
"AFFILIATE"................................................................................. 1
"ASSETS".................................................................................... 1
"ASSUMED CONTRACTS"......................................................................... 1
"BASIC CUSTOMER"............................................................................ 2
"BULK CUSTOMER"............................................................................. 2
"CABLE ACT"................................................................................. 2
"CABLE SERVICE INSTALLATION REQUEST"........................................................ 3
"CLOSING"................................................................................... 3
"CLOSINGS".................................................................................. 3
"CLOSING DATE".............................................................................. 3
"CLOSING DATES"............................................................................. 3
"CODE"...................................................................................... 3
"COMMUNICATIONS ACT"........................................................................ 3
"COMPENSATION ARRANGEMENT".................................................................. 3
"COMPLETE CLOSING"; "INITIAL CLOSING" and "SUBSEQUENT CLOSING".............................. 3
"COMPLETE CLOSING DATE"; "INITIAL CLOSING DATE" and "SUBSEQUENT CLOSING DATE"............... 3
"CONSENTS".................................................................................. 3
"CONTRACTS"................................................................................. 4
"COPYRIGHT ACT"............................................................................. 4
"EFFECTIVE TIME"............................................................................ 4
"EMPLOYEE PLAN"............................................................................. 4
"EQUIVALENT BILLING UNITS".................................................................. 4
"ERISA"..................................................................................... 4
"ESCROW DEPOSIT"............................................................................ 4
"EXCLUDED ASSETS"........................................................................... 5
"FCC"....................................................................................... 5
"FRANCHISES"................................................................................ 5
"FRANCHISING AUTHORITIES"................................................................... 5
"GENERAL PARTNER"........................................................................... 5
"INTANGIBLES"............................................................................... 5
"LEGAL REQUIREMENTS"........................................................................ 5
"MANAGER"................................................................................... 5
"NONCOMPETITION AGREEMENT".................................................................. 5
"PERSONAL PROPERTY"......................................................................... 6
"PROGRAMMING AGREEMENTS".................................................................... 6
"RATE REGULATORY MATTERS"................................................................... 6
"RATE REGULATORY REDUCTION ORDER"........................................................... 6
"REAL PROPERTY"............................................................................. 6
"SIGNALS"................................................................................... 6
"TAXES"..................................................................................... 7
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"TAX RETURN"........................................................... 7
1.2 Terms Defined Elsewhere in this Agreement......................... 7
1.3 Rules of Construction............................................. 8
SECTION 2: SALE AND PURCHASE OF ASSETS..................................... 8
2.1 Agreement to Sell and Buy...................................... 8
2.2 Excluded Assets................................................ 9
2.3 Purchase Price.................................................10
2.4 Adjustments and Prorations.....................................10
2.5 Payment of Purchase Price......................................13
(a) Payment of Purchase Price...............................13
(b) Payments to Reflect Adjustments.........................14
2.6 Assumption of Liabilities and Obligations......................14
SECTION 3: REPRESENTATIONS AND WARRANTIES OF SELLER........................14
3.1 Organization, Standing and Authority...........................14
3.2 Authorization and Binding Obligation...........................15
3.3 Absence of Conflicting Agreements..............................15
3.4 Franchises and Contracts.......................................15
3.5 Title to and Condition of Real and Personal Property...........16
3.6 Intangibles....................................................16
3.7 Consents.......................................................17
3.8 Information on the Systems.....................................17
(a) Plant...................................................17
(b) Rates; Signals; Frequencies.............................17
(c) Franchise and Pole Attachment Fees......................18
(d) Request for Signal Carriage.............................18
(e) Account Balances........................................18
(f) FCC Filings.............................................18
(g) Cable Act of 1992.......................................18
(h) Copyright...............................................19
(i) Commitments.............................................19
(j) Other Operators.........................................19
3.9 Financial Statements...........................................20
3.10 Taxes and Tax Returns..........................................20
3.11 Insurance and Bonds............................................20
3.12 Personnel Matters..............................................20
3.13 Environmental Laws.............................................21
3.14 Claims and Legal Actions.......................................22
3.15 Compliance with Laws...........................................22
3.16 Conduct of Business in Ordinary Course.........................23
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3.17 No Material Adverse Change.....................................23
3.18 Accuracy of Schedules..........................................24
3.19 Disclosure.....................................................24
SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER..........................24
4.1 Organization, Standing and Authority...........................24
4.2 Authorization and Binding Obligation...........................24
4.3 Absence of Conflicting Agreements..............................24
4.4 Qualification..................................................25
4.5 Litigation.....................................................25
4.6 Buyer's Investigation..........................................25
4.7 Disclosure.....................................................25
SECTION 5: COVENANTS OF SELLER..............................................25
5.1 Pre-Closing Covenants..........................................25
(a) Negative Covenants.......................................25
(1) Compensation.......................................26
(2) Contracts..........................................26
(3) Disposition of Assets..............................26
(4) Encumbrances.......................................26
(5) Franchises.........................................26
(6) No Inconsistent Action.............................26
(7) Offers.............................................27
(8) Marketing Promotions...............................27
(9) Changes in Rates and Programming...................27
(10) Waivers............................................27
(b) Affirmative Covenants....................................27
(1) Access to Information..............................27
(2) Maintenance of Assets..............................28
(3) Maintenance of Personnel, Inventory and Plant......28
(4) Insurance..........................................28
(5) Consents...........................................28
(6) Books and Records..................................28
(7) Notification.......................................28
(8) Financial Information..............................28
(9) Compliance with Laws...............................28
(10) Keep Organization Intact...........................28
(11) Contracts..........................................29
5.2 Requests for Written Consent...................................29
5.3 Further Assurances.............................................29
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SECTION 6: SPECIAL COVENANTS AND AGREEMENTS................................29
6.1 Consents......................................................29
6.2 Cooperation...................................................31
6.3 Buyer's Qualifications and Financing..........................31
6.4 Brokers.......................................................31
6.5 Bonds, Letters of Credit, etc.................................31
6.6 Billing Obligations...........................................32
6.7 Confidentiality/Press Releases................................32
6.8 Risk of Loss..................................................33
6.9 Antitrust Laws Compliance.....................................34
6.10 Access of Seller to Records...................................34
6.11 Accounts Receivable...........................................34
6.12 Employee Matters..............................................35
6.13 Noncompetition Agreement......................................36
6.14 Financial Statements..........................................37
6.15 Current Proceedings and Post-Closing Rate Proceedings.........37
6.16 Must-Carry and Retransmission Consent Agreements..............37
6.17 Proof of Performance..........................................38
6.19 Maryland Bulk Sales and Use Tax Returns.......................38
6.20 Maryland Personal Property Taxes..............................39
SECTION 7: CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER...................39
7.1 Conditions to Obligations of Buyer............................39
(a) Representations and Warranties..........................39
(b) Covenants and Conditions................................39
(c) Consents................................................39
(d) Franchises..............................................40
(e) Title Reports...........................................40
(f) Power of Attorney.......................................40
(g) Lien Searches...........................................40
(h) HSR Act Compliance......................................40
(i) Deliveries..............................................40
(j) Pole Attachment Agreements..............................41
7.2 Conditions to Obligations of Seller...........................41
(a) Representations and Warranties..........................41
(b) Covenants and Conditions................................41
(c) Consents................................................41
(d) Deliveries..............................................41
(e) HSR Act Compliance......................................41
(f) Purchase Price Adjustment...............................42
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SECTION 8: CLOSING AND CLOSING DELIVERIES...................................42
8.1 Closing.........................................................42
8.2 Partial Closings................................................42
8.3 Deliveries by Seller............................................45
(a) Transfer Documents.......................................45
(b) Consents.................................................45
(c) Officer's Certificate....................................45
(d) Secretary's Certificate..................................45
(e) Indemnity Agreement......................................46
(f) Management Agreement.....................................46
(g) Signal Services Agreement................................46
(h) Franchises, Contracts, Business Records, Etc.............46
(i) Opinions of Counsel......................................46
(j) FIRPTA Certification.....................................46
(k) Other Documents..........................................46
8.4 Deliveries by Buyer.............................................46
(a) Purchase Price...........................................46
(b) Assumption Agreements....................................46
(c) Officer's Certificate....................................47
(d) Secretary's Certificate..................................47
(e) Indemnity Agreement......................................47
(f) Management Agreement.....................................47
(g) Signal Services Agreement................................47
(h) Opinion of Counsel.......................................47
(i) Other Documents..........................................47
SECTION 9: RIGHTS OF BUYER AND SELLER ON TERMINATION OR BREACH..............47
9.1 Termination Rights..............................................47
9.2 Specific Performance............................................48
9.3 Liquidated Damages..............................................48
9.4 Special Termination Right for Nonreceipt of Authorization.......49
SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AND INDEMNIFICATION..49
10.1 Representations and Warranties..................................49
10.2 Indemnification by Seller.......................................50
10.3 Indemnification by Buyer........................................50
10.4 Procedure for Indemnification...................................50
10.5 Affiliates......................................................51
10.6 Limitations.....................................................51
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10.7 Indemnity Escrow..............................................52
10.8 Exclusive Remedy..............................................52
SECTION 11: MISCELLANEOUS..................................................53
11.1 Fees and Expenses.............................................53
11.2 Notices.......................................................53
11.3 Benefit and Binding Effect....................................54
11.4 Knowledge.....................................................55
11.5 Governing Law.................................................55
11.6 Entire Agreement..............................................55
11.7 Waiver of Compliance; Consents................................55
11.8 Bulk Sales Law................................................55
11.9 Severability..................................................55
11.10 Counterparts..................................................56
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LIST OF EXHIBITS
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Exhibit 6.1(a) -- Forms of Consents to Franchise and Contract Assignments
Exhibit 8.2(f) -- Management Agreement
Exhibit 8.2(g) -- Terms of Signal Services Agreement
Exhibit 8.3(i) -- Opinion of Seller's Counsel
Exhibit 8.4(h) -- Opinion of Buyer's Counsel
Exhibit 10.7 -- Indemnity Agreement
LIST OF SCHEDULES
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Schedule 3.4 -- Franchises and Contracts
Schedule 3.5 -- Real and Personal Property
Schedule 3.6 -- Intangibles
Schedule 3.7 -- Consents
Schedule 3.8 -- Information on the Systems
Schedule 3.11 -- Insurance and Bonds
Schedule 3.12 -- Personnel Matters
Schedule 3.13 -- Environmental Laws
Schedule 3.14 -- Claims and Legal Actions
Schedule 3.15 -- Compliance with Laws
Schedule 5.1(a) -- Planned Changes to Rates, Tiers and Programming
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ASSET PURCHASE AGREEMENT
========================
This ASSET PURCHASE AGREEMENT is dated July 30, 1996, by and between
JONES COMMUNICATIONS OF MARYLAND, INC., a Colorado corporation ("BUYER"), and
MARYLAND CABLE PARTNERS, L.P., a Delaware limited partnership ("SELLER").
R E C I T A L S:
---------------
A. Seller owns and operates certain cable television systems (as more
fully described in the schedules hereto) serving areas of Prince George's
County, Maryland (individually, a "SYSTEM" and collectively, the "SYSTEMS").
B. Seller desires to sell, and Buyer wishes to buy, substantially all of
Seller's assets used or held for use in the operation of the Systems on the
terms and conditions hereinafter set forth.
A G R E E M E N T S:
-------------------
In consideration of the covenants and agreements contained herein,
Buyer and Seller agree as follows:
SECTION 1: DEFINED TERMS
-------------
1.1 Terms Defined in this Section. The following terms shall have
-----------------------------
the following meanings in this Agreement:
"ACCOUNTS RECEIVABLE" means all rights of Seller to payment for
services provided by Seller prior to the Closing Date, including for (i) cable
services to customers of the Systems, (ii) the sale of advertising, (iii) the
leasing of channels, and (iv) other services or rentals.
"AFFILIATE" means any person, corporation or partnership directly or
indirectly, controlling, controlled by or under common control with either Buyer
or Seller, as the case may be, or any of its officers, directors, shareholders,
or general partners.
"ASSETS" means all the tangible and intangible assets of Seller used
or held for use in connection with the conduct of the business or operations of
the Systems, which assets are being sold, transferred, or otherwise conveyed by
Seller to Buyer hereunder, as specified in detail in Section 2.1.
"ASSUMED CONTRACTS" means (i) all Contracts listed in Schedule 3.4
------------
hereto except those Contracts which have been marked with an asterisk to
indicate that they
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shall not be assumed by Buyer at Closing, (ii) any Contracts entered into by
Seller in the ordinary course of business between the date hereof and the
Closing Date in compliance with Section 5.1(a)(2), and (iii) all Contracts in
existence on the Closing Date which meet the criteria in Section 3.4 for
exclusion from disclosure on Schedule 3.4.
------------
"BASIC CUSTOMER" means each residential customer or resident of a
multiple dwelling unit who pays directly to Seller the Standard monthly fees and
charges established by Seller for Basic Service (as described in Schedule 3.8)
------------
(either alone or in combination with any other service) from any of the Systems,
and (i) who has paid at least one month's payment in full without discount; (ii)
whose payment for service is not more than 60 days past due from the billing
date (provided that a customer's account shall not be considered past due as a
result of unpaid amounts not exceeding $5.00 in the more than 60 day aging
category (provided further that up to 1,004 customer accounts which would not
otherwise be included pursuant to this definition may be included for purposes
of this definition so long as such accounts are no greater than 90 days past
due)); and (iii) who has not given Seller notice of termination, provided,
however, that up to that number of customers which would be disqualified as
Basic Customers solely due to the effect of this clause (iii) shall be offset,
on a one-for-one basis, by the number of pending Cable Service Installation
Requests which Buyer shall not have connected prior to the Closing Date.
"BULK CUSTOMER" means any commercial establishment (e.g., any hotel or
motel) or multiple dwelling unit establishment (e.g., any apartment, condominium
or cooperative building) served by a System that pays a bulk rate for such
System's basic cable service (either alone or in combination with any other
cable television service), provided that such establishment: (i) has paid at
least one month's payment in full; and (ii) whose payment for service is not
more than sixty (60) days past due from the billing date (provided that a bulk
customer's account shall not be considered past due as a result of unpaid
amounts not exceeding $5.00 in the more than 60 day aging category); and (iii)
who has not given Seller notice of termination, provided, however, that up to
that number of bulk customers (determined on an Equivalent Billing Unit basis)
which would be disqualified as Bulk Customers solely due to the effect of this
clause (iii) shall be offset, on an Equivalent Billing Unit basis, by the number
of pending Cable Service Installation Requests for bulk rate service which Buyer
shall not have connected prior to the Closing Date.
"CABLE ACT" means Title VI of the Communications Act of 1934,as
amended, 47 U.S.C. Section 151 et seq., and all other provisions of the Cable
Communications Policy Act of 1984, Pub. L. No. 98-549, the Cable Television
Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385 and the
provisions of the
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-3-
Telecommunications Act of 1996 amending Title VI of the Communications Act of
1934, as amended, as such statutes may be amended from time to time.
"CABLE SERVICE INSTALLATION REQUEST" means a request for cable service
made by a potential customer whose residence exists and is passed by any of the
Systems in such a manner as to permit service by such System without any expense
to Seller or Buyer for extension or modification of the System other than
installation of a standard tap or drop.
"CLOSING" means, as the context requires, the Complete Closing, the
Initial Closing or the Subsequent Closing, and "CLOSINGS" mean the Initial
Closing and the Subsequent Closing, collectively.
"CLOSING DATE" means, as the context requires, the Complete Closing
Date, the Initial Closing Date or the Subsequent Closing Date, and "CLOSING
DATES" means the Initial Closing Date and the Subsequent Closing Date,
collectively.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, or any subsequent legislative enactment thereof, as in
effect from time to time.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
"COMPENSATION ARRANGEMENT" means any plan or compensation arrangement
other than an Employee Plan, whether written or unwritten, which provides to
employees, former employees, officers, independent contractors, directors and
shareholders of Seller or any entity related to Seller (under the terms of
Sections 414(b), (c), (m) or (o) of the Code) any compensation or other
benefits, whether deferred or not, in excess of base salary or wages and
excluding overtime pay, including any bonus or incentive plan, stock rights
plan, deferred compensation arrangement, life insurance, stock purchase plan,
severance pay plan and any other perquisites and employee fringe benefit plan.
"COMPLETE CLOSING"; "INITIAL CLOSING" and "SUBSEQUENT CLOSING" mean
the consummation of the transactions contemplated by this Agreement in
accordance with the provisions of Section 8.
"COMPLETE CLOSING DATE"; "INITIAL CLOSING DATE" and "SUBSEQUENT
CLOSING DATE" mean the dates on which the Complete Closing, Initial Closing and
Subsequent Closing occurs, respectively, as determined pursuant to Section 8.
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"CONSENTS" means all of the consents, permits or approvals of
government authorities and other third parties necessary (i) to transfer the
Assets to Buyer or otherwise to consummate the transaction contemplated hereby,
and (ii) for Buyer to assume the Franchise and Assumed Contracts.
"CONTRACTS" means all Franchises (as defined below), deeds, leases,
easements, rights-of-way, programming agreements, pole attachment and conduit
agreements, customer agreements, and other agreements, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and which relate to the Assets or the
business or operations of any System, and (i) which are in effect on the date
hereof, or (ii) which are entered into by Seller between the date hereof and the
Closing Date.
"COPYRIGHT ACT" means the Copyright Act of 1976, as amended.
"EFFECTIVE TIME" means 11:59 p.m., East Coast time, on the Complete
Closing Date or the Initial Closing Date, as the case may be.
"EMPLOYEE PLAN" means any pension, retirement, profit-sharing,
deferred compensation, vacation, severance, bonus, incentive, medical, vision,
dental, disability, life insurance or any other employee benefit plan as defined
in Section 3(3) of ERISA to which either of the Seller or any entity related to
Seller (under the terms of Sections 414 (b), (c), (m) or (o) of the Code)
contributes or which either of the Seller or any entity related to Seller (under
the terms of Sections 414 (b), (c), (m) or (o) of the Code) sponsors or
maintains, or by which Seller or any such entity is otherwise bound.
