EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
dated as of
October 3, 1997
among
COMCAST CORPORATION,
CABLE TV FUND 14 A/B VENTURE,
JONES INTERNATIONAL, LTD.,
JONES INTERCABLE, INC.,
CABLE TV FUND 14-A, LTD.,
and
CABLE TV FUND 14-B, LTD.
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions........................................... 1
ARTICLE 2
PURCHASE AND SALE
Section 2.1. Purchase and Sale..................................... 10
Section 2.2. Excluded Assets....................................... 12
Section 2.3. Assumption of Liabilities............................. 14
Section 2.4. Excluded Liabilities.................................. 14
Section 2.5. Purchase Price........................................ 15
Section 2.6. Closing............................................... 17
Section 2.7. Allocation of Purchase Price.......................... 18
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND
JONES INTERCABLE
Section 3.1. Existence and Power; Affiliates....................... 18
Section 3.2. Authorization......................................... 18
Section 3.3. Governmental Authorization............................ 19
Section 3.4. Non-Contraventio...................................... 19
Section 3.5. Required Consents; Franchise Approvals................ 19
Section 3.6. Financial Statements.................................. 19
Section 3.7. Absence of Certain Changes............................ 20
Section 3.8. Properties............................................ 21
Section 3.9. Sufficiency of and Title to the Assets................ 23
Section 3.10. No Undisclosed Liabilities............................ 23
Section 3.11. Litigation............................................ 23
Section 3.12. Material Contracts.................................... 24
Section 3.13. Affiliates............................................ 25
Section 3.14. Insurance Coverage.................................... 25
Section 3.15. Compliance............................................ 25
Section 3.16. Receivables........................................... 26
Section 3.17. Intellectual Property................................. 26
Section 3.18. Finders' Fees......................................... 26
i
Page
----
Section 3.19. Environmental Compliance............................. 27
Section 3.20. Authorizations and CATV Instruments.................. 27
Section 3.21. Technical Compliance................................. 28
Section 3.22. Additional FCC Matters............................... 29
Section 3.23. Federal Aviation Authority........................... 30
Section 3.24. Subscriber and Revenue Data.......................... 30
Section 3.25. Legality of Signal Carriage.......................... 31
Section 3.26. Certain System Information........................... 31
Section 3.27. No Impediments to Business........................... 32
Section 3.28. Full Disclosure...................................... 32
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF JONES
Section 4.1. Organization and Existence........................... 32
Section 4.2. Corporate Authorization.............................. 33
Section 4.3. Governmental Authorization........................... 33
Section 4.4. Non-Contravention.................................... 33
Section 4.5. Litigation........................................... 33
Section 4.6. Full Disclosure...................................... 33
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF JONES INTERCABLE
Section 5.1. Organization and Existence........................... 33
Section 5.2. Corporate Authorization.............................. 33
Section 5.3. Governmental Authorization........................... 34
Section 5.4. Non-Contravention.................................... 34
Section 5.5. Litigation........................................... 34
Section 5.6. Full Disclosure...................................... 34
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 6.1. Organization and Existence........................... 34
Section 6.2. Corporate Authorization.............................. 34
Section 6.3. Governmental Authorization........................... 35
Section 6.4. Non-Contravention.................................... 35
Section 6.5. Finders' Fees........................................ 35
ii
Page
----
Section 6.6. Litigation............................................ 35
Section 6.7. Full Disclosure....................................... 35
ARTICLE 7
COVENANTS OF SELLER, JONES AND JONES INTERCABLE
Section 7.1. Conduct of the Business............................... 35
Section 7.2. Access to Information................................. 39
Section 7.3. Notices of Certain Events............................. 39
Section 7.4. Noncompetition........................................ 40
Section 7.5. Use of Seller's Name.................................. 41
Section 7.6. Capital Leases........................................ 41
Section 7.7. Consents; Estoppel Certificates....................... 41
Section 7.8. Agreement to Consult.................................. 42
Section 7.9. Transitional Billing Services......................... 42
Section 7.10. No Solicitation....................................... 42
Section 7.11. SEC Filings........................................... 43
Section 7.12. Jones Intercable Recommendation....................... 44
Section 7.13. Vote of Partners of Fund 14-B......................... 44
Section 7.14. Schedules............................................. 44
Section 7.15. Jones Intercable Guarantee............................ 44
Section 7.16. Fees for Environmental Assessment..................... 44
Section 7.17. Termination of Revolving Credit and Term Loan
Agreements and Security Interests..................... 45
Section 7.18. Title Defects......................................... 45
Section 7.19. Lease Renewal......................................... 45
Section 7.20. Paging Reseller Agreement............................. 45
Section 7.21. Retransmission Consent Agreements..................... 46
ARTICLE 8
COVENANTS OF BOTH PARTIES
Section 8.1. Best Efforts; Further Assurances...................... 46
Section 8.2. Certain Filings....................................... 47
Section 8.3. Public Announcements.................................. 47
iii
ARTICLE 9
Page
----
TAX MATTERS
Section 9.1. Tax Definitions....................................... 47
Section 9.2. Tax Representations................................... 48
Section 9.3. Tax Cooperation and Other Tax Matters................. 48
ARTICLE 10
EMPLOYEE BENEFITS
Section 10.1. Employee Benefits Definitions......................... 50
Section 10.2. Employee Benefits Representations..................... 51
Section 10.3. Employees and Offers of Employment.................... 53
Section 10.4. Seller's Employee Benefit Plans....................... 54
Section 10.5. No Third Party Beneficiaries.......................... 55
ARTICLE 11
CONDITIONS TO CLOSING
Section 11.1. Conditions to the Obligations of Each Party........... 55
Section 11.2. Conditions to Obligation of Buyer..................... 56
Section 11.3. Conditions to Obligation of Seller.................... 58
ARTICLE 12
SURVIVAL; INDEMNIFICATION
Section 12.1. Survival.............................................. 59
Section 12.2. Indemnification....................................... 59
Section 12.3. Conduct of Indemnification Proceedings................ 60
Section 12.4 Establishment of Losses............................... 60
Section 12.5 Payment of Losses..................................... 61
Section 12.6 Limitation on Indemnity Claims........................ 61
iv
ARTICLE 13
Page
----
TERMINATION
Section 13.1. Termination......................................... 61
Section 13.2. Effect of Termination............................... 62
Section 13.3. Fees and Expenses................................... 62
ARTICLE 14
MISCELLANEOUS
Section 14.1. Notices............................................. 63
Section 14.2. Amendments and Waivers.............................. 64
Section 14.3. Expenses............................................ 64
Section 14.4. Successors and Assigns.............................. 64
Section 14.5. Governing Law....................................... 65
Section 14.6. Specific Performance; Remedies Cumulative........... 65
Section 14.7. Counterparts; Effectiveness......................... 65
Section 14.8. Entire Agreement; Third Party Beneficiaries......... 65
Section 14.9. Captions............................................ 65
Exhibit A -- Form of Assumption and Assignment Agreement
Exhibit B -- Form of Jones Intercable Guarantee
v
SCHEDULES
---------
Schedule 2.2 Programming Agreements to be Assumed;
Excluded Retransmission Consent Agreements;
Other Excluded Assets
Schedule 2.5(b)(vi) Estimated Purchase Price Adjustments
Schedule 2.5(b)(vii) Final Purchase Price Adjustments
Schedule 3.1 Affiliates of Seller
Schedule 3.5(a) Required Consents
Schedule 3.5(b) Franchise Approvals
Schedule 3.7 Absence of Certain Changes
Schedule 3.8(a) Real Property
Schedule 3.8(b) Personal Property
Schedule 3.8(d) Liens
Schedule 3.10 Undisclosed Liabilities
Schedule 3.11 Litigation
Schedule 3.12(a) Material Contracts and Purchase Orders
Schedule 3.12(c) Bulk Billed Agreements
Schedule 3.12(d) Form of Paging Subscriber Agreement
Schedule 3.13 Affiliates
Schedule 3.14 Insurance Coverage
Schedule 3.16 Accounts Receivable Aging
Schedule 3.18 Finders' Fees
Schedule 3.19 Environmental Compliance
Schedule 3.20 Authorizations and CATV Instruments
Schedule 3.22 Additional FCC Matters
Schedule 3.24(a) Subscriber Information and Homes Passed
vi
Schedule 3.24(e) System Rates
Schedule 3.24(f) FCC Notices to Subscribers
Schedule 3.25 Legality of Signal Carriage
Schedule 3.26 Certain System Information
Schedule 3.27 Impediments to Business
Schedule 7.1(q) Permitted Modifications to Programming Service
Schedule 9.2 State Tax Returns
Schedule 10.2(c) Employment, Severance and Similar
Agreements and Policies
Schedule 10.2(f) Transferred Employees - Retirement
and Severance Benefits
Schedule 10.2(g) Compliance with ERISA
Schedule 11.2(m) Retransmission Consent Agreement
vii
ASSET PURCHASE AGREEMENT
AGREEMENT dated as of October 3, 1997 among Comcast Corporation, a
Pennsylvania corporation ("BUYER"), Cable TV Fund 14 A/B Venture, a Colorado
general partnership ("SELLER") and for purposes of Articles 3 and 5 and Sections
7.4,7.9, 7.10, 7.11, 7.12, 7.13, 7.15, 7.19 and 7.20 hereof, Jones Intercable,
Inc., a Colorado corporation ("JONES INTERCABLE") and for purposes of Article 4
and Sections 7.4 and 7.10 hereof, Jones International, Ltd., a Colorado
corporation ("JONES"), Cable TV Fund 14-A Ltd., a Colorado limited partnership
("FUND 14-A") and Cable TV Fund 14-B Ltd., a Colorado limited partnership ("FUND
14-B").
W I T N E S S E T H :
WHEREAS, Seller owns and operates (a) the cable television business in
and around the Franchise Areas (as defined below) (the "SYSTEM") and Jones
Intercable ownes and operates (b) the paging business ("PAGING BUSINESS") in and
around the System (clauses (a) and (b) together, the "BUSINESS");
WHEREAS, Jones Intercable, Fund 14-A and Fund 14-B control Seller and
desire to enter into this Agreement to induce Buyer to acquire the Business as
provided herein;
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the
terms and subject to the conditions contained in this Agreement, substantially
all of the assets, rights, privileges, interests, business and properties owned,
leased, used, useful or held for the use by Seller in connection with the
Business;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. DEFINITIONS. (a) The following terms, as used herein,
-----------
have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
other Person,
with "control" for such purpose meaning the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities or voting
interests, by contract or otherwise.
"AVERAGE MONTHLY REVENUE" means all revenue (excluding any revenue
received as a result of franchise fees, late fees or any other fees that are
passed through to the subscriber) received by Seller from subscribers for the
provision of Limited Basic Service, Tier One Service, Expanded Basic Service,
Premium Pay Service and additional outlets, for the three calendar month period
immediately preceding the Closing Date, divided by three.
"AVERAGE MONTHLY REVENUE PER BASIC SUBSCRIBER" means an amount equal to
the Average Monthly Revenue divided by the Average Number of Basic Subscribers.
"AVERAGE NUMBER OF BASIC SUBSCRIBERS" means the sum of the number of
Basic Subscribers on the last day of each of the four months immediately
preceding the date of determination, divided by four.
"AUTHORIZATIONS" means all Federal Authorizations and all Other
Authorizations.
