<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) SEPTEMBER 15, 1995
Northland Cable Properties Four Limited Partnership
---------------------------------------------------
(Exact name of registrant as specified in charter)
<TABLE>
<CAPTION>
STATE OF WASHINGTON 0-16064 75-1998317
- ---------------------------- ------------ ------------------
<S> <C> <C>
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
NORTHLAND COMMUNICATIONS CORPORATION
3600 WASHINGTON MUTUAL TOWER
1201 THIRD AVENUE, SEATTLE, WASHINGTON 98101
-----------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (206) 621-7244
N.A.
-------------------------------------------------------------
(Former name or former address, if changed since last report)
This filing contains ___ pages. Financial Statements/Schedules Index appears
on page ____.
<PAGE> 2
<TABLE>
<CAPTION>
Sequentially
Numbered
Page
------------
<S> <C>
Item 7. Financial Statements, Pro Forma
- ------- -------------------------------
Financial Statements and Exhibits
---------------------------------
(a) Financial Statements of SLT Cable TV, Inc.
------------------------------------------
Hillsboro, Kaufman, New Waverly, Oak Grove
------------------------------------------
and Waterwood Franchises
------------------------
For Years Ended 1994, 1993 and 1992
Report of Independent Public Accountants 5
Balance Sheet as of December 31,
1994 and 1993 6
Statements of Operations for Years Ended
December 31, 1994, 1993 and 1992 7
Statements of Changes in Parent Company
Investment for Years Ended December 31,
1994, 1993 and 1992 8
Statements of Cash Flows for Years
Ended December 31, 1994, 1993 and 1992 9
Notes to Financial Statements for the
Year Ended December 31, 1994 10
For the Six Months Ended June 30, 1995 and 1994
Unaudited Balance Sheet as of June 30,
1995 and 1994 15
Unaudited Statements of Operations
for Six Months Ended June 30,
1995 and 1994 16
Statements of Changes in Parent Company
Investment for Years Ended December 31,
1995 and 1994 17
Unaudited Statements of Cash Flows
for the Six Months Ended June 30,
1995 and 1994 18
(b) Pro Forma Financial Statements
------------------------------
Introduction 20
Unaudited Pro Forma Balance Sheet at
June 30, 1994 21
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Unaudited Pro Forma Statement of Operations
for the Six Months Ended June 30, 1995 22
Unaudited Pro Forma Statement of Operations
for the Year Ended December 31, 1994 23
Notes to Unaudited Financial Statements
for the Year Ended December 31, 1994 24
(c) Exhibits
--------
Franchise Agreement with City of Oak Grove,
TX - Assignment and Assumption Agreement
dated September 15, 1995.
Franchise Agreement with City of New Waverly,
TX - Assignment and Assumption Agreement
date September 15, 1995.
</TABLE>
<PAGE> 4
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN,
NEW WAVERLY, OAK GROVE AND WATERWOOD
FRANCHISES
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
TOGETHER WITH AUDITORS' REPORT
<PAGE> 5
Report of Independent Public Accountants
To the Shareholder of
SLT Cable TV, Inc. - Hillsboro, Kaufman,
New Waverly, Oak Grove and Waterwood Franchises:
We have audited the accompanying balance sheets of SLT Cable TV, Inc. -
Hillsboro, Kaufman, New Waverly, Oak Grove and Waterwood Franchises (a segment
of SLT Cable TV, Inc., a wholly-owned subsidiary of SLT Communications, Inc.)
as of December 31, 1994 and 1993, and the related statements of operations,
changes in parent company investment and cash flows for each of the three years
in the period ended December 31, 1994. These financial statements are the
responsibility of the Franchises' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SLT Cable TV, Inc. -
Hillsboro, Kaufman, New Waverly, Oak Grove and Waterwood Franchises as of
December 31, 1994 and 1993, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Little Rock, Arkansas,
September 13, 1995.
<PAGE> 6
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN,
NEW WAVERLY, OAK GROVE AND WATERWOOD FRANCHISES
BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
ASSETS 1994 1993
------ ---------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 10,142 $ 201,848
Accounts receivable, net of allowance of $985
in 1994 and $0 in 1993 15,439 23,158
Affiliate receivables 70,995 113,566
Materials and supplies 18,004 26,367
Prepaid expenses and other 14,805 5,702
---------- ----------
Total current assets 129,385 370,641
---------- ----------
PROPERTY AND EQUIPMENT, net 2,492,980 2,620,162
---------- ----------
GOODWILL, net 2,318,128 2,384,011
---------- ----------
Total assets $4,940,493 $5,374,814
========== ==========
LIABILITIES AND PARENT COMPANY INVESTMENT
-----------------------------------------
CURRENT LIABILITIES:
Current maturities of note payable $ 17,842 $ 16,339
Accounts payable 73,635 52,979
Customer deposits 14,412 7,250
Accrued taxes, other than income taxes 18,821 16,364
Accrued interest 4,041 4,531
Other current liabilities 15,246 37,800
---------- ----------
Total current liabilities 143,997 135,263
---------- ----------
NOTE PAYABLE 116,860 134,702
---------- ----------
DEFERRED FEDERAL INCOME TAXES 548,825 499,008
---------- ----------
Total liabilities 809,682 768,973
---------- ----------
PARENT COMPANY INVESTMENT 4,130,811 4,605,841
---------- ----------
Total liabilities and parent company investment $4,940,493 $5,374,814
========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
<PAGE> 7
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN
NEW WAVERLY, OAK GROVE AND WATERWOOD FRANCHISES
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES, net $ 878,143 $ 905,386 $ 779,044
----------- ----------- -----------
EXPENSES:
Programming 268,676 240,014 167,571
Operating 406,734 381,354 354,984
Depreciation and amortization 281,680 279,009 277,035
General and administrative 149,924 155,954 214,700
Taxes other than income taxes 36,572 37,193 34,765
----------- ----------- -----------
1,143,586 1,093,524 1,049,055
----------- ----------- -----------
Operating loss (265,443) (188,138) (270,011)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (146,977) (122,137) (172,599)
Other income 1,859 2,078 1,598
Loss of disposal of assets (9,240) -- --
----------- ----------- -----------
(154,358) (120,059) (171,001)
----------- ----------- -----------
Loss before benefit
from income taxes (419,801) (308,197) (441,012)
INCOME TAX BENEFIT 123,469 84,810 131,295
----------- ----------- -----------
NET LOSS $ (296,332) $ (223,387) $ (309,717)
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 8
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN,
NEW WAVERLY, OAK GROVE AND WATERWOOD FRANCHISES
STATEMENTS OF CHANGES IN PARENT COMPANY INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<TABLE>
<S> <C>
Balance at December 31, 1991 $4,919,007
Net loss (309,717)
Increase in advances from parent 89,666
----------
Balance at December 31, 1992 4,698,956
Net loss (223,387)
Increase in advances from parent 130,272
----------
Balance at December 31, 1993 4,605,841
Net loss (296,332)
Decrease in advances from parent (178,698)
----------
Balance at December 31, 1994 $4,130,811
==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 9
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN,
NEW WAVERLY, OAK GROVE AND WATERWOOD FRANCHISES
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------ ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(296,332) $(223,387) $(309,717)
Adjustments provided to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 281,680 279,009 277,035
Provision for deferred taxes 49,817 90,654 145,548
Loss on disposal of asset 9,240 - -
Changes in operating assets and liabilities:
Accounts receivable, net 7,719 (8,706) 39,056
Affiliate receivables 94,931 (113,556) 2,346
Materials and supplies 8,363 2,853 13,240
Prepaid expenses and other (9,103) 12,809 (4,200)
Accounts payable and accrued expenses 69 33,185 (97,369)
Customer deposits 7,162 (56) 7,306
--------- --------- ---------
Net cash provided by operating
activities 153,546 72,805 73,245
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (150,215) (28,850) (140,935)
--------- --------- ---------
Net cash used in investing activities (150,215) (28,850) (140,935)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on note payable (16,339) (14,962) (13,701)
Increase (decrease) in advances from parent (178,698) 130,272 89,666
--------- --------- ---------
Net cash provided by (used in) financing
activities (195,037) 115,310 75,965
--------- --------- ---------
INCREASE (DECREASE) IN CASH (191,706) 159,265 8,275
CASH, beginning of year 201,848 42,583 34,308
--------- --------- ---------
CASH, end of year $ 10,142 $ 201,848 $ 42,583
========= ========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the year for:
Interest $ 13,724 $ 14,970 $ 16,373
========= ========= =========
Income taxes $ - $ - $ -
========= ========= =========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 10
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN,
NEW WAVERLY, OAK GROVE AND WATERWOOD FRANCHISES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
1. ORGANIZATION:
The accompanying financial statements include the operations of five cable
television franchises located in Hillsboro, Kaufman, New Waverly, Oak Grove and
Waterwood, Texas, collectively referred to as the Franchises. The Franchises
are a segment of SLT Cable TV, Inc. ("SLT Cable"), a wholly-owned subsidiary of
SLT Communications, Inc. ("SLTCI"). SLTCI became a wholly-owned subsidiary of
ALLTEL Corporation ("ALLTEL") on December 31, 1992 through a merger agreement
which provided for the exchange of all of SLTCI's common and preferred stock
for common stock of ALLTEL. SLT Cable has nonexclusive franchises to operate
the cable systems for periods which will expire at various dates between 1998
and 2009.
SLT Cable acquired all of the assets of the Franchises on separate dates in
1990. The acquisitions were accounted for using the purchase method.
Accordingly, the purchase price was allocated to the assets acquired based on
their estimated fair values at the date of acquisition. The excess of the
purchase price over the estimated fair value of the assets acquired has been
recorded as goodwill in the accompanying financial statements.