"EQUIVALENT BILLING UNITS" means that number of customers of the
System calculated by dividing by $28.64 the sum of the aggregate monthly
billings, before nonrecurring charges or credits, for the month in which such
calculation is being made, attributable to the Basic Customers and Bulk
Customers for Basic Service, MVP Service and CPS Service, all as described in
Schedule 3.8 (excluding billings in each instance for service in any month other
- ------------
than the month for which the Equivalent Billing Units are being calculated, and
charges relating to services other than Basic, MVP and CPS Service, such as
charges for internal wiring maintenance, converters, remotes, cable guides,
premium services, taxes, copyright fees, late charges and installation and
disconnect charges). For purposes of making the calculation in this formula,
payments on account of monthly billings to a customer will be deemed to be due
on the first day of the month during which the service to which the billing
relates is provided.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder, as in effect from time to
time.
"ESCROW DEPOSIT" means the sum of Twelve Million Dollars ($12,000,000)
which is being deposited by Buyer with Colorado National Bank (the "ESCROW
AGENT") on the date hereof to secure the obligations of Buyer to close under
this Agreement, with (i) such deposit being held by the Escrow Agent in
accordance with the Escrow Agreement executed among Buyer, Seller and Escrow
Agent on the date hereof, and (ii) the Escrow Deposit, and all earnings thereon,
being returned to Buyer upon the consummation hereof.
"EXCLUDED ASSETS" means certain assets of Seller that are not being
sold, transferred, or otherwise conveyed to Buyer hereunder, as specified in
detail in Section 2.2.
"FCC" means the Federal Communications Commission.
"FRANCHISES" means all municipal, county, state and federal cable
franchises, franchise applications (if any), domestic satellite, business radio
and other FCC licenses, and all authorizations and permits relating to a System
granted to Seller by any governmental instrumentality.
"FRANCHISING AUTHORITIES" means all governmental authorities which
have issued municipal or county cable franchises relating to the operation of a
System or before which are pending any franchise applications filed by the
Seller relating to the operation of a System, and the FCC with respect to
domestic satellite, business radio and other licenses issued by the FCC.
"GENERAL PARTNER" means Maryland Cable General Partner, Inc., a
Delaware corporation, which is Seller's general partner.
"INTANGIBLES" means all copyrights, trademarks, trade names, licenses,
permits, privileges, and other similar intellectual property rights and
interests applied for, issued to, or owned by Seller or under which Seller is
licensed or franchised and used or held for use in the business and operations
of a System, together with any additions thereto between the date hereof and the
Closing Date.
"LEGAL REQUIREMENTS" means applicable common law and any applicable
statute, ordinance, code or other law, rule, regulation, order, technical or
other standard, requirement or procedure enacted, adopted, promulgated or
applied by any governmental authority, including any applicable order, decree or
judgment which may have been handed down, adopted or imposed by any governmental
authority.
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"MANAGER" means Marcus Cable Operating Company, L.P., a Delaware
limited partnership, which serves as the manager of the Systems.
"NONCOMPETITION AGREEMENT" means the covenant not to compete set
forth in Section 6.13 hereof.
"PERSONAL PROPERTY" means all of the equipment, plant, inventory,
spare parts, supplies and other tangible personal property which are owned or
leased by Seller and used or useful as of the date hereof in the conduct of the
business or operations of the Systems, including all of Seller's towers, tower
equipment, antennas, aboveground and underground cable, distribution systems,
headend amplifiers, line amplifiers, earth satellite receive stations and
related equipment, microwave equipment, testing equipment, motor vehicles,
office equipment, furniture and fixtures, supplies, inventory and other physical
assets, plus such additions thereto and less such deletions therefrom arising in
the ordinary course of business between the date hereof and the Closing Date.
"PROGRAMMING AGREEMENTS" means those agreements or other contractual
arrangements by which Seller obtains those Signals which, in the absence of such
arrangements, it does not have the right under applicable law to distribute to
customers or other customers of a System.
"RATE REGULATORY MATTERS" shall mean any matter or any effect on
Seller or any of the Systems, or the business or operations thereof, arising out
of or related to the Cable Act, any regulations heretofore adopted thereunder,
or any other federal, state or local law or regulation dealing with, limiting or
affecting the rates which can be charged by cable television systems to their
customers (whether for programming, equipment, installation, service or
otherwise).
"RATE REGULATORY REDUCTION ORDER" shall mean a final order issued by a
federal, state or local governmental or regulatory authority relating to Rate
Regulatory Matters which effectuates prior to or as of the Closing Date a
reduction in the aggregate rates charged to customers of the Systems for basic
cable television service and for cable programming services from the aggregate
rates charged by Seller for such services during the period of time in which
Seller owned any System.
"REAL PROPERTY" means all of the fee estates and buildings and other
improvements thereon, leasehold interests, easements, licenses, rights to
access, rights-of-way, and other real property interests which are used or held
for use by Seller in the business or operations of a System, plus such additions
thereto and less such deletions therefrom arising in the ordinary course of
business between the date hereof and the Closing Date.
<PAGE>
-7-
"SIGNALS" means the transmissions (whether television, satellite or
otherwise) of video or audio programming or other cable-distributed information
that Seller offers to customers and other customers of a System.
"TAXES" means all levies and assessments of any kind or nature imposed
by any governmental authority, including all income, sales, use, ad valorem,
value added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes, together with any interest thereon and any
penalties, additions to tax or additional amounts applicable thereto.
"TAX RETURN" means any federal, state, or local tax return, report,
statement and other similar filings required to be filed by Seller with respect
to Taxes.
1.2 Terms Defined Elsewhere in this Agreement. The following is a
-----------------------------------------
list of additional terms used in this Agreement and a reference to the Section
hereof in which such term is defined:
Term Section
------------------------- ---------------
Annualized Gross Revenues Section 2.4(e)
Assumed Liabilities Section 2.6
Buyer Preamble
Buyer's Damages Section 10.2
Buyer's Statement Section 2.4(d)(2)
CERCLA Section 3.13(b)
Claimant Section 10.1
Complete Closing Section 8.1(a)
Customer Adjustment Amount Section 2.4(e)
Enforceability Exceptions Section 3.2
Environmental Law Section 3.13(b)
Estimated Purchase Price Section 2.5(a)
Hazardous Substance Section 3.13(b)
HSR Act Section 6.9
Indemnifier Section 10.1
Indemnity Agreement Section 10.7
<PAGE>
-8-
Information Section 6.7
Initial Closing Section 8.2(b)
Initial Closing Date Section 8.2(b)
Initial Closing Purchase Price Section 8.2(c)
Management Agreement Section 8.2(f)
Permitted Encumbrances Section 3.5
Post-Closing Adjustment Section 2.4(d)(2)
Pro Forma Purchase Price Section 8.2(c)(1)
Provider Section 6.7
Purchase Price Section 2.3
Receiver Section 6.7
Retained Systems Section 8.2(b)
Revenue Adjustment Amount Section 2.4(e)
Seller Preamble
Seller's Damages Section 10.3
Signal Services Agreement Section 8.2(g)
Subsequent Closing Section 8.2(b)
Subsequent Closing Date Section 8.2(b)
System Recitals
Threshold Amount Section 10.6(a)
1.3 Rules of Construction. Words used in this Agreement,
---------------------
regardless of the gender and number specifically used, shall be deemed and
construed to include any other gender and any other number as the context
requires. As used in this Agreement, the word "including" is not limiting, and
the word "or" is not exclusive. Except as specifically otherwise provided in
this Agreement in a particular instance, a reference to a Section or Schedule is
a reference to a Section of this Agreement or a Schedule hereto, and the terms
"hereof," "herein," and other like terms refer to this Agreement as a whole,
including the Schedules to this Agreement, and not solely to any particular part
of this Agreement. The descriptive headings in this Agreement are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
<PAGE>
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SECTION 2: SALE AND PURCHASE OF ASSETS
---------------------------
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
-------------------------
forth in this Agreement including, without limitation, the provisions of Section
8.2 relating to partial Closings, Seller hereby agrees to transfer and deliver
to Buyer on the Closing Date, and Buyer agrees to purchase, all of the Assets
(other than those assets described in Section 2.2), with full warranties of
title and free and clear of any claims, liabilities, liens, claims, or
encumbrances (except for those permitted in accordance with Sections 2.6 or 3.5
below), more specifically described as follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Franchises;
(d) The Assumed Contracts;
(e) The Intangibles;
(f) The Accounts Receivable, subject to adjustments pursuant
to Section 2.4(b) hereof;
(g) All books and records relating to the business or operations of
the Systems (except as expressly excluded by Section 2.2(c) and subject to the
requirements of Section 6.10), including executed copies of the Assumed
Contracts, all equipment warranties, all technical information and data, maps,
computer discs, diagrams, blueprints and schematics relating to the Systems and
all filings made with or records required to be kept by the Franchising
Authorities and all backup information on which such filings are based; and
(h) All intangible assets of Seller relating to the Systems
not specifically described above.
2.2 Excluded Assets. The Assets shall exclude the following
---------------
assets:
(a) Seller's cash and cash equivalents on hand as of the Closing
Date and all other cash in any of Seller's bank or savings accounts; any and all
insurance policies, letters of credit, or other similar items and any cash
surrender value in regard thereto; and any stocks, bonds, certificates of
deposit and similar investments;
<PAGE>
-10-
(b) The Programming Agreements (other than those agreements which permit
or require the retransmission of broadcast signals, to the extent necessary for
Buyer to operate the Systems), the Management Agreement between Seller and
Manager, and any other Contracts other than the Assumed Contracts;
(c) Any books and records which Seller is required by law to retain,
subject to the right of Buyer to have access and to copy for a period of three
(3) years from the last Closing Date, and Seller's partnership name, minute
books, other books and records related to internal partnership matters,
financing arrangements and the other assets described in this Section 2.2;
(d) Any claims, rights and interest in and to any refunds of Taxes for
periods prior to the Closing Date (regardless of whether a claim for any such
refund is made prior to or after the Closing Date);
(e) Any general liability, casualty, property or other
insurance policies;
(f) The Management Incentive Plan, any Employee Plan, Compensation
Arrangement, and any employment or collective bargaining agreements;
(g) Two fee estates owned by Seller in Beltsville, Maryland
and Leesburg, Virginia;
(h) Any Marcus Cable Company, L.P. proprietary information,
trademarks and related intellectual property assets;
(i) Any advertising Accounts Receivable that shall be retained
by Seller in accordance with Section 2.4(b); and
(j) Any claims or choses in action of Seller relating to
periods prior to the Closing Date.
2.3 Purchase Price. The purchase price (the "PURCHASE PRICE") for the
--------------
Assets shall be Two Hundred Thirty-Five Million Dollars ($235,000,000), which
amount shall be adjusted as set forth in the following sentence and be paid by
Buyer to Seller at Closing by wire transfer of immediately available funds.
Subject to the provisions of Sections 8.2 (c) and (d), the Purchase Price shall
be adjusted to reflect any adjustments or prorations made at Closing as provided
in Section 2.4 hereof.
<PAGE>
-11-
2.4 Adjustments and Prorations.
--------------------------
(a) The Purchase Price shall be increased or decreased as required to
effectuate the proration of income and expenses. All income and expenses arising
from the operation of the Systems prior to the Effective Time, including Basic
Customer fees, Bulk Customer fees, premium channel fees, installation fees,
advertising fees, service charges, franchise fees, pole and other rental charges
payable in respect to cable television service, all refund liabilities due to
customers for the pre-closing period under any Rate Regulatory Reduction Order
applicable to the Systems, utility charges, real and personal property taxes and
assessments levied against the Assets, salesmen advances, property and equipment
rentals, applicable copyright or other fees, sales and services charges, taxes
(except for taxes arising from the transfer of the Assets hereunder), and
similar prepaid and deferred items, shall be prorated between Buyer and Seller
in accordance with the principle that Seller shall be responsible for all
expenses, costs, obligations and liabilities, and shall be entitled to receive
all income, allocable to the conduct of the business or operations of the
Systems for the period prior to the Effective Time, and Buyer shall be
responsible for all expenses, costs, obligations and liabilities, and shall be
entitled to receive all income, allocable to the conduct of the business or
operations of the Systems after the Effective Time; provided, however, that
-------- -------
there shall be no adjustment for, and Seller shall remain solely liable with
respect to, any Contracts not included in the Assumed Contracts, or any other
obligation or liability not being assumed by Buyer in accordance with Section
2.6 and Buyer shall be entitled to all income from Accounts Receivable in
accordance with Section 2.4(b).
(b) Subject to the provisions of Section 8.2(d), the Purchase Price
payable under Section 2.3 shall be increased by an amount equal to the sum of
(i) 100% of the face amount of all Accounts Receivable (other than advertising
sales) that are current or 30 days or less past due as of the Effective Time,
plus (ii) 90% of the face amount of all Accounts Receivable (other than
advertising sales) that are between 31 days and 60 days past due as of the
Effective Time, plus (iii) 100% of the face amount of all direct-billed
advertising Accounts Receivable that are current or sixty (60) days or less past
due as of the Effective Time, plus (iv) 50% of the face amount of all direct-
billed advertising Accounts Receivable that are between 61 and 90 days past due
as of the Effective Time, plus (v) 100% of the face amount of all agency
advertising Accounts Receivable that are current or ninety (90) days or less
past due as of the Effective Time, plus (vi) 50% of the face amount of all
agency advertising Accounts Receivable that are between 91 and 120 days past due
as of the Effective Time; provided, however, that if any advertising client has
any receivables greater than ninety (90) days in the instance of a direct-billed
advertiser, or greater than one-hundred twenty (120) days in the case of an
agency advertiser, the entire amount of such advertiser's account receivable
shall be disregarded except that such account receivable shall
<PAGE>
-12-
thereupon comprise an Excluded Asset and be retained by Seller at Closing with
Buyer remitting to Seller any payments which it may receive subsequent to
Closing with respect to such account receivable. For purposes of making "past
due" calculations with respect to Seller's customers, the monthly billing
statements of Seller's customers shall be deemed to be due and payable on the
first day of the monthly period of service to which such billing statements
relate. For purposes of making "past due" calculations with respect to
advertising receivables, billing statements shall be deemed to be due and
payable on the date of such billing statements.
(c) The Purchase Price payable under Section 2.3 shall be adjusted at
Closing by subtracting any customer deposits held by Seller, which Buyer is
assuming the responsibility post-Closing to pay or to provide goods or services
with respect thereto.
(d) The Purchase Price, taking into account the adjustments and prorations
pursuant to this Section 2.4, will be determined in accordance with the
following procedures:
(1) Seller shall prepare and deliver to Buyer not later than five
days before the Closing Date a preliminary settlement statement which shall set
forth Seller's good faith estimate of the adjustments to the Purchase Price
under this Section 2.4. The preliminary settlement statement shall contain all
information reasonably necessary to determine the adjustments to the Purchase
Price under this Section 2.4, to the extent such adjustments can be determined
or estimated as of the date of the preliminary settlement statement. For
purposes of the adjustment provided for in Section 2.4(e), the Customer
Adjustment Amount shall be estimated as of Closing by applying the criteria set
forth in definition of Basic Customer to a list of the Systems' customers
generated by the Systems' billing service no more than ten days prior to the
Closing Date, and the Revenue Adjustment Amount shall be estimated in good faith
by Seller based upon (i) the Systems' actual gross revenues during the two most
recent calendar months which ended prior to the date of the preparation of such
preliminary settlement statement, and (ii) the Systems' estimated gross revenues
for the then current calendar month during which such preliminary settlement
statement shall be prepared. Preliminary adjustments shall be made in accordance
with this statement, with any changes thereto agreed to between Buyer and
Seller.
(2) No later than sixty (60) days after the Closing Date, Seller will
deliver to Buyer a statement setting forth Seller's determination of the net
payment owing to Buyer or Seller, as the case may be, on account of the
adjustments to the Purchase Price under this Section 2.4 (the "POST-CLOSING
ADJUSTMENT"), together with all information reasonably necessary to determine
such net payment. This statement,
<PAGE>
-13-
if not disputed by Buyer as hereafter provided, shall be the basis of the Post-
Closing Adjustment. If Buyer disputes such amount determined by Seller, it shall
deliver to Seller within thirty (30) days after its receipt of Seller's
statement a statement setting forth its determination of the amount of the Post-
Closing Adjustment, together with all information reasonably necessary to
determine such amount ("BUYER'S STATEMENT"). If Buyer notifies Seller of its
acceptance of Seller's statement, or if Buyer fails to deliver its Buyer's
Statement within the 30-day period specified in the preceding sentence, Seller's
determination of the Post-Closing Adjustment shall be conclusive and binding on
the parties as of the last day of the 30-day period.
(3) Buyer and Seller shall use good faith efforts to resolve
any dispute involving the determination of the Post-Closing Adjustment. If the
parties are unable to resolve the dispute within fifteen (15) days following the
delivery of the Buyer's Statement, Buyer and Seller shall each set forth in
writing its determination of the Post-Closing Adjustment, and shall submit such
determinations to a mutually acceptable "Big Six" independent accounting firm
for resolution of the dispute. The accountant's resolution of the dispute shall
be final and binding on the parties, and a judgment may be entered thereon in
any court of competent jurisdiction. Any fees to the accountant shall be paid
by the nonprevailing party as shall be determined by the accountant, provided,
--------
however, that if the accountant does not make such determination, the fees shall
- -------
be shared equally by Buyer and Seller.
(e) The Purchase Price shall be reduced by the greater of the
"CUSTOMER ADJUSTMENT AMOUNT" and the "REVENUE ADJUSTMENT AMOUNT" (if either or
both of such amounts is a positive number). The Customer Adjustment Amount shall
be an amount equal to $2,699 multiplied by the number, if any, by which the
aggregate Equivalent Billing Units served by the Systems as of the Closing Date
is less than 87,056. The Revenue Adjustment Amount shall be an amount equal to
4.53 multiplied by the amount, if any, by which the Systems' Annualized Gross
Revenues as of the Closing Date are less than $51,887,616. The Systems'
"ANNUALIZED GROSS REVENUES" shall be an amount equal to the Systems' gross
revenues during the three calendar month period including and ending with that
calendar month the last day of which falls nearest the Closing Date, multiplied
by four.