"BASIC SUBSCRIBER" means as of any date and for each Franchise Area
served by the System, without duplication, the aggregate of all of the following
that are receiving Limited Basic Service provided by the System: (a) private
residential customer accounts that are billed by individual unit (regardless of
whether such accounts are in single family homes or in individually billed units
in apartment houses and other multi-unit buildings) (excluding "second connects"
or "additional outlets," as such terms are commonly understood in the CATV
industry), each of which shall be counted as one Basic Subscriber, and (b) all
commercial, bulk-billed and other accounts not billed by individual unit, such
as hotels, motels, apartment houses and multi-family homes, provided that the
number of "Basic Subscribers" serviced by each such account shall be deemed to
be an amount equal to the quotient of (x) the aggregate monthly revenue received
from the provision of Limited Basic Service, Tier One Service and Expanded Basic
Service from such accounts, in each case for the last calendar month (or, if
applicable, the last billing period) preceding the date of determination,
divided by (x) the Monthly Predominant Rate. Notwithstanding the foregoing, the
term "Basic Subscriber" shall not include any subscriber, whether a private
residential, commercial or bulk-billed subscriber, who:
(1) with respect to a private residential subscriber, is receiving the
Limited Basic Service, Tier One Service or Expanded Basic Service at less than
the standard rate for the applicable service as set forth on Schedule 3.24(e)
----------------
(as such Schedule is
-2-
updated as of the Closing Date), and with respect to commercial or bulk-billed
subscribers, is receiving the Limited Basic Service, Tier One Service or
Expanded Basic Service at less than the rates set forth in the applicable
agreement to provide service to a commercial subscriber or the applicable bulk-
billed agreement, as appropriate (provided however, that no subscriber shall be
excluded from the definition of "Basic Subscriber" pursuant to this clause if
such subscriber resides on an Indian reservation and receives Limited Basic
Service, Tier One Service or Expanded Basic Service at no less than the standard
rate for the applicable service for residents of such Indian reservation, as set
forth on Schedule 3.24(e)(as such Schedule is updated as of the Closing Date));
----------------
(2) has not been receiving such service for at least sixty (60)
consecutive days immediately prior to the date of determination;
(3) has not paid for at least two (2) months' consecutive service at
standard rates as set forth on Schedule 3.24(e) for the period immediately
----------------
preceding the date of determination (together with subscribers described in the
immediately preceding clause (2), and for purposes of Section 2.5(b)(5)(B) only,
"PROVISIONAL SUBSCRIBERS");
(4) is more than sixty (60) days delinquent from the date of billing on
any amount due to Seller (provided that a subscriber's account shall not be
considered delinquent as a result of unpaid amounts not exceeding $10.00
relating to (A) customary late charges imposed by Seller and/or (B) disputed
amounts); or
(5) is pending disconnection from the service provided by the System for
any reason.
"BUSINESS DAY" means any day other than a Saturday, Sunday or holiday on
which federal banks are or may elect to be closed.
"CABLE ACT" means the Communications Act of 1934, as amended, including
without limitation, by the Cable Communication Policy Act of 1984 and by the
Cable Television Consumer Protection and Competition Act of 1992 and by the
Telecommunications Act of 1996, and the rules and regulations promulgated
thereunder.
"CABLE ACT NOTICES" means all written notices, written requests, written
inquiries or other written communications from the FCC or any Municipality
relating to or requesting information from the System or requesting that the
System take certain actions, in accordance with the Cable Act.
"CABLE ACT ORDERS" means all written orders, written decisions, written
actions, written determinations or other written pronouncements of the FCC or
any
-3-
franchising authority specifically with respect to the System, issued in
accordance with the Cable Act.
"CABLE ACT PETITIONS" means all petitions, motions, oppositions, notices
of appeal, applications or similar instruments filed or submitted by or to the
FCC or any Municipality with respect to the System, in accordance with the Cable
Act.
"CATV INSTRUMENTS" means the instruments granting the Authorizations.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time and any rules or regulations
promulgated thereunder.
"CLOSING DATE" means the date of the Closing.
"COPYRIGHT ACT" means the Copyright Act of 1976, as amended.
"COURTESY SUBSCRIBER" means any Person (whether receiving service at a
residential, commercial or other location) receiving any service (other than
promotional services in the ordinary course of business) from the System for
free.
"CURRENT ASSETS" means (a) ninety-five percent (95%) of the face amount
of all accounts receivable included in the Assets (other than accounts
receivable related to advertising sales) that are 30 days or less past due from
the date of billing, (b) ninety percent (90%) of the face amount of all accounts
receivable included in the Assets (other than accounts receivable related to
advertising sales) that are between 31 and 60 days past due from the date of
billing; provided however, that, any such accounts receivable shall be excluded
from clause (a) and (b) above if (x) any portion of such accounts receivable is,
on the Closing Date, 61 days or more past due from the date of invoice
(provided, that late fees shall not be counted in determining whether an account
receivable is 61 days or more past due, and provided, further that any such late
fees shall not be included in Current Assets) or (y) such accounts receivable
relate to Basic Subscribers whose accounts are inactive or whose service is
pending disconnection for nonpayment on the Closing Date), (c) ninety-five
percent (95%) of the face amount of all accounts receivable included in the
Assets that are related to advertising sales and that are 60 days or less past
due from the date of billing, (d) ninety percent (90%) of the face amount of all
accounts receivable included in the Assets that are related to advertising sales
and that are between 61 and 90 days past due from the date of billing, (e)
seventy-five percent (75%) of the face amount of all accounts receivable
included in the Assets that are related to advertising sales and that are
between 91 and 120 days past due from the date of billing; provided, however,
that any such accounts receivable shall be excluded from clause (c) and (d)
above if any portion of such accounts receivable is, on the Closing Date, 121
days or more past due from the date of invoice (provided that late fees shall
not be counted in
-4-
determining whether an account receivable is 121 days or more past due, and
provided further, that any such late fees shall not be included in Current
Assets), (e) the amount of all prepaid expenses on the Closing Date that
directly relate to the Business to the extent the benefit of such prepaid
expenses can be realized by Buyer within twelve months after the Closing Date,
and (f) any other current asset of Seller as defined by GAAP (excluding any
cash, cash equivalents, marketable securities and inventory) directly related to
the Business that shall directly benefit the Buyer within 12 months after the
Closing Date, other than (i) intercompany allocations and other payments of
overhead charges; (ii) prepaid taxes based in whole or in part on the income of
Seller or its Affiliates or the transactions contemplated by this Agreement;
(iii) prepaid wages, salaries, payroll taxes and expenses, benefits, perquisites
and other compensation related expenses other than for a Transferred Employee
for which Seller is not otherwise obligated to make such payments under the
terms of Article 10 of this Agreement; (iv) prepaid expenses relating to
inventory; and (v) prepaid insurance expenses.
"ENVIRONMENTAL LAWS" means (i) any and all federal, state and local
statutes, laws, judicial decisions, regulations, ordinances, rules, codes and
other governmental restrictions and (ii) all judgments, orders, decrees,
injunctions, permits, licenses and agreements relating to the Assets or the
Business, in each case relating to the environment, the effect of the
environment on human health or to emissions, discharges or releases of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic, radioactive or hazardous substances or wastes into the
environment, including without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic, radioactive or hazardous substances or wastes or the clean-up
or other remediation thereof.
"ENVIRONMENTAL LIABILITIES" means any and all liabilities arising in
connection with or in any way relating to the Business, the Assets or activities
or operations occurring or conducted at any of the Real Property (including,
without limitation, offsite disposal), whether vested or unvested, contingent or
fixed, actual or potential, known or unknown, which (i) arise under or relate to
Environmental Laws (including, without limitation, any matter disclosed or
required to be disclosed in Schedule 3.19) and (ii) relate to actions occurring
-------------
or conditions existing on or prior to the Closing Date.
"ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations,
certificates and approvals of governmental authorities relating to or required
by Environmental Laws and necessary or proper for the Business as currently
conducted.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
-5-
"EXPANDED BASIC SERVICE" means those programming services set forth on
Schedule 3.24(e).
- ----------------
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"FEDERAL AUTHORIZATIONS" means all licenses, permits, certificates,
consents, clearances and other similar rights and approvals relating to the
Business issued by or obtained from any branch of the Federal government,
including but not limited to, the FCC, the Copyright Office or the Commission.
"FRANCHISE AREAS" mean those geographical areas set forth on Schedule
--------
3.20 in which Seller is authorized under one or more Authorizations to provide
- ----
CATV service to subscribers.
"GAAP" means generally accepted accounting principles consistently
applied as in effect from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means (i) the United States of America, (ii) any
state, commonwealth, territory or possession of the United States of America and
any political subdivision thereof (including counties, municipalities and the
like) and (iii) any agency, authority or instrumentality of any of the
foregoing, including any court, tribunal department, bureau, commission or
board.
"HAZARDOUS SUBSTANCES" means any pollutant, toxic, radioactive, corrosive
or otherwise hazardous substance, including petroleum, its derivatives, by-
products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics, regulated by or which
may form the basis for liability under Environmental Laws or that is regulated
or labeled as such pursuant to any Environmental Law.
"HOMES PASSED" means residential dwelling units, multiple dwelling
buildings, residential hotels and other commercial locations (including each
unit in a multiple dwelling building or complex, as one Home Passed and counting
each commercial location, including without limitation, hotels and motels, as
one Home Passed) to which cable communications service may be provided at a
distance no greater than approximately 200 feet from the System's existing
distribution cable, and residential dwelling units, multiple dwelling buildings,
residential hotels and other commercial locations which are at a distance
greater than approximately 200 feet from the System's existing distribution
cable but which are premises of subscribers; provided that Homes Passed shall
--------
not include unoccupied residential lots.
-6-
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INTERIM BALANCE SHEET" means the balance sheet of Seller as of June 30,
1997, delivered to Buyer pursuant to Section 3.6.
"LEGAL REQUIREMENT" means any statute, ordinance, code, law, rule,
regulation, order or other requirement, standard or procedure enacted, adopted
or applied by any Governmental Authority, including judicial decisions applying
common law or interpreting any other Legal Requirement.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, legal or equitable claim of a third party, or
other encumbrance of any kind or defect in title in respect of such property or
asset. For the purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any property or asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such property or
asset.
"LIMITED BASIC SERVICE" means any service tier which includes the
retransmission of local television broadcast signals, as defined in 47 U.S.C.
Section 522(3), plus any other programming currently offered by the System on
the lowest tier offered by the Business (i.e. the tier to which all subscribers
are required to subscribe).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, condition (financial or otherwise), results of operations or
prospects of the Business taken as a whole.
"MONTHLY PREDOMINANT RATE" means the sum of the standard retail rates
charged to non-discounted subscribers receiving Limited Basic Service, Tier One
Service and Tier One Service as of the date of determination. The Monthly
Predominant Rate as of the date of this Agreement is an amount equal to $27.25.
"MULTI-CHANNEL VIDEO SERVICE" means (i) the distribution by a single
provider to end users of two or more channels of video programming, by any
means, including but not limited to cable television, direct broadcast
satellite, master antenna television system, satellite master antenna television
system and multi-channel microwave distribution system; or (ii) providing
facilities for the distribution of such video programming.
"MUNICIPALITY" means each governmental unit listed on Schedule 3.20 which
-------------
has granted Seller an Authorization.
-7-
"NET LIABILITIES" means the amount by which the Total Liabilities with
respect to the Business, as of the Closing Date, are in excess of or are less
than, as the case may be, the Current Assets as of the Closing Date.
"OTHER AUTHORIZATIONS" means all approvals, authorizations, consents,
easements (whether or not of record), franchises, leases, licenses,
qualifications, registrations and other similar rights relating to the Business
obtained from any Governmental Authority, other than Federal Authorizations.
"PERMITTED LIENS" means any (i) Lien for current taxes and other
governmental charges and assessments which are not yet due and payable, (ii)
zoning law or ordinance or any similar Legal Requirement, (iii) right reserved
to any Governmental Authority to regulate affected property, (iv) in the case of
Leased Real Property, the rights of any lessor and any Lien granted by any
lessor, and (v) immaterial mechanics, materialmen's and similar liens, which do
not individually or in the aggregate adversely affect the value of any Real
Property or interfere with the right or ability to own, use, dispose of or
operate any of the Assets.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including any
Governmental Authority.
"PREMIUM PAY SERVICE" means any pay-per-channel, including but not
limited to, any one or more of HBO, Showtime, The Movie Channel, Disney, Encore
and Cinemax programming, provided that any pay-per-view programming is excluded
from the definition of Premium Pay Service.
"PROCEEDING" means any investigation, proceeding or other process by the
FCC or any other Governmental Authority that relates in whole or in part to
rates charged to subscribers.