SLT Cable also owns other cable franchises. The financial records of its cable
franchises are not maintained on a segregated basis. Accordingly, working
capital items other than cash and accrued interest and operating expenses,
other than programming expenses, could not be separately identified for the
Franchises. Such items in the accompanying financial statements reflect
allocations of the total balances based on the ratio of subscribers of the
Franchises to total subscribers of SLT Cable.
SLT Cable is regulated pursuant to the "Cable Television Consumer Protection
and Competition Act of 1992" which was enacted on April 3, 1993. The City of
Hillsboro, Texas is the only franchise authority within SLT Cable's service
territory which obtained certification from the Federal Communications
Commission to regulate basic cable service.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Depreciation
Depreciation of property and equipment is provided using the straight-line
method over the following estimated service lives.
<TABLE>
<S> <C>
Buildings 15 years
Distribution plant 20 years
Other equipment 5-10 years
</TABLE>
<PAGE> 11
-2-
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
Revenue Recognition
The Franchises recognize revenue in the month service is provided to customers.
Parent Company Investment
Parent company investment consists of the initial capitalization of the
Franchises, advances made to the Franchises by SLTCI and/or ALLTEL and the
cumulative net losses incurred by the Franchises.
The Franchises are charged interest on the advances outstanding. The interest
rates charged at December 31, 1994, 1993 and 1992 were 6%, 3.25% and 6%,
respectively. Advances from SLTCI and/or ALLTEL were $2,693,900 and $2,925,048
at December 31, 1994 and 1993, respectively and are included in parent company
investment in the accompanying balance sheets.
Income Taxes
The Franchises adopted Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes" on January 1, 1992. The adoption of SFAS
No. 109 did not have a material effect on the Franchises financial position or
results of operations.
Under SFAS No. 109, deferred income taxes are provided based upon the estimated
future tax effects of temporary differences between financial statement
carrying amounts and the tax bases of existing assets and liabilities.
Deferred tax balances are adjusted to reflect tax rates, based on enacted tax
laws, that will be in effect in the years in which the temporary differences
are expected to reverse.
3. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following at December 31, 1994 and
1993:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Land $ 10,500 $ 10,500
Buildings 50,315 31,455
Distribution plant 2,635,743 2,624,226
Other equipment 723,138 715,299
---------- ----------
3,419,696 3,381,480
Less accumulated depreciation 926,716 761,318
---------- ----------
$2,492,980 $2,620,162
========== ==========
</TABLE>
Replacements, renewals and improvements are capitalized. Maintenance and
repairs are charged to expense as incurred.
<PAGE> 12
-3-
4. GOODWILL:
Goodwill, recorded in connection with the purchase of the cable systems
comprising the Franchises, is amortized using the straight-line method over 40
years. Goodwill, net, consisted of the following at December 31, 1994 and
1993:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Goodwill $2,635,297 $2,635,297
Accumulated amortization (317,169) (251,286)
---------- ----------
$2,318,128 $2,384,011
========== ==========
</TABLE>
5. NOTE PAYABLE:
The Franchises have a note payable to a previous owner of one of the cable
system franchises. The note is payable in semi-annual installments of $14,786,
including interest, through 2000. The note bears interest at an annual rate of
9%. The balance outstanding at December 31, 1994 matures as follows:
<TABLE>
<S> <C>
1995 $17,842
1996 19,484
1997 21,277
1998 23,235
1999 25,373
Thereafter 27,491
</TABLE>
6. INCOME TAXES:
Federal income tax expense (benefit) was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Current $(173,286) $(175,464) $(276,843)
Deferred 49,817 90,654 145,548
--------- --------- ---------
$(123,469) $ (84,810) $(131,295)
========= ========= =========
</TABLE>
The provision for deferred Federal income tax expense is a result of the use of
an accelerated method of depreciation for tax reporting purposes. The
effective federal income tax benefit of 29.4%, 27.5% and 29.7% for the years
ended December 31, 1994, 1993 and 1992, respectively, differs from the federal
income tax statutory rate of 35% as a result of the amortization of goodwill
which is not deductible for tax purposes. Deferred federal income taxes of
$548,825 at December 31, 1994 and $499,008 at December 31, 1993 result from
accelerated depreciation of property and equipment for tax purposes.
The Franchises do not file a federal income tax return but are included in the
consolidated return of ALLTEL. The Franchises are not subject to state income
taxes. Pursuant to a tax sharing agreement with ALLTEL, the Franchises
recognize a benefit for tax losses incurred.
<PAGE> 13
-4-
7. RETIREMENT PLANS:
Effective January 1, 1993, the Franchises began participation in the ALLTEL
trusteed, noncontributory, defined benefit pension plan which provides
retirement benefits for all eligible employees of the Franchises. Pension
benefits are based on an employee's years of service and compensation.
ALLTEL's funding policy for the defined benefit contributions is to satisfy the
funding requirements of the Employees' Retirement Income Security Act of 1974
("ERISA").
As of December 31, 1994, the fair value of ALLTEL plan assets available for
plan benefits exceeded the projected benefit obligation. Total ALLTEL pension
expense (credit) was $2,225,000 in 1994 and ($3,892,000) in 1993, of which the
Franchises share was $5,819 and $7,400 for 1994 and 1993, respectively.
Actuarial assumptions used to calculate the projected benefit obligation were
9% and 8.5% for the investment earnings rate, 5% for future compensation level
increases and 8.5% and 7.5% for the settlement rate for 1994 and 1993,
respectively.
Effective January 1, 1993 the Franchises also began participation in the ALLTEL
noncontributory defined contribution plan. This plan is in the form of a
profit sharing arrangement for all eligible employees, except bargaining unit
employees. Effective with this plan, there was a reduction in future service
benefits earned by eligible employees under the defined benefit pension plan.
The amount of profit sharing contributions to the plan is determined annually
by ALLTEL's and subsidiaries' Board of Directors. ALLTEL's profit sharing
expense amounted to $26,351,000 and $22,717,000, of which the Franchises share
was $6,459 and $7,910 for 1994 and 1993, respectively.
Prior to January 1, 1993, the Franchises participated in the SLT
Communications, Inc. Retirement Plan, a noncontributory, defined benefit
pension plan. Pension benefits were based on an employees' years of service
and compensation. Total SLTCI pension expense for 1992 was $418,248 of which
the Franchises share was $7,847.
8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
ALLTEL provides postretirement healthcare and life insurance benefits for
eligible employees. The healthcare benefit is based on comprehensive hospital,
medical and surgical benefit provisions, while the life insurance is based on
annual earnings at the time of retirement. The employees share in the cost of
these benefits. ALLTEL is not currently funding these plans. On January 1,
1993, ALLTEL adopted SFAS No. 106 "Employers' Accounting for Post Retirement
Benefits other than Pensions." The adoption of SFAS No. 106 did not have a
material effect on the Franchises financial position or results of operations.
Total ALLTEL postretirement expense was $4,121,000 in 1994 and $4,460,000 in
1993, of which the Franchises share was $1,078 for 1994 and $3,220 for 1993.
Actuarial assumptions used to calculate the accumulated postretirement benefit
obligation were 8.5% for the weighted average discount rate in 1994 and 7.5%
for 1993, and the healthcare cost trend rate was 11% in 1994 and 12% for 1993,
decreasing on a graduated basis to an ultimate rate of 6% in the year 2000.
<PAGE> 14
-5-
9. RELATED PARTY TRANSACTIONS:
All accounting and assistance in financial matters and a major portion of
management, marketing, public relations, engineering and other services are
provided at cost to SLT Cable by ALLTEL and its subsidiary, ALLTEL Service
Corporation. Charges are calculated on a basis consistent with that used in
calculating the charges made for similar services rendered by ALLTEL to its
other subsidiaries. Charges to the Franchises for these services were $149,924
in 1994, $155,954 in 1993 and $214,700 in 1992.
In 1993, SLT Cable began to provide certain administrative services, primarily
payroll processing, to an affiliate at cost. Outstanding billings pursuant to
this arrangement were $70,995 and $113,566 at December 31, 1994 and 1993,
respectively, and are reflected as affiliate receivables in the accompanying
balance sheets.
10. COMMITMENTS AND CONTINGENCIES:
The Franchises have lease obligations to unrelated parties under noncancelable
leases expiring on various dates through December 1997, primarily for land and
building sites. The future minimum rentals for the years subsequent to
December 31, 1994 are as follows:
<TABLE>
<S> <C>
1995 $8,700
1996 7,200
1997 7,200
</TABLE>
11. SUBSEQUENT EVENTS:
During August, 1995, ALLTEL entered into an agreement to sell substantially all
of the assets of SLT Cable, including the Franchises. Also in August 1995, SLT
Cable received an advance from ALLTEL which was used to retire all of SLT
Cable's debt, including the Franchises note payable discussed in Note 5.