2.5 Payment of Purchase Price. The Purchase Price shall be paid
-------------------------
by Buyer to Seller as follows:
(a) Payment of Purchase Price. At the Closing, Buyer shall pay or
-------------------------
cause to be paid to or for the account of Seller the Purchase Price as adjusted
by the estimated adjustments made in accordance with Sections 2.4 and 8.2(c)
(the "ESTIMATED PURCHASE PRICE") by federal wire transfer of immediately
available funds pursuant to wire instructions which shall be delivered by Seller
to Buyer no later than
<PAGE>
-14-
three business days before the Closing Date, which sum shall be reduced by the
amount of the Escrow Deposit, which is to be retained by the Escrow Agent to
secure payment by Seller of any indemnification obligations to Buyer in
accordance with the terms of the Indemnity Agreement.
(b) Payments to Reflect Adjustments.
-------------------------------
(1) If the Purchase Price as finally determined pursuant to Section
2.4(d) exceeds the Estimated Purchase Price, Buyer shall pay to Seller, in
immediately available funds within three business days after the date on which
the Purchase Price is determined pursuant to Section 2.4(d), the difference
between the Purchase Price and the Estimated Purchase Price.
(2) If the Purchase Price as finally determined pursuant to Section
2.4(d) is less than the Estimated Purchase Price, Seller shall pay to Buyer, in
immediately available funds within three business days after the date on which
the Purchase Price is determined pursuant to Section 2.4(d), the difference
between the Estimated Purchase Price and the Purchase Price.
2.6 Assumption of Liabilities and Obligations. As of the Closing Date,
-----------------------------------------
Buyer shall assume and pay, discharge and perform the following (the "ASSUMED
LIABILITIES") (i) all the obligations and liabilities of Seller under the
Franchises and the other Assumed Contracts insofar as they relate to the time
period after the Effective Time, (ii) all obligations and liabilities of Seller
to any customer of the Systems for any advance payments or deposits, if and to
the extent that an adjustment was made to the Purchase Price with respect to
such customer pursuant to Section 2.4(b) above, and (iii) all obligations and
liabilities arising out of events occurring after the Effective Time related to
Buyer's ownership of the Assets or its conduct of the business or operations of
the Systems after the Effective Time. All obligations and liabilities of Seller
other than the Assumed Liabilities, including (a) obligations with respect to
the Excluded Assets, including under any Contract not included in the Assumed
Contracts, (b) any obligations under the Assumed Contracts relating to the time
period prior to the Effective Time, and (c) any claims or pending litigation or
proceedings relating to the operation of the System prior to the Effective Time,
shall remain and be the obligations and liabilities solely of Seller.
SECTION : REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a limited
------------------------------------
partnershipduly organized, validly existing and in good standing under the laws
of the State of
<PAGE>
-15-
Delaware, and qualified to conduct business in the State of Maryland. Seller has
all requisite partnership power and authority (i) to own, lease and use the
Assets as presently owned, leased and used, (ii) to conduct the business or
operations of the Systems as presently conducted, and (iii) to execute, deliver
and perform this Agreement in accordance with its terms. Seller is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the Systems' operations or the Assets.
3.2 Authorization and Binding Obligation. No later than August 11, 1996,
------------------------------------
the execution, delivery and performance of this Agreement by Seller will have
been duly authorized by all necessary partnership actions on the part of Seller
and its partners, with written confirmation of the receipt of such authorization
having been provided by Seller to Buyer and with such authorization being in
full force and effect at and as of Closing. Subject to receipt by Seller of the
aforementioned approval of the Board of Directors of Seller's General Partner
and of Seller's partners, this Agreement has been duly executed and delivered by
Seller and constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except to the extent
such enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, and the
application of general principles of equity (collectively, the "ENFORCEABILITY
EXCEPTIONS").
3.3 Absence of Conflicting Agreements. Subject to obtaining the Consents,
---------------------------------
the execution, delivery and performance of this Agreement and the documents
contemplated hereby by Seller (with or without the giving of notice, the lapse
of time, or both): (i) do not require the consent of any third party, other than
such consents that result from the specific legal or regulatory status of Buyer
or that are immaterial to the operation of the Systems; (ii) will not conflict
with any provision of Seller's organizational documents; (iii) will not conflict
with, result in a breach of, or constitute a default under, (A) any Legal
Requirements applicable to Seller or the Systems or any immaterial Assumed
Contract, other than such conflicts, breaches or defaults that would not have a
material adverse effect on the Systems, (B) any judgment or order of any court
or governmental authority, or (C) any Franchise or any material Assumed
Contract; and (iv) will not create any claim, lien, liability, or encumbrance
upon the Assets.
3.4 Franchises and Contracts. Schedule 3.4 includes a list of the cable
------------------------ ------------
Franchises issued by Franchising Authorities, licenses issued by the FCC and
other material Franchises and Contracts in effect on the date hereof, except
for: (i) subscription agreements with customers, for cable services provided by
the Systems in the ordinary course of business, (ii) oral employment contracts
and miscellaneous service contracts terminable on not more than thirty (30)
days' notice, and (iii) other contracts entered into in the ordinary course of
business, not involving liabilities under
<PAGE>
-16-
all such contracts exceeding One Hundred Thousand Dollars ($100,000). Except as
noted on Schedule 3.4, Seller has delivered to Buyer copies of the Franchises
------------
and written Contracts listed on Schedule 3.4 (together with all amendments
------------
thereto), except for any such Contracts which are included in the Excluded
Assets. The Franchises and Contracts listed on Schedule 3.4, together with the
------------
agreements described in the exceptions listed above, comprise all franchises,
material licenses and permits, and material contracts, necessary to own and
operate the Systems. The Franchises and Contracts are in full force and effect
and are valid, binding and enforceable upon Seller and, to Seller's knowledge,
the other parties thereto in accordance with their terms, except to the extent
such enforceability may be limited by the Enforceability Exceptions. None of the
Franchises or Contracts would be breached by virtue of the transaction
contemplated hereby or by virtue of the assignment thereof by Seller to Buyer,
provided the Consents are obtained. Except as disclosed on Schedule 3.4, there
------------
is not (i) under any Franchise any default by Seller or, to Seller's knowledge,
any other party thereto, and (ii) under any material Contract any material
default by Seller or, to Seller's knowledge any other party thereto. Seller has
given appropriate notices in compliance with the Cable Act with respect to the
renewal of those cable Franchises listed on Schedule 3.4 and has made copies of
------------
such notices available to Buyer.
3.5 Title to and Condition of Real and Personal Property. Schedule 3.5
---------------------------------------------------- ------------
contains descriptions of all the Real Property and all material items of
Personal Property owned by Seller as of the date hereof. Seller has good and
marketable title to all of the fee estates included in the Real Property and all
of the tangible Personal Property which is not leased by Seller under leases
listed in Schedule 3.5, free and clear of all liabilities, liens, claims and
encumbrances, except for the following (the "PERMITTED ENCUMBRANCES"): (i) liens
for current taxes and other government charges not yet due and payable or liens
for taxes the payment of which is being contested in good faith in appropriate
proceedings, (ii) inchoate materialmen's, mechanics', carriers', workmen's and
repairmen's liens arising in the ordinary course of business, (iii) recorded
easements, rights-of-way, and other restrictions of record on the Real Property
and unrecorded easements and rights-of-way which do not have a material adverse
effect on the use of such property, and (iv) any other claims or encumbrances
which are described in Schedule 3.5 and annotated to indicate that such claims
------------
or encumbrances shall be removed prior to or at Closing. Seller has delivered
to Buyer copies of all deeds and other Contracts listed on Schedule 3.5
------------
pertaining to the Real or Personal Property (including any and all amendments or
modifications). Except as specified on Schedule 3.5, all tangible Personal
------------
Property and all improvements on fee estates included in the Real Property are
(a) in good condition and repair in all material respects (ordinary wear and
tear excepted) and (b) available for use in the conduct of the business or
operations of the Systems.
<PAGE>
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3.6 Intangibles. Schedule 3.6 contains a description of the Intangibles
----------- ------------
(exclusive of those required to be listed in Schedule 3.4), all of which are
------------
valid and in full force and
effect and uncontested. Except as described on Schedule 3.6, Seller is not
aware that it is infringing upon or otherwise acting adversely to any
trademarks, trade names, copyrights, service mark, service name, or similar
intellectual property rights owned by any other person or persons.
3.7 Consents. Except for the Consents described in Schedule 3.7, no
-------- ------------
consent, approval, permit or authorization of, or filing with any Franchising
Authority is required to be obtained by Seller to permit Seller to assign or
transfer the Franchises issued by the Franchising Authorities to Buyer. Except
for the Consents described in Schedule 3.7, no material consent, approval,
------------
permit or authorization of, or filing with any governmental authority or any
other third party is required to be obtained by Seller (i) to consummate this
Agreement and the transactions contemplated hereby, (ii) to permit Seller to
assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct the
business or operation of the Systems in essentially the same manner as such
business or operations are presently conducted.
3.8 Information on the Systems.
--------------------------
(a) Plant. As of May 31, 1996, the Systems had approximately 1,302
-----
miles of operational trunk and distribution cable, all of which, excluding no
more than 232 miles of such trunk and cable, has bandwidth capacity of dual 400
Mhz. The remaining, up to 232 miles has bandwidth capacity of dual 330 Mhz. As
of May 31, 1996, the Systems had approximately 78,400 Equivalent Billing Units
(prior to the June 1, 1996 rate adjustments) and at least 147,300 homes passed.
On the Closing Date, the Systems will have approximately 149,600 homes passed.
Schedule 3.8 lists all of the existing towers of the Systems. Except as set
forth in Schedule 3.8, Seller does not lease space on such towers to any third
party.
(b) Rates; Signals; Frequencies. Schedule 3.8 sets forth materially
--------------------------- ------------
true and accurate lists of the following information:
(1) a description of each class of service available from the
Systems, the rates charges by Seller for each, together with the number of
customers receiving each of the services as of June 30, 1996, and any other
charges by Seller for services to customers; and
(2) the channel and bandwidth capacity of each System, the
stations and signals carried by each System, the channel position of each such
signal and station, and all FCC restricted frequencies utilized by each System.
<PAGE>
-18-
Schedule 3.4 lists each must-carry election or retransmission consent agreement
- ------------
pursuant to which any broadcast station listed on Schedule 3.8 is carried by the
------------
Systems.
(c) Franchise and Pole Attachment Fees. The rates for all franchise fees
----------------------------------
payable with respect to the Franchises and for all pole attachment fees and the
number of poles covered by each of Seller's pole attachment agreements are
disclosed in Schedule 3.8 as of such dates as are set forth thereon. Seller is
------------
in compliance in all material respects with its pole attachment agreements and
Seller's pole attachments are in compliance in all material respects with its
pole lessors' rules and regulations. Except as disclosed in Schedule 3.8, Seller
------------
has not been notified in writing by any government authority or third party
regarding any material adjustment to the amount of franchise fees or pole
attachment fees paid by Seller to such authority or third party.
(d) Request for Signal Carriage. Seller has acted upon all written
---------------------------
requests or demands received from television broadcast stations to carry or to
terminate carriage of a television broadcast signal on any System. Seller has
not received any FCC order requiring any System to carry a television broadcast
signal or to terminate carriage of a television broadcast signal and, to
Seller's knowledge, no television broadcast station has filed a written
complaint with the FCC claiming that Seller carried or refused to carry a
television broadcast signal in violation of the requirements of the FCC's
mandatory broadcast signal carriage rules.
(e) Account Balances. All the account balances of Customers to the
----------------
Systems are actual and bona fide receivables representing obligations for
---- ----
services rendered in the regular course of Seller's business, in the total
dollar amount thereof shown on the books of Seller; provided, though, that no
-------- ------
representation or warranty is made with respect to the collectibility of such
Accounts Receivable by Buyer.
(f) FCC Filings. Seller has made available to Buyer complete and correct
-----------
copies of all material reports and filings made or filed by Seller with respect
to the Systems with the FCC pursuant to the Communications Act or FCC rules and
regulations since Seller acquired the Systems in October 1994.
(g) Cable Act of 1992. Seller has used reasonable, good faith efforts to
-----------------
establish rates charged to customers, and to its knowledge, it is charging such
rates that are allowable under the rules and regulations promulgated by the FCC
under the Cable Act if or to the extent that such rates are subject to
regulation by any governmental authority, including any Franchising Authority.
Notwithstanding the foregoing, Seller makes no representation or warranty that
the rates charged to customers would be allowable under any rules and
regulations of the FCC
<PAGE>
-19-
promulgated after the Closing Date. Seller has made available to Buyer complete
and correct copies of all FCC Forms 393, 1200, 1205, 1210, 1215 and 1240
provided to Franchising Authorities with respect to the Systems and copies of
all correspondence with any Franchising Authority relating to rate regulation
generally or specific rates charged to customers of the Systems. Except as
otherwise described in Schedule 3.8 or 3.14, as of the date of this Agreement,
--------------------
(i) to Seller's knowledge, there is no outstanding or unresolved Rate Regulatory
Matter, (ii) the Systems are not subject to any Rate Regulatory Reduction Order,
other than those affecting the cable industry generally, and (iii) no local
governmental authority has been certified by the FCC as a rate regulating
authority.
(h) Copyright. Seller is entitled to hold and does hold the compulsory
---------
copyright license described in Section 111 of the Copyright Act, which
compulsory copyright license is in full force and effect and has not been
revoked, cancelled, encumbered or adversely affected in any respect except
relating to any immaterial disputes which may arise after the date hereof with
respect to copyright fees payable with respect to the operation of the Systems
by Seller.
(i) Commitments. Except as described on Schedule 3.8, there are no
----------- ------------
unfulfilled binding material commitments for capital improvements which Seller
is obligated to make in connection with the Systems. There are no obligations
or liabilities to customers or to other users of Seller's services which are
material to the business of the Systems, except: (i) with respect to deposits
made by such customers or such other users; (ii) the obligation to supply
services to customers in the ordinary course of business pursuant to the
Franchises; and (iii) its obligations with respect to leased access channels,
public, educational and governmental channels, and other similar obligations to
other users of the Systems under the Franchises and Legal Requirements. Except
as described on Schedule 3.8, or on Schedule 3.12 with respect to certain of
------------ -------------
Seller's employees and other persons, there is no free service liability
existing with respect to customers of the Systems. Except with respect to
deposits for converters, encoders, decoders and related equipment, and any other
item which is to be adjusted for pursuant to Section 2.4 hereof, Seller has no
obligation or liability for the refund of monies or for the provision of rebates
to its customers. Except as set forth in the Franchises, with respect to the
Systems, Seller has not made a commitment to any Franchising Authority to
maintain a local office in any location. Except as described on Schedule 3.8,
------------
Seller has not made any commitment to any Franchising Authority to pay franchise
fees to any such authority in excess of the amounts set forth in the Franchises.
(j) Other Operators. As of the date of this Agreement, Schedule 3.8 lists
--------------- ------------
the SMATV systems which, to Seller's knowledge, serves customers within the
areas of Prince George's County served by the Systems. As of the date of this
Agreement,
<PAGE>
-20-
to Seller's knowledge based upon inquiry by Seller with the cable Franchising
Authorities, Buyer holds the only other cable Franchise which has been issued
with respect to any of the communities served by the Systems.
3.9 Financial Statements. Seller has delivered to Buyer true and complete
--------------------
copies of (i) the audited financial statements of Seller, containing a balance
sheet and statement of income as at and for Seller's fiscal year ended December
31, 1995, and (ii) the unaudited balance sheet and statement of income as at and
for Seller's three-month period ended March 31, 1996. Such financial statements
have been prepared in accordance with generally accepted accounting principles
consistently applied, and present fairly the financial condition of the Systems
as at, respectively, December 31, 1995, and March 31, 1996, and the financial
results of operations during the respective periods then ended, except that the
unaudited financial statements do not include footnotes or customary year-end
adjustments.
3.10 Taxes and Tax Returns. All Tax Returns have been filed with the
---------------------
appropriate governmental agencies in all jurisdictions in which such Tax Returns
are required to be filed, and all Taxes shown on such Tax Returns have been
properly accrued or paid to the extent such Taxes have become due. Seller has
received no notice of, nor does Seller have any knowledge of, any notice of
deficiency or assessment of proposed deficiency or assessment from any taxing
governmental authority with respect to the Systems or the Assets except as
described on Schedule 3.15. There are no outstanding agreements or waivers by
-------------
Seller that extend the statutory period of limitations applicable to any
federal, state, local or foreign tax returns or taxes with respect to the
Systems or the Assets.
3.11 Insurance and Bonds. Schedule 3.11 comprises a list of all insurance
------------------- -------------
policies of Seller, currently in full force and effect, which insure the Systems
or any part of the Assets, and a list of all surety and performance bonds in
connection with the Systems.
3.12 Personnel Matters. Schedule 3.12 contains a list of all employees of
----------------- -------------
the Systems as of May 31, 1996, and all Employee Plans. Except as described in
Schedule 3.12, Seller has no written or oral contracts of employment with any
- -------------
employee of the Systems other than oral employment agreements terminable at will
without penalty. Seller is not required to contribute to any "MULTIEMPLOYER
PLAN," as defined in ERISA Section 3(37), nor has Seller withdrawn from such a
"MULTIEMPLOYER PLAN." Seller is not a party to or subject to any collective
bargaining agreements with respect to the Systems, and no labor union or other
collective bargaining unit represents or, to the best knowledge of Seller,
claims to represent any of the employees of the Systems. Seller has furnished
Buyer with true and complete copies of all employee handbooks, employee rules
and regulations, and Employee
<PAGE>
-21-
Plans, if any. No reportable event, within the meaning of Title IV of ERISA, has
occurred and is continuing with respect to any such Employee Plan or; and no
prohibited transaction, within the meaning of Title I or ERISA, has occurred
with respect to any such Employee Plan. With respect to any persons employed by
Seller who render services in connection with the Systems, Seller is not liable
for any arrears of wages or any taxes or penalties for failure to comply with
any of the foregoing. There are no existing or, to Seller's knowledge,
threatened, labor strikes, disputes, or grievances affecting the Systems or
other labor controversies which could reasonably be expected to have a material
and adverse effect on the financial condition or operations of the Systems.