"REGULATED ACTIVITY" means any generation, treatment, storage, recycling,
transportation or Release of any Hazardous Substance.
"RELEASE" means any discharge, emission or release, including a Release
as defined in CERCLA at 42 U.S.C. (S) 9601(22). The term "Released" has a
corresponding meaning.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
-8-
"TIER ONE SERVICE" means those programming services set forth on Schedule
--------
3.24(e).
- -------
"TOTAL LIABILITIES" means all subscriber deposits and advance payments
existing on the Closing Date and related to the Business (including any interest
required to be paid thereon), any customary payments related to the Business
required to be made by the Buyer after the Closing relating to the period on or
prior to Closing (including without limitation, property taxes, pole rental,
copyright fees, accrued vacation time for Transferred Employees, rent,
utilities, etc.), which payments benefit Seller, and any other liabilities or
obligations of Seller related to the Business which Buyer agrees to assume
pursuant to this Agreement.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Active Employee 10.3
Additional Basic Subscribers 2.5
Assets 2.1
Assumed Liabilities 2.3
Bank Loan Documents 7.17
Basket Amount 12.6
BNS 7.17
Break-Up Fee 13.3
Business recitals
Buyer's List 10.3
City 7.1
Closing 2.7
Code 9.1
Contracts 2.1
Cost of Service Election 7.1
Cure Amount 7.18
Employee Plans 10.1
Environmental Assessment 11.2
ERISA 10.1
ERISA Affiliate 10.1
Excluded Assets 2.2
Excluded Liabilities 2.4
Expense Fee 13.3
Franchise Approvals 3.5
Indemnified Party 12.3
Indemnifying Party 12.4
-9-
Leased Real Property 3.8
Loss 12.2
Material Contracts 3.13
Multiemployer Plan 10.1
Owned Real Property 3.8
PNC 7.7
Paging Business recitals
Paging Business Purchase Price 2.5
Paging Reseller Agreement 7.20
Personal Property 2.1
Post-Closing Tax Period 9.1
Pre-Closing Tax Period 9.1
Preliminary Proxy Statement 7.11
Prime Rate 2.5
Proxy Statement 7.11
Purchase Price 2.5
Real Property 2.1
Required Consent 3.5
Superior Proposal 7.9
Surveys 7.18
System recitals
System Purchase Price 2.5
Title Commitments 7.18
Title Company 7.18
Title Defect 7.18
Tax 9.1
Town 7.1
Transferred Employee 10.3
Transitional Billing Services 7.9
(c) Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, and all accounting determinations hereunder shall
be made, in accordance with GAAP.
ARTICLE 2
PURCHASE AND SALE
SECTION 2.1. PURCHASE AND SALE. (a) Except as otherwise provided
-----------------
below, upon the terms and subject to the conditions of this Agreement, Buyer
agrees to purchase from Seller and Seller agrees to sell, transfer, assign and
deliver, or cause to be sold, transferred, assigned and delivered, to Buyer at
Closing, free and clear of all Liens other than Permitted Liens, all of the
right, title and interest in, to and under
-10-
the assets, properties and business, of every kind and description, wherever
located, real, personal or mixed, tangible or intangible, owned, held or used in
the conduct of the Business as the same shall exist on the Closing Date,
including without limitation, all assets shown on the Interim Balance Sheet,
other than current assets disposed of in the ordinary course of business (all
assets, rights, properties and claims acquired by Buyer pursuant to this
Agreement are collectively referred to as the "ASSETS"), and including, without
limitation, all right, title and interest in, to and under:
(i) All Authorizations;
(ii) All interests in real property, including without limitation,
all appurtenances, towers and fixtures located thereon, rights-of-way,
easements and other real property interests owned or leased by Seller
(collectively, the "REAL PROPERTY");
(iii) All tangible personal property, including, without
limitation, all electronic devices, towers, satellite dishes, antennae,
downleads, trunk and distribution pedestals, grounding and pole hardware,
cable system plant, machinery, installed subscribers' devices (including,
without limitation, drop lines, converters, and encoders, transformers and
fittings), headends, origination, transmission and distribution systems and
equipment, internal wiring, hardware, tools, inventory, spare parts, motor
vehicles, supplies, test and closed circuit devices, earth stations and
microwave equipment and systems and furniture, furnishings and office
equipment used in the Business (collectively the "PERSONAL PROPERTY");
(iv) All claims and rights of every kind arising out of or related
to all contracts, leases of real and personal property (both as lessor and
lessee), agreements, non-governmental licenses, orders for service to be
provided by the Business and understandings in connection with the Business
and to which Seller or any Affiliate of Seller is a party and which relate
to the Business, other than Authorizations, including without limitation,
all pole attachment and conduit agreements, wire crossing agreements,
subscriber agreements, retransmission consent agreements and other
agreements, written or oral, to which Seller or any Affiliate of Seller is
a party and which relate to the Business (collectively, the "CONTRACTS");
(v) All business records regardless of the medium of storage
relating to the Business, including without limitation, all schematics,
blueprints, working drawings, engineering data, engineering drawings,
reports, design information, specifications, maintenance manuals, test
procedures, current customer and subscriber lists, maps, reports, plans,
specifications, projections, statistics, promotional graphics, original art
work, mats, plates, negatives, advertising, marketing or related materials,
files, manuals and records, lists of
-11-
all pending subscriber hook-ups, disconnect and repair orders and supply
orders, and all other technical, accounting and financial information
concerning the Business;
(vi) All deposits with respect to the Authorizations or with
respect to any bonding or surety arrangements;
(vii) All rights, claims and causes of action against third
parties, including without limitation, any rights, claims and causes of
action arising under warranties from vendors and other third parties;
(viii) All accounts receivable, notes receivable and prepaid
expenses, as well as insurance and indemnity claims with respect to the
Assets;
(ix) All goodwill associated with the Business and the Assets; and
(x) All other assets of whatever nature and wherever located, and
owned, used or held for use by the Seller or any Affiliate of Seller in
connection with the Business.
Provided that, notwithstanding the foregoing, the Assets shall not include
any Excluded Assets.
(b) Jones Intercable shall assign to Buyer all of its right, title
and interest in, to and under any contracts, agreements permits and other
Assets, used by Seller in connection with the operation of the Business,
including without limitation:
(i) Subscriber Agreement, dated October 1, 1993, as amended on
October 15, 1996, by and between Jones Intercable and Audiocom, Inc.;
(ii) Paging Reseller Agreement, effective September 1, 1995, by
and between Jones Intercable and PageMart, Inc.;
(iii) All subscriber agreements between Jones Intercable d/b/a
Jones Paging and subscribers of the Paging Business; and
(iv) Any other permits, easements, agreements or Assets used by
Seller in connection with the Business.
SECTION 2.2. EXCLUDED ASSETS. The following assets and properties of
---------------
Seller (the "EXCLUDED ASSETS") shall be excluded from the Assets:
(a) all cash and cash equivalents on hand and in banks (other than any
deposits referred to in Section 2.1(g));
-12-
(b) all programming contracts (including without limitation, the
Distribution Agreement between Seller and Bonjour Media, Inc., dated August
18, 1994) other than any such agreements listed on Schedule 2.2;
------------
(c) all retransmission consent agreements listed on Schedule 2.2;
------------
(d) any books and records that Seller is required by law to retain, and
Seller's corporate books and records;
(e) all insurance policies, intercompany receivables with respect to
any Affiliate of Seller, letters of credit or similar items and any cash
surrender value in regard thereto;
(f) any claims, rights and interests in and to any refunds of federal,
state or local franchise, income or other taxes or fees for periods prior to
the Closing Date;
(g) Employee Plans;
(h) subscriber billing services agreements and related leased
equipment;
(i) all trade marks, service marks, copyrights and trade names and all
rights associated therewith owned or used by Seller (subject to Buyer's
rights under Section 7.5);
(j) the Trunked Subscriber Radio Service Agreement between Seller and
Advanced Radio Communications Services of Florida, Inc., dated September 11,
1992;
(k) the Programming Guide Agreement, dated November 21, 1992, between
Seller and Miami Herald Publishing Company, a division of Knight Ridder,
Inc.;
(l) the TV Book Distribution Agreement, dated May 1, 1993 between
Seller and Sun-Sentinel;
(m) the Amended and Restated Partnership Agreement of South Florida
Cable Advertising, effective January 1, 1994, and any partnership interest
associated therewith; and
(n) any Assets sold or otherwise disposed of in the ordinary course of
business and not in violation of any provisions of this Agreement during
the period from the date hereof until the Closing Date, and any Assets
listed on Schedule 2.2.
------------
-13-
SECTION 2.3. ASSUMPTION OF LIABILITIES. Upon the terms and subject to
-------------------------
the conditions of this Agreement, Buyer agrees, effective at the time of
Closing, to assume the following liabilities (the "ASSUMED LIABILITIES"):
(a) the obligations of Seller for subscriber deposits and subscriber
advance payments and any other obligations or liabilities set forth on
Schedule 2.5(b)(v), to the extent such obligations or liabilities are
------------------
related to the Business and have been included as an adjustment to the
Purchase Price in accordance with the provisions of Section 2.5; and
(b) all obligations of Seller arising under all Contracts, not
excluded pursuant to Section 2.2, with respect to the period of time after
the Closing Date (other than liabilities or obligations attributable to any
failure by Seller to comply with the terms thereof).
SECTION 2.4. EXCLUDED LIABILITIES. Buyer is assuming only the Assumed
--------------------
Liabilities and is not assuming any other liability or obligation of Seller (or
any predecessor owner of all or part of its business and assets) of whatever
nature, whether presently in existence or arising hereafter, known or unknown,
contingent or otherwise. All such other liabilities and obligations shall be
retained by and remain obligations and liabilities of Seller or such
predecessor, as applicable (all such liabilities and obligations not being
assumed being herein referred to as the "EXCLUDED LIABILITIES"). The Excluded
Liabilities shall include, but not be limited to the following:
(a) any liabilities or obligations for Taxes or any audits related
thereto (including, without limitation, sales and payroll taxes) arising
from or relating to (i) the Excluded Assets or any business of Seller, and
(ii) the Assets or the operation of the Business attributable to or
incurred in the Pre-Closing Tax Period;
(b) any liabilities or obligations relating to employee benefits or
compensation arrangements existing on or prior to the Closing Date (except
for accrued vacation time for Transferred Employees), including, without
limitation, any liability or obligation arising from or relating to (i)
"sticking bonuses" or similar payments to induce Seller's employees to
remain in Seller's employ prior to Closing, (ii) severance payments, or
earned or accrued vacation for Seller's employees that are not Transferred
Employees or sick pay, (iii) earned or accrued sick leave, (iv) short-term
or long-term disability benefits or (v) any liabilities or obligations
under any of Seller's employee benefit agreements, plans or other
arrangements;
(c) any Environmental Liability;
-14-
(d) any liability or obligation relating to an Excluded Asset;
(e) any liability or obligation arising from any litigation, action,
suit, proceeding or investigation, actual or threatened, relating to any
act or omission occurring on or prior to the Closing Date;
(f) any liability or obligation relating to the Business attributable
to or incurred during the period prior to the Closing, other than the
Assumed Liabilities;
(g) any liabilities or obligations as to which Seller or any other
Person might assert that Buyer has transferee liability, other than the
Assumed Liabilities.
SECTION 2.5. PURCHASE PRICE. (a) The purchase price for the Assets
--------------
related to or used or usable in connection with the operation of the System is
One Hundred and Thirty Nine Million Seven Hundred Thousand Dollars
($139,700,000) (the "SYSTEM PURCHASE PRICE"). The purchase price for the Assets
related solely to or used solely in connection with the operation of the Paging
Business is Three Hundred Thousand Dollars ($300,000) (the "PAGING BUSINESS
PURCHASE PRICE") (the System Purchase Price and the Paging Business Purchase
Price shall be collectively referred to herein as the "PURCHASE PRICE"). The
Purchase Price shall, subject to adjustment as provided in subsection (b) below,
be paid by wire transfer to an account of Seller with a bank in the United
States designated by Seller, by notice to Buyer, not later than two business
days prior to the date such payment is due (or if not so designated, then by
certified or official bank check payable to the order of Seller).