<PAGE> 15
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN,
NEW WAVERLY, OAK GROVE AND WATERWOOD FRANCHISES
BALANCE SHEETS
AS OF JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 40,301 $ 7,229
Accounts receivable, net of allowance of $0
in 1995 and $1,649 in 1994 47,154 18,099
Affiliate receivables 66,713 123,080
Materials and supplies 15,135 17,004
Prepaid expenses and other 8,630 13,656
---------- ----------
Total current assets 177,933 179,068
---------- ----------
PROPERTY AND EQUIPMENT, net 2,399,303 2,535,330
---------- ----------
GOODWILL, net 2,285,187 2,351,070
---------- ----------
Total assets $4,862,423 $5,065,468
========== ==========
LIABILITIES AND PARENT COMPANY INVESTMENT (Unaudited)
-----------------------------------------------------
CURRENT LIABILITIES:
Current maturities note payable $ 18,645 $ 17,074
Accounts payable 23,967 41,315
Customer deposits 20,599 8,286
Accrued taxes, other than income taxes 12,821 11,445
Accrued interest 2,335 4,291
Other current liabilities 8,847 4,138
---------- ----------
Total current liabilities 87,214 86,549
---------- ----------
NOTE PAYABLE 107,332 125,977
---------- ----------
DEFERRED FEDERAL INCOME TAXES 570,653 525,058
---------- ----------
Total liabilities 765,199 737,584
---------- ----------
PARENT COMPANY INVESTMENT 4,097,224 4,327,884
---------- ----------
Total liabilities and parent company investment $4,862,423 $5,065,468
========== ==========
</TABLE>
<PAGE> 16
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN,
NEW WAVERLY, OAK GROVE AND WATERWOOD FRANCHISES
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
REVENUES, net $ 461,984 $ 458,969
---------- ----------
EXPENSES:
Programming 93,873 141,224
Operating 226,018 203,355
Depreciation and amortization 139,639 140,080
General and administrative 85,040 66,837
Taxes other than income taxes 15,286 17,905
---------- ----------
559,856 569,401
---------- ----------
Operating loss (97,872) (110,432)
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (117,256) (61,863)
Other (6,043) 923
---------- ----------
(123,299) (60,940)
---------- ----------
Loss before benefit
from income taxes (221,171) (171,372)
INCOME TAX BENEFIT 65,679 48,451
---------- ----------
NET LOSS $(155,492) $(122,921)
========= =========
</TABLE>
<PAGE> 17
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN,
NEW WAVERLY, OAK GROVE AND WATERWOOD FRANCHISES
STATEMENTS OF CHANGES IN PARENT COMPANY INVESTMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<S> <C>
Balance at December 31, 1994 $4,130,811
Net loss (155,492)
Increase in advances from parent 121,905
----------
Balance at June 30, 1995 $4,097,224
==========
Balance at December 31, 1993 $4,605,841
Net loss (122,921)
Decrease in advances from parent (155,036)
----------
Balance at June 30, 1994 $4,327,884
==========
</TABLE>
<PAGE> 18
SLT CABLE TV, INC. - HILLSBORO, KAUFMAN,
NEW WAVERLY, OAK GROVE AND WATERWOOD FRANCHISES
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(155,492) $(122,921)
Adjustments provided to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 139,639 140,080
Provision for deferred taxes 21,828 26,050
Changes in operating assets and liabilities:
Accounts receivable, net (31,715) 5,059
Affiliate receivables 4,282 (9,514)
Materials and supplies 2,869 9,363
Prepaid expenses and other 6,175 (7,954)
Accounts payable and accrued expenses (63,773) (50,485)
Customer deposits 6,187 1,036
--------- ---------
Net cash used in operating
activities (70,000) (9,286)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (13,021) (22,307)
--------- ---------
Net cash used in investing activities (13,021) (22,307)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on note payable (8,725) (7,990)
Increase (decrease) in Parent Company Investment 121,905 (155,036)
--------- ---------
Net cash provided by (used in) financing activities 113,180 (163,026)
--------- ---------
INCREASE (DECREASE) IN CASH 30,159 (194,619)
CASH, beginning of period 10,142 201,848
--------- ---------
CASH, end of period $ 40,301 $ 7,229
========= =========
Supplemental Cash Flow Disclosures:
Cash paid during the year for:
Interest $ 6,324 $ 7,037
========= =========
Income Taxes $ - $ -
========= =========
</TABLE>
<PAGE> 19
NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP
PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1995
(PREPARED BY MANAGING GENERAL PARTNER)
<PAGE> 20
NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP
PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1995
(PREPARED BY MANAGING GENERAL PARTNER)
The accompanying unaudited pro forma financial statements for the year
ended December 31, 1994 and six months ended June 30, 1995, have been prepared
to present the effect of the purchase by Northland Cable Properties Four
Limited Partnership ("the Partnership") of substantially all of the operating
assets and franchises of SLT Cable TV, Inc., Hillsboro, Kaufman, New Waverly,
Oak Grove and Waterwood Franchises.
The pro forma statements reflect the acquisition as of June 30, 1995
for balance sheet purposes and as if such acquisition had occurred on January
1, 1994 for income statement purposes.
The pro forma financial statements have been prepared by the Managing
General Partner of the Partnership based upon the historical financial
statements of the Partnership and SLT Cable TV, Inc, Hillsboro, Kaufman, New
Waverly, Oak Grove and Waterwood Franchises. Pro forma adjustments are
described in the accompanying notes. The Pro Forma Statements of Operations
may not be indicative of the results of operations that actually would have
occurred if the transactions had been in effect as of the beginning of the
respective periods nor do they purport to indicate the results of future
operations of the Partnership. The pro forma financial statements should be
read in conjunction with the audited and unaudited financial statements and
notes thereto of Northland Cable Properties Four Limited Partnership, as
previously reported in the Partnership's Form 10-K for the year ended December
31, 1994 and Form 10-Q for the three and six months ended June 30, 1995, and
SLT Cable TV, Inc., Hillsboro, Kaufman, New Waverly, Oak Grove and Waterwood
Franchises included elsewhere in this Form 8-K/A.
<PAGE> 21
NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP
BALANCE SHEET
(UNAUDITED)
JUNE 30, 1995
(PREPARED BY MANAGING GENERAL PARTNER)
<TABLE>
<CAPTION>
As reported After purchase
--------------------------------------------------------------------------------
SLT Cable TV,
Inc. - Hillsboro,
Kaufman, New
Waverly, Oak Northland
Grove and Cable
Waterwood Properties Pro Forma Pro Forma
Franchises Four Total Adjustments Combined
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 40,301 $ 263,665 $ 303,966 $ (19,702)(1b) $ 769,023
484,759 (1c)
Accounts receivable 47,154 144,428 191,582 (9,414)(1b) 182,168
Property and equipment, net 2,399,303 3,343,645 5,742,948 654,222 (1a) 6,397,170
Intangible assets 2,285,187 349,358 2,634,545 1,400,989 (1a) 1,800,347
(2,285,187)(1b)
50,000 (1c)
Other assets 90,478 88,519 178,997 (90,478)(1b) 88,519
-------------------------------------------------------------------------------
$4,862,423 $ 4,189,615 9,052,038 $ 185,189 $ 9,237,227
===============================================================================
LIABILITIES:
Accounts payable and accrued expenses $ 66,615 $ 553,052 $ 619,667 $ (66,615)(1b) $ 482,688
(70,364)(1c)
Due to managing general partner and
affiliates - 88,496 88,496 88,496
Converter deposits 20,599 32,507 53,106 53,106
Subscriber prepayments - 55,725 55,725 55,725
Notes payable 107,332 9,194,878 9,302,210 (107,332)(1b) -
(9,194,878)(1c)
Note payable to seller - 265,359 (1c) 265,359
Note payable to bank - 14,026,896 (1c) 14,026,896
Accumulated deferred federal income taxes 570,653 - 570,653 (570,653)(1b) -
-------------------------------------------------------------------------------
765,199 9,924,658 10,689,857 4,282,413 14,972,270
-------------------------------------------------------------------------------
PARTNERS' CAPITAL (DEFICIT) 4,097,224 (5,735,043) (1,637,819) (4,097,224)(1b) (5,735,043)
-------------------------------------------------------------------------------
$4,862,423 $ 4,189,615 $ 9,052,038 $ 185,189 $ 9,237,227
===============================================================================
</TABLE>
See notes to pro forma financial statements
<PAGE> 22
NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP
PRO FORMA STATEMENT OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995
(PREPARED BY MANAGING GENERAL PARTNER)
<TABLE>
<CAPTION>
As reported After purchase
---------------------------------------------------------------------------
SLT Cable TV,
Inc. - Hillsboro,
Kaufman, New
Waverly, Oak Northland
Grove and Cable
Waterwood Properties Pro Forma Pro Forma
Franchises Four Total Adjustments Combined
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SERVICE AND CONNECTION FEES $ 461,984 $2,989,066 $3,451,050 $3,451,050
OPERATING EXPENSES 420,217 1,741,316 2,161,533 27,719 (2) 2,189,252
DEPRECIATION AND AMORTIZATION 139,639 709,390 849,029 90,565 (1d) 939,594
---------------------------------------------------------------------------
Income (Loss) from Operations (97,872) 538,360 440,488 (118,284) 322,204
NONOPERATING INCOME (EXPENSE) (6,043) (1,846 (7,889) 6,043 (1b) (1,846)
INTEREST EXPENSE 117,256 365,087 482,343 (117,256)(1b) 773,255
408,168 (1e)
---------------------------------------------------------------------------
Net Income (Loss) before benefit for income taxes (221,171) 171,427 (49,744) (403,153) (452,897)
BENEFIT FOR INCOME TAXES 65,679 - 65,679 (65,679)(1b) -
---------------------------------------------------------------------------
Net Income (Loss) $(155,492) $ 171,427 $ 15,935 $(468,832) $(452,897)
===========================================================================
</TABLE>
See notes to pro forma financial statements
<PAGE> 23
NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP
PRO FORMA STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1994
(PREPARED BY MANAGING GENERAL PARTNER)
<TABLE>
<CAPTION>
As reported After purchase
----------------------------------------------------------------------------
SLT Cable TV,
Inc. - Hillsboro,
Kaufman, New
Waverly, Oak Northland
Grove and Cable
Waterwood Properties Pro Forma Pro Forma
Franchises Four Total Adjustments Combined
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SERVICE AND CONNECTION FEES $ 878,143 $5,657,619 $6,535,762 6,535,762
OPERATING EXPENSES 861,906 3,437,320 4,299,226 52,689 (2) 4,351,915
DEPRECIATION AND AMORTIZATION 281,680 1,653,369 1,935,049 178,727 (1d) 2,113,776
----------------------------------------------------------------------------
Income (Loss) from Operations (265,443) 566,930 301,487 (231,416) 70,071
NONOPERATING INCOME (EXPENSE) (7,381) (34,260) (41,641) 7,381 (1b) (34,260)
INTEREST EXPENSE 146,977 601,948 748,925 (146,977)(1b) 1,300,346
698,398 (1e)
----------------------------------------------------------------------------
Net Income (Loss) before benefit for income taxes (419,801) (69,278) (489,079) (775,456) (1,264,535)
BENEFIT FOR INCOME TAXES 123,469 - 123,469 (123,469)(1b) -
----------------------------------------------------------------------------
Net Income (Loss) $(296,332) $ (69,278) $ (365,610) $(898,925) (1,264,535)
============================================================================
</TABLE>
See notes to pro forma financial statements
<PAGE> 24
NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1995
1. The pro forma financial statements show the adjustments for the acquisition
of substantially all of the operating assets and franchises (which occurred on
September 15, 1995) of SLT Cable TV, Inc. The adjustments reflect the
acquisition as of June 30, 1995 for balance sheet purposes and as if such
acquisition had occurred on January 1, 1994 for income statement purposes. The
sources of funds for this acquisition are assumed to consist of bank debt and
an unsecured noninterest bearing note payable to the Seller. The pro forma
adjustments for the above transaction are as follows:
(a) To record the net increase in property and equipment, which
includes an adjustment for excluded assets from the purchase of the
system:
<TABLE>
<S> <C>
Purchase price $4,492,254
Less - book value of assets recorded
on SLT Cable TV, Inc., Hillsboro,
Kaufman, New Waverly, Oak Grove and
Waterwood Franchises (2,437,043)
Franchise Cost (1,400,989)
-----------
Net Increase to Property and Equipment $ 654,222
===========
</TABLE>
(b) To eliminate nonassumed assets and liabilities of SLT Cable TV,
Inc., Hillsboro, Kaufman, New Waverly, Oak Grove and Waterwood
Franchises.