3.13 Environmental Laws.
------------------
(a) Except as disclosed in Schedule 3.13 hereto, (i) Seller's
-------------
operations with respect to the Systems and its use of the Real Property comply
in all material respects with all applicable Environmental Laws as in effect on
the date upon which this representation is being made; (ii) Seller has not used
the Real Property for, and has no knowledge that the Real Property has been used
for, the manufacture, transportation, treatment, storage or disposal of
Hazardous Substances except for such use of Hazardous Substances (in cleaning
fluids, solvents and other similar substances) customary in the construction,
maintenance and operation of a cable television system and in amounts or under
circumstances that would not reasonably be expected to give rise to liability
for remediation; and (iii) to Seller's knowledge, the Real Property complies in
all material respects with all applicable Environmental Laws. Except as
described in Schedule 3.13 hereto, no surface impoundments or underground
-------------
storage tanks are located on or, to Seller's knowledge, have been located on the
Real Property. Seller has delivered to Buyer copies of all environmental reports
and studies that Seller has commissioned with respect to the Real Property, and
such copies are true, complete and accurate copies of such reports and studies.
(b) The following definitions shall be used in this Section
3.13:
"ENVIRONMENTAL LAW" means any requirement of federal, state or local
law pertaining to land use, air, soil, surface water, groundwater (including the
protection, cleanup, removal, remediation or damage thereof), public or employee
health or safety or other environmental matter, or to emissions, discharges, or
releases or threatened releases of any Hazardous Substance, including the
following laws as the same may be amended from time to time: (i) Clean Air Act
(42 U.S.C. (S) 7401, et seq.); (ii) Clean Water Act (33 U.S.C. (S) 1251 et
-- --- --
seq.); (iii) Resource Conservation and Recovery Act (42 U.S.C. (S) 6901, et
- --- --
seq.); (iv) the Comprehensive Environmental Response Compensation Liability Act,
- ---
as amended, 42 U.S.C. (S) 9601, et seq. ("CERCLA");
<PAGE>
-22-
(v) Safe Drinking Water Act (42 U.S.C. (S) 300f et seq.); and (vi) Toxic
-- ---
Substance Control Act (15 U.S.C. (S) 2601, et seq.).
-- ---
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, hazardous or
toxic substance or material that is: (i) designated as a "hazardous substance"
pursuant to Section 307 of the Clean Water Act, 33 U.S.C. Section 1251, et seq.
-- ---
(33 U.S.C. (S) 1317); (ii) defined as a "hazardous waste" pursuant to Section
1004 of the Federal Solid Waste Disposal Act, as amended, 42 U.S.C. Section
6901, et seq. (42 U.S.C. (S) 6903); or (iii) defined as a "hazardous substance"
-- ---
pursuant to Section 101 of CERCLA.
3.14 Claims and Legal Actions. Except (i) as set forth on Schedule 3.14,
------------------------ -------------
(ii) proceedings affecting the cable television industry generally, and (iii)
proceedings arising between the date of the execution of this Agreement and the
Closing Date which would not reasonably be expected to have a material adverse
effect on the Systems, there is no claim, legal action, arbitration,
governmental investigation or other legal, administrative or tax proceeding, nor
any order, decree or judgment, in progress or pending, or to the knowledge of
Seller threatened, against or relating to Seller, the Assets, or the business or
operations of the Systems, including any which individually or in the aggregate
could reasonably be expected to adversely affect the ability of Seller to
perform its obligations under this Agreement or which, if adversely determined,
would restrain or enjoin the consummation of the transactions contemplated by
this Agreement or declare unlawful the transactions contemplated by this
Agreement or cause any of such transactions to be rescinded. To the best of
Seller's knowledge, there are no pending written complaints by customers or
other users of Seller's services that, individually or in the aggregate, could
materially and adversely affect the financial condition of the Systems or the
Assets. Other than requests for network nonduplication and syndex protection or
as described on Schedule 3.14, no written requests have been received by Seller
-------------
since October 1994 from the FCC, the United States Copyright Office or any other
person challenging or questioning the right of Seller to operate the Systems and
any FCC-licensed or registered facility used in conjunction with Seller's
operation of the Systems. Seller is not, to its knowledge, the subject of (i)
any "Superfund" evaluation or investigation or proceeding in connection with the
Real Property, and (ii) any investigation or proceeding of any governmental
authority evaluating whether any remedial action is necessary to respond to any
release of Hazardous Substances on or in connection with the Real Property.
3.15 Compliance with Laws. Except as disclosed on Schedule 3.15, Seller
-------------------- -------------
has complied with, and to Seller's knowledge, the Systems and Assets are in
compliance with, in all material respects all applicable Legal Requirements.
Seller is permitted under all applicable Franchises and FCC rules, regulations
and orders to distribute the
<PAGE>
-23-
Signals (except for any inadvertent failure by the Systems to comply with the
FCC's nonduplication and syndex rules) and to utilize all carrier frequencies
generated by the operations of the Systems, and is licensed in all material
respects to operate all the facilities required by law to be licensed. Without
limiting the generality of the foregoing, except as disclosed on Schedule 3.15,
-------------
Seller has complied with, and to Seller's knowledge, the Systems and the Assets
are in compliance with, in all materialrespects, the following:
(a) Personnel Matters. Legal Requirements under ERISA and the
-----------------
National Labor Relations Act, as amended, or regarding employment conditions
and practices (including withholding requirements from wages or salaries),
prohibitions upon employment discrimination, and unfair labor practices;
(b) Communications Act. Legal Requirements under the Communications
------------------
Act, including FCC filing requirements, notices to subscribers and FCC equal
opportunity rules;
(c) Cable Act. Legal Requirements under the Cable Act, the FCC rules
---------
and regulations promulgated thereunder, and the must-carry and
retransmission consent provisions thereof;
(d) CLI. Legal Requirements regarding cumulative leakage index
---
testing with respect to the Systems, including the maintenance of
appropriate records related thereto and the correction of any radiation
leakage required to be corrected under FCC rules and regulations;
(e) FAA Rules and Regulations. Legal Requirements of the Federal
-------------------------
Aviation Administration; and
(f) Copyright. Legal Requirements of the Copyright Act.
---------
3.16 Conduct of Business in Ordinary Course. Since March 31, 1996, Seller
--------------------------------------
has conducted the business and operations of the Systems only in the ordinary
course and has not (i) made any material increase in compensation payable or to
become payable to any of the employees of Seller, or any material change in
personnel policies, insurance benefits or other compensation arrangements
affecting the employees of Seller, or (ii) made any sale, assignment, lease or
other transfer of any of Seller's properties other than Excluded Assets,
obsolete assets no longer usable in the operation of the Systems, or other
assets sold or disposed of in the normal course of business with suitable
replacements being obtained therefor.
<PAGE>
-24-
3.17 No Material Adverse Change. Since March 31, 1996, there has been (i)
--------------------------
no material adverse change in the Systems or their financial condition, taken as
a whole, other than any change arising out of matters of a general economic
nature or matters (including competition caused by or arising from other
multiple channel distribution services and from litigation, legislation,
rulemaking or regulation) affecting the cable television industry generally, and
(ii) no material loss, damage, impairment, confiscation or condemnation of any
of the Assets that has not been repaired or replaced in all material respects.
3.18 Accuracy of Schedules. All Schedules to this Agreement are accurate
---------------------
and complete in all material respects as of the date of this Agreement.
3.19 Disclosure. No representation or warranty by Seller, or any statement
----------
or certificate furnished by Seller to Buyer pursuant to this Agreement or in
connection with the transaction contemplated by this Agreement, contains or will
on the Closing Date contain any untrue statement of a material fact or omits or
will on the Closing Date omit to state a material fact necessary to make the
statements contained therein not misleading.
SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
------------------------------------
organized, validly existing and in good standing under the laws of the State of
Colorado, and shall be, at Closing, qualified to conduct business in the State
of Maryland. Buyer has all requisite corporate power and authority to execute,
deliver and perform this Agreement in accordance with its terms.
4.2 Authorization and Binding Obligation. No later than August 11, 1996,
------------------------------------
the execution, delivery and performance of this Agreement by Buyer will have
been duly authorized by all necessary corporate actions on the part of Buyer,
with written confirmation of the receipt of such authorization having been
provided by Buyer to Seller and with such authorization being in full force and
effect at and as of Closing. Subject to receipt by Buyer of the aforementioned
approval of the Board of Directors of Buyer, this Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except to the extent such enforceability may be limited by the Enforceability
Exceptions.
4.3 Absence of Conflicting Agreements. Subject to obtaining the Consents,
---------------------------------
the execution, delivery and performance of this Agreement and the documents
<PAGE>
-25-
contemplated hereby by Buyer (with or without the giving of notice, the lapse of
time, or both): (i) does not require the consent of any third party; (ii) will
not conflict with Buyer's organizational documents; or (iii) will not conflict
with, result in a breach of, or constitute a default under, any applicable Legal
Requirements applicable to Buyer, or any contract or agreement to which Buyer is
a party or by which Buyer may be bound, such that Buyer could not perform its
obligations hereunder.
4.4 Qualification. To Buyer's knowledge, Buyer has the requisite
-------------
qualifications to be the transferee of the Franchises and the owner and operator
of the Assets and Systems.
4.5 Litigation. There is no claim, legal action, arbitration,
----------
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment, in progress or pending, or to the knowledge of Buyer
threatened, against or relating to Buyer, which would give any third party the
right to enjoin, rescind or condition the transactions contemplated hereunder
other than proceedings affecting the cable television industry generally.
4.6 Buyer's Investigation. Buyer hereby acknowledges that it has
---------------------
conducted an investigation of the physical plant of the Systems which
investigation included evaluation of the condition and performance of the
physical plant. Notwithstanding anything in this Agreement to the contrary,
Buyer acknowledges that Seller has made no warranty, express or implied, as to
the condition or suitability of the Assets except for such representations and
warranties of Seller set forth in Section 3 hereof. Buyer has not relied upon,
and Seller shall not be liable for or bound in any manner by, any express or
implied verbal or written information, warranties, promises, statements,
inducements, representations or opinions pertaining to the Systems or the
Assets, except as may be contained this Agreement or the Schedules hereto, or in
instruments or certificates delivered at Closing hereunder.
4.7 Disclosure. No representation and warranty by Buyer, or any statement
----------
or certificate furnished by Buyer to Seller pursuant to this Agreement or in
connection with the transaction contemplated by this Agreement, contains or will
on the Closing Date contain any untrue statement of a material fact or omits or
will on the Closing Date omit to state a material fact necessary to make the
statements contained therein not misleading.
<PAGE>
-26-
SECTION 5: COVENANTS OF SELLER
-------------------
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
---------------------
with the written consent of Buyer, which consent shall not be unreasonably
withheld, between the date hereof and the Closing Date, Seller shall operate the
Systems in the ordinary course of business in accordance with its past practices
(except where such would conflict with the following covenants or with Seller's
other obligations hereunder) and abide by the following negative and affirmative
covenants:
(a) Negative Covenants. Seller shall not do any of the following:
------------------
(1) Compensation. Increase annual recurring compensation
------------
payable or to be payable to any person employed in connection with the
conduct of the business or operations of the Systems, except in accordance
with past practices and then, no more than 5% per annum;
(2) Contracts. Subject to Section 6.1 with respect to Franchises, and
---------
Section 6.16 with respect to Seller's "must-carry" elections and
retransmission consent agreements, modify or amend in any material respect
any Assumed Contract except such immaterial Assumed Contracts which may be
modified or amended in the ordinary course of business so long as the
additional liability under such amended Assumed Contracts shall not exceed,
in the aggregate, $50,000 (not including additional liability under
Contracts which are terminable at will without penalty); or enter into any
new Contracts that will be binding on Buyer except (i) agreements for the
provision of services to customers, or (ii) contracts or commitments entered
into in the ordinary course of business; provided, however, that the
liability under such contracts or commitments shall not exceed, in the
aggregate, $100,000 (other than those contracts which are terminable at will
without penalty);
(3) Disposition of Assets. Sell, assign, lease, or otherwise
---------------------
transfer or dispose of any of the Assets, except for assets consumed or
disposed of in the ordinary course of business that are obsolete and no
longer usable in the operation of the Systems or are replaced by property of
equivalent kind and value;
(4) Encumbrances. Create, assume or permit to exist any claim,
------------
liability, lien, or encumbrance upon the Assets, except for the Permitted
Encumbrances or as permitted by Section 2.6;
(5) Franchises. Do any act or fail to do any act which could
----------
reasonably be expected to result in the expiration, revocation, suspension,
non-
<PAGE>
-27-
renewal or materially adverse modification of any of the cable
Franchises issued by any Franchising Authority, or fail to prosecute with
due diligence any applications to any governmental authority in connection
with the operation of the Systems;
(6) No Inconsistent Action. Take any action which is inconsistent in
----------------------
any material respect with its obligations hereunder or which would
reasonably be expected to materially hinder or delay the consummation of the
transaction contemplated by this Agreement;
(7) Offers. Offer the Assets or the Systems for sale, entertain
------
offers for the Assets or the Systems or otherwise negotiate for the sale of
the Assets or the Systems or make information about the Assets or the
Systems available to any third party;
(8) Marketing Promotions. Offer customers or solicit prospective
--------------------
customers except through the use of marketing promotions consistent with
Seller's past practices, its marketing plan for the Systems which has been
delivered to Buyer, or with respect to pay services, through the offer of
discounts on pay services in accordance with programs adopted by the
providers of such pay services;
(9) Changes in Rates and Programming. Except as set forth on
--------------------------------
Schedule 5.1(a), or otherwise required by applicable Legal Requirements,
---------------
change the rates charged by the Systems for any class of service, change any
other customer charges or institute any new charges, add or delete any
programming services on the Systems, or change the mix of programming which
comprises each class of service; or
(10) Waivers. Waive any material right relating to the Systems or the
-------
Assets.
(b) Affirmative Covenants. Seller shall do the following:
---------------------
(1) Access to Information. Allow Buyer and its authorized
---------------------
representatives reasonable access at Buyer's expense during normal business
hours to the Assets and to all other properties, equipment, books, records,
Contracts and documents relating to the Systems for the purpose of audit and
inspection, and furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and business of
the Systems as Buyer may reasonably request. Any such audit, investigation
or request for information shall be conducted in such a manner as not to
interfere
<PAGE>
-28-
unreasonably with the business or operations of the Systems,
provided, however, that neither the furnishing of such information to Buyer
-------- -------
or its representatives nor any investigation made heretofore or hereafter by
Buyer shall affect Buyer's right to rely on any representation or warranty
made by Seller in this Agreement, each of which shall survive any furnishing
of information or any investigation, and provided, further, that Buyer shall
-------- -------
provide written notice to Seller if Buyer determines that based upon
information provided to Buyer or through its investigation, Seller is in
breach of any of its representations or warranties set forth in this
Agreement;
(2) Maintenance of Assets. Maintain all of the Personal Property or
---------------------
replacements thereof and all buildings or other improvements located on the
Real Property in good condition (ordinary wear and tear excepted), and use
all of the Personal Property and all buildings or other improvements located
on the Real Property in a reasonable manner, with inventories of spare parts
and expendable supplies being maintained at levels consistent with past
practices;
(3) Maintenance of Personnel, Inventory and Plant. Maintain
---------------------------------------------
appropriate staff and management personnel at the Systems consistent with
past practices, maintain adequate inventories consistent with past
practices, fulfill installation requests in accordance with past practices,
and complete line extensions and place conduit or cable in new developments
consistent with Seller's annual budgets;
(4) Insurance. Maintain the existing insurance policies on the
---------
Systems and the Assets;
(5) Consents. Use its commercially reasonable best efforts to obtain
--------
the Consents;
(6) Books and Records. Maintain its books and records in accordance
-----------------
with past practices;
(7) Notification. Promptly notify Buyer of any material change in any
------------
of the information contained in Seller's representations and warranties
contained in Section 3 hereof or in the schedules hereto;
(8) Financial Information. Furnish to Buyer within thirty (30) days
---------------------
after the end of each month between the date hereof and the Closing Date, a
statement of income and expense for the month just ended and such other
financial information as Buyer may reasonably request and which is prepared
in the ordinary course of business in accordance with past practices;
<PAGE>
-29-
(9) Compliance with Laws. Comply in all material respects with all
--------------------
Legal Requirements applicable to the operation of the Systems;
(10) Keep Organization Intact. Use its reasonable efforts to preserve
------------------------
intact its business and organization relating to the Systems and preserve
for Buyer the goodwill of its suppliers, customers and others having
business relations with it;
(11) Contracts. Prior to the Closing Date, deliver to Buyer a list of
---------
all Contracts entered into between the date hereof and the Closing Date of
the type required to be listed in Schedule 3.4, together with copies of such
Contracts.
5.2 Requests for Written Consent. In the event that between the date
----------------------------
hereof and the Closing Date Seller shall wish to take an action which is not
permitted by Section 5.1 without the prior written consent of Buyer, Seller may
give written notice to Buyer to request its consent, with such notice being
given in accordance with Section 11.2 hereof
and providing a reasonably detailed description of the action which Seller
wishes to take, including, in the event that such action comprises Seller's
execution of a particular Contract, a copy of such Contract. If within ten (10)
business days of Seller's notice, Seller shall not have received notice from
Buyer regarding either the grant of Buyer's consent to such action or Buyer's
refusal to grant its consent (with such notice providing a good faith
explanation of such denial), Seller may enter into such Contract or take such
other requested action that shall have been described in its notice to Buyer.
5.3 Further Assurances. After the Closing, Seller will take such actions,
------------------
and execute and deliver to Buyer such further deeds, bills of sale, assignments
or other transfer documents as, in the reasonable opinion of counsel for Buyer,
may be necessary to evidence the transfer of the Assets to Buyer pursuant to
this Agreement; provided that Buyer shall be responsible for all fees, taxes and
other costs (other than Seller's attorneys' fees and expenses) payable with
respect to the filing or recording of any such further deeds, bills of sale,
assignments or other transfer documents.