(b) At the Closing, the Purchase Price shall be adjusted as follows:
(i) In the event the Seller's Current Assets as of the Closing Date
are in excess of the Seller's Total Liabilities as of the Closing Date, the
Purchase Price shall be increased by an amount equal to the Net
Liabilities.
(ii) In the event the Seller's Current Assets as of the Closing Date
are less than the Seller's Total Liabilities as of the Closing Date, the
Purchase Price shall be decreased by an amount equal to the Net
Liabilities.
(iii) The Purchase Price shall be decreased by an amount equal to the
product of $2,472, multiplied by the number, if any, by which the Average
Number of Basic Subscribers as of the Closing Date is less than 56,637.
(iv) The Purchase Price shall be decreased by an amount equal to
the amount of refunds to be made to subscribers of the Paging Business
after the Closing Date under the agreements for paging services between
Jones
-15-
Intercable d/b/a Jones Paging and subscribers of the Paging Business, which
subscribers executed a subscriber agreement with Jones Intercable d/b/a
Jones Paging on or prior to the Closing Date.
(v) To the extent the Seller is unable to obtain a waiver from
PageMart, Inc., in accordance with Section 7.20(a) hereof, the Purchase
Price shall be decreased by an amount equal to $300,000.
(vi) The amount of the net adjustment to the Purchase Price hereunder
shall be estimated by Seller (after consultation with Buyer), which shall
prepare Schedule 2.5(b)(vi), to be delivered at least ten (10) days prior
-------------------
to the Closing Date, containing the estimated Purchase Price adjustment
indicating in detail the basis for its estimate. If the adjustment to the
Purchase Price provides for a net increase in the Purchase Price, Buyer
shall pay such net increase on the Closing Date. If the adjustment to the
Purchase Price provides for a net decrease in the Purchase Price, Buyer
shall reduce accordingly the amount of the Purchase Price.
(vii) (A) The amount of the final adjustment to the Purchase Price
hereunder, if any, shall initially be determined by Buyer, which shall
prepare Schedule 2.5(b)(vii), to be delivered within ninety (90) days after
--------------------
the Closing Date, containing the final Purchase Price adjustment and
setting forth in detail the calculation of such adjustment. Seller may
designate, at its sole expense, any qualified agent or certified public
accountant to review Buyer's work in preparing Schedule 2.5(b)(vii).
--------------------
(B) In computing the amount of the final adjustment to the
Purchase Price, all Provisional Subscribers as of the Closing Date that satisfy
the definition of a Basic Subscriber as of the 60th day immediately following
the Closing Date shall be referred to herein as "ADDITIONAL BASIC SUBSCRIBERS".
To the extent that the Purchase Price was reduced on the Closing Date in
accordance with Section 2.5(b)(iii), the final adjustment to the Purchase Price
shall reflect a credit to the Seller in an amount equal to $2,472 for each
Additional Basic Subscriber; provided however, that in no event shall such
credit exceed the amount of the adjustment to the Purchase Price calculated in
accordance with Section 2.5(b)(iii).
(C) Except for any item which is disputed in accordance with
subsection (vii) below, any adjusting payment required by Schedule 2.5(b)(vii)
--------------------
shall be made within fifteen (15) days after the submission thereof to Seller.
(vii) In the event Seller provides written notice to Buyer within ten
(10) days after submission of Schedule 2.5(b)(vii) that it disagrees with
--------------------
the final adjustment to the Purchase Price set forth therein, Buyer and
Seller shall have an additional thirty (30) days to mutually resolve the
disagreement. If a
-16-
mutually satisfactory conclusion is not reached within said thirty (30) day
period, each of Buyer and Seller, respectively, at its own cost, shall
engage an independent accounting firm of national reputation to provide an
independent determination with respect to the final adjustment to the
Purchase Price set forth on Schedule 2.5(b)(vii) within thirty (30) days
-------- -----------
after the initial thirty (30) day period. In the event that such firms
disagree with respect to such final adjustment, such firms shall select a
third independent accounting firm of national reputation, and such third
firm shall provide an independent determination with respect to such final
adjustment within thirty (30) days after such firm is retained, and the
determination of such third independent accounting firm shall be deemed to
be the final adjustment to the Purchase Price. Buyer and Seller shall
share equally in the cost of such third independent accounting firm.
(viii) Any amount due to Seller or Buyer, as the case may be, as a
result of the final Purchase Price adjustment shall bear interest from the
Closing Date to the date of payment of the amount due at a rate equal to
the rate announced from time to time by Buyer's principal lender as its
prime rate (and the rate hereunder shall change each time such prime rate
changes) (the "PRIME RATE").
(ix) Any payment pursuant to this Section 2.5(b) shall be made by
wire transfer of immediately available funds to such account of Seller or
Buyer as may be designated by Seller or Buyer (as applicable).
SECTION 2.6. CLOSING. Subject to the provisions of Section 2.6(b), the
-------
closing (the "CLOSING") of the purchase and sale of the Assets and the
assumption of the Assumed Liabilities hereunder shall take place at the offices
of Buyer in Philadelphia, Pennsylvania on the last day of the month immediately
following the tenth day after the date on which all conditions to Closing have
been satisfied, or on such date as Buyer and Seller may otherwise mutually
agree. At the Closing:
(a) Buyer shall deliver to Seller the Purchase Price, adjusted in
accordance with Section 2.5(b)(vi);
(b) Each of Seller and Jones Intercable shall enter into an Assignment
and Assumption Agreement with Buyer substantially in the form attached hereto as
Exhibit A, and Seller and Jones Intercable shall deliver to Buyer such warranty
deeds, bills of sale, endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment as Buyer shall deem
reasonably necessary or appropriate to vest in Buyer all right, title and
interest in, to and under the Assets, subject only to Permitted Liens and
Assumed Liabilities; and
(c) Seller and Jones Intercable shall deliver all such further documents,
instruments and agreements as may be reasonably requested by Buyer or its
counsel,
-17-
in order to more effectively transfer title to the Assets to Buyer, or to
effectuate and carry out any provision of this Agreement.
SECTION 2.7. ALLOCATION OF PURCHASE PRICE. The Purchase Price and
----------------------------
Assumed Liabilities shall be allocated among the Assets and the covenant not to
compete described in Section 7.4 hereof in accordance with the decision of an
appraisal firm to be mutually agreed upon by Buyer and Seller, as promptly as
possible following the Closing Date. The cost of such appraisal shall be shared
equally by Seller and Buyer. Buyer and Seller shall each file Tax returns
consistent with such allocation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND
JONES INTERCABLE
Each of Seller and Jones Intercable represents and warrants to Buyer as
of the date hereof and as of the Closing Date that:
SECTION 3.1. EXISTENCE AND POWER; AFFILIATES. Seller is a general
-------------------------------
partnership, validly existing and in good standing under the laws of the State
of Colorado, and has all partnership powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted. Seller is duly qualified to do business and is in
good standing in each jurisdiction where such qualification is necessary.
Seller has requisite partnership power and authority to own, lease and use the
Assets and to conduct the Business as currently conducted. Seller is not a
participant in any joint venture or partnership with any other Person. Seller
does not own any equity interest in any other entity. Seller has heretofore
delivered to Buyer true and complete copies of the partnership agreement of
Seller as currently in effect. Seller has no Affiliates other than as set forth
on Schedule 3.1 that have any direct or indirect interest in either the Assets
------------
or the Business.
SECTION 3.2. AUTHORIZATION. The execution, delivery and performance by
-------------
Seller of this Agreement are within Seller's powers and, subject to receipt of
the approval of the limited partners of Fund 14-B, have been duly authorized by
all necessary action on the part of Seller and its partners. The approval of
the limited partners of Fund 14-A is not required for the consummation of the
transactions contemplated by this Agreement. This Agreement has been duly and
validly executed and delivered by Seller and constitutes a valid and binding
agreement of Seller, enforceable against Seller in accordance with its terms.
SECTION 3.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
--------------------------
performance by Seller of this Agreement require no action by or in respect of,
or
-18-
filing with, any Governmental Authority other than (a) for filings required
under the Exchange Act, (b) compliance with any applicable requirements of the
HSR Act, and (c) as described in Section 3.5.
SECTION 3.4. NON-CONTRAVENTION. The execution, delivery and performance
-----------------
by Seller of this Agreement do not and will not (a) violate or conflict with the
partnership agreement of any of Seller or of Fund 14-A or Fund 14-B, (b)
assuming compliance with the matters referred to in Section 3.3, violate or
conflict with any applicable Legal Requirement applicable to Seller; (c)
assuming the obtaining of all Required Consents and Franchise Approvals, violate
or conflict with, result in a breach of, or constitute a default under or give
rise to any right of termination, cancellation, modification or acceleration of
any right or obligation of Seller or to a loss of any benefit relating to the
Business to which Seller is entitled under any provision of any agreement,
contract or other instrument (including without limitation any Authorization)
binding upon Seller or by which any of the Assets is or may be bound or (d)
result in the creation or imposition of any Lien on any Asset.
SECTION 3.5. REQUIRED CONSENTS; FRANCHISE APPROVALS. (a) Schedule
-------------------------------------- --------
3.5(a) sets forth all franchises, licenses, authorizations, notices, approvals
- ------
and consents required pursuant to the Contracts or otherwise for (i) Seller to
transfer the Assets and the Business to Buyer free and clear of all Liens other
than Permitted Liens, and for (ii) Buyer to assume the Assets, assume and
perform the Contracts and the Authorizations and operate the Business, except
for Franchise Approvals (each such consent, a "REQUIRED CONSENT" and together
the "REQUIRED CONSENTS").
(b) Schedule 3.5(b) sets forth all franchises, licenses, authorizations,
---------------
approvals and consents (each, a "FRANCHISE APPROVAL" and together the "FRANCHISE
APPROVALS") required pursuant to the Authorizations or by any Governmental
Authority for (i) Seller to transfer the Assets and the Business to Buyer free
and clear of all Liens other than Permitted Liens, (ii) Buyer to conduct the
Business and to own, lease, use and operate the Assets and (iii) Buyer to assume
the CATV Instruments.
SECTION 3.6. FINANCIAL STATEMENTS. The (a) audited financial statements
--------------------
of Seller contained in Fund 14-B's Annual Report on Form 10-K for the year ended
December 31, 1996, and (b) Interim Balance Sheet and the related statements of
income and cash flows of Seller for the six month period ended June 30, 1997,
are complete, true and accurate in all material respects and fairly present, in
accordance with GAAP, the financial position of the Seller as of the dates
thereof, and the results of its operations and changes in financial position for
the periods then ended (subject to normal year-end adjustments, none of which
will be material, in the case of the unaudited interim financial statements).