(c) To record the financing of the acquisition of SLT Cable TV, Inc.,
Hillsboro, Kaufman, New Waverly, Oak Grove and Waterwood Franchises
and refinance of the Partnership's existing debt.
<TABLE>
<S> <C>
Bank Debt $14,026,896
Seller Note 265,359
Repayment of Existing
Bank Debt (9,194,878)
Accrued Interest (70,364)
Loan Fees (50,000)
Purchase Price (4,492,254)
-----------
Cash Provided $ 484,759
=========
</TABLE>
(d) To eliminate depreciation and amortization of the systems and
record depreciation and amortization of cable television property and
equipment and franchises in accordance with the Managing General
Partner's policies.
(e) To record interest expense for the new debt associated with the
acquisition. The interest rate on the debt is assumed at the bank's
prime rate (varies from 6.75% to 9.00%) plus 1.75% per annum. No
draws are assumed during the revolving credit period. For purposes of
the interest expense calculation, an additional $500,000 borrowing on
the Partnership's credit facility was assumed to occur 210 days after
the acquisition, to repay the seller note.
2. To record the Partnership Management Fee payable to the Managing General
Partner (Northland Communications Corporation) of 6% of Gross Revenues.
<PAGE> 25
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 thereunto duly authorized.
NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP
BY: Northland Communications Corporation
Managing General Partner
Dated: BY: /s/GARY S. JONES
---------------- ---------------------------------
Gary S. Jones
(Vice President)
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- -----------------------------------------------------------
<S> <C>
10.42 Franchise Agreement with City of
Oak Grove, TX - Assignment and
Assumption dated September 15, 1995.
10.43 Franchise Agreement with City of
New Waverly, TX - Assignment and
Assumption dated September 15, 1995.
</TABLE>
<PAGE> 1
ASSIGNMENT AND ASSUMPTION OF FRANCHISE
This Assignment and Assumption of Franchise ("Assignment") is made and
shall be deemed effective as of September 15, 1995 (the "Effective Date"), by
and between NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP, a Washington
limited partnership, and its assigns ("Assignee"), and SLT CABLE TV, INC., a
Texas corporation ("Assignor").
RECITALS
A. Pursuant to that certain amended Ordinance No. 27, passed and
approved on September 18, 1989, the City of Oak Grove, Texas (the "City")
granted a cable television franchise (the "Franchise") to Progressive Cable
Communications, Incorporated ("Progressive"). Pursuant to that certain Agreement
for Purchase and Sale of Assets and Bill of Sale, dated September 18, 1990, the
Franchise was assigned from Progressive to Assignor. A copy of the Franchise is
attached hereto as Exhibit C-1 and incorporated herein by this reference.
B. Pursuant to the terms and conditions of that certain Asset Purchase
Agreement between Assignor and Northland Telecommunications Corporation, a
Washington corporation, dated as of April 10, 1995 (the "Agreement"), which
Agreement was assigned to Assignee pursuant to that certain Assignment and
Assumption of Asset Purchase Agreement dated September 15, 1995, Assignee shall
acquire from Assignor all of Assignor's right, title and interest in and to the
Franchise.
C. The City consented to the assignment of the Franchise as described
above and such consent is documented by that certain Resolution of the City
Council of the City of Oak Grove, dated August 21, 1995, a copy of which is
attached hereto as Exhibit C-2 and incorporated herein by this reference.
AGREEMENTS
In consideration of the mutual covenants, promises and conditions set
forth in the Agreement and herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties covenant and agree as follows:
1. Assignment of Franchise
(a) As of the Effective Date, Assignor hereby assigns,
conveys, transfers and sets-over to Assignee any and all of Assignor's right,
title and interest in and to the Franchise and any and all of Assignor's
responsibilities and obligations under the Franchise, such assignment being upon
all of the terms and conditions as contained in the Franchise.
(b) Assignor hereby covenants and warrants to Assignee that
Assignor has performed all of the obligations to be performed by Assignor
pursuant to and in accordance with the terms of the Franchise and that Assignor
is not in default or breach of any provisions of the
Assignment and Assumption of Franchise 9/11/95
Page 1
<PAGE> 2
Franchise, including, but not limited to the timely payment of the franchise
fee, and that the same is in full force and effect.
(c) Exhibit C-1 is a true, correct and complete copy of
the Franchise.
2. Assumption of Franchise. As of the Effective Date, Assignee
hereby accepts and assumes the assignment of the Franchise from Assignor and
hereby assumes all of the responsibilities and obligations of the franchisee
under the terms of the Franchise.
3. Effect. This Assignment shall not limit or modify any of the
provisions of the Agreement.
Assignor: SLT CABLE TV, INC.
By /s/ AMERICO CORNACCHIONE
--------------------------------
Its VICE PRESIDENT
-------------------------------
Assignee: NORTHLAND CABLE PROPERTIES FOUR
LIMITED PARTNERSHIP
By Northland Communications Corporation,
Managing General Partner
By /s/ JAMES A PENNY
--------------------------------
Its VICE PRESIDENT
-------------------------------
Assignment and Assumption of Franchise 9/13/95
Page 2
<PAGE> 3
RESOLUTION OF THE CITY COUNCIL
CITY OF OAK GROVE, TEXAS
REGARDING THE CONSENT TO
ASSIGNMENT OF FRANCHISE
WHEREAS, the City of Oak Grove, Texas (the "City"), acting by and
through its City Council passed and enacted that certain Ordinance No. 27, dated
September 18, 1989, granting to Progressive Cable Communications, Incorporated
("Progressive"), the authority to build, construct, operate and maintain a cable
television system within the City (the "Franchise"); and
WHEREAS, Progressive assigned the Franchise to SLT Cable TV Company
("SLT Cable") by Agreement for Purchase and Sale of Assets and Bill of Sale,
dated September 18, 1990, which assignment was approved by the City; and
WHEREAS, SLT Cable intends to sell substantially all of its assets,
including all of its right, title and interest in the Franchise to Northland
Cable Properties Four Limited Partnership and its successors and assigns
("Northland"); and
WHEREAS, it is in the best interests of the City and its citizens to
consent to the above-referenced assignment and transfer of the Franchise.
NOW, THEREFORE, be it resolved by the Council acting on behalf of the
City that:
1. The City hereby approves and consents to the transfer and
assignment of the Franchise from SLT Cable to Northland.
2. The City hereby approves the encumbrance of the Franchise and
the assets of the cable television system, and the assignment of same for
security purposes, in connection with the acquisition and operation of the
system and the financing and refinancing, from time to time, of the business
operations of Northland.
3. Except as specifically set forth herein, the assignment and
transfer of the Franchise shall not alter, affect or otherwise change any of the
terms or conditions of the Franchise.
4. In connection with the assignment and transfer of the
Franchise to Northland the City certifies to SLT Cable and Northland that:
(a) The Franchise was duly and validly issued by the
City, and upon its assignment to Northland, the duly authorized franchisee will
be Northland.
(b) The Franchise is in full force and effect as of the
date hereof, is valid and enforceable in accordance with its terms and will not
expire until September 18, 2009.
(c) No event of default under the Franchise, and no event
which could become an event of default with the passage of time or the giving of
notice, or both, has occurred and is continuing as of the date hereof.
City of Oak Grove Resolution - Assignment of Franchise 7/13/95
Page 1
<PAGE> 4
(d) The four percent (4%) franchise fee payable to the
City under the terms of the Franchise is calculated on the franchisee's receipts
collected annually and is payable, in arrears, on a semi-annual basis. The
payments are due within sixty (60) days of the end of each period, the first
period ending the last day of June and the second period ending the last day of
December of each year.
(e) All fees owing to the City pursuant to the Franchise
have been paid through 12-31-94.
(f) The City acknowledges receipt of a completed FCC Form
394 from SLT Cable and Northland.
5. Ordinance No. 27 and this Resolution were and are adopted in
accordance with the notice and procedure requirements of the laws of the State
of Texas governing cities, and with the notice and procedure requirements
prescribed by the City. Ordinance No. 27 and this Resolution, including without
limitation the grant of and the consent to the assignment of the Franchise, were
and are adopted in accordance with and do not conflict with the laws,
ordinances, resolutions and other regulations of the City, as presently in
effect or as the same were in effect at the time the particular action was
taken.
6. This Resolution shall take effect immediately upon passage by
the Council.