SECTION 6: SPECIAL COVENANTS AND AGREEMENTS
--------------------------------
6.1 Consents.
--------
(a) Within thirty (30) days after the execution hereof, Buyer and
Seller shall submit appropriate FCC Forms 394 to the Franchising Authorities,
and on a timely basis Seller shall request the Consent of such other third
parties whose Consents are required for the consummation hereof. Seller shall
thereafter use its
<PAGE>
-30-
commercially reasonable efforts to obtain the Consents as expeditiously as
possible, each such Consent being in form and substance reasonably satisfactory
to Buyer. Consents for transfers of Franchises and Assumed Contracts,
respectively, will be deemed to be satisfactory to Buyer if they are similar in
all material respects to the applicable forms attached as Exhibit 6.1(a)(1) and
Exhibit 6.1(a)(2) or, with respect to Franchise Consents, if they are similar in
all materials respects to the terms of the Consent given by Prince George's
County to Buyer (or its Affiliate) with respect to its acquisition of the cable
television system serving the southern portion of Prince George's County;
provided, however, that no Consent shall include any material adverse change to
- -------- -------
the terms of the underlying instrument to which the Consent applies unless
otherwise agreed to by Buyer. If notwithstanding its commercially reasonable
efforts, Seller is unable to obtain such Consents, Seller shall not be liable to
Buyer for any breach of covenant (but Buyer shall have no obligation to effect
the Closing unless the condition set forth in Section 7.1(c) hereof shall have
been satisfied). Nothing herein shall require the expenditure or payment of any
funds (other than in respect of normal and usual attorneys fees, filing fees or
other normal costs of doing business) or the giving of any other consideration
by Seller in order to obtain any Consent; provided, however, that all reasonable
fees or out-of-pocket costs (for example, application fees) imposed by
Franchising Authorities in connection with obtaining Consents therefrom shall be
borne by Seller.
(b) Buyer agrees to cooperate fully with Seller in obtaining any necessary
Consents, but Buyer will not be required (i) to make any payment to any person,
entity or Franchising Authority from whom such Consent is sought or (ii) to
accept any material changes in, or the imposition of any adverse condition to
any Franchise or any material Assumed Contract as a condition to obtaining any
Consent. Seller shall bear any costs required to remedy any item of
noncompliance by Seller with the terms of all Franchises. Buyer shall bear any
costs arising with respect to the performance of the Franchises post-Closing
(other than any costs arising as a result of noncompliance by Seller with any
Franchise) in accordance with the terms of any Franchises (including any
amendments or modifications) executed or assumed by Buyer or under the terms of
any Consents granted by any Franchising Authority and agreed to by Buyer.
Seller and Buyer shall jointly participate in negotiations with Franchising
Authorities and other third parties with respect to the Consents. Buyer agrees
that it shall not, without the prior written consent of Seller (which may be
withheld at Seller's sole discretion), seek amendments or modifications to the
Franchises or other Assumed Contracts which could reasonably be expected to
delay or prevent obtaining the necessary Consents.
(c) Buyer shall promptly furnish to any Franchising Authority or other
third party such accurate and complete information regarding Buyer, including
financial information concerning Buyer and other information relating to the
cable and
<PAGE>
-31-
other media operations of Buyer (other than information which Buyer
reasonably deems to be proprietary), as a Franchising Authority or other third
party may reasonably require in connection with obtaining any Consent, and Buyer
shall promptly furnish to Seller a copy of any such information provided to a
Franchising Authority or other third party, and any other information concerning
Buyer as Seller may reasonably request in connection with obtaining any Consent.
Buyer shall ensure that its appropriate officers and employees shall be
available to attend, as Seller or the Franchising Authorities may reasonably
request, any scheduled hearings or meetings in connection with obtaining any
Consent.
6.2 Cooperation. Buyer and Seller shall cooperate fully with each other
-----------
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
reasonably necessary and desirable to the implementation and consummation of
this Agreement, and otherwise use their commercially reasonable efforts to
consummate the transactions contemplated hereby and to fulfill their obligations
hereunder.
6.3 Buyer's Qualifications and Financing.
------------------------------------
(a) Buyer will not take any action that could reasonably be expected
to disqualify Buyer to be the transferee of the Franchises or the owner and
operator of the Assets and Systems. Should Buyer become aware of any fact or
circumstance that would disqualify Buyer as transferee of the Franchises or the
owner and operator of the Assets and Systems, Buyer will promptly notify Seller
in writing thereof and use its reasonable best efforts to remove any such
disqualifying fact or circumstance.
(b) At all times between the date hereof and the Closing Date, Buyer
will take all necessary or advisable actions to ensure, and Buyer will ensure,
that funds sufficient to permit Buyer to pay the Purchase Price will be
available on the Closing Date.
(c) Buyer will not take any action that is inconsistent with its
obligations under this Agreement or which would reasonably be expected to
materially hinder or delay the consummation of the transaction contemplated by
this Agreement.
6.4 Brokers. Except for the brokerage fee due Goldman, Sachs & Co., which
-------
fee shall be paid solely by Seller, and the brokerage fee due Jones Financial
Group, Inc., which fee shall be paid solely by Buyer, Buyer and Seller each
represents and warrants that neither it nor any person or entity acting on its
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transaction contemplated by this Agreement.
<PAGE>
-32-
6.5 Bonds, Letters of Credit, etc. Buyer shall take all necessary steps,
-----------------------------
and execute and deliver all necessary documents, to ensure that Buyer shall have
delivered on the Closing Date bonds, letters of credit, indemnity agreements and
similar instruments in the amounts and in favor of the persons referred to in
Schedule 3.11.
- -------------
6.6 Billing Obligations. Subject to the receipt of any necessary consents
-------------------
from CableData, Buyer shall, at its expense, be permitted by Seller to use its
CableData billing system computers, software and other fixed assets relating
thereto for a period of up to sixty (60) days after the Closing Date in order to
complete the transition to Buyer's billing system. Seller shall cooperate,
subject to reimbursement of its reasonably incurred expenses, with all
reasonable requests by Buyer in connection with such billing transition
following the Closing.
6.7 Confidentiality/Press Releases. Buyer and Seller will each hold and
------------------------------
will cause its officers, directors, employees, lenders, accountants,
representatives, agents, consultants and advisors to hold in confidence all
information (other than such information as may be publicly available) furnished
by such party ("PROVIDER") to the other party ("RECEIVER") in connection with
the transactions contemplated by this Agreement, as well as all information
concerning Provider, its Affiliates or its assets, business or operations
contained in any analyses, compilations, studies or other documents prepared by
or on behalf of Receiver based on information provided by Provider
(collectively, the "INFORMATION"). Neither Buyer nor Seller as Receiver, will,
without the prior written consent of Provider, release or disclose any
Information regarding Provider to any other person, except to Receiver's own
officers, directors, employees, lenders, accountants, representatives, agents,
consultants and advisors who need to know the Information in connection with the
consummation of the transactions contemplated by this Agreement, who are
informed of the confidential nature of the Information and who agree to be bound
by the terms and conditions of this Section 6.7.
(a) In the event Receiver or any person to whom Receiver transmits
Information regarding Provider pursuant to this Agreement becomes legally
compelled to disclose any of such Information, Receiver will provide Provider
with prompt notice so that Provider may seek a protective order or other
appropriate remedy. In the event that such protective order or other remedy is
not obtained, Receiver will furnish only that portion of the Information which
Receiver is legally required to disclose.
(b) If the transactions contemplated by this Agreement are not
consummated, Buyer and Seller each, as Receiver, agree that: (i) the
Information, except for that portion thereof which consists of analyses,
compilations, studies or other documents prepared by or on behalf of Receiver,
will be returned to Provider
<PAGE>
-33-
immediately upon Provider's request therefor; and (ii) that portion of the
Information which consists of analyses, compilations, studies or other documents
prepared by or on behalf of Receiver will be held by Receiver and kept
confidential and subject to the terms of this Section 6.7, or will be destroyed.
(c) No press release or public disclosure, either written or oral, of the
existence or terms of this Agreement shall be made by either Buyer or Seller
without the consent of the other, and Buyer and Seller shall each furnish to the
other advance copies of any release which it proposes to make public concerning
this Agreement or the transactions contemplated hereby and the date upon which
Buyer or Seller, as the case may be, proposes to make such press release. This
provision shall not, however, be construed to prohibit any party from (i) making
any disclosures to any governmental authority which it is required to make under
any Legal Requirement, or from filing this Agreement with, or disclosing the
terms of this Agreement to, any institutional lender to such party or potential
investor in such party, or (ii) subsequent to the Closing, disclosing the
existence of this Agreement, its consummation, and other information that has
previously become publicly known or available through press releases or public
disclosures previously authorized or coordinated between the parties.
6.8 Risk of Loss.
------------
(a) The risk of any loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing. In the event of any
loss, damage or impairment, confiscation or condemnation, the proceeds of any
claim for loss payable under any insurance policy, judgment or award with
respect thereto shall be applied to repair, replace or restore such Assets to
their prior condition as soon as possible after such loss, impairment,
condemnation or confiscation.
(b) In the event of any damage or destruction of the Assets described
above, if such Assets have not been restored or replaced and the affected
System's normal and usual transmission resumed by the Closing Date: (1) Buyer
may elect, at its option, to close this Agreement and complete the restoration
and replacement of such damaged Assets after the Closing Date, in which event
Seller shall (i) deliver to Buyer all remaining insurance proceeds received, to
the extent not already expended by Seller in connection with such damage or
destruction of the Assets, and (ii) Buyer shall bear any additional costs or
expenses incurred by Buyer, in excess of such insurance proceeds, in completing
such restoration and replacement; or if Buyer does not so elect the preceding
option, either Buyer or Seller may elect, at its option, to delay Closing up to
the earlier of sixty (60) days or until such Assets are repaired or restored, or
(3) if neither Buyer or Seller shall so elect any of the preceding options,
<PAGE>
-34-
either Buyer or Seller may elect, at its option, to terminate this Agreement
forthwith without any further obligation hereunder by written notice to the
other party hereto.
(c) If any damage or destruction of the Assets or any other event occurs
which does not prevent signal transmission by the Systems in the normal and
usual manner and if such damaged or destroyed Assets can be repaired, replaced
or restored to their prior condition at an aggregate expense of less than Two
Million Five Hundred Thousand Dollars ($2,500,000), (1) Buyer may elect, at its
option, to close this Agreement and complete the restoration and replacement of
such damaged Assets after the Closing Date, in which event Seller shall (i)
deliver to Buyer all remaining insurance proceeds received, to the extent not
already expended by Seller in connection with such damage or destruction of the
Assets, and (ii) Buyer shall bear any additional costs or expenses incurred by
Buyer, in excess of such insurance proceeds, in completing such restoration and
replacement; or (2) if Buyer does not so elect the preceding option, Seller
shall proceed to repair or restore such Assets with the Closing being delayed
until such repair or restoration has been completed, with Seller using its
commercially reasonable efforts to complete such restoration within sixty (60)
days of the initially scheduled Closing Date; provided, however, that if such
-------- -------
restoration is not completed within such 60-day period, either Buyer or Seller
may elect, at its option, to terminate this Agreement forthwith without any
further obligation hereunder by written notice to the other party hereto.
6.9 Antitrust Laws Compliance. No later than thirty (30) days after the
-------------------------
date of the execution hereof, Buyer and Seller will each make filings as
required under Title II of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR ACT"). Seller and Buyer shall each pay one-half of
all fees payable to governmental authorities in connection with such filings.
Each party will cooperate with the other in accomplishing such filings and will
keep the other party apprised of the status of any inquiries made of such party
by the Federal Trade Commission, the Antitrust Division of the U.S. Department
of Justice, or any other governmental agency with respect to this Agreement or
the transaction contemplated hereby. The transfer of the Assets hereunder is
expressly conditioned upon the waiting period relating to any such filings
having duly expired or been duly terminated by the appropriate government
agencies without the commencement of any action by any such agencies to restrain
or postpone the transaction contemplated hereby.
6.10 Access of Seller to Records. Seller shall, for a period of three (3)
---------------------------
years from the Closing Date, have access to, and the right to copy, at its
expense, during usual business hours upon reasonable prior notice to Buyer, all
books and records relating to the Systems which are transferred and conveyed to
Buyer pursuant to this Agreement. Buyer shall retain and preserve all such
books and records for such
<PAGE>
-35-
three-year period. Subsequent to such three-year period, Buyer shall only
destroy the aforesaid books and records if there is no ongoing governmental
audit or litigation.
6.11 Accounts Receivable. At the Closing, Seller shall assign to Buyer all
-------------------
Accounts Receivable arising out of the conduct of the business and operations of
the Systems through the Closing Date. Seller shall deliver to Buyer on or as
soon as practicable after the Closing Date a complete and detailed statement of
the Accounts Receivable, showing the account number and date of issuance, the
name and address of the account payor, the aggregate amount of such receivable,
and the balance due as of Closing Date on each of such Account Receivable. Any
payments received by Seller from account payors on or after the Closing Date
shall be remitted to Buyer.
6.12 Employee Matters.
----------------
(a) Buyer shall assume responsibility for offering and providing
"continuation coverage" to any "qualified beneficiary" who is covered by a
"group health plan" sponsored, maintained or contributed to by Seller and who
has experienced a "qualified event" or is receiving such "continuation coverage"
on or prior to the Closing Date. Continuation coverage, qualified beneficiary,
qualifying event and group health plan shall have the meanings given such terms
under Section 4980B of the Code and Section 601 et seq. of ERISA. [Open until
-- ---
Buyer has consulted with ERISA
counsel.]
(b) Seller shall comply with the provisions of the Worker Adjustment
and Retaining Notification Act, as amended, 29 U.S.C. (S)2101, et seq., as it
-- ---
relates to the transaction contemplated hereby, including providing all affected
employees and other necessary persons with any notice that may be required under
such Act, and shall indemnify and hold harmless Buyer from and against all
losses arising with respect thereto.
(c) Seller acknowledges that Buyer has no obligation to employ any of
Seller's employees and that Seller shall be responsible for satisfying in full
all amounts owed to such employees, including wages, salaries, severance pay,
sick pay, accrued vacation, any employment, incentive, compensation or bonus
agreements or other benefits or payments relating to the period of employment by
Seller.
(d) As of the Closing Date, Seller shall terminate employment of all
employees of Seller engaged in the operations of the Systems who will not remain
employees of Seller after the Closing (including any to be hired by Buyer after
the Closing).
<PAGE>
-36-
(e) Buyer shall, at such times as shall be arranged by Buyer with Seller,
meet with Seller's employees prior to Closing and provide appropriate
information to such employees regarding the operation of the Systems and
opportunities for employment post-Closing. Nothing in this Section 6.12 or in
any other provision of this Agreement is intended to confer upon any employee of
Seller or such employee's legal representative or heirs any rights as a third
party beneficiary or otherwise or any remedies of any kind whatsoever under or
by reason of this Agreement, or the transactions contemplated hereby, including
any rights of employment or continued employment. All rights and obligations
created by this Agreement are solely between the parties.
6.13 Noncompetition Agreement.
------------------------
(a) Seller, and, by their signatures hereto with respect to this Section
6.13, General Partner and Manager, each agrees that subject to the consummation
of the Closing, for a period of three (3) years thereafter, it will not, without
prior written consent of Buyer, directly or indirectly, own, manage, operate,
join, control or engage or participate in the ownership, management, or control
of or operation, or be connected as a shareholder, director, officer, agent,
partner, or otherwise with, any business or organization any part of which
engages in the business of operating a cable television system (or obtaining or
holding any franchises therefor) or other provider of multipoint
distribution system distributing Signals within the area covered by the cable
Franchises issued by the Franchising Authorities and transferred by Seller to
Buyer on the Closing Date. Notwithstanding the foregoing, the following shall
not be prohibited: (i) the ownership of a company's securities listed on a
national securities exchange or the National Association of Securities Dealers
Automated Quotation System, which constitute less than ten percent (10%) of the
outstanding voting stock of such company or does not otherwise constitute
control over such company, or (ii) the participation in the ownership,
management or operations of a company distributing Signals by direct broadcast
satellite.
(b) Seller, General Partner and Manager each agrees that in the event that
it commits a breach of any of the provisions of this Section 6.13, Buyer shall
have the right and remedy to have the provisions of this Section 6.13
specifically enforced to the extent permitted by law by any court having
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause immediate irreparable injury to Buyer and that
money damages will not provide an adequate remedy at law for any such breach or
threatened breach. Such right and remedy shall be in addition to, and not in
lieu of, any other rights and remedies available to Buyer at law or in equity.
<PAGE>
-37-
(c) If any of the provisions of or covenants in this Section 6.13 are held
to be unenforceable in any jurisdiction because of the duration or scope
thereof, the parties agree that the court making such determination shall have
the power to reduce the duration and/or scope of such provision or covenant and,
in its reduced form, said provision or covenant shall be enforceable; provided,
however, that the determination of such court shall not affect the
enforceability of this Section 6.13 in any other jurisdiction.
(d) Buyer and Seller confirm and agree that no portion of the Purchase
Price shall be allocated or be allocable to the Noncompetition Agreement set
forth in this Section 6.13.
6.14 Financial Statements. To the extent that the financial statements
--------------------
described in Section 3.9 do not satisfy the requirements of Regulation S-X of
the Securities and Exchange Commission, Seller shall make its books and records
available to Buyer or a reputable accounting firm designated thereby as
necessary to produce, at Buyer's sole expense, financial statements which meet
such requirements. After the Closing Date, Seller shall make its books and
records available to Buyer or such accounting firm as necessary to produce
unaudited financial statements of the Systems for the interim period between
December 31, 1995 and the last day of the calendar month immediately preceding
the calendar month in which the Closing Date occurs, including an income
statement for the corresponding period of the preceding fiscal year.
6.15 Current Proceedings and Post-Closing Rate Proceedings. Seller shall
-----------------------------------------------------
diligently pursue any current rate proceedings and shall deliver to Buyer copies
of any documents, correspondence or notices sent by or received by Seller in
connection with the current rate proceedings or any Rate Regulatory Matter
instituted after the date of this Agreement. If at any time after Closing, any
Franchising Authority commences a rate proceeding, Buyer will so notify Seller.
The parties will cooperate in their participation in such proceeding, and each
party will promptly deliver to the other all information reasonably requested by
such party as necessary or helpful in such proceeding. Without the other
party's consent, neither party shall settle any such proceeding for which the
other party would have any liability.