-19-
SECTION 3.7. ABSENCE OF CERTAIN CHANGES. Except as set forth on
--------------------------
Schedule 3.7, since December 31, 1996, the Business has been conducted in the
- ------------
ordinary course consistent with past practice, and there has not been:
(a) any material adverse change in the business, assets, condition
(financial or otherwise), or results of operations of the Business, including
without limitation, as to the System's rate regulation position (provided
that, certification of a local franchising authority shall not, by itself,
constitute a material adverse change in the business, assets, condition
(financial or otherwise) or results of operation of the Business), other than
(i) a change arising out of general economic conditions in the United States,
(ii) any change affecting the United States cable industry as a whole,
including any change arising from legislation, litigation, rulemaking or
regulation, any of which affects the United States cable industry as a whole
or (iii) competition caused by or arising from any Multi-Channel Video Service
providers who are currently competing with, have the legal authorization,
pursuant to a franchise or license, to compete with, or have announced their
intention to compete with the Seller, and which are set forth on Schedule
--------
3.27;
----
(b) any incurrence, assumption or guarantee by Seller of any indebtedness
for borrowed money with respect to the Business other than in the ordinary
course of business and in amounts and on terms consistent with past practice,
but in any event not exceeding $20,000;
(c) any creation or other incurrence of any Lien on any Asset, other than
Permitted Liens and Liens which will be removed on or before the Closing Date;
(d) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting any Asset which has not been repaired or
replaced to Buyer's satisfication and which, individually or in the aggregate,
has resulted in a Material Adverse Effect;
(e) any contract, agreement, commitment or arrangement between Seller and
any party, other than in the ordinary course of business involving an
obligation or liability of Seller in an amount equal to or exceeding $20,000;
(f) any modification, amendment, cancellation, termination (or receipt of
notice of termination), forfeiture, failure to renew or encumbrance in any
manner (other than in the ordinary course of business consistent with past
practice or as is contemplated by this Agreement) of any of the Authorizations
or Contracts;
-20-
(g) any sale, assignment, lease or other transfer or disposition of any
of the Assets, other than in the ordinary course of business consistent with
past practice;
(h) any transaction or commitment made by Seller relating to the Business
or any Asset (including the acquisition of any assets) or any relinquishment
by Seller of any Contract or other right, in either case, other than
transactions and commitments in the ordinary course of business consistent
with past practice and those contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice by
Seller with respect to the Business except for any such change after the date
hereof required by reason of a concurrent change in GAAP or any change in any
of the assumptions underlying, or methods of calculating any bad debt,
contingency or other reserve;
(j) any change in compensation or other benefits payable to any such
employee of the Business (whether or not pursuant to any severance or
retirement plans or policies), other than in the ordinary course of business
consistent with past practice;
(k) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the Business, or any lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to such employees; or
(l) any change in any of Seller's subscriber policies (including without
limitation, subscriber acquisition and retention and disconnect policies),
billing rates or procedures related to the Business, including its
billing/subscriber report systems (other than increases in rates in the
ordinary course of business) or any material reduction of the services
provided to subscribers by the System.
SECTION 3.8. PROPERTIES. (a) Schedule 3.8(a) describes all of the Real
---------- ---------------
Property, which Seller owns (the "OWNED REAL PROPERTY"), leases or subleases
(the "LEASED REAL PROPERTY"), and which is used in connection with the Business,
any surveys with respect thereto, and any Liens thereon, specifying in the case
of the Leased Real Property, the name of the lessor or sublessor, the lease term
and basic annual rent.
(b) Schedule 3.8(b) describes all Personal Property with a book or fair
---------------
market value in excess of $1,000 which Seller owns, leases or subleases, and any
Liens thereon, specifying in the case of leases or subleases, the name of the
lessor or sublessor, the lease term and basic annual rent.
-21-
(c) (i) Seller has good and marketable, indefeasible, fee simple
title to, or in the case of leased Assets, has valid leasehold interests in, all
Assets.
(ii) The Real Property includes all real property as is used or
held for use in connection with the conduct of the business and operations
of the Business.
(iii) Subject to ordinary wear and tear, the buildings, structures
and equipment included in the Assets have no defects and are in good
operating condition and repair, and have been maintained and are suitable
for their present uses and, in the case of buildings and other structures
(including without limitation, the roofs thereof), are structurally sound.
(iv) To the Seller's knowledge, the buildings and structures
included in the Assets currently have access to (1) public roads or valid
perpetual easements over private streets or private property for such
ingress to and egress from all such plants, buildings and structures and
(2) water supply, storm and sanitary sewer facilities, telephone, gas and
electrical connections, fire protection, drainage and other public
utilities, as are necessary and appropriate for the conduct of the
Business.
(v) To the Seller's knowledge, none of the material structures on
the Real Property encroaches upon real property of another Person, and no
structure of any other Person encroaches upon any Real Property
(vi) All Real Property is available for immediate use in the
conduct of the Business.
(vii) The Owned Real Property and the Leased Real Property
complies in all material respects with all applicable building or zoning
codes and the regulations of any Governmental Authority having
jurisdiction.
(viii) No condemnation of any of the Owned Real Property has
occurred, is pending, or to the knowledge of Seller, is threatened.
(ix) To the Seller's knowledge, no condemnation of any of the
Leased Real Property has occurred or is threatened.
(d) Except as disclosed on Schedule 3.8(d), no Asset is subject to any
---------------
Lien, except Permitted Liens.
SECTION 3.9. SUFFICIENCY OF AND TITLE TO THE ASSETS. (a) The Assets
--------------------------------------
constitute all of the assets or property used or held for use in the Business,
except the Excluded Assets.
-22-
(b) Upon consummation of the transactions contemplated hereby, Buyer
will have acquired good and marketable title in and to, or a valid leasehold
interest in, each of the Assets, free and clear of all Liens, except for
Permitted Liens.
(c) The System constitutes a fully operational cable television
system with all material assets, properties, licenses, permits, consents,
certificates, operating rights, leases, easements, licenses, rights-of-way,
agreements, commitments and arrangements and all Authorizations and franchises
necessary to operate in accordance with Legal Requirements and maintain the
same.
SECTION 3.10. NO UNDISCLOSED LIABILITIES. There are no liabilities
--------------------------
of the Business of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and to the Seller's knowledge after due
investigation, there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability, other than
liabilities set forth on Schedule 3.10 and on the Interim Balance Sheet; and
-------------
current liabilities, within the meaning of GAAP, entered into the ordinary
course of business which, individually and in the aggregate, are not material to
the Business.
SECTION 3.11. LITIGATION. Except as set forth on Schedule 3.11,
---------- -------------
there is no action, suit, investigation or proceeding pending against, or to the
knowledge of Seller, threatened against or affecting Seller, the Business or any
Asset before any arbitrator or any Governmental Authority. To Seller's
knowledge, there are no facts which could reasonably serve as the basis for any
material claim, action, suit or proceeding. No pending claim, if determined or
resolved adversely, would have a Material Adverse Effect or could terminate or
adversely change the terms and conditions of the System's rights with respect to
(a) pole attachment rights or rents, (b) subscriber rates or tariffs, (c) the
rearrangement, relocation or removal of cable, amplifiers, towers or other
property (including easements, rights of access and other such rights), (d)
carriage of signals presently carried on the System (except for notices to
blackout programming pursuant to FCC rules and regulations) or (e) the right to
operate the System pursuant to the Authorizations. There is no claim, action,
suit or proceeding pending against, or to Seller's knowledge threatened against
Seller or any of its Affiliates, which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay the transactions contemplated hereby.
SECTION 3.12. MATERIAL CONTRACTS. (a) Schedule 3.12(a) sets forth,
------------------ ----------------
with respect to the Business, a true and complete list of: (A) all leases of
Real Property (both as lessor and lessee); (B) all leases of Personal Property
(both as lessor and lessee); (C) all agreements to provide service to multiple
dwelling units (including any such agreements which are pending execution),
whether on a bulk or direct bill basis; (D) all agreements with or for the
benefit of any partner, officer or Affiliate of Seller or any partner or officer
of any such Affiliate; (E) all pole attachment and conduit use agreements; (F)
all agreements between Seller and those broadcast stations
-23-
with "must carry" rights who have received carriage and all retransmission
consent agreements; (G) all agreements between Seller and any Governmental
Authority, other than Authorizations, including rate regulation agreements and
other agreements containing provisions that prohibit or restrict regulation by
any Governmental Authority; (H) any partnership or joint venture contracts or
arrangements or any other agreements involving a sharing of revenues or profits
to which Seller is a party or by which it is bound or which affects or relates
to the Assets; (I) any contracts or agreements for the sale of any of the Assets
or the grant of any rights to purchase any of the Assets; (J) any agreement that
limits the freedom of Seller or any of its officers or employees to compete in
any line of business or with any Person or in any area or to own, operate, sell,
transfer, pledge or otherwise dispose of or encumber any Asset or which would so
limit the freedom of Buyer after the Closing Date; (K) all agreements, other
than subscriber agreements, related to the Paging Business; (L) each evidence of
indebtness, note, guarantee or letter of credit entered into or issued or to be
issued, contingently or otherwise, by or for the benefit of Seller, and all
loan, security and other agreements relating thereto; (M) each Lien (other than
Permitted Liens) relating to or affecting any of the Assets; and (N) all other
Contracts included in the Assets which: (1) involve an annual payment in excess
of Five Thousand Dollars ($5,000); (2) could involve total payments by Seller in
excess of Twenty-Five Thousand Dollars ($25,000); (3) do not terminate by their
terms or are not cancelable by Seller without penalty on no more than sixty (60)
days, prior notice; or (4) are otherwise material to the operation of the
Business (all such items under subsections (A) - (N) are collectively referred
to as the "MATERIAL CONTRACTS"). Schedule 3.12(a) also sets forth a true and
----------------
complete list of all of the System's outstanding purchase orders for an amount
in excess of $5,000 pending on the date hereof. The aggregate amount of all
unscheduled purchase orders does not exceed $20,000. True and correct copies of
the Material Contracts and such scheduled purchase orders (other than Material
Contracts relating to Seller's bank financing), have been delivered or made
available to Buyer.
(b) Each Contract disclosed in any Schedule to this Agreement or
required to be disclosed pursuant to this Agreement is a valid and binding
agreement of Seller or Jones Intercable, as applicable, and each other party
thereto and is in full force and effect, and neither Seller nor Jones
Intercable, as applicable, nor to the knowledge of Seller or Jones Intercable,
as applicable, any other party thereto is in default or breach under the terms
of any such Contract, nor, to the knowledge of Seller or Jones Intercable, as
applicable, has any event or circumstance occurred that, with notice or lapse of
time or both, would constitute any event of default thereunder. Neither Seller
nor Jones Intercable, as applicable, has any knowledge of any intention by any
party to terminate or amend any Contract or to refuse to renew the same upon
expiration of its term.
(c) Schedule 3.12(c) sets forth for each bulk-billed agreement
----------------
applicable to the Business, as of the date of this Agreement, the names of the
parties
-24-
thereto, the number of units served, the services provided (i.e. Limited Basic
Service, Tier One Service, Expanded Basic Service, HBO, Cinemax and other
Premium Pay Services), the current rate for Limited Basic Service, Tier One
Service, Expanded Basic and Premium Pay Service, the date of execution, the date
of termination and whether consent is required to transfer such agreement to
Buyer.
(d) Each agreement between the Seller and a subscriber, related to
the provision of Services in connection with the Paging Business, is on the same
terms and conditions as the form of subscriber agreement attached hereto as
Schedule 3.12(d).
- ----------------
SECTION 3.13. AFFILIATES. Except as set forth on Schedule 3.13, none
---------- -------------
of Seller's partners, employees, officers or Affiliates has any interest in any
of the Assets and neither Seller nor any of such Persons has any stock or other
ownership interest in any other Person which is a supplier to the System or
which provides Multi-Channel Video Service in any community contiguous with the
communities served by the System. For purposes of this Section, ownership of
not more than 10% of the common or preferred stock of any publicly held company
whose stock is listed on any recognized stock exchange or traded over-the-
counter shall not be deemed an ownership interest.
SECTION 3.14. INSURANCE COVERAGE. Seller has furnished to Buyer a
------------------
list of all insurance policies and fidelity bonds relating to the Assets and the
Business and its employees, agents and contractors which are currently in force.
There is no claim by Seller pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds or in respect of which such underwriters have reserved
their rights. All premiums payable under all such policies and bonds have been
timely paid and Seller has otherwise complied fully with the terms and
conditions of all such policies and bonds. Such policies and bonds are of the
type and in amounts customarily carried by persons conducting business similar
to the Business. Except as disclosed in Schedule 3.14, after the Closing Seller
-------------
shall continue to have coverage under such policies and bonds, or equivalent
policies and bonds, with respect to events occurring prior to Closing.
SECTION 3.15. COMPLIANCE. Seller is in compliance in all material
----------
respects with (i) all Legal Requirements of all Governmental Authorities having
jurisdiction over the Assets, the Business or Seller and (ii) the terms and
provisions of all Contracts and Authorizations. Seller has received no notice
claiming a violation by Seller or the Business of any Legal Requirement
applicable to the Assets or the Business and to Seller's knowledge, there is no
basis for any claim that such a violation exists. Neither Seller nor any
officer, partner, agent, employee or representative of Seller, nor, to the
knowledge of Seller, any of Seller's predecessors in title to any portion of the
Business, or any other Person, has violated any Legal
-25-
Requirement in connection with procuring, obtaining, or maintaining any
Authorization in any respect so as to adversely affect the Business.