PASSED, ADOPTED AND HEREBY RESOLVED by the City Council of the City of
Oak Grove, Texas this 21st day of August, 1995.
OAK GROVE CITY COUNCIL
CITY OF OAK GROVE, TEXAS
/s/
-------------------------------------
Mayor of the City of Oak Grove, Texas
ATTEST:
- ----------------------------
City Secretary
- ----------------------------
Clerk of the City Council
<TABLE>
<CAPTION>
CITY COUNCIL MEMBERS YES NO ABSTAIN ABSENT
- --------------------- --- -- ------- ------
<S> <C> <C> <C> <C> <C>
/s/ Don Stay X
- --------------------- (motion) --- -- ------- ------
/s/ Edgar Cotton X
- --------------------- (second) --- -- ------- ------
/s/ Clint Pugh X
- --------------------- --- -- ------- ------
/s/ Don Moore X
- --------------------- --- -- ------- ------
/s/ Kirby McGlaughlin X
- --------------------- --- -- ------- ------
- --------------------- --- -- ------- ------
</TABLE>
City of Oak Grove Resolution - Assignment of Franchise 7/13/95
Page 2
<PAGE> 5
ORDINANCE NO. 27
AN ORDINANCE GRANTING A FRANCHISE TO PROGRESSIVE CABLE COMMUNICATIONS,
INCORPORATED, A TEXAS CORPORATION, ITS SUCCESSORS AND ASSIGNS, TO
BUILD, CONSTRUCT, OPERATE AND MAINTAIN A CABLE TELEVISION SYSTEM IN THE
CITY OF OAK GROVE, TEXAS AND SETTING FORTH CONDITIONS ACCOMPANYING THE
GRANTING OF THIS FRANCHISE;
BE IT ORDAINED BY THE PEOPLE OF THE CITY OF OAK GROVE, TEXAS:
SECTION 1 -- TITLE
This ordinance shall be know and may be cited as a franchise.
SECTION 2 -- DEFINITIONS
For the purpose of this Ordinance, and when not inconsistent with the
context, words used herein in the present tense include the future; words in
plural include the singular, and vice versa. The word "shall" is always
mandatory. The captions supplied herein for each section are for convenience
only. Said captions have no force of law, are not part of the section, and are
not to be used in construing the language of the section. The following terms
and phrases, as used herein, shall be given the meaning set forth below:
(A) "Basic Cable Service" is any service tier which includes the
retransmission of local television signals.
(B) "Cable television system" or "CATV System" or "cable system"
is a facility consisting of a set of closed transmission paths and associated
signal generation, reception and control equipment designed to provide video and
other programming and information to subscribing members of the public.
(C) "City" is the City of Oak Grove, Texas as a municipal
corporation under the laws of the state of Texas.
(D) "Grantee" is Progressive Cable Communications, Incorporated, a
corporation organized and existing under the laws of the State of Texas, and it
is the grantee of rights under this franchise.
(E) "City Council" is the Council of the City of Oak Grove, Texas
or its designated representative.
(F) "Federal Communications Commission" or "FCC" is the present
Federal agency of that name as constituted by the Communications Act of 1934, or
any successor agency created by the United States Congress.
(G) "Person" is any individual, firm, partnership, association,
corporation, company or organization of any kind.
(H) "Gross subscriber revenues" shall include any and all
compensation or receipts derived by Grantee from charges for subscriber services
offered in connection with the carriage of broadcast signals. It shall not
include any refunds or credits made to subscribers or any taxes imposed upon the
services furnished by Grantee. It shall include revenues from leased channels,
and programming offered as options to the regular service either on a per
program or per channel basis, if any.
SECTION 3 -- GRANT OF AUTHORITY
<PAGE> 6
There is hereby granted by the City to Grantee the right and privilege
to construct, erect, operate and maintain in, upon, along, across, above, over,
or under the streets, alleys, public utility easements, public ways and public
places now laid out or dedicated and all extensions thereof and additions
thereto in the City, all poles, wires, cables, underground conduits, manholes
and other conductors and fixtures necessary for the maintenance and operation in
the City of a cable television system for the transmission of television signals
and all other signals, including those permitted by the FCC, either separately
or upon or in conjunction with any public utility maintaining the same in the
City, with all of the necessary and desirable appliances and appurtenances
pertaining thereto. Without limiting the generality of the foregoing, this
franchise and grant shall and does hereby include the right in, over, under and
upon the streets, sidewalks, alleys, public utility easements and public grounds
and places in the City to install, erect, operate or in any way acquire the use
of, as by leasing or licensing, all lines and equipment necessary to a cable
television system and the right to make connections to subscribers and the right
to repair, replace, enlarge and extend said lines, equipment and connections.
The rights herein granted for the purposes set forth shall not be exclusive, and
the City reserves the right to grant a similar use of said streets, alleys,
public utility easements, public ways and places to any person at any time
during the period of this franchise.
SECTION 4 -- POLICE POWERS
Grantee shall at all times during the term of this franchise be subject
to all lawful exercise of the police power of the City. The right is hereby
reserved to the City to adopt, in addition to the provisions herein contained
and any other existing applicable ordinances, such additional applicable
ordinances as it shall find necessary in the exercise of its police power;
provided, however, that such additional ordinances shall be reasonable, shall
not conflict with or alter in any manner the rights granted herein, and shall
not conflict with the laws of the State of Texas, the laws of the United States
of America, or the rules, regulations and policies of the FCC.
SECTION 5 -- INDEMNIFICATION
Grantee shall save the City, its officers, agents and employees
harmless from all loss sustained by the City on account of any suit, judgment,
execution, or claim or demand whatsoever against the City resulting from
negligence on the part of Grantee or arising in any manner whatsoever from the
construction, operation or maintenance of its cable television system in the
City; and for this purpose Grantee shall carry property damage and personal
injury insurance with some responsible insurance company or companies qualified
to do business in the State of Texas which shall name the City as additional
insured. The amounts of such insurance to be carried for liability due to
property damage shall be $500,000 as to any occurrence; and against liability
due to injury to or death of person, $500,000 as to any one person and
$1,000,000 as to any one occurrence. The City shall notify Grantee, in writing,
within thirty (30) days after the presentation of any claim or demand, either by
suit or otherwise, made against the City on account of any negligence or
activity as aforesaid on the part of Grantee. Where any such claim or demand
against the City is made by suit or other legal action, written notice thereof
shall be given by the City to grantee not less than five (5) days prior to the
date upon which an answer to such legal action is due or within thirty (30) days
after the claim or demand is made upon the City, whichever notice period yields
Grantee the larger amount of time within which to prepare an answer. Failure by
the City to notify Grantee properly in accordance with the foregoing of any such
claim, suit, or demand against the City shall not release Grantee from its
obligation to indemnify the City as provided herein as long as Grantee rights
are not prejudiced thereby.
SECTION 6 -- CONSTRUCTION AND MAINTENANCE
(A) All structures, lines and equipment erected by Grantee within the
City shall be so located as to cause minimum interference with the proper use of
streets, alleys, public utility easements and other public ways and places and
to cause minimum interference with the rights of reasonable convenience of
property owners, and Grantee shall comply with all reasonable, proper and lawful
<PAGE> 7
ordinances of the City now or hereafter in force. Existing poles, posts,
conduits, and other such structures of electric power system , telephone
company, or other public utility located in the City shall be made available to
Grantee for leasing or licensing upon reasonable terms and rates and shall be
used to the extent practicable in order to minimize interference with travel and
avoid unnecessary duplication of facilities. The City shall use reasonable
effort to actively assist Grantee in obtaining reasonable joint pole or conduit
use agreements from the owners of existing poles or conduits. To the extent that
existing poles, posts, conduits and other such structures are not available, or
are not available under reasonable terms and conditions, including excessive
cost or unreasonable limitation upon the use of Grantee's cable television
system. Grantee shall have the right to purchase or lease land, rights-of-way,
or public utility easements upon or under which to erect and maintain its own
poles, conduits, and other such structures as may be necessary for the
construction and maintenance of its cable television system.
(B) In case of any disturbance by Grantee of pavement, sidewalk,
driveway or other surfacing, Grantee shall, at its own cost and expense and in a
manner approved by the City, replace and restore all paving, sidewalk, driveway
or surface so disturbed in as good condition as before said work was commenced.
(C) In the Event that at any time during the period of this
franchise the City shall lawfully elect to alter or change any street, alley,
public utility easement, or other public way requiring the relocation of
Grantee's facilities, then in such event Grantee, upon reasonable notice by the
City shall remove, relay and relocate the same at its own expense; provided,
however, that where public funds are available for such relocation pursuant to
law, Grantee shall not be required to pay the cost.
(D) Grantee shall, on the request of any person holding a building
moving permit issued by the City, temporarily raise or lower its lines to permit
the moving of the building. The expense of such temporary removal shall be paid
by the person requesting the same, and Grantee shall have the authority to
require such payment in advance.
(E) Grantee shall have the authority to trim trees and/or shrubs
upon and/or overhanging all streets, alleys, public utility easements, sidewalks
and public places of the City so as to prevent the branches of such from coming
into contact with Grantee's facilities.
(F) All poles, lines, structures and other facilities of Grantee
in, on, over and under the streets, sidewalks, alleys, public utility easements
and public grounds or places of the City shall be kept by Grantee at all times
in a safe and substantial condition. All equipment, lines, poles, structures,
cables and other facilities installed in the City, shall remain the sole
property of Grantee, unless so otherwise stated.
(G) Grantee shall extend its distribution system so as to service
the people within the franchise area. However, Grantee shall not be required to
extend such distribution system to any potential subscriber who is located in an
isolated area from the main trunk system, unless Grantee can be guaranteed a
fair rate of return as per industry standards by those subscribers who request
the extension of the distribution system into such areas.
SECTION 7 -- APPLICABLE LAW
This franchise is governed by and subject to all applicable rules,
regulations and policies of the Federal Communications Commission and by the
laws of the State of Texas.