6.16 Must-Carry and Retransmission Consent Agreements. Certain of the
------------------------------------------------
"must-carry" elections and retransmission consent agreements listed in Schedule
--------
3.4 expire on or about December 31, 1996. Seller shall deliver to Buyer copies
- ---
of any correspondence or notices sent or received by Seller in connection with
its negotiations of extensions to or follow-on contracts for such expiring
Contracts. Seller shall notify each third party which has elected must-carry or
has executed a retransmission consent agreement of the transaction contemplated
hereby and shall use commercially reasonable efforts to ensure that any such
Contract to be executed therewith shall
<PAGE>
-38-
provide for the assignment of such Contract to Buyer. Notwithstanding Section
6.1 hereof, so long as Seller shall in good faith use commercially reasonable
efforts to extend or renew such Contracts on terms which are not materially and
adversely different than the terms of Seller's current agreements with such
parties, Buyer shall assume at Closing the obligations under such Contracts to
the extent they relate to the post-Closing time period.
6.17 Proof of Performance. No later than 30 days prior to Closing, Seller
--------------------
shall have completed a sweep and proof of the 400 Mhz portion of the plant of
the System to enable it to meet, and to prove that it meets, FCC specifications
at 400 Mhz, and shall have delivered proper documentation of such to Buyer.
6.18 Environmental Surveys. Seller, at its cost, shall deliver to Buyer,
---------------------
no later than thirty (30) days prior to Closing, "Phase I Environmental Surveys"
for the two fee estates included in the Real Property prepared by an
environmental engineering firm reasonably acceptable to Buyer. Seller
acknowledges that any disclosures of environmental conditions included in such
surveys shall be "within its knowledge" for the purposes of its representations
and warranties in Section 3.13 hereof.
6.19 Maryland Bulk Sales and Use Tax Returns. Approximately thirty (30)
---------------------------------------
days prior to Closing, Seller shall inquire in writing with the Compliance
Division of the Maryland Comptroller of the Treasury regarding the amount of
sales and use taxes due with respect to the taxable personal property included
in the Assets, with a copy of such inquiry being provided to Buyer. Such inquiry
shall include a schedule of the taxable personal property included in the Assets
and the value of such property as determined by Seller, and such other
information as is customarily required by the Compliance Division for it to
research Seller's account to determine the amount of sales tax due upon the
consummation of the sale. Seller shall promptly provide Buyer with a copy of the
determination made by the Compliance Division of the amount of sales tax due.
Seller shall (i) at Closing, reserve and hold in escrow from the Purchase Price
paid by Buyer the amount of sales tax due, (ii) promptly following Closing (and
in no event later than the 21st day of the month following the month in which
the Closing occurs), prepare and submit to the Maryland Comptroller of the
Treasury the bulk sales and use tax return required to be filed by Seller and
pay the amount of sales tax due as reserved from the Purchase Price, with a copy
of such return and evidence of payment being contemporaneously provided to
Buyer, and (iii) promptly provide Buyer with a copy of any inquiries or other
correspondence received by Seller from Maryland governmental authorities with
respect to the sales tax due on the sale.
6.20 Maryland Personal Property Taxes. Seller has provided Buyer with (i)
--------------------------------
a copy of its Cable Television Property Returns which it has filed for 1995 and
1996,
<PAGE>
-39-
which are all such returns which Seller has had the obligation to file
under applicable Legal Requirements, (ii) a copy of all assessments which it has
received from the Maryland Department of Assessments and Taxation with respect
to such returns, and (iii) evidence of payment of any taxes which are due in
accordance with such assessments. Seller shall promptly provide Buyer with (i)
any backup information which Buyer shall reasonably request with respect to the
preparation of such returns, and (ii) a copy of any inquiries or other
correspondence received by Seller from, or sent by Seller to, Maryland
governmental authorities with respect to such returns or the amount of personal
property taxes due thereunder.
SECTION 7: CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
---------------------------------------------
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
----------------------------------
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
(a) Representations and Warranties. All representations and warranties of
------------------------------
Seller in this Agreement shall be true and complete in all material respects at
and as of the Closing Date as though such representations and warranties were
made at and as of such time, except (i) insofar as any such representation or
warranty is made as of the date of this Agreement or relates to any other
specified earlier date and (ii) with respect to changes contemplated by this
Agreement.
(b) Covenants and Conditions. Seller shall have in all material respects
------------------------
performed and complied with all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
(c) Consents. Each of the Consents designated as "MATERIAL" on Schedule
-------- --------
3.7 shall have been duly obtained and delivered to Buyer with, as a result of
- ---
obtaining such Consent, no material adverse change having been made in the terms
of the Franchise or other Assumed Contract; provided, however, with respect to
-------- -------
Consents of Franchising Authorities which have granted cable Franchises to
Seller, the foregoing condition shall be deemed to have been satisfied, and the
provisions of Section 8.2 shall apply, if Franchising Authorities shall have
granted satisfactory Consents, as described above, with respect to Franchises
covering no less than ninety percent (90%) of the number of Equivalent Billing
Units; provided, that such percentage shall be determined based on the number of
Seller's then current Equivalent Billing Units. If any Consent necessary to
assign any Contract that is not designated as "material" on Schedule 3.7 is not
--- ------------
obtained prior to Closing, the Contract to which such Consent relates shall not
be assigned, and Seller and Buyer shall
<PAGE>
-40-
continue to cooperate to try to obtain such Consent as soon as practicable after
Closing and the provisions of Section 6.1 shall continue to apply to such
Consent.
(d) Franchises. Seller shall be the holder of the Franchises issued by
----------
the Franchising Authorities to be conveyed at such Closing. No proceeding shall
be pending the effect of which is reasonably likely to be to revoke, cancel,
fail to renew, or suspend any of such Franchises to be conveyed at such Closing;
provided, though, that Buyer acknowledges that if any such proceedings are
- -------- ------
pending and the provisions of Section 8.2 apply, and if such proceedings relate
to Systems which are to be included in the Retained Systems, then the condition
set forth in this Section 7.1(d) shall not be deemed to be unsatisfied as it
pertains to the Initial Closing.
(e) Title Reports. Any commitments for owner's policies of title
-------------
insurance obtained by Buyer (issued by a title insurance company reasonably
satisfactory to Seller) for any fee estate included in the Real Property shall
include no exceptions other than standard exceptions, exceptions for Permitted
Encumbrances, or other exceptions which do not interfere in any material respect
with the use of the property for the purpose for which it is used in the
operation of the Systems.
(f) Power of Attorney. Seller shall deliver to Buyer a power of attorney
-----------------
sufficient to enable Buyer to collect the Accounts Receivable, including the
endorsement of any payments by check made by customers.
(g) Lien Searches. Any lien searches on Seller which may have been
-------------
obtained by Buyer, at its expense, shall disclose no liabilities, liens, claims
or encumbrances comprising a material breach of Seller's representations in
Section 3.5 and, with respect to the Personal Property, the search shall not
disclose the existence of any financing statements, other than (i) those which
will be terminated on the Closing Date, or (ii) any financing statements filed
by a lessor of Personal Property (other than Motor Vehicles) reflecting such
lessor's title to such Personal Property.
(h) HSR Act Compliance. All waiting periods under the HSR Act applicable
------------------
to this Agreement or the transaction contemplated hereby shall have expired or
been terminated.
(i) Deliveries. Seller shall have made or stand willing and able to make
----------
all the deliveries to Buyer set forth in Section 8.3.
(j) Pole Attachment and Crossing Agreements. None of the utilities or
---------------------------------------
railroad company's with which Seller has pole attachment agreements or crossing
agreements as listed in Schedule 3.4 shall be threatening as of Closing to
------------
refuse to (1) consent to the assignment to Buyer of Seller's pole attachment
agreement or crossing
<PAGE>
-41-
agreement, or (2) execute with Buyer a replacement pole attachment agreement or
crossing agreement in such form as customarily executed by such utility or
railroad company with cable television companies, or to order or otherwise
compel the removal of the cable plant owned by Seller from such utility's poles
or from the conduits crossing such railroad company's rights-of-way.
(k) Capital Improvements. Seller shall have delivered to Buyer
--------------------
evidence that Seller has fulfilled its commitment described in Schedule 3.8 to
spend $2.5 million for capital improvements under the 1994 Transfer Agreements
which are part of the Franchises.
7.2 Conditions to Obligations of Seller. All obligations of Seller at the
-----------------------------------
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
(a) Representations and Warranties. All representations and warranties of
------------------------------
Buyer in this Agreement shall be true and complete in all material respects at
and as of the Closing Date as though such representations and warranties were
made at and as of such time, except (i) insofar as any such representation or
warranty is made as of the date of this Agreement or relates to any other
specified earlier date and (ii) with respect to changes contemplated by this
Agreement.
(b) Covenants and Conditions. Buyer shall have in all material respects
------------------------
performed and complied with all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
(c) Consents. Each of the Consents designated as "MATERIAL" on Schedule
-------- --------
3.7 shall have been duly obtained; provided, however, with respect to Consents
- --- -------- -------
of Franchising Authorities, the foregoing condition shall be deemed to have been
satisfied, and the provisions of Section 8.2 shall apply, if Franchising
Authorities shall have granted Consents with respect to cable Franchises
covering no less than ninety percent (90%) of the number of Equivalent Billing
Units; provided that such percentage shall be determined based on the number of
--------
Seller's then current Equivalent Billing Units. If any Consent necessary to
assign any Contract that is not designated as "material" on Schedule 3.7 is not
--- ------------
obtained prior to Closing, the Contract to which such Consent relates shall not
be assigned, and Seller and Buyer shall continue to cooperate to obtain such
Consent as soon as practicable after Closing and the provisions of Section 6.1
shall continue to apply to such Consent.
(d) Deliveries. Buyer shall have made or stand willing and
----------
able to make all the deliveries set forth in Section 8.4.
<PAGE>
-42-
(e) HSR Act Compliance. All waiting periods under the HSR Act applicable
------------------
to this Agreement or the transaction contemplated hereby shall have expired or
been terminated.
(f) Purchase Price Adjustment. The Purchase Price Adjustment under
-------------------------
Section 2.4(e) shall not exceed Ten Million Dollars ($10,000,000).
SECTION 8: CLOSING AND CLOSING DELIVERIES
------------------------------
8.1 Closing.
-------
(a) Subject to the requirements of Section 8.2, the Closing shall take
place at 10:00 a.m. on the last day of a calendar month, or if such day is not a
business day, then upon the business day falling closest to such last day, which
date shall be no sooner than ten (10) days nor more than forty-one (41) days
after the date on which the Franchising Authorities shall have granted all
Consents required therefrom (the "COMPLETE CLOSING"), provided, however, that if
-------- -------
in accordance with the foregoing the Closing shall be scheduled to occur prior
to December 31, 1996, either Buyer or Seller may elect to delay the Closing
until December 31, 1996.
(b) Closing Place. The Closing shall be held at the offices of Seller's
-------------
counsel, Dow, Lohnes & Albertson, in Washington, D.C., or at such other location
as may be agreed upon by Buyer and Seller.
8.2 Partial Closings.
----------------
(a) Notwithstanding the requirements of Section 8.1, in the event that the
conditions to the obligations of Buyer in Section 7.1 shall have been satisfied
or waived (if and to the extent permitted by law) except that all Consents of
Franchising Authorities shall not have been obtained, the transactions
contemplated by this Agreement shall be consummated through two partial Closings
in accordance with the terms of this Section 8.2.
(b) The first partial Closing (the "INITIAL CLOSING") shall take place at
10:00 a.m. on a date (the "INITIAL CLOSING DATE") which is the last day of a
calendar month, or if such day is not a business day, then upon the business day
falling closest to such last day, which date shall be no sooner than ten (10)
days nor more than forty-one (41) days after the date on which Franchising
Authorities shall have granted Consents with respect to Franchises covering no
less than ninety percent (90%) of the Equivalent Billing Units of the Systems on
such date (determined as described in Section 7.1(c)) and all other Closing
conditions set forth in Section 7.1 shall have been met with respect to such
Systems for which such Consents of the Franchising
<PAGE>
-43-
Authorities have been obtained, provided, however, that if in accordance with
-------- -------
the foregoing the Initial Closing shall be scheduled to occur prior to December
31, 1996, either Buyer or Seller may elect to delay the Initial Closing until
December 31, 1996. On the Initial Closing Date, Seller shall transfer and
deliver to Buyer, and Buyer shall purchase from Seller, on the terms and
conditions specified herein, the Assets used or held for use in connection with
the Systems operated pursuant to Franchises which do not require Consents or
with respect to which Consents have been obtained as of such date. The second
partial Closing (the "SUBSEQUENT CLOSING") shall take place at 10:00 a.m. on a
date (the "SUBSEQUENT CLOSING DATE") which is the last day of a calendar month,
or if such day is not a business day, then upon the business day falling closest
to such last day, which date shall be no sooner than ten (10) days nor more than
forty-one (41) days after the date on which Franchising Authorities shall have
granted Consents with respect to the Franchises which were not conveyed to Buyer
at the Initial Closing. On the Subsequent Closing Date, Seller shall transfer
and deliver to Buyer, and Buyer shall purchase from Seller, on the terms and
conditions specified herein, the Assets used or held for use in connection with
the Systems which were not conveyed to Buyer on the Initial Closing Date
(collectively, the "RETAINED SYSTEMS").
(c) At the Initial Closing, Buyer shall pay to Seller a portion of the
Purchase Price (the "INITIAL CLOSING PURCHASE PRICE") calculated as follows:
(1) The parties shall calculate and make the adjustment to the
Purchase Price, if any, which would be made pursuant to Section 2.4(e) if
the Initial Closing were to cover 100% of the Equivalent Billing Units
served by all of the Systems as of the Initial Closing Date (as adjusted,
the "PRO FORMA PURCHASE PRICE").
(2) The Pro Forma Purchase Price shall then be multiplied by a
fraction, (i) the numerator of which shall be the number of Equivalent
Billing Units served by the Systems other than the Retained Systems as of
the Initial Closing Date, and (ii) the denominator of which shall be the
number of Equivalent Billing Units served by all of the Systems (including
the Retained Systems) as of the Initial Closing Date.
On the Subsequent Closing Date, Buyer shall pay to Seller the difference between
the Pro Forma Purchase Price and the Initial Closing Purchase Price.
(d) The amount payable by Buyer for the Accounts Receivable as provided in
Section 2.4(b) shall be paid at the Initial Closing, and the other adjustments
described in Section 2.4 hereof (other than Section 2.4(e)) shall be made to the
Initial Closing Purchase Price, only to the extent such Accounts Receivable and
other adjustments are attributable to the Systems to be conveyed to Buyer at the
Initial
<PAGE>
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Closing. The amount payable pursuant to Section 2.4(b) and the other
adjustments pursuant to Section 2.4 (other than Section 2.4(e)) that are
attributable to the Retained Systems shall be paid on the Subsequent Closing
Date and made to the balance of the Purchase Price being paid on such date.
(e) Following the Initial Closing, Buyer and Seller shall cooperate fully
in obtaining any Consents with respect to Franchises for Retained Systems, and
Buyer's and Seller's obligations under Section 6.1 shall be fully applicable to
obtaining such Consents after such Initial Closing.
(f) Concurrent with the Initial Closing hereunder, Buyer and Seller shall
enter into a management agreement (the "MANAGEMENT AGREEMENT") with respect to
the Retained Systems, with the principle business terms of such Management
Agreement being set forth in Exhibit 8.2(f) hereto, pursuant to which Buyer
--------------
shall manage the Retained Systems until consummation of the Subsequent Closing.
(g) The Systems' headend and business offices, and the Assets related
thereto, shall be conveyed to Buyer at the Initial Closing; provided, however,
-------- -------
that Buyer shall provide signal services to Seller pursuant to a signal services
agreement (the "SIGNAL SERVICES AGREEMENT"), the principal business terms of
which are set forth in Exhibit 8.2(g) hereto, which agreement shall be
--------------
negotiated in good aith and executed by Seller and Buyer at the Initial Closing.
(h) At any Closing under this Section 8.2, the following provisions shall
apply:
(1) The representations, warranties, covenants and conditions of this
Agreement shall be deemed to apply only to those Assets and Systems conveyed at
such Closing; and
(2) Certificates and other documents contemplated by this Agreement
shall be delivered in the form and substance provided for in this Agreement,
modified as appropriate to reflect the provisions of this Section 8.2.
(i) The parties intend that legal and beneficial ownership of any Retained
System shall remain with Seller and shall not be transferred to Buyer until the
Subsequent Closing, which shall take place only if and when all conditions to
the Subsequent Closing shall have been satisfied including receipt of all
Consents to the transfer of the Franchises relating to the Retained Systems.
(j) The obligation of either Buyer or Seller (or both) to consummate the
Subsequent Closing may be terminated by either Buyer or Seller, if the
terminating
<PAGE>
-45-
party is not then in breach of any material provision of this Agreement, upon
written notice to the other party, if the Subsequent Closing shall not have
occurred on or before the eighteen-month anniversary of the Initial Closing
Date, unless such date is extended by agreement of Buyer and Seller. Upon
termination: (i) if neither party hereto is in breach of any material provision
of this Agreement with respect to the consummation of the Subsequent Closing,
the parties hereto shall not have any further liability hereunder to each other
with respect to the Subsequent Closing and the transfer of the Retained Systems
by Seller to Buyer; and (ii) if a party hereto shall be in breach of any
material provision of this Agreement with respect to the consummation of the
Subsequent Closing, the other party shall have all rights and remedies available
at law or equity, with Buyer also having the remedy of specific performance
provided in Section 9.2 hereof.