SECTION 3.16. RECEIVABLES. All accounts receivable, notes receivable
-----------
and other receivables included in the Assets were created in the ordinary course
of business consistent with past practice and are and, on the Closing Date, will
be, valid and genuine. The aging schedule of the accounts receivable of the
Business, attached hereto as Schedule 3.16, was prepared in accordance with GAAP
-------------
and is true and correct as of the date of such Schedule.
SECTION 3.17. INTELLECTUAL PROPERTY. (a) Seller has not during the
---------------------
three years preceding the date of this Agreement been a defendant in any action,
suit, investigation or proceeding relating to, or otherwise been notified of,
any alleged claim or infringement of any patents, trademarks, service marks or
copyrights, and Seller has no knowledge of any other claim or infringement by
Seller.
(b) During the three-year period preceding the date the most
recent copyright reports were due, Seller has timely and accurately filed all
required copyright reports, notices, statements, supplemental statements, and
amendments and made all payments required in connection therewith, with the
United States Copyright Office, and will promptly deliver to Buyer copies
thereof, as well as correspondence with any Governmental Authorities relating
thereto. Seller and the Business are in compliance with the Copyright Act.
Seller and the Business are entitled to hold and do now hold the compulsory
copyright license described in Section 111 of the Copyright Act, which
compulsory copyright license is in full force and effect and has not been
revoked, canceled, encumbered or adversely affected in any manner. Seller is
aware of no facts and has not received any notice or other communication
asserting that the System is not in compliance with the Copyright Act.
SECTION 3.18 FINDERS' FEES. Except as set forth on Schedule 3.18,
------------- -------------
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Seller or any of its
Affiliates who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement. Any finders' fee paid to any
person or entity set forth on Schedule 3.18 shall be paid by Seller.
-------------
SECTION 3.19. ENVIRONMENTAL COMPLIANCE. (a) Except as disclosed on
------------------------
Schedule 3.19, the Seller is, to its knowledge, in compliance in all material
- -------------
respects with all Environmental Laws and the Business is and has been operated
by Seller, and to Seller's knowledge, all other Persons, in material compliance
with all Environmental Laws. Except as disclosed on Schedule 3.19:
-------------
(i) in connection with or relating to the Assets or Business, no
notice, notification, demand, request for information, citation, summons
-26-
or order has been received, no complaint has been served, no penalty has
been assessed and no investigation or review is pending or, to Seller's
knowledge, threatened by any governmental or other entity with respect to
any (A) alleged violation of any Environmental Law, (B) alleged failure to
have any Environmental Permit, (C) Regulated Activity or (D) Release of
Hazardous Substances;
(ii) neither Seller, nor to Seller's knowledge, any other Person,
has engaged in any Regulated Activity at, on or in connection with any
Asset or any Real Property;
(iii) neither Seller, nor to Seller's knowledge, any other Person,
has Released any Hazardous Substance (and no oral or written notification
of such Release has been made or filed) on or under any Real Property;
(iv) there are no Liens under Environmental Laws on any of the Owned
Real Property or the Assets and, to Seller's knowledge, no government
actions have been taken or, to Seller's knowledge, are in process which
could subject any of such Owned Real Property or Assets to such Liens. No
notices or restrictions relating to Hazardous Substances have been or are
required to be placed in any deed to any Owned Real Property; and
(v) there are no Environmental Permits that are nontransferable or
require consent, notification or other action to remain in full force and
effect following the consummation of the transactions contemplated hereby.
(b) There has been no written environmental study, audit, test, review or
other analysis conducted of which Seller has knowledge in relation to any Asset
or Real Property which has not been delivered to Buyer at least five days prior
to the date hereof.
SECTION 3.20. AUTHORIZATIONS AND CATV INSTRUMENTS. (a) Each
-----------------------------------
Authorization and CATV Instrument is valid, is in full force and effect, is not
in default and is in accordance with all applicable Legal Requirements
(including without limitation, FCC rules and regulations) and Seller is in
compliance therewith in all material respects. The System is serving only those
Franchise Areas and other areas set forth on Schedule 3.20. Except as set forth
-------------
in Schedule 3.20, Seller has not made any commitments to any Governmental
-------------
Authority that are not fully reflected in the Authorizations or CATV
Instruments. Except as set forth on Schedule 3.20, there are no proposed
-------------
increases in the fees and charges payable by Seller under any provisions of the
Authorizations or CATV Instruments or any other proposed modifications to any of
the Authorizations or CATV Instruments. Schedule 3.20 sets forth a true and
-------------
-27-
complete list, including expiration dates, of each Municipality and all
currently outstanding Authorizations and CATV Instruments issued to Seller by
the FCC with respect to Federal Authorizations and each other Governmental
Authority with respect to Other Authorizations, including without limitation,
all current licenses, franchises, ordinances, permits, compliance certificates,
any pending license or franchise application and those Federal Authorizations
relating to Business Radio Services and CARS, and for the System's earth
stations. All filings, reports and notices required to be given or filed with
the FCC and the Governmental Authorities granting any license or Authorization
in connection with the Business, the operation of the System and the carriage of
all signals carried with respect thereto have been duly given or filed, and all
such notices and reports are accurate and complete in all material respects.
Seller has provided to Buyer true and complete copies of all documents listed on
Schedule 3.20, as well as all material correspondence with any Governmental
- -------------
Authorities related thereto. The Authorizations and/or CATV Instruments enable
Seller to operate the System in accordance with all Legal Requirements in the
entire areas purportedly covered by the Authorizations and/or CATV Instruments
with respect to the System, whether or not Seller is currently operating in any
such area. To Seller's knowledge, after due inquiry, there is no fact or matter
that could constitute a basis for revocation, suspension, termination or denial
of the granting of a new Authorization upon the expiration thereof, or
diminishment or elimination of any rights under any Authorization or CATV
Instrument and no legal action, proceeding or investigation is pending or, to
the knowledge of Seller, threatened that could result in any of the foregoing.
No conditions or restrictions, except as stated in the Authorizations or CATV
Instruments, apply to the Authorizations or CATV Instruments, other than such as
may exist by virtue of any act of Congress or the various Governmental
Authorities or by regulations of any Federal regulatory agency.
(b) Except as set forth on Schedule 3.20, for any Authorization which has
-------------
an unexpired term of less than three (3) years from the date hereof, a request
for renewal thereof has been filed under Section 626(a) of the Cable
Communication Policy Act of 1984, as amended, with the proper Governmental
Authority, within thirty (30) to thirty-six (36) months prior to the expiration
date thereof.
SECTION 3.21. TECHNICAL COMPLIANCE. All aeronautical frequencies in use
--------------------
in the System have been properly registered with the FCC, and on the Closing
Date only aeronautical frequencies eligible under Part 76.612 of Title 47 of the
Code of Federal Regulations shall be in use. The System provides reception on
the channels set forth on the Information Sheet in compliance with the technical
guidelines set forth in Part 76, Subpart K of Title 47 of the Code of Federal
Regulations, and any additional standard for signal quality as set forth in the
Authorizations, the CATV Instruments and/or any other applicable Legal
Requirement. The System meets all Legal Requirements concerning signal leakage,
including without limitation, all signal leakage criteria prescribed by the FCC,
including without limitation, the signal leakage performance criteria specified
in Part 76.611 of Title 47 of the Code of Federal
-28-
Regulations. The System materially complies with all applicable grounding and
bonding requirements.
SECTION 3.22. ADDITIONAL FCC MATTERS. (a) Seller has provided all
----------------------
notices to subscribers and maintained all public files as required by FCC rules
and regulations. Seller has submitted all required equal employment opportunity
reports to the FCC, and the System has received equal employment opportunity
certification from the FCC for each year except as set forth on Schedule 3.22.
-------------
Seller is operating only those radio facilities for which appropriate
Authorizations have been obtained and are in effect, and Seller is meeting the
conditions of such Authorizations. As of the date of this Agreement, the rates
charged to customers of the System are not subject to regulation by any
Governmental Authority, including the local franchising authority and/or the
FCC. Notwithstanding the foregoing, to the knowledge of Seller, the rates
charged by the System would be allowable under the rules and regulations
promulgated by the FCC under the Cable Act as of the date of this Agreement and
for the twelve month period prior to the date of this Agreement, and any
authoritative interpretation thereof, if such rates were subject to regulation
by any Governmental Authority. As of the date of this Agreement, Seller has not
filed any reports or forms with respect to the rates of the System pursuant to
the Cable Act. Seller has delivered to Buyer a true and correct copy of an
actual bill sent to a Basic Subscriber which provides an itemization of all
charges.
(b) Seller has provided syndicated exclusivity and network nonduplication
protection to stations that have requested such protection, and has followed all
FCC procedures, including but not limited to, those procedures applicable to
origination cablecasting, equal time and personal attack obligations, obscenity,
sponsorship identifications, sponsorship lists, and commercial leased access as
specified by FCC rules and regulations.
(c) Seller is aware of no facts and Seller has received no notice or
other communication from any Person indicating or alleging that Seller is not in
compliance in any material respect with all requirements of (i) the FCC rules
and regulations or the Cable Act, (ii) any Authorization, or that any
Authorization has been revoked, suspended, has expired, or is otherwise not in
full force and effect or (iii) any other applicable Legal Requirement.
SECTION 3.23. FEDERAL AVIATION ADMINISTRATION. Seller has obtained all
-------------------------------
necessary FAA approvals and waivers with respect to the System's towers. All
existing towers of the System are obstruction marked and lighted, to the extent
required by FAA rules and regulations, and otherwise comply with the rules and
regulations of the FAA. To the extent required by the rules and regulations of
the FAA, Seller has provided proper notice to the FAA prior to the construction
or alteration of radio towers used in the operation of the System.
-29-
SECTION 3.24. SUBSCRIBER AND REVENUE DATA.
---------------------------
(a) Schedule 3.24(a) sets forth a true and complete list as of June 30,
----------------
1997 of the number of: (i) Basic Subscribers; (ii) Courtesy Subscribers; (iii)
Paging Business Customers; and (iv) Homes Passed.
(b) Seller has provided Buyer with a true and correct detailed breakdown
for the year ended December 31, 1996 and for each calendar month for the 7 month
period ended July 31, 1997, of the source of System (i) expenses and (ii)
revenues (Limited Basic Service, Tier One Service, Expanded Basic Service,
Premium Pay Service, additional outlet, converters (remote) rental, late and
other fees, installation, advertising, shopping, guide, etc.).
(c) Seller has provided Buyer with a true and complete copy of the
System's subscriber reports for each calendar month for the twelve months ended
December 31, 1996 and for each calendar month for the 7 month period ended July
31, 1997.
(d) Using its billing service, the System bills subscribers monthly in
advance prior to the first day of each subscriber billing cycle for services to
be received during such billing cycle.
(e) Schedule 3.24(e) sets forth true and correct copies, as of the date
----------------
of this Agreement, of the rate schedules (excluding periodic promotional
activities in the normal course of business consistent with past practice or the
availability of a promotional opportunity from a Premium Pay Service provider)
for individual subscribers for the System, identifying the rates charged to each
type of subscriber for Limited Basic Service, Tier One Service, Expanded Basic
Service, and Premium Pay Service, and all equipment and other charges. Schedule
--------
3.24(e) also sets forth the rates charged by the System for Leased Access
- -------
Programming; and
(f) Schedule 3.24(f) sets forth true and correct copies of all privacy
----------------
notices required by the FCC to be delivered by the System to any of its
subscribers since January 1, 1994 and true and correct copies of all notices and
other written correspondence, other than privacy notices, required by the FCC to
be delivered by the System to any of its subscribers since January 1, 1996.