SECTION 8 -- FRANCHISE TERM
This franchise shall take effect and be in full force from and after
acceptance by Grantee as provided in Section 15, and the same shall continue in
full force and effect for a term of twenty (20) years.
SECTION 9 -- RENEWAL PROCEDURE
<PAGE> 8
Grantee shall have the unlimited option to renew this franchise for an
additional period not to exceed fifteen (15) years. Should Grantee desire to
exercise this option, it shall so notify the City in writing, not less than
three (3) months prior to expiration of this franchise.
SECTION 10 -- FORFEITURE
If Grantee should violate any of the terms, conditions, or provisions
of this franchise or if Grantee should fail to comply with any reasonable
provisions of any ordinance of the City regulating the use by Grantee of the
street, alleys, public utility easements or public ways of the City, and should
Grantee further continue to violate or fail to comply with the same for a period
of thirty (30) days or such longer period specified by the City as is reasonable
under the circumstances, after Grantee shall have been notified in writing by
the City to cease and desist from any such violation or failure to comply so
specified, then Grantee may be deemed to have forfeited and annulled and shall
thereby forfeit and annul all the rights and privileges granted by this
franchise; provided, however, that such forfeiture shall be declared only by
written decision of the City Council after an appropriate public proceeding
before the City Council affording Grantee due process and full opportunity to
assess the evidence used rendering said declaration and to be heard in response
to any such notice of violation or failure to comply; and provided further that
the City Council may, in its discretion and upon a finding of violation or
failure to comply, impose a lesser penalty than forfeiture of this franchise or
excuse the violation or failure to comply upon a showing by Grantee of
mitigating circumstances. Grantee shall have the right to appeal any finding of
violation or failure to comply and any resultant penalty to any court of
competent jurisdiction. In the event that forfeiture is imposed upon Grantee, it
shall be afforded a period of six (6) months within which to sell, transfer, or
convey this cable television system to a qualified purchaser at an equitable
price based on the fair market value of the franchise itself and the cable
system as a going concern. Reasonable extensions of time in which to effect said
sale, transfer or conveyance shall be granted by resolution from the City
Council. During this six (6) month period, which shall run from the effective
date of the final order or decision imposing forfeiture, including any appeal,
Grantee shall have the right to operate this cable system pursuant to the
provisions of this franchise.
SECTION 11 -- SURRENDER RIGHT
Grantee may surrender this franchise at any time upon filing with the
City Council of the City a written notice of its intention to do so at least
three (3) months before the surrender date. On the surrender date specified in
the notice, all of the rights and privileges and all of the obligations, duties
and liabilities of Grantee in connection with this franchise shall terminate.
SECTION 12 -- TRANSFERS
All of the rights and privileges and all of the obligations, duties and
liabilities created by this franchise shall pass to and be binding upon the
successors of the City and the successors and assigns of Grantee; and the same
shall not be assigned or transferred without the written approval of the City
Council, which approval shall not be unreasonably withheld; provided, however,
that this Section shall not prevent the assignment of hypothecation of the
franchise by the Grantee as security for debt without such approval; and
provided further that transfers or assignments of this franchise between any
parent and subsidiary corporation or between entities of which at least fifty
percent (50%) of the beneficial ownership is held by the same person, persons,
or entities, or entities which are controlled or managed by the same person,
persons, or entities, shall be permitted without the prior approval of the City
Council.
SECTION 13 -- FRANCHISE FEE
In consideration of the terms of this franchise, Grantee agrees to pay
the City a sum of money equal to four percent (4%) of Grantee's gross subscriber
revenues per year derived from the subscriber services in the City. Such annual
sum shall be payable one-half (1/2) thereof at the end of each semi-annual
period. The semi-annual anniversary shall be the last day of June and last day
of December of each year, and each semi-
<PAGE> 9
annual period. The semi-annual anniversary shall be the last day of June and
last day of December of each year, and each semi-annual payment shall be paid
within sixty (60) days thereafter.
SECTION 14 -- RECEIVER SALES PROHIBITED
As a condition of this franchise, Grantee agrees that it shall not
engage in the business of sales or repair of television receivers owned by its
subscribers; nor shall it be responsible for the operating condition of said
receivers; provided, however, that this paragraph shall not apply to converters,
decoders, home interactive terminals and other such devices as may be used in
furnishing any programming or service via Grantee's cable television system.
SECTION 15 -- EFFECTIVE DATE
This Ordinance shall become effective when all terms and conditions are
accepted by both Grantee and City and shall then be and become a valid and
binding contract between the City and Grantee.
SECTION 16 -- UNLAWFUL ACTS
(A) It shall be unlawful for any person to intercept or assist in
intercepting or receiving, whether physically, electrically, acoustically,
inductively or otherwise any television signals, radio signals, pictures,
programs, sounds or any other information, impulses or intelligence transmitted
over Grantee's cable system without full payment to Grantee or its lessee by all
parties receiving service. For purposes of this provision "assist in
intercepting or receiving" shall include the manufacture of distribution of
equipment intended by the manufacturer or distributor for unauthorized reception
of any communications service offered over a cable system.
(B) It shall be unlawful for any person, without the consent of
the Grantee, to willfully tamper with, remove, or injure any cable, wires, or
other equipment used for the distribution of television signals, radio signals,
pictures, programs, sounds, or any other information, impulses, or intelligence
transmitted over Grantee's cable system.
(C) It shall be a misdemeanor punishable by a fine or not more
than Five Hundred Dollars ($500.00), or by imprisonment for a term not to exceed
six (6) months, or both, for any person to violate any of the provisions of this
Section.
(D) The prohibitions, penalties and remedies set forth in this
Section are in addition to the prohibitions, penalties and remedies for theft of
cable service provided by federal and state law.
SECTION 17 -- SEVERABILITY
If any section, subsection, sentence, clause, phrase or portion of this
Ordinance is for any reason held invalid or unconstitutional by any Federal or
State court or administrative or governmental agency of competent jurisdiction,
specifically including the FCC, such portion shall be deemed a separate,
distinct and independent provision, and such holding shall not affect the
validity of the remaining portions hereof.
PASSED AND APPROVED THIS 18TH DAY OF SEPTEMBER 1989.
ATTEST:___________________________ _______________________________________
CITY SECRETARY CHIEF OFFICIAL
CITY OF OAK GROVE, TEXAS
ATTEST: _______________________________________
Progressive Cable Communications, Inc.
<PAGE> 1
ASSIGNMENT AND ASSUMPTION OF FRANCHISE
This Assignment and Assumption of Franchise ("Assignment") is made and
shall be deemed effective as of September 15, 1995 (the "Effective Date"), by
and between NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP, a Washington
limited partnership, and its assigns ("Assignee"), and SLT CABLE TV, INC., a
Texas corporation ("Assignor").
RECITALS
A. Pursuant to that certain Ordinance No. 1988-03, passed and approved
on September 12, 1988, the City of New Waverly, Texas (the "City") granted a
cable television franchise (the "Franchise") to Limestone Cable of Texas
("Limestone"). Pursuant to that certain Ordinance No. 1990-02, passed and
approved on February 12, 1990, the Franchise was assigned from Limestone to DMS.
With the City's consent, the Franchise was assigned from DMS to Assignor, on
August 20, 1990. A copy of the Franchise is attached hereto as Exhibit C-1 and
incorporated herein by this reference.
B. Pursuant to the terms and conditions of that certain Asset Purchase
Agreement between Assignor and Northland Telecommunications Corporation, a
Washington corporation, dated as of April 10, 1995 (the "Agreement"), which
Agreement was assigned to Assignee pursuant to that certain Assignment and
Assumption of Asset Purchase Agreement dated September 15, 1995 (the
"Assignment"), Assignee shall acquire from Assignor all of Assignor's right,
title and interest in and to the Franchise.
C. The City consented to the assignment of the Franchise as described
above and such consent is documented by that certain Resolution No. 1995-01 of
the City Council of the City of New Waverly, dated July 11, 1995, a copy of
which is attached hereto as Exhibit C-2 and incorporated herein by this
reference.
AGREEMENTS
In consideration of the mutual covenants, promises and conditions set
forth in the Agreement and herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties covenant and agree as follows:
1. Assignment of Franchise
(a) As of the Effective Date, Assignor hereby assigns,
conveys, transfers and sets-over to Assignee any and all of Assignor's right,
title and interest in and to the Franchise and any and all of Assignor's
responsibilities and obligations under the Franchise, such assignment being upon
all of the terms and conditions as contained in the Franchise.
(b) Assignor hereby covenants and warrants to Assignee
that Assignor has performed all of the obligations to be performed by Assignor
pursuant to and in accordance with
Assignment and Assumption of Franchise 9/13/95
Page 1
<PAGE> 2
the terms of the Franchise and that Assignor is not in default or breach of any
provisions of the Franchise, including, but not limited to the timely payment of
the franchise fee, and that the same is in full force and effect.
(c) Exhibit C-1 is a true, correct and complete copy of
the Franchise.
2. Assumption of Franchise. As of the Effective Date, Assignee
hereby accepts and assumes the assignment of the Franchise from Assignor and
hereby assumes all of the responsibilities and obligations of the franchisee
under the terms of the Franchise.
3. Effect. This Assignment shall not limit or modify any of the
provisions of the Agreement.
Assignor: SLT CABLE TV, INC.