8.3 Deliveries by Seller. On the Closing Date, Seller shall deliver to
--------------------
Buyer the following, in form and substance reasonably satisfactory to Buyer and
its counsel:
(a) Transfer Documents. Duly executed bills of sale, deeds (for each fee
------------------
estate, in form commercially customary in Maryland), motor vehicle titles,
assignments and other transfer documents which shall be in forms reasonably
acceptable to Buyer, and sufficient to vest good and marketable title to the
Assets in the name of Buyer, free and clear of any claims, liabilities, liens,
or encumbrances of any nature whatsoever (except for those permitted in
accordance with Sections 2.6 and 3.5 hereof);
(b) Consents. The original of each Consent required pursuant
--------
to the condition in Section 7.1(c);
(c) Officer's Certificate. A certificate, dated as of the Closing Date,
---------------------
executed by the President or any Vice President of Seller's General Partner,
certifying: (i) that the representations and warranties of Seller contained in
this Agreement are true and complete in all material respects as of the Closing
Date as though made on and as of that date, except (x) insofar as any such
representation and warranty is made as of the date of this Agreement or relates
to any other earlier specified date, or (y) with respect to changes contemplated
by this Agreement; (ii) that Seller has, in all material respects, performed all
of its obligations and complied with all of its covenants set forth in this
Agreement to be performed and complied with prior to or on the Closing Date; and
(iii) as set forth on a schedule attached thereto, the amounts or number,
estimated in good faith as of the Closing Date, of Accounts Receivable, income
and expense prorations, customer deposits, Equivalent Billing Units and
Annualized Gross Revenues, based on which the Purchase Price shall be adjusted
on the Closing Date in accordance with Section 2.4(d)(1) (including the
adjustment under Section 2.4(e) to be estimated as of the Closing Date);
<PAGE>
-46-
(d) Secretary's Certificate. A certificate, dated as of the Closing
-----------------------
Date, executed by the Secretary of Seller's General Partner, certifying that the
resolutions, as attached to such certificate, were duly adopted by the Board of
Directors of Seller's General Partner with all necessary consents of Seller's
partners having been obtained, authorizing and approving the execution of this
Agreement and the consummation of the transaction contemplated hereby and that
such resolutions remain in full force and effect;
(e) Indemnity Agreement. An executed counterpart of the Indemnity
-------------------
Agreement; and
(f) Management Agreement. If the Initial Closing, the Management
--------------------
Agreement, duly executed by Seller;
(g) Signal Services Agreement. If the Initial Closing, the Signal
-------------------------
Services Agreement, if necessary, duly executed by Seller;
(h) Franchises, Contracts, Business Records, Etc. Copies of all
--------------------------------------------
Franchises, other Assumed Contracts, customer and customer lists, computer
master tapes or disks with customer information, blueprints, schematics, working
drawings, plans, projections, statistics, engineering records and other books
and records owned or maintained by Seller relating to the business or operations
of the Systems (other than those excluded by Section 2.2(c);
(i) Opinions of Counsel. Opinions, dated as of the Closing Date, of
-------------------
Seller's special and FCC counsels, substantially in the form of Exhibit 8.3(i)
--------------
hereto;
(j) FIRPTA Certification. Seller shall deliver to Buyer a certification
--------------------
that Seller is not a foreign person in the form set forth in Treasury Regulation
1.1445-2(b)(iii)(B);
(k) Other Documents. Such other documents and instruments as shall be
---------------
reasonably necessary to effect the intent of this Agreement and consummate the
transaction contemplated by this Agreement.
8.4 Deliveries by Buyer. On the Closing Date, Buyer shall deliver to
-------------------
Seller the following, in form and substance reasonably satisfactory to Seller
and its counsel:
(a) Purchase Price. The Purchase Price as provided in Sections 2.3
--------------
and 8.2;
<PAGE>
-47-
(b) Assumption Agreements. Appropriate assumption agreements and other
---------------------
documents reasonably requested by Seller pursuant to which Buyer shall assume
and undertake to perform Seller's obligations arising after the Effective Time
under the Franchises and other Assumed Contracts;
(c) Officer's Certificate. A certificate, dated as of the Closing Date,
---------------------
executed by the President or any Vice President of Buyer, certifying (i) that
the representations and warranties of Buyer contained in this Agreement are true
and complete in all material respects as of the Closing Date as though made on
and as of that date, except (x) insofar as any such representation and warranty
is made as of the date of this Agreement or relates to any other earlier
specified date and (y) with respect to changes contemplated by this Agreement;
and (ii) that Buyer has, in all material respects, performed all of its
obligations and complied with all of its covenants set forth in this Agreement
to be performed and complied with prior to or on the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the Closing Date,
-----------------------
executed by Buyer's Secretary certifying that the resolutions, as attached to
such certificate, were duly adopted by Buyer's Board of Directors, authorizing
and approving
the execution of this Agreement and the consummation of the transaction
contemplated hereby and that such resolutions remain in full force and effect;
(e) Indemnity Agreement. An executed counterpart of the Indemnity
-------------------
Agreement;
(f) Management Agreement. If the Initial Closing, the Management
--------------------
Agreement, duly executed by Buyer;
(g) Signal Services Agreement. If the Initial Closing, the Signal
-------------------------
Services Agreement, if necessary, duly executed by Buyer;
(h) Opinion of Counsel. An opinion of Buyer's counsel dated as of the
------------------
Closing Date, substantially in the form of Exhibit 8.4(h) hereto; and
--------------
(i) Other Documents. Such other documents and instruments as shall be
---------------
reasonably necessary to effect the intent of this Agreement and consummate the
transaction contemplated by this Agreement.
<PAGE>
-48-
SECTION 9: RIGHTS OF BUYER AND SELLER ON TERMINATION OR BREACH
---------------------------------------------------
9.1 Termination Rights. This Agreement may be terminated prior to the
------------------
Complete Closing or the Initial Closing, as the case may be, by either Buyer or
Seller, if the terminating party is not then in breach of this Agreement in any
material respect or, in the case of Section 6.8 or 9.4 hereof, if such party has
the right to terminate, upon written notice to the other party upon the
occurrence of any of the following:
(a) At any time by mutual consent of Seller and Buyer;
(b) If on the Closing Date (i) any of the conditions precedent to the
obligations of the terminating party set forth in Section 7 of this Agreement
shall not have been satisfied, and (ii) satisfaction of such unsatisfied
condition shall not have been waived by the terminating party;
(c) If there shall be in effect on the Closing Date any judgment, decree
or order that would prevent or make unlawful the Closing hereof;
(d) In accordance with the provisions of Section 6.8 or 9.4
hereof; or
(e) By either Seller or Buyer if the Initial Closing or the Complete
Closing hereunder has not taken place on or before March 31, 1997.
Upon termination: (i) if neither party hereto is in material breach of any
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in material breach of any
provision of this Agreement, Buyer shall have the rights and remedies provided
in Section 9.2 or otherwise available at law or equity; or (iii) if Buyer shall
be in material breach of any provision of this Agreement, Seller shall be
entitled to receive as liquidated damages the Escrow Deposit (with all interest
or other proceeds from the investment thereof, less any compensation due the
Escrow Agent, being thereafter disbursed by Escrow Agent to Buyer). If, upon
termination, Buyer shall not be in breach of any material provision of this
Agreement, the Escrow Deposit, plus all interest or other proceeds from the
investment thereof, less any compensation due the Escrow Agent, shall be paid to
Buyer.
9.2 Specific Performance. In the event Seller should refuse to perform
--------------------
under the provisions of this Agreement, monetary damages alone will not be
adequate. Buyer shall therefore be entitled, in addition to any other remedies
which may be available, including money damages, to obtain specific performance
of the terms of this Agreement. In the event of an action by Buyer to obtain
specific performance of
<PAGE>
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the terms of this Agreement, Seller hereby waives the defense that there is an
adequate remedy at law.
9.3 Liquidated Damages. In the event this Agreement is terminated by
------------------
Seller due to a material breach by Buyer of its representations, warranties and
covenants under this Agreement, then the amount at such time of termination then
comprising the Escrow Deposit shall be paid to Seller as liquidated damages, it
being agreed that such amount shall constitute full payment for any and all
damages suffered by Seller by reason of Buyer's failure to consummate the
transaction contemplated by this Agreement to occur at the Complete Closing or
the Initial Closing, as the case may be. Buyer and Seller agree in advance that
actual damages would be difficult to ascertain and that the amount then
comprising the Escrow Deposit is a fair and equitable amount to reimburse Seller
for damages sustained due to Buyer's failure to consummate this Agreement at the
Complete Closing or the Initial Closing, as the case may be, for the above-
stated reason.
9.4 Special Termination Right for Nonreceipt of Authorization. When
---------------------------------------------------------
either Seller or Buyer has obtained all necessary partnership or corporate (as
the case may be) authorizations to enter into and perform this Agreement, as
contemplated by Sections 3.2 and 4.2, respectively, such party shall promptly
provide written confirmation to the other party that such authorization has been
obtained. If Buyer or Seller (or both) shall not have received prior to August
12, 1996, written confirmation from the other party that such necessary
authorizations have been obtained, then beginning on such date, either
party may elect, at its option, by written notice to the other party, to
terminate this Agreement forthwith, in which event neither Buyer nor Seller
shall have any further obligations or liabilities to the other party hereunder;
provided, however, that this right to terminate shall expire upon the receipt by
- -------- -------
both parties, each from the other, of such written confirmation that such
necessary authorizations have been obtained.
SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AND INDEMNIFICATION
---------------------------------------------------------------
10.1 Representations and Warranties. All representations, warranties and
------------------------------
covenants contained in this Agreement shall be deemed continuing
representations, warranties and covenants, and shall survive the Closing Date
(i) for six months following the Closing Date with respect to any claim by the
party claiming indemnification (the "CLAIMANT") that the other party (the
"INDEMNIFIER") has breached its representations or warranties contained in this
Agreement or failed to comply with its covenants contained herein which claim
does not arise from a claim made by an unrelated third party against Claimant or
any of the Systems or the Assets, and (ii) for one year following the Initial
Closing Date with respect to any
<PAGE>
-50-
alleged breach by the Indemnifier of its representations, warranties or
covenants contained herein arising from any claim by an unrelated third party
against Claimant or any of the Systems or the Assets; provided, however, that
-------- -------
the obligation of Seller set forth in Section 11.8 hereof and the obligations of
the respective parties under the Noncompetition Agreements shall survive for the
period of the applicable statute of limitations, as shall any claim by either
party against the other for fraud in connection with this Agreement or the
transactions contemplated hereby. Any investigations by or on behalf of any
party hereto shall not constitute a waiver as to enforcement of any
representation, warranty or covenant contained herein.
10.2 Indemnification by Seller. Subsequent to the Complete Closing or the
-------------------------
Initial Closing, as the case may be, and notwithstanding such 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 harmless
against and with respect to, and shall reimburse Buyer for (collectively,
"BUYER'S DAMAGES"):
(a) Any and all losses, liabilities or damages resulting from any breach
of any representation or warranty, or any nonfulfillment of any covenant by
Seller contained herein or in any certificate, document or instrument prepared
by Seller and delivered to Buyer hereunder;
(b) Any and all obligations of Seller not assumed by Buyer pursuant to
the terms hereof; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 Indemnification by Buyer. Subsequent to the Complete Closing or the
------------------------
Initial Closing, as the case may be, and notwithstanding such 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 harmless
against and with respect to, and shall reimburse Seller for (collectively,
"SELLER'S DAMAGES"):
(a) Any and all losses, liabilities or damages resulting from any breach
of any representation or warranty, or any nonfulfillment of any covenant by
Buyer contained herein or in any certificate, document or instrument prepared by
Buyer and delivered to Seller hereunder;
(b) Any and all obligations of Seller assumed by Buyer pursuant to the
terms hereof; and
<PAGE>
-51-
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification shall
-----------------------------
be as follows:
(a) The Claimant, as the party claiming indemnification, shall give
notice to the Indemnifier of any claim, whether between the parties or brought
by a third party, within ten (10) days of receiving notice, or becoming aware,
thereof and specifying (i) the factual basis for such claim, and (ii) the amount
of the claim.
(b) Following receipt of notice from the Claimant of a claim, the
Indemnifier shall have thirty (30) days to make such investigation of the claim
as the Indemnifier deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifier and/or
its authorized representative(s) the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnifier agree at or prior
to the expiration of said thirty (30) day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifier
shall immediately pay to the Claimant the full amount of the claim. If the
Claimant and the Indemnifier do not agree within said period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which either Buyer
or Seller is claiming indemnification hereunder, the Indemnifier shall have the
right at its own expense, to participate in or assume control of the defense of
such claim, and the Claimant shall cooperate fully with the Indemnifier, subject
to reimbursement for actual out-of-pocket expenses incurred by the Claimant as
the result of a request by the Indemnifier. If the Indemnifier elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifier does not elect to assume control or otherwise participate in the
defense of any third-party claim, it shall be bound by the results obtained by
the Claimant with respect to such claim.
10.5 Affiliates. The indemnifications rights provided in Sections 10.2 and
----------
10.3 shall, in any instance, extend to any Affiliate of each of Buyer and Seller
although any indemnification claims by such parties shall be made by and through
the Claimant.
10.6 Limitations. The Indemnifier's obligations to indemnify the Claimant
-----------
pursuant to Section 10.2 or 10.3 shall be subject to the following limitations:
<PAGE>
-52-
(a) No indemnification shall be required to be made by Buyer or Seller as
the Indemnifier, as the case may be, under Section 10.2 or 10.3 until the
aggregate amount of Damages of Buyer or Seller as Claimant exceeds Two Hundred
Fifty Thousand Dollars ($250,000) (the "THRESHOLD AMOUNT"); provided, however,
-------- -------
that when the losses of a Claimant exceed the Threshold Amount, the Indemnifier
shall be liable for the Claimant's aggregate losses of the Threshold Amount and
any losses in excess of the Threshold Amount, and provided further that if the
losses of one Claimant exceeds the Threshold Amount, the Threshold Amount
limitation shall no longer apply to any claim with respect to the losses of the
other party hereto as Claimant. In the event of a partial Closing under Section
8.2 hereof, the foregoing limitation shall not apply to any claim by either
Buyer or Seller as Claimant for indemnity for Damages sustained by Claimant
relating to the wrongful failure by the Indemnifier to consummate the
transaction contemplated to occur at the Subsequent Closing.
(b) The Claimant shall be entitled to indemnification only for those
Damages arising with respect to any Claim as to which Claimant has given the
Indemnifier written notice within the appropriate time period set forth in
Section 10.1 hereof for such Claim.
(c) All of Buyer's or Seller's Damages sought to be recovered under
Section 10.2 or 10.3 hereof shall be net of (i) any insurance proceeds received
by Buyer or Seller as Claimants, as the case may be, or which such party shall
be entitled to receive, with respect to the events giving rise to such Damages,
and (ii) any tax benefits received by or accruing to such Claimant in connection
with such events. Buyer and Seller each agrees that subsequent to Closing, such
party shall look first to recover under its applicable insurance policies, if
any, prior to seeking indemnity as Claimant from the other party hereto as
Indemnifier.
(d) In no event shall Claimant's right to indemnity exceed Twelve Million
Dollars ($12,000,000), other than with respect to a Claimant's right to
indemnity for any claims of fraud on the part of the Indemnifier in connection
with this Agreement or the transactions contemplated hereby..
10.7 Indemnity Escrow. At Closing the Escrow Deposit shall be retained by
----------------
the Escrow Agent and held thereby in accordance with the terms of an indemnity
agreement substantially in the form attached hereto as Exhibit 10.7 (the
"INDEMNITY AGREEMENT"). Buyer's initial remedy hereunder for claims against
Seller arising out of or relating to this Agreement shall be under the Indemnity
Agreement. If the Indemnity Amount (as defined in the Indemnity Agreement) is
insufficient to satisfy the claim(s) of Buyer, Buyer may proceed against Seller
directly and shall have all
<PAGE>
-53-
remedies against Seller available at law or in equity subject to the limitations
set forth in Sections 10.1, 10.6 and 10.8 hereof.
10.8 Exclusive Remedy. Following the consummation hereof, the sole and
----------------
exclusive remedy for either party for any claim arising out of a breach of any
representation, warranty, covenant or other agreement herein shall be a claim
for indemnification pursuant to this Section 10 except with respect to any claim
regarding a breach by any party of its obligations under the Noncompetition
Agreement set forth in Section 6.13 hereof.
SECTION 11: MISCELLANEOUS
-------------
11.8 Fees and Expenses. Any transfer taxes, recordation taxes, sales
-----------------
taxes, document stamps, filing fees, or other charges levied by any governmental
entity on account of the transfer of the Assets from Seller to Buyer shall be
paid by Seller; subject to Buyer's reimbursement to Seller of one-half of the
amount of such taxes, fees or charges up to a maximum reimbursement of $27,500.
Buyer shall bear the cost of any title insurance policies, surveys or
environmental studies it chooses to obtain with respect to the Real Property.
Except as otherwise provided in this Agreement, each party shall pay its own
expenses incurred in connection with the authorization, preparation, execution,
and performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and representatives, and each party shall be responsible
for all fees or commissions payable to any finder, broker, advisor, or similar
person retained by or on behalf of such party.
11.2 Notices. All notices, demands and requests required or permitted to
-------
be given under the provisions of this Agreement shall be (i) in writing, (ii)
sent by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or certified mail,
return receipt requested, (iii) deemed to have been given on the date telecopied
with receipt confirmed, the date of personal delivery, or the date set forth in
the records of the delivery service or on the return receipt, and (iv) addressed
as follows:
If to Seller: Maryland Cable Partners, L.P.
------------
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Att: Barry S. Volpert
Telecopy: 212/902-4103
Telephone: 212/902-3149
<PAGE>
-54-
with a copy Leonard J. Baxt, Esquire
(which shall Dow, Lohnes & Albertson
not constitute 1200 New Hampshire Ave., Suite 800
notice) to: Washington, D.C. 20036
Telecopy: 202/776-2222
Telephone: 202/776-2000
with a copy Marcus Cable Company, L.P.
(which shall 2911 Turtle Creek Boulevard, Suite 1300
not constitute Dallas, Texas 75219
notice to: Att: Jeffrey A. Marcus
Telecopy: 214/526-2154
Telephone: 214/521-7898
If to Buyer: Jones Communications of Maryland, Inc.
-----------
c/o Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, CO 80112
Att: President
Telecopy:303/799-1644
Telephone:303/792-3111
with a copy General Counsel
(which shall Jones Communications of Maryland, Inc.
not constitute c/o Jones Intercable, Inc.
notice) to: 9697 East Mineral Avenue
Englewood, CO 80112
Telecopy:303/799-1644
Telephone:303/792-3111
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.2.