SECTION 3.25. LEGALITY OF SIGNAL CARRIAGE. Schedule 3.25 sets forth a
--------------------------- -------------
true and complete list of all stations or signals carried or proposed to be
carried on the System, describes whether each station or signal is acquired by
microwave, satellite earth station or off-air reception or is locally
originated, identifies the channel on which the station is carried, identifies
which stations or signals are automated or alpha-numeric, identifies whether the
stations or signals are included in the Limited Basic Service, Tier One Service
or Expanded Basic Service, identifies which if any of
-30-
such stations or signals are carried part-time and describes the classification
of each station or signal for copyright purposes. The System is duly authorized
to carry all stations or signals being carried and is presently carrying all
stations or signals required to be carried and all signals are being carried in
accordance with all rules and regulations of the FCC and the United States
Copyright Office. Timely notice was given in accordance with the Cable Act and
FCC rules and regulations to each commercial and non-commercial station carried
by the System who have "must carry" rights. There are no broadcast stations
that are entitled to carriage under the FCC "must carry" rules which are not
carried by the System, except as separately listed on Schedule 3.25, which list
-------------
specifies the exemption which provides the basis for not carrying each such
station. Schedule 3.25 also indicates, as to each broadcast station that is
-------------
entitled to carriage on the System under FCC rules, whether the station has
elected mandatory carriage or retransmission consent, the date of such station's
notice and whether such station is considered a "low powered television
station". As to each such station which requested retransmission consent, a
list of all correspondence in connection with such negotiations that is in
Seller's possession is set forth in Schedule 3.25. A copy of each
-------------
retransmission consent agreement entered into by Seller, and of all written
notices and correspondences sent or received by Seller in connection with such
mandatory carriage and retransmission consent matters, has been provided to
Buyer, and Seller has included in Schedule 3.25 a description of each such
-------------
retransmission consent agreement which is not written. No notices or demands
have otherwise been received by Seller challenging the right of the System to
carry any television or broadcast channel or radio broadcast channel or other
programming, or asserting an obligation of the System to carry any television or
radio broadcast channel or other programming not carried by the System.
SECTION 3.26. CERTAIN SYSTEM INFORMATION.
--------------------------
(a) Schedule 3.26 sets forth for the System a true and correct
-------------
description of: (i) the approximate miles of underground cable system plant;
(ii) the approximate miles of aerial cable system plant; (iii) channel capacity;
and (iv) addressability.
(b) The System and the geographic areas in which Seller is entitled to
extend cable communications services under the Authorizations are not in areas
of "effective competition" as such term is defined in the Cable Act. Neither
the FCC nor any other Governmental Authority has concluded, and Seller has not
taken the position, that the System or the Authorizations are "small systems" as
contemplated by the Cable Act.
(c) A true and correct copy of an "as built" map of the System has been
provided or made available to Buyer. The System has been designed, constructed,
operated and maintained in all material respects in compliance with all
applicable regulatory codes, Authorizations and FCC and FAA rules and
regulations, and all
-31-
equipment operates in all material respects within the manufacturers'
specifications, the System has been designed and constructed to deliver a video
and associated audio signal on each channel meeting the technical standards for
quality contained in the Authorizations and FCC rules and regulations, and all
aeronautical frequencies used in the operation of the System are authorized for
the entire service radii of the System, which radii encompass all areas served
by the System. The System is in compliance with Rule 76.610 of the FCC.
SECTION 3.27. NO IMPEDIMENTS TO BUSINESS. Except as disclosed in
--------------------------
Schedule 3.27, to Seller's knowledge after reasonable investigation, there is no
- -------------
Multi-Channel Video Service in the communities or geographic areas served by the
System and Seller knows of no plans of any Person for the establishment of any
such television signal delivery system in the communities or geographic areas
served by the System. Except as disclosed in Schedule 3.27, no franchise to
-------------
permit any Multi-Channel Video Service to be provided has been granted by a
Governmental Authority in the communities or geographic areas served by the
System to any Person other than Seller, and to Seller's knowledge, no
application for any Multi-Channel Video Service is pending.
SECTION 3.28 FULL DISCLOSURE. The statements made by each of Seller,
---------------
Jones, Jones Intercable, Fund 14-A and Fund 14-B in this Agreement do not
include or contain any untrue statement of a fact, and do not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF JONES
SECTION 4.1. ORGANIZATION AND EXISTENCE. Jones is a corporation duly
--------------------------
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.
SECTION 4.2. CORPORATE AUTHORIZATION. The execution, delivery and
-----------------------
performance by Jones of this Agreement are within the corporate powers of Jones
and have been duly authorized by all necessary corporate action on the part of
Jones. This Agreement constitutes the valid and binding agreement of Jones,
enforceable against it in accordance with its terms.
SECTION 4.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
--------------------------
performance by Jones of this Agreement require no action by or in respect of, or
-32-
filing with, any Governmental Authority other than (i) compliance with any
applicable requirements of the HSR Act (ii) the filing of FCC Form 394 in
connection with the transfer of the Authorizations.
SECTION 4.4. NON-CONTRAVENTION. The execution, delivery and performance
-----------------
by Jones of this Agreement do not and will not (i) violate the certificate or
articles of incorporation or bylaws of Jones, (ii) assuming compliance with the
matters referred to in Section 4.3, violate any applicable Legal Requirement or
(iii) violate any material agreement to which Jones is a party.
SECTION 4.5. LITIGATION. There is no action, suit, investigation or
----------
proceeding pending against, or to the knowledge of Jones, threatened against or
affecting, Jones before any arbitrator or any Governmental Authority, which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated hereby.
SECTION 4.6 FULL DISCLOSURE. The statements made by Jones in this
---------------
Agreement do not include or contain any untrue statement of a fact, and do not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF JONES INTERCABLE
SECTION 5.1. ORGANIZATION AND EXISTENCE. Jones Intercable is a
--------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted.
SECTION 5.2. CORPORATE AUTHORIZATION. The execution, delivery and
-----------------------
performance by Jones Intercable of this Agreement are within the corporate
powers of Jones Intercable and have been duly authorized by all necessary
corporate action on the part of Jones Intercable. This Agreement constitutes
the valid and binding agreement of Jones Intercable, enforceable against it in
accordance with its terms.
SECTION 5.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
--------------------------
performance by Jones Intercable of this Agreement require no action by or in
respect of, or filing with, any Governmental Authority other than (i) compliance
with any applicable requirements of the HSR Act and (ii) the filing of FCC Form
394 in connection with the transfer of the Authorizations.
-33-
SECTION 5.4. NON-CONTRAVENTION. The execution, delivery and performance
-----------------
by Jones Intercable of this Agreement do not and will not (i) violate the
certificate or articles of incorporation or bylaws of Jones Intercable, (ii)
violate any covenants contained in any loan documents or debt instruments of
Jones Intercable or any of its subsidiaries, (iii) violate any material
agreement to which Jones Intercable is a party or (iv) assuming compliance with
the matters referred to in Section 5.3, violate any applicable Legal
Requirement.
SECTION 5.5. LITIGATION. There is no suit, investigation or proceeding
----------
pending against, or to the knowledge of Jones Intercable, threatened against or
affecting, Jones Intercable before any arbitrator or any Governmental Authority,
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated hereby.
SECTION 5.6 FULL DISCLOSURE. The statements made by Jones Intercable
---------------
in this Agreement do not include or contain any untrue statement of a fact, and
do not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of
the Closing Date that:
SECTION 6.1. ORGANIZATION AND EXISTENCE. Buyer is a corporation duly
--------------------------
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.
SECTION 6.2. CORPORATE AUTHORIZATION. The execution, delivery and
-----------------------
performance by Buyer of this Agreement are within the corporate powers of Buyer
and have been duly authorized by all necessary corporate action on the part of
Buyer. This Agreement constitutes a valid and binding agreement of Buyer,
enforceable against it in accordance with its terms.
SECTION 6.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
--------------------------
performance by Buyer of this Agreement require no action by or in respect of, or
filing with, any Governmental Authority other than (i) compliance with any
applicable requirements of the HSR Act and (ii) the filing of FCC Form 394 in
connection with the transfer of the Authorizations.
-34-
SECTION 6.4. NON-CONTRAVENTION. The execution, delivery and performance
-----------------
by Buyer of this Agreement do not and will not (i) violate the certificate of
incorporation or bylaws of Buyer, (ii) violate any material agreement to which
Buyer is a party or (iii) assuming compliance with the matters referred to in
Section 6.3, violate any applicable Legal Requirement.
SECTION 6.5. FINDERS' FEES. There is no investment banker, broker,
-------------
finder or other intermediary which has been retained by or is authorized to act
on behalf of Buyer or any of its Affiliates who might be entitled to any fee or
commission from Seller or any of its Affiliates upon consummation of the
transactions contemplated by this Agreement.
SECTION 6.6. LITIGATION. There is no action, suit, investigation or
----------
proceeding pending against, or to the knowledge of Buyer threatened against or
affecting, Buyer before any arbitrator or any Governmental Authority, which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated hereby.
SECTION 6.7 FULL DISCLOSURE. The statements made by Buyer in this
---------------
Agreement do not include or contain any untrue statement of a fact, and do not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
ARTICLE 7
COVENANTS OF SELLER, JONES AND JONES INTERCABLE
SECTION 7.1. CONDUCT OF THE BUSINESS. From the date hereof until the
-----------------------
Closing Date, Seller and Jones Intercable, as applicable, shall conduct the
Business solely in the ordinary course consistent with past practice (including
without limitation, with respect to subscriber acquisition and retention and
disconnect policies) and use reasonable efforts to preserve intact the business
organizations and relationships with third parties and to keep available the
services of the present employees of the Business. Without limiting the
generality of the foregoing, from the date hereof until the Closing Date, with
respect to the Business, Seller shall:
(a) deliver to Buyer, promptly after such statements become available
to Seller, correct and complete copies of unaudited monthly balance sheets,
income statements and operating reports for the Business for each month between
the date of this Agreement and the Closing Date;
(b) not amend its partnership agreement;
-35-
(c) not issue, sell, deliver or agree to issue, sell or deliver
(whether through the issuance or granting of options, commitments,
subscriptions, rights to purchase or otherwise) any partnership interests;
(d) not acquire, sell, lease or dispose of any assets material to the
Business, other than sales of inventory or equipment in the ordinary course of
business consistent with past practice and the disposition of damaged or
defective equipment or material in the normal course of business;
(e) not mortgage, pledge or subject to any Lien, any of the Assets,
except Liens in place as of the date of this Agreement;
(f) not increase the amount of any compensation payable to any
individual employee of Seller, unless such increase is limited to customary
annual merit increases not exceeding 7% of such employees previous base salary,
and not increase the amount of compensation payable to any employee of Seller,
if such increase would be inconsistent with past practices or would cause the
aggregate cash compensation payable to all employees to exceed by more than four
percent (4%) the cash compensation payable by Seller on an annualized basis as
of June 30, 1997 (provided that this Section 7.1(f) shall not apply with respect
to any "sticking bonuses" paid to Seller's employees prior to Closing.