By /s/ AMERICO CORNACCNIONE
----------------------------------------
Its
---------------------------------------
Assignee: NORTHLAND CABLE PROPERTIES FOUR
LIMITED PARTNERSHIP
By Northland Communications Corporation,
Managing General Partner
By /s/ JAMES A PENNEY
-------------------------------------
Its VICE PRESIDENT
------------------------------------
Assignment and Assumption of Franchise 9/13/95
Page 2
<PAGE> 3
RESOLUTION OF THE CITY COUNCIL
CITY OF NEW WAVERLY, TEXAS
REGARDING THE CONSENT TO
ASSIGNMENT OF FRANCHISE
WHEREAS, the City of New Waverly, Texas (the "City"), acting by and
through its City Council (the "Council"), passed and enacted that certain
Ordinance No. 1988-03, dated September 12, 1988, granting to Limestone Cable of
Texas and its successors and assigns the right and privilege to construct,
erect, operate, and maintain a cable television system within the City (the
"Franchise"); and
WHEREAS, the City amended the Franchise to change the name of the cable
company from Limestone Cable of Texas to DMS by Ordinance No. 1990-02, passed
and approved on February 12, 1990; and
WHEREAS, DMS assigned the Franchise to SLT Cable TV Company ("SLT
Cable") which assignment was approved by the Council on August 20, 1990; and
WHEREAS, SLT Cable intends to sell substantially all of its assets,
including all of its right, title and interest in the Franchise to Northland
Cable Properties Four Limited Partnership and its successors and assigns
("Northland"); and
WHEREAS, it is in the best interests of the City and its citizens to
consent to the above-referenced assignment and transfer of the Franchise.
NOW, THEREFORE, be it ordained by the Council acting on behalf of the
City that:
1. The City hereby approves and consents to the transfer and
assignment of the Franchise from SLT Cable to Northland.
2. The City hereby approves the encumbrance of the Franchise and
the assets of the cable television system, and the assignment of same for
security purposes, in connection with the acquisition and operation of the
system and the financing and refinancing, from time to time, of the business
operations of Northland.
3. Except as specifically set forth herein, the assignment and
transfer of the Franchise shall not alter, affect or otherwise change any of the
terms or conditions of the Franchise.
4. In connection with the assignment and transfer of the
Franchise to Northland, the City certifies to SLT Cable and Northland that:
(a) The Franchise was duly and validly issued by the
City, and upon its assignment to Northland, the duly authorized franchisee will
be Northland.
(b) The Franchise is in full force and effect as of the
date hereof, is valid and enforceable in accordance with its terms and will not
expire until the twenty (20) year Franchise period, September 12, 2008.
City of New Waverly Resolution - Assignment of Franchise 06/05/95
Page 1
<PAGE> 4
(c) No event of default under the Franchise, and no event
which could become an event of default with the passage of time or the giving of
notice, or both, has occurred and is continuing as of the date hereof.
(d) The three percent (3%) franchise fee payable to the
City under the terms of the Franchise is calculated on the franchisee's receipts
collected annually and is payable, in arrears, on a semi-annual basis. The
payments are due within sixty (60) days of the end of each period, the first
period ending the last day of June and the second period ending the last day of
December of each year.
(e) All fees owing to the City pursuant to the Franchise
have been paid through December 31, 1994.
(f) The City acknowledges receipt of a completed FCC Form
394 from SLT Cable and Northland.
5. Ordinance No. 1988-03, all amendments thereto, and this
Resolution were and are adopted in accordance with the notice and procedure
requirements of the laws of the State of Texas governing cities, and with the
notice and procedure requirements prescribed by the City. Ordinance No. 1988-03,
all amendments thereto, and this Resolution, including without limitation the
grant of and the consent to the assignment of the Franchise, were and are
adopted in accordance with and do not conflict with the laws, ordinances,
resolutions and other regulations of the City, as presently in effect or as the
same were in effect at the time the particular action was taken.
6. This Resolution shall take effect immediately upon passage by
the Council.
PASSED, ADOPTED AND HEREBY RESOLVED by the City Council of the City of
New Waverly, Texas this ______ day of ____________, 199___.
NEW WAVERLY CITY COUNCIL
CITY OF NEW WAVERLY, TEXAS
/s/
---------------------------------------
Mayor of the City of New Waverly, Texas
ATTEST:
/s/ DANA BARTU
- ----------------------------
CITY SECRETARY
- ----------------------------
Clerk of the City Council
<TABLE>
<CAPTION>
CITY COUNCIL MEMBERS YES NO ABSTAIN ABSENT
- -------------------- --- -- ------- ------
<S> <C> <C> <C> <C> <C>
/s/ ANTHONY ZABAVA X
- -------------------- (motion) --- -- ------- ------
/s/ GENE BARTEE X
- -------------------- (second) --- -- ------- ------
/s/ CLYDE LOLL X
- -------------------- --- -- ------- ------
/s/ MARY MARSHALL X
- -------------------- --- -- ------- ------
</TABLE>
City of New Waverly Resolution - Assignment of Franchise 06/05/95
Page 2
<PAGE> 5
ORDINANCE NO. 1988-03
AN ORDINANCE GRANTING A FRANCHISE TO LIMESTONE CABLE OF TEXAS, A TEXAS COMPANY,
ITS SUCCESSORS AND ASSIGNS, TO BUILD, CONSTRUCT, OPERATE AND MAINTAIN A CABLE
TELEVISION SYSTEM IN THE CITY OF NEW WAVERLY TEXAS, AND SETTING FORTH CONDITIONS
ACCOMPANYING THE GRANTING OF THIS FRANCHISE:
BE IT ORDAINED BY THE PEOPLE OF THE CITY OF New Waverly, TEXAS:
SECTION 1--TITLE
This ordinance shall be known and may be cited as Cable Television
Ordinance.
SECTION 2--DEFINITIONS
For the purpose of this Ordinance, and when not inconsistent with the
context, words used herein in the present tense include the future; words in
plural include the singular, and vice versa. The words "shall" is always
mandatory. The captions supplied herein for each section are for convenience
only. Said captions have no force of law, are not part of the section, and are
not to be used in construing the language of the section. The following terms
and phrases, as used herein, shall be given the meaning set forth below:
(A) "Basic Cable Service" is any service tier which
includes the retransmission of local television signals.
(B) "Cable television system" or "CATV Systems" or "cable
system" is a facility consisting of a set of closed transmission paths and
associated signal generation, reception and control equipment designed to
provide video and other programming and information to subscribing members of
the public.
(C) "City" is the City of New Waverly, a municipal
corporation under the laws of the state of Texas.
(D) "Grantee" is Limestone Cable TV of Texas, Co.,
organized and existing under the laws of the State of Texas, and it is the
grantee of rights under this franchise.
(E) "City Council" is the City Council of the city of ,
Texas, or its designated representative.
(F) "Federal Communications Commission" of "FCC" is the
present Federal agency to the name as constituted by the Communications Act of
1934, or any successor agency created by the United States Congress.
(G) "Person" is any individual, firm, partnership,
association, corporation, company or organization of any kind.
(H) "Gross subscriber revenues" shall include and all
compensation or receipts derived by Grantee from charges for regular subscriber
services offered in connection with the carriage of broadcast signals. It shall
not include any refunds or
<PAGE> 6
credits made to subscribers or any taxes imposed upon the services furnished by
Grantee. Nor shall it include revenues from leased channels, and programming
offered as options to the regular service either on a per program or per channel
charge basis, if any.
(I) "Regular subscriber services" shall include the
carriage of required broadcast signals and non-broadcast services, but shall not
include "ancillary" or "auxiliary" services, which include, but are not limited
to, advertising, leased channels, and programming supplied on a per program or
per channel charge basis, if any.
SECTION 3--GRANT OF AUTHORITY
There is hereby granted by the City of Grantee the right and privilege
to construct, erect, operate and maintain in, upon, along, across, above, over,
or under the streets, alleys, public utility easements, public ways and public
places now laid out or dedicated and all extensions thereof and additions
thereto in the City, all poles, wires, cables, underground conduits, manholes
and other conductors and fixtures necessary for the maintenance and operation in
the City of a cable television system for the transmission of television signals
and all other signals, including those permitted by the FCC, either separately
or upon or in conjunction with any public utility maintaining the same in the
City, with all of the necessary and desirable appliances and appurtenances
pertaining thereto. Without limiting the generality of the foregoing, this
franchise and grant shall and does hereby include the right in, over, under and
upon the streets, sidewalks, alleys, public utility easements and public grounds
and places in the City to install, erect, operate or in any way acquire the use
of, as by leasing or licensing, all lines and equipment necessary to a cable
television system and the right to repair, replace, enlarge and extend said
lines, equipment and connections. The rights herein granted for the purposes set
forth shall not be exclusive, and the City reserves the right to grant a similar
use of said streets, alleys, public utility easements, public ways and places to
any person at any time during the period of this franchise.
SECTION 4--POLICE POWERS
Grantee shall at all times during the term of this franchise be subject
to all lawful exercise of the police power of the City. The right is hereby
reserved to the City to adopt, in addition to the provisions herein contained
and any other existing applicable ordinances, such additional applicable
ordinances as it shall find necessary in the exercise of its police power;
provide, however, that such additional ordinances shall be reasonable, shall not
conflict with the laws of the State of Texas, the laws of the United States of
America, or the rules regulations and policies of the FCC.
SECTION 5--INDEMNIFICATION
Grantee shall save the City, its officers, agents and employees
harmless from all loss sustained by the City on account of any suit, judgment,
execution, claim or demand whatsoever against the City resulting from negligence
on the part of Grantee in the construction, operation or maintenance of its
cable television system in the City; and for
<PAGE> 7
this purpose Grantee shall carry property damage and personal injury insurance
with some responsible insurance company or companies qualified to do business in
the State of Texas. The amounts of such insurance to be carried for liability
due to property damage shall be $500,000 as to any occurrence; and against
liability due to injury to or death of person, $1,000,000 as to any one
occurrence. The City shall notify Grantee, in writing, within ten (10) days
after the presentation of any claim or demand, either by suit or otherwise, made
against the City on account of any negligence as aforesaid on the part of
Grantee. Where any such claim or demand against the City is made by suit or
other legal action, written notice thereof shall be given by the City to Grantee
not less than five (5) days prior to the date upon which an answer to such legal
action is due or within ten (10) days after the claim or demand is made upon the
City, whichever notice period yields Grantee the larger amount of time within
which to prepare an answer. Failure by the City to notify Grantee properly in
accordance with the foregoing of any such claim, suit, or demand against the
City shall release Grantee from its obligation to indemnify the City as provided
herein.