11.3 Benefit and Binding Effect. Neither party hereto may assign this
--------------------------
Agreement without the prior written consent of the other party hereto, which
Consent shall not be unreasonably withheld; provided, however, that prior to and
-------- -------
until the submission by Buyer and Seller of the FCC Forms 394 to the Franchising
Authorities in accordance with Section 6.1 hereof, Buyer shall have the right,
upon written notice to Seller, to assign, in whole or in part, its rights and
obligations hereunder to any Affiliate of Buyer, including any limited or
general partnership of which Buyer or any Affiliate of Buyer is a general
partner, or any joint venture or general partnership of which Buyer, or any
Affiliate of Buyer, or any of such limited or general
<PAGE>
-55-
partnerships, is the managing partner; and provided, further, that such
assignment shall not relieve Buyer of liability hereunder for any noncompliance
by such assignee with, or any nonfulfillment by such assignee of, its
obligations hereunder. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
11.4 Knowledge. The use of the phrase "to Seller's knowledge" or such
---------
similar phrases shall, as used herein, refer specifically to the knowledge of
any of (a) the following employees or representatives of Seller: the Officers
of the Manager, and David Wilson, Farrell Moseley and Margaret Moseley.
11.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND
-------------
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND.
11.6 Entire Agreement. This Agreement, all exhibits and schedules hereto
----------------
(which are hereby incorporated herein), and all documents and certificates to be
delivered by the parties pursuant hereto collectively represent the entire
understanding and agreement between Buyer and Seller with respect to the subject
matter hereof. All exhibits and schedules attached to this Agreement shall be
deemed part of this Agreement and are incorporated herein, where applicable, as
if fully set forth herein. This Agreement supersedes all prior negotiations,
letters of intent or other writings between Buyer and Seller with respect to the
subject matter hereof, and cannot be amended, supplemented or modified except by
a written agreement which makes specific reference to this Agreement or an
agreement delivered pursuant hereto, as the case may be, and which is signed by
the party against which enforcement of any such amendment, supplement or
modification is sought.
11.7 Waiver of Compliance; Consents. Except as otherwise provided in this
------------------------------
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this 11.7.
11.8 Bulk Sales Law. The parties hereto waive compliance with the
--------------
provisions of any bulk sales law applicable to the transaction contemplated
hereby, and Seller
<PAGE>
-56-
agrees to indemnify Buyer for all Buyer's Damages resulting from any
noncompliance by Seller with any such applicable bulk sales law.
11.9 Severability. If any provision hereof or the application thereof to
------------
any person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
11.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which, when so executed and delivered, shall be an
original, and all of which counterparts together shall constitute one and the
same fully executed instrument.
<PAGE>
-57-
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
BUYER: SELLER:
- ----- ------
JONES COMMUNICATIONS OF MARYLAND CABLE PARTNERS, L.P.
MARYLAND, INC.
By: Maryland Cable General Partner, Inc.,
its general partner
By: /s/ Elizabeth Steele By: /s/ Jeffrey A. Marcus
---------------------- ---------------------
Name: Elizabeth Steele Name: Jeffrey A. Marcus
Title: Vice President Title: President
Section 6.13, "Noncompetition Agreement," agreed to by:
- ------------------------------------------------------
MARYLAND CABLE GENERAL MARCUS CABLE OPERATING
PARTNER, INC. COMPANY, L.P.
By: Marcus Cable Company, L.P.,
By: /s/ Jeffrey A. Marcus its general partner
--------------------- By: Marcus Cable Properties, L.P.,
Name: Jeffrey A. Marcus its general partner
Title: President By: Marcus Cable Properties, Inc.,
its general partner
By: /s/ Jeffrey A. Marcus
---------------------
Name: Jeffrey A. Marcus
Title: President
<PAGE>
FIRST AMENDMENT TO PURCHASE AGREEMENT
=====================================
This FIRST AMENDMENT TO PURCHASE AGREEMENT (this "AMENDMENT"), is
dated January 30, 1997, by and between JONES COMMUNICATIONS OF MARYLAND, INC.
("BUYER"), and MARYLAND CABLE PARTNERS, L.P. ("SELLER").
R E C I T A L S:
---------------
A. Buyer and Seller are parties to that certain Asset Purchase
Agreement dated July 30, 1996 (the "PURCHASE AGREEMENT"), which provides for the
sale and transfer by Seller to Buyer of certain cable television systems (as
more fully described in the schedules to the Purchase Agreement) serving areas
of Prince George's County, Maryland (the ("COUNTY").
B. The parties wish to amend the Purchase Agreement to set forth
their understandings with respect to (i) the payment of certain costs being
incurred in connection with the consummation of the transaction contemplated by
the Purchase Agreement, and (ii) certain other matters as set forth herein.
A G R E E M E N T S:
-------------------
In consideration of the above recitals and the covenants and
agreements contained herein, the parties hereto agree as follows:
1. Capitalized Terms. Any capitalized term not defined herein
-----------------
shall have the meaning given to such term in the Purchase Agreement, as amended
hereby.
2. Closing Date. With reference to Sections 8.1 and 8.2 of the
------------
Purchase Agreement, Buyer and Seller confirm that the Closing is occurring on
January 31, 1997, subject to the fulfillment by Buyer and Seller on such date of
their respective obligations set forth in Section 7 of the Purchase Agreement.
3. Transfer Agreements. In connection with obtaining the consent to
-------------------
the transfer of the Franchises issued by the franchise authorities listed on
Schedule 1 hereto (the "COALITION FRANCHISING AUTHORITIES"), Buyer and Seller
have agreed to a form of Transfer Agreement in which Buyer and/or Seller shall
incur certain obligations or liabilities in connection with the transfer of the
Franchises (the "TRANSFER AGREEMENTS").
(a) The Fund. In accordance with Section 2.3 of the Transfer
--------
Agreements, the amount of $500,000 (the "FUND") will be deposited with the
Executive Director of Prince George's County Cable Television Commission (the
"EXECUTIVE DIRECTOR") as part of the Closing, which amount shall be held by the
Executive Director on behalf of all of the Coalition Franchising Authorities in
accordance with the terms of the Transfer Agreement. Buyer and Seller confirm
their agreement to the arrangement implemented by Section 2.3 of the Transfer
Agreements.
<PAGE>
-2-
(1) To the extent that Buyer's Damages shall be payable from
the Fund, the Threshold Amount set forth in Section 10.6(a) shall not apply with
respect to any Buyer's Damages incurred by Buyer to cure any "Noncompliance
Matters" (as defined in the Transfer Agreements) which it is required to cure as
a result of any notices of default which it receives from the Executive
Director. The Threshold Amount shall continue to apply to any indemnity claims
made by Buyer against Seller which are not payable from the Fund.
(2) Buyer shall promptly provide to Seller a copy of any
notices of default which Buyer receives from the Executive Director or from any
of the Coalition Franchising Authorities, and Buyer and Seller shall coordinate
a response to such notices in accordance with the procedures of Section 10 of
the Purchase Agreement.
(b) Renewal Costs. In accordance with Section 4.2 of the
-------------
Transfer Agreements, Buyer has agreed to be liable for up to $325,000 of costs
and expenses with respect to the upcoming renewals of the current Franchises
issued by the Coalition Franchising Authorities (including the franchise for the
southern portion of the County). Buyer shall deduct from the Purchase Price the
amount of $125,000, which is the sum of $75,000 in "Accrued Renewal Costs" (as
defined in Section 4.2 of the Transfer Agreements) and $50,000 in additional
renewal costs and expenses which Buyer and Seller anticipate that Buyer will
have the obligation to pay under Section 4.2 of the Transfer Agreements in
connection with the renewal of the Franchises issued by the Coalition
Franchising Authorities (the "COALITION FRANCHISES"). If upon the renewal of all
of the Coalition Franchises and the payment by Buyer of all renewal
reimbursement amounts under Section 4.2 of the Transfer Agreements which Buyer
shall be obligated to pay, such aggregate renewal reimbursement amounts shall be
less than $325,000 (including the $75,000 in Accrued Renewal Costs), Buyer shall
promptly reimburse Seller an amount equal to 50% of the amount by which $325,000
exceeds the amount of such renewal reimbursement amounts, up to a maximum
reimbursement amount of $50,000.
4. Non-Coalition Noncompliance Matters. Similar to the arrangement
-----------------------------------
in Section 2.3 of the Transfer Agreements, Buyer and Seller are putting in
place, with respect to the communities of Bladensburg, Cheverly, Riverdale and
Takoma Park (the "NON-COALITION AUTHORITIES"), arrangements whereby $26,696 (in
the aggregate) shall be held back by Buyer from the Purchase Price which shall
be used for the remedy of any noncompliance matters which Buyer shall be
required to cure as a result of any notices of default which it receives from
the Non-Coalition Authorities. Buyer and Seller confirm that their agreements
set forth in subsections 3(a)(1) and (b) shall also apply to Buyer's cure of
any Franchise noncompliance matters which it is required to cure in accordance
with the respective Franchise agreements with the Non-Coalition Authorities, as
a result of any notices of default which it receives from the Non-Coalition
Authorities, with the term "Fund" referring to the holdback amount.
<PAGE>
-3-
5. Consents, Waivers and Special Understandings.
--------------------------------------------
(a) Preliminary Settlement Statement (re (S)2.4(d)(1)). The
--------------------------------------------------
preliminary settlement statement to be prepared by Seller pursuant to Section
2.4(d)(1) shall have been delivered to Buyer no later than 12:00 noon, MST,
Monday, January 27, 1997.
(b) National Sales Revenues (re (S)2.4(e)). Terri Holtz,
--------------------------------------
Seller's employee, is currently producing national and regional advertising
sales revenue for both Buyer and Seller pursuant to any arrangement approved by
Buyer and Seller. Buyer and Seller confirm that in accordance with that
arrangement, Annualized Gross Revenues under Section 2.4(e) of the Purchase
Agreement shall include national and regional advertising sales revenue for
January 1997 in the amount of the greater of (i) Ms. Holtz's budgeted sales
revenue of $44,672, or (ii) her actual net, national and regional advertising
sales revenue for Seller for January 1997.
(c) Consent to Employee Promotions (re (S)5.1(a)(1)). Buyer
------------------------------------------------
confirms its consent to the merit increases, which were in excess of 5%, awarded
by Seller to certain of its employees under its "wage-criteria program." Those
employees were listed on an attachment to each of the letters dated October 8,
1996, and December 17, 1996, from John H. Pomeroy to Katherine A. LeVoy.
(d) Waiver of "WARN" Act Notice (re (S)6.12(b)). Buyer confirms
-------------------------------------------
that fewer than twenty of Seller's employees will not be offered employment by
Buyer at Closing. Buyer waives any obligation of Seller under Section 6.12(b) of
the Purchase Agreement to provide notice to its employees under the Worker
Adjustment and Retaining Notification Act, as amended, 29 U.S.C. (S)2101,
et seq.
- -- ---
(e) Performance of Financial Audit (re (S)6.14). After the
-------------------------------------------
Closing Seller shall make its books and records available to KPMG Peat Marwick
as necessary to prepare audited financial statements of the Systems for calendar
year 1996. The results of such audit (i) may be used by Buyer as necessary to
comply with the requirements of the Securities and Exchange Commission, and (ii)
may be used by Seller for tax, financial and other related purposes. Seller
shall pay $8,000 of the expense of the audit, and Buyer shall pay the remaining
expense.
(f) Bulk Sales and Use Tax Returns (re (S)6.19). Buyer agrees
-------------------------------------------
that Seller's inquiry with the Compliance Division of the Maryland Comptroller
of the Treasury regarding the amount of sales and use taxes due with respect to
the taxable personal property included in the Assets shall have occurred fewer
than thirty (30) days prior to Closing.
(g) Post-Closing Use of Office by Seller's Controller. Ms.
-------------------------------------------------
Linda Rubin, Seller's Controller, may continue to occupy and use her current
office and office equipment located in Seller's office/headend building at 9609
Annapolis Road, Lanham, Maryland, for up to six months following the Closing.
Such office shall be used by Ms. Rubin to perform her duties regarding the
accounting of Seller's operations for financial and tax purposes. Such office
use shall be rent-free.
<PAGE>
-4-
(h) Asbestos Abatement. On January 28, 1997, Contaminated Soil
------------------
Consultants, Inc. performed asbestos testing at, among other sites, the real
property owned by Seller at 4314 Farragut Street (the "FARRAGUT SITE"), which
revealed the presence of asbestos in the upstairs bathroom floor and the
basement floor tile at the Farragut Site (the "ASBESTOS"). Seller hereby agrees
to reimburse Buyer for its out-of-pocket costs and expenses reasonably incurred
by Buyer for the abatement of the Asbestos within 30 days after Seller's receipt
from Buyer of an invoice or invoices detailing such expenses, up to a maximum
reimbursement amount of $25,000. Seller agrees that the Threshold Amount set
forth in Section 10.6(a) shall not apply to any claim by Buyer for Buyer's
Damages incurred by Buyer if Seller shall not remit the foregoing reimbursement.
(i) Capital Expenditure Obligations (re (S)7.1(k)). At Closing,
----------------------------------------------
Seller shall deliver to Buyer an Officer's Certificate in a form agreed upon by
counsel for Buyer and Seller in satisfaction of the closing requirement set
forth in Section 7.1(k) of the Purchase Agreement, to which shall be attached
(i) the form of semi-annual progress report to be submitted to the Franchising
Authorities on or prior to January 31, 1997, to summarize Seller's activity and
progress in the completion of "upgrade projects" proposed for calendar year 1996
(the "1996 PROGRESS REPORT"), (ii) a detailed listing of capital expenditures
incurred by Seller through December 31, 1996, in the completion of upgrade
projects; (iii) the form of description, including estimated cost, of upgrade
projects proposed for the month of January 1997, to be submitted to the
Franchising Authorities on or prior to January 31, 1997 (the "1997 PROPOSAL"),
and (iv) the form of Seller's final semi-annual progress report to be submitted
to the Franchising Authorities in March 1997, to summarize Seller's activity and
progress in the completion of the upgrade projects proposed for January 1997
(the "FINAL REPORT"). Seller shall deliver the 1996 Report and the 1997 Proposal
to the Franchising Authorities no later than January 31, 1997. Pursuant to
Section 4 of the Transfer Agreements entered into in September 1994 by Seller,
among others, with the Franchising Authorities, the Franchising Authorities have
50 days after submission of the 1997 Proposal to object to any Upgrade Projects
(as defined therein). If any Franchising Authority makes such an objection,
Seller shall be solely responsible for resolving the objection within 90 days
after such an objection has been made. Seller shall deliver the Final Report to
the Franchising Authorities no later than March 31, 1997, provided, however,
that if any Franchising Authorities object to any Upgrade Projects, Seller shall
deliver the Final Report to such Franchising Authorities no later than ten days
after such objection is resolved. Such resolution shall not require the payment
of any money or the fulfillment of any obligation on the part of Buyer without
the prior written consent of Buyer, which may be given or withheld in Buyer's
sole discretion.
(j) Queenstown Apartments. Seller has received a letter dated
---------------------
November 18, 1996 from Edgewood Management Corporation ("EDGEWOOD") terminating
that certain Multiple Dwelling Unit Cable Television Access Agreement dated
August 18, 1989 (the "QUEENSTOWN AGREEMENT"), between Queenstown Apartments
Limited Partnership ("QUEENSTOWN") and Maryland Cable Corp. covering the
Queenstown Apartments, with such termination to be effective as of March 31,
1997. Seller is seeking a five-year extension of the Queenstown Agreement (the
"EXTENSION") from Edgewood, but has not yet received the
<PAGE>
-5-
Extension. As a result, any customer who resides in the Queenstown Apartments
will be deemed at Closing to be a customer who has given Seller notice of
termination. Buyer agrees to cooperate with Seller in obtaining the Extension
and to notify Seller of any contacts by Buyer with Edgewood or Queenstown, but
Buyer will not be required to make any payment to Edgewood or Queenstown to
obtain the Extension or to accept any material adverse change in the Queenstown
Agreement as a condition to obtaining the Extension. If an Extension is
delivered to Buyer within sixty (60) days after the Closing Date, any customer
who resided in the Queenstown Apartments at Closing will be counted for purposes
of the Post-Closing Adjustment as a Basic Customer, if such customer otherwise
met at Closing the criteria set forth in the definition of Basic Customers in
the Purchase Agreement.
(k) Current Rate Proceedings (re (S)6.15). Section 6.15 of the
-------------------------------------
Purchase Agreement is hereby amended to add the following three sentences at the
end thereof:
Without Buyer's prior consent, Seller shall not settle any such
proceeding which would require Buyer to lower the rates it is then
charging to customers. If in any such proceeding (i) an order or
decision is adopted based upon rates charged prior to the Closing
which would require Buyer to lower the rates it is then charging to
customers (an "ADVERSE DECISION") and (ii) Seller shall have standing
to appeal such Adverse Decision and Buyer shall not have standing,
Seller shall appeal such order or decision unless (a) Buyer shall give
its consent that such appeal shall not be filed, which consent shall
not be unreasonably withheld, or (b) Seller's counsel shall determine
in good faith that such appeal shall not present an issue of law or
fact that is a fair ground for litigation or that the appeal would be
interposed for an improper purpose. If Buyer shall have standing to
appeal and does appeal any such Adverse Decision, the reasonable legal
fees and expenses incurred by Buyer in connection with such appeal
shall comprise Buyer's Damages, subject to the terms of Section
10.4(c) of this Agreement, and the Threshold Amount set forth in
Section 10.6(a) shall not apply to any claim by Buyer for Buyer's
Damages to recover such legal fees and expenses.
6. Miscellaneous. Except as expressly provided in this Amendment,
-------------
all of the terms and conditions of the Purchase Agreement shall remain unchanged
and in full force and effect. This Amendment and the provisions hereof shall be
binding on the successors and assigns of the parties hereto. This Amendment may
be executed in counterpart, and both so executed shall constitute one agreement,
binding on the parties hereto.
<PAGE>
-6-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first above written.
BUYER: SELLER:
- ----- ------
JONES COMMUNICATIONS OF MARYLAND CABLE PARTNERS, L.P.
MARYLAND, INC.
By: Maryland Cable General Partner,
Inc., its general partner
By: /s/ Elizabeth Steele By: /s/ Thomas P. McMillin
--------------------- ------------------------
Name: Elizabeth Steele Name: Thomas P. McMillin
------------------- ----------------------
Title: VP Title: Vice President
------------------ ---------------------
<PAGE>
Schedule 1
----------
List of Coalition Communities
=============================
Prince George's County Greenbelt
Berwyn Heights Hyattsville
Bowie Landover Hills
Brentwood Laurel
College Park Mount Rainier
Colmar Manor New Carrollton
Cottage City North Brentwood
Edmonston University Park
Glenarden