SECTION 6--CONSTRUCTION AND MAINTENANCE
(A) All structures, lines and equipment erected by Grantee within the
City shall be so located as to cause minimum interference with the proper use of
streets, alleys, public utility easements and other public ways and places and
to cause minimum interference with the rights of reasonable convenience of
property owners, and Grantee shall comply with all reasonable, proper and lawful
ordinances of the City now or hereafter in force. Existing poles, posts,
conduits, and other such structures of electric power system, telephone company,
or other public utility located in the City shall be made available to Grantee
for leasing or licensing upon reasonable terms and rates and shall be used to
the extent practicable in order to minimize interference with travel and avoid
unnecessary duplication of facilities. The City shall actively assist Grantee to
the fullest extent necessary in obtaining reasonable joint pole or conduit use
agreements from the owners of existing poles or conduits. To the extent that
existing poles, posts, conduits, and other such structures are not available, or
are not available under reasonable terms and conditions, including excessive
cost or unreasonable limitation upon the use of Grantee's cable television
system. Grantee shall have the right to purchase, lease, or in any other manner
acquire land, rights-of-way, or public utility easements upon or under which to
erect and maintain its own poles, conduits, and other such structures as may be
necessary for the construction and maintenance of its cable television system.
(B) In case of any disturbance by Grantee of pavement, sidewalk,
driveway or other surfacing, Grantee shall, at its own cost and expense and in a
manner approved by the City, replace and restore all paving, sidewalk, driveway
or surface so disturbed in as good condition as before said work was commenced.
(C) In the event that at any time during the period of this franchise
the City shall lawfully elect to alter or change any street, alley, public
utility easement, or other public way requiring the relocation of Grantee's
facilities, then in such event Grantee, upon reasonable notice by the City shall
remove, relay and relocate the same at its own expense;
<PAGE> 8
provide, however, that where public funds are available for such relocation
pursuant to law, Grantee shall not be required to pay the cost.
(D) Grantee shall, on the request of any person holding a building
moving permit issued by the City, temporarily raise or lower its lines to permit
the moving of the building. The expense of such temporary removal shall be paid
by the person requesting the same, and Grantee shall have the authority to
require such payment in advance.
(E) Grantee shall have the authority to trim trees and / or shrubs upon
and / or overhanging all streets, alleys, public utility easements, sidewalks
and public places of the City so as to prevent the branches of such from coming
into contact with Grantee's facilities.
(F) All poles, lines, structures and other facilities of Grantee in,
on, over and under the streets, sidewalks, alleys, public utility easements and
public grounds or places of the City shall be kept by Grantee at all times in a
safe and substantial condition. All equipment, lines, poles, structures, cables
and other facilities installed in the City as being a part of Grantee's
distribution system, up to and including that part of the system installed
within the individual residences or commercial buildings of the City, shall
remain the sole property of Grantee, unless so otherwise stated.
(G) Grantee shall extend its distribution system so as to service the
people within the franchise area. However, Grantee shall not be required to
extend such distribution system to any potential subscriber who is located in an
isolated area form the main trunk system, unless Grantee can be guaranteed a
fair rate of return as per industry standards by those subscribers who request
the extension of the distribution system into such areas.
SECTION 7--APPLICABLE LAW
This franchise is governed by and subject to all applicable rules,
regulations and policies of the Federal Communications Commission and by the
laws of the State of Texas.
SECTION 8--FRANCHISE TERM
This franchise shall take effect and be in full force from and after
acceptance by Grantee as provided in Section 15, and the same shall continue in
full force and effect for a term of twenty (20) years.
SECTION 9--RENEWAL PROCEDURE
Grantee shall have the unlimited option to renew this franchise for an
additional period not to exceed fifteen (15) years. Should Grantee desire to
exercise this option, it shall so notify the City in writing, not less than
three (3) months prior to expiration of this franchise.
<PAGE> 9
SECTION 10--FORFEITURE
If Grantee should violate any of the terms, conditions, or provisions
of this franchise or if Grantee should fail to comply with any reasonable
provisions of any ordinance of the City regulating the use by Grantee of the
street, alleys, public utility easements or public ways of the City, and should
Grantee further continue to violate or fail to comply with the same for a period
of thirty (30) days or such longer period specified by the City as is reasonable
under the circumstances, after Grantee shall have been notified in writing by
the City to cease and desist from any such violation or failure to comply so
specified, then Grantee may be deemed to have forfeited and annulled and shall
thereby forfeit and annul all the rights and privileges granted by this
franchise; provided, however, that such forfeiture shall be declared only by
written decision of the City Council after an appropriate public proceeding
before the City Council affording Grantee due process and full opportunity to
assess the evidence used in rendering said declaration and to be heard in
response to any such notice of violation or failure to comply; and provided
further that the City Council may, in its discretion and upon a finding of
violation or failure to comply, impose a lesser penalty than forfeiture of this
franchise or excuse the violation or failure to comply upon a showing by Grantee
of mitigating circumstances. Grantee shall have the right to appeal any finding
of violation or failure to comply and any resultant penalty to any court of
competent jurisdiction. In the event that forfeiture is imposed upon Grantee, it
shall be afforded a period of six (6) months within which to sell, transfer, or
convey this cable television system to a qualified purchaser at an equitable
price based on the fair market value of the franchise itself and the cable
system as a going concern. Reasonable extensions of time in which to effect said
sale, transfer or conveyance shall be granted by resolution of the City Council.
During this six month period, which shall run from the effective date of the
final order or decision imposing forfeiture, including any appeal, Grantee shall
have the right to operate this cable system pursuant to the provisions of this
franchise.
SECTION 11--SURRENDER RIGHT
Grantee may surrender this franchise at any time upon filing with the
City Council of the City a written notice of its intention to do so at least
three (3) months before the surrender date. On the surrender date specified in
the notice, all of the rights and privileges and all of the obligations, duties
and liabilities of Grantee in connection with this franchise shall terminate.
SECTION 12--TRANSFERS
All of the rights and privileges and all of the obligations, duties and
liabilities created by this franchise shall pass to and be binding upon the
successors of the City and the successors and assigns of Grantee; and the same
shall not be assigned or transferred without the written approval of the City
Council, which approval shall not be unreasonably withheld; provided, however,
that this Section shall not prevent the assignment or hypothecation of the
franchise by Grantee as security for debt without such approval; and
<PAGE> 10
provided further that transfers or assignments of this franchise between any
parent and subsidiary corporation or between entities of which at least fifty
percent (50%) of the beneficial ownership is held by the same person, persons,
or entities, or entities which are controlled or managed by the same person,
persons, or entities, shall be permitted without the prior approval of the City
Council.
SECTION 13--FRANCHISE FEE
In consideration of the terms of this franchise, Grantee agrees to pay
the City a sum of money equal to three percent (3%) of Grantee's gross
subscriber revenues per year derived from the regular basic subscriber services
in the City. Such annual sum shall be payable one-half (1/2) thereof at the end
of each semi-annual period. The semi-annual anniversary shall be the last day of
June and last day of December of each year, and each semi-annual payment shall
be paid within sixty (60) days thereafter. All other license fees or taxes
levied upon Grantee by the City shall be credited against the payment required
herein.
SECTION 14--RECEIVER SALES PROHIBITED
As a condition of this franchise, Grantee agrees that it shall not
engage in the business of sales or repair of television receivers owned by its
subscribers; nor shall it be responsible for the operating condition of said
receivers; provided, however, that this paragraph shall not apply to converters,
decoders, home interactive terminals and other such devices as may be used in
furnishing any programming service via Grantee's cable television system.
SECTION 15--EFFECTIVE DATE
This ordinance shall become effective when all terms and conditions are
accepted by both Grantee and City and shall then be and become a valid and
binding contract between the City and Grantee.
SECTION 16--UNLAWFUL ACTS
(A) It shall be unlawful for any person to intercept or assist in
intercepting or receiving, whether physically, electrically, acoustically,
inductively or otherwise any television signals, radio signals, pictures,
programs, sounds or any other information, impulses or intelligence transmitted
over Grantee's cable system without full payment to Grantee or its lessee by all
parties receiving service. For purposes of this provision "assist in
intercepting or receiving" shall include the manufacture or distribution of
equipment intended by the manufacturer or distributor for unauthorized reception
of any communications service offered over a cable system.
(B) It shall be unlawful for any person, without the consent of the
Grantee, to willfully tamper with, remove, or injure any cable, wires, or other
equipment used for the
<PAGE> 11
distribution of television signals, radio signals, pictures, programs, sounds,
or any other information, impulses, or intelligence transmitted over Grantee's
cable system.
(C) It shall be a misdemeanor punishable by a fine of not more then
Five Hundred Dollars ($500.00), or by imprisonment for a term not to exceed six
(6) months, or both, for any person to violate any of the provisions of this
Section.
(D) The prohibitions, penalties and remedies set forth in this Section
are in addition to the prohibitions, penalties and remedies for theft of cable
service provided by federal and state law.
SECTION 17--SEVERABILITY
If any section, subsection, sentence, clause, phrase or portion of this
Ordinance is for any reason held invalid or unconstitutional by any Federal or
State court of administrative or governmental agency of competent jurisdiction,
specifically including the FCC, such portion shall be deemed a separate,
distinct and independent provision, and such holding shall not affect the
validity of the remaining portions hereof.
PASSED AND APPROVED THIS 12TH DAY OF SEPTEMBER 1988.
________________________________
Chief Official
City of New Waverly, Texas
ATTEST:
___________________________________
ACCEPTED--DATE: SEPTEMBER 12, 1988
___________________________________
LIMESTONE CABLE T.V. OF TEXAS, CO.