(g) not declare, set aside or pay any distribution (whether in cash,
partnership interests or property or any combination thereof) in respect of its
partnership interests, or redeem or otherwise acquire any of its partnership
interests;
(h) promptly notify Buyer if Seller shall learn of any event or
circumstance which may make or cause any representation or warranty given by it
to be or become untrue at or prior to Closing;
(i) not reveal, orally or in writing, to any party, other than Buyer
and its authorized agents, any of the business procedures and practices followed
by the System in the conduct of its business or any technology used in the
processing, evaluation or distribution of any of its products or services;
(j) maintain in full force and effect insurance coverage and fidelity
bonds substantially equivalent to that listed on Schedule 3.14;
-------------
(k) continue to maintain all of the business records of the Business in
accordance with its past practice;
(l) pay all debts, liabilities and obligations of or relating to the
Business as they become due, except for such debts or obligations which are
contested by Seller in good faith;
-36-
(m) maintain Seller's partnership existence and not merge or consolidate
with any other Person;
(n) comply, in all material respects, with all applicable Legal
Requirements (including, without limitation, regulations of Governmental
Authorities and ordinances relating to the System) and all Contracts;
(o) comply with, and use best efforts to maintain in full force and
effect, all Authorizations;
(p) maintain its facilities and assets in the same state of repair, order
and condition as they were on the date hereof, reasonable wear and tear
excepted, and maintain commercially reasonable inventory levels consistent with
past practice, which shall include sufficient quantities of amplifiers, line
extenders, installation materials and converters to operate and maintain the
System in the ordinary course consistent with past practice;
(q) except as set forth on Schedule 7.1(q), not delete, substitute or add
---------------
any programming service on the System or enter into or amend any contract,
agreement, commitment, license or understanding therefor or change the channel
alignment, retier or repackage the cable television programming without Buyer's
consent;
(r) not take any rate increases or make any election with respect to any
cost of service proceeding conducted in accordance with Section 76,922 of Title
47 of the Code of Federal Regulations or any similar proceeding (a "COST OF
SERVICE ELECTION"), without Buyer's prior written consent;
(s) replace subscriber drops that do not comply with the current
provisions of the National Electrical Safety Code in the ordinary course
consistent with past practice;
(t) continue to implement its procedures for disconnection and
discontinuance of service to Subscribers whose accounts are delinquent in
accordance with those in effect on the date of this Agreement;
(u) continue to give all customary notices to subscribers in the ordinary
course of business consistent with past practices;
(v) not enter into any retransmission consent or similar agreements or
amend any existing retransmission consent or similar agreements without the
prior written consent of Buyer;
-37-
(w) make capital expenditures in the ordinary course of business
consistent with past practice;
(x) except as set forth on Schedule 3.7, not borrow any money and not
------------
incur, guarantee or become subject to, or agree to incur, guarantee or become
subject to, any obligation or liability of another Person;
(y) use its reasonable efforts to retain the services of all of its
employees between the date hereof and the Closing Date;
(z) either (i) obtain an extension through at least March 2003 of the
current franchise with the City of Lauderdale Lakes (the "CITY"), free from any
material adverse changes in the reasonable judgment of Buyer, (ii) obtain a
franchise renewal agreement with the City for a term extending through at least
March 2003 and containing such other terms and provisions that are, in the
aggregate, in the Buyer's reasonable judgment, no less favorable and no more
burdensome than the terms and provisions of the current franchise with the City
or (iii) receive from the City an affirmation that the franchise agreement
between the City and Seller remains in full force and effect; that the quality
of Seller's service, including signal quality, response to consumer complaints
and billing practices has been reasonable in light of community needs; that
Seller has substantially complied with the material terms of the existing
franchise and other applicable law; and that the City is aware of no
circumstances or conduct by Seller which would constitute a default of Seller's
franchise obligations; and
(aa) either (i) obtain an extension through at least October 2003 of the
current franchise with the Town of Davie (the "TOWN"), free from any material
adverse changes in the reasonable judgment of Buyer, (ii) obtain a franchise
renewal agreement with the Town for a term extending through at least October
2003 and containing such other terms and provisions that are, in the aggregate,
in the Buyer's reasonable judgment, no less favorable and no more burdensome
than the terms and provisions of the current franchise with the Town or (iii)
receive from the Town an affirmation that the franchise agreement between the
Town and Seller remains in full force and effect; that the quality of Seller's
service, including signal quality, response to consumer complaints and billing
practices has been reasonable in light of community needs; that Seller has
substantially complied with the material terms of the existing franchise and
other applicable law; and that the Town is aware of no circumstances or conduct
by Seller which would constitute a default of Seller's franchise obligations.
Seller shall not (i) take or agree or commit to take any action that would make
any representation or warranty of Seller hereunder inaccurate in any respect at,
or as of any time prior to, the Closing Date or (ii) omit or agree or commit to
omit to take any
-38-
action necessary to prevent any such representation or warranty from being
inaccurate in any respect at any such time.
SECTION 7.2. ACCESS TO INFORMATION. From the date hereof until the
---------------------
Closing Date, Seller (a) shall give Buyer, its counsel, financial advisors,
auditors and other authorized representatives full access to the offices,
properties, books and records of Seller relating to the Assets and the Business,
(b) shall furnish to Buyer, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information relating to the Assets or Business as such Persons may reasonably
request and (c) shall instruct the employees, counsel and financial advisors of
Seller to cooperate with Buyer in its investigation of the Business; provided
--------
that no investigation by Buyer or other information received by Buyer shall
operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by Seller hereunder. Any investigation pursuant to this
Section shall be conducted during normal business hours and in such manner as
not to interfere unreasonably with the conduct of the Business.
SECTION 7.3. NOTICES OF CERTAIN EVENTS. Seller shall promptly notify
-------------------------
Buyer of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement or
relating in any way to an alleged violation of any Legal Requirement
applicable to the Business;
(c) any action, suit, claim, investigation or proceeding, commenced
or, to its knowledge threatened against, relating to or involving or
otherwise affecting Seller or the Business that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 3.11 or that relates to the consummation of the transactions
contemplated by this Agreement;
(d) the filing of any additional FCC Forms 328 (for certification) or
FCC Forms 329 (for rate complaints) with respect to the System, and any
notice of a change in status of any of the FCC certifications filed with
respect to the System or a change in the status of any complaint with
respect to the cable communications service rates charged to Basic
Subscribers; and
(e) any Cable Act Petitions, Cable Act Orders and Cable Act Notices
filed or received by Seller.
-39-
SECTION 7.4. NONCOMPETITION. (a) Each of Seller, Jones, Jones
--------------
Intercable, Fund 14-A and Fund 14-B agree that for a period of three years from
the Closing Date, neither they nor any Person in which they have an economic
interest, shall:
(i) directly or indirectly engage in or be financially interested in
or otherwise connected with (A) any business, except as set forth in
subparagraphs (1), (2) and (3) below, competitive with the multichannel
video delivery business in any area served by the System or any area in
which Buyer or any of its Affiliates conducts business and which is
contiguous to any area served by the System, or (B) any business
competitive with the Paging Business in any area served by the Paging
Business or any area in which the Buyer or any of its affiliates conducts
business and which is contiguous to any area served by the Paging Business.
This restrictive covenant shall not prohibit Seller, Jones, Jones
Intercable, Fund 14-A or Fund 14-B or any Person in which any of the
foregoing have an economic interest from (1) engaging in any programming
service, including without limitation, Knowledge TV, Great American
Country, Product Information Network, Jones Radio Networks, Jones Internet
Channel, Superaudio and AD/FX; (2) engaging in a national direct broadcast
satellite service in any area outside of the area served by the System or
(3) acquiring an equity interest of 10% or less in any company; provided
that such investment shall be a passive investment, and none of Seller,
Jones, Jones Intercable, Fund 14-A or Fund 14-B, or any entity in which any
of the foregoing have an economic interest, shall play a role in the
management or operation of such company.
(ii) solicit the performance of services by, any Transferred Employee
or any employee of the Business to whom Buyer has made an offer of
employment.
(b) If any provision contained in this Section shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Section, but this Section shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. It is the intention of
the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but instead such provision shall be construed to the fullest extent so
that such provision would be valid or enforceable under applicable law, and it
is the parties' mutual intent that a court of competent jurisdiction shall
construe and interpret or reform this Section to provide for a covenant having
the maximum enforceable geographic area, time period and other provisions (not
greater than those contained herein) as shall be valid and enforceable under
such applicable law. Each of Seller,
-40-
Jones, Jones Intercable, Fund 14-A and Fund 14-B acknowledge that Buyer would be
irreparably harmed by any breach of this Section and that there would be no
adequate remedy at law or in damages to compensate Buyer for any such breach.
Each of Seller, Jones, Jones Intercable, Fund 14-A and Fund 14-B agree that
Buyer shall be entitled to injunctive relief requiring specific performance by
Seller, Jones, Jones Intercable, Fund 14-A and Fund 14-B of this Section, and
Seller, Jones, Jones Intercable, Fund 14-A and Fund 14-B consent to the entry
thereof.
SECTION 7.5. USE OF SELLER'S NAME. For a period up to 90 days after the
--------------------
Closing Date, Buyer may continue to operate the Business using Seller's d/b/a
names and its corporate name and all derivations and abbreviations of such names
and related marks, in order to effectively transfer title to all Assets and the
Business to Buyer. Within 90 days after the Closing Date, Buyer shall
discontinue using and shall dispose of all items of stationery, business cards
and literature bearing such names or marks. Notwithstanding the foregoing,
Buyer will not be required to remove or discontinue using any such name or mark
that is affixed to converters or other items in or to be used in Subscribers'
homes or properties, or as are used in a similar fashion making such removal or
discontinuation impracticable for Buyer.
SECTION 7.6. CAPITAL LEASES. Seller shall pay the remaining balance of
--------------
any capital lease, if any, for any Personal Property and deliver the title to
such Personal Property free and clear of all Liens to the Buyer at the Closing.
SECTION 7.7. CONSENTS; ESTOPPEL CERTIFICATES. Seller shall use its best
-------------------------------
efforts to obtain, as soon as possible and at its expense, all the Required
Consents and Franchise Approvals, in form and substance reasonably satisfactory
to Buyer. Seller shall notify Buyer in advance of and give Buyer an opportunity
to participate in all material contacts with, and provide copies of all
correspondence to or from, any franchising authorities in connection with the
Authorizations. Buyer shall cooperate with Seller to obtain all Required
Consents and Franchise Approvals, but Buyer shall not be required to agree to
any changes in, or the imposition of any condition to the transfer to Buyer of,
any Contract or Authorization as a condition to obtaining any Required Consent
or Franchise Approval. Seller also shall use reasonable efforts to obtain, at
its expense, such estoppel certificates or similar documents from lessors and
other Persons who are parties to Contracts as Buyer may reasonably request.
Seller shall obtain an acknowledgement from Florida Cellular Telephone Company
that Seller is not in breach of the noncompetition provision of the sublease
with Florida Cellular Telephone Company, as a result of Seller's operation of
the Paging Business.
SECTION 7.8. AGREEMENT TO CONSULT. For the six month period immediately
--------------------
following the Closing Date, upon the request of Buyer, Seller shall, and shall
use reasonable efforts to cause such of its employees, agents or representatives
as Buyer may reasonably request from time to time, without payment of additional
consideration, to consult with or advise Buyer or any of its Affiliates with
respect to
-41-
the operation of the System, in order to effect a smooth transition of ownership
of the System.
SECTION 7.9. TRANSITIONAL BILLING SERVICES. Jones Intercable shall
-----------------------------
provide to Buyer, upon written request and at the cost of Buyer, subscriber
billing services ("TRANSITIONAL BILLINGS SERVICES") in connection with the
System for a period of up to 90 days following Closing to allow for conversion
of existing billing arrangements. Buyer shall notify Seller in writing at least
30 days prior to Closing as to whether it desires Transitional Billing Services.
The amount to be paid by Buyer for Transitional Billings Services, if provided
hereunder, shall not exceed the actual cost to Jones Intercable of providing
such Transitional Billing Services.
SECTION 7.10. NO SOLICITATION. (a) From the date hereof, none of the
---------------
Seller, Fund 14-A, Fund 14-B, Jones Intercable, Jones, nor any of their
respective Affiliates, nor any of their respective officers, directors,
representatives or agents shall, directly or indirectly, encourage, solicit,
initiate or, except as otherwise provided in this Section 7.10(a), participate
in any way in discussions or negotiations with or provide any confidential
information to, any corporation, partnership, person or other entity or group
(other than Buyer or any Affiliate or associate of Buyer and their respective
directors, officers, employees, representatives and agents) concerning any
merger of or business combination with or involving Seller, the sale of any of
the Assets, other than in the ordinary course of business, consistent with past
practice, including without limitation, the System, the sale of the partnership
interests of Seller or similar transactions involving Seller; provided, however,
that nothing contained in this Section 7.10(a) shall prohibit Seller, Fund 14-A,
Fund 14-B, Jones Intercable or Jones from responding to any unsolicited proposal
or inquiry solely by advising the person making such proposal or inquiry of the
terms of this Section 7.10(a). It is understood that any violation of the
restrictions set forth in this Section 7.10(a) by any officer, director,
employee, investment banker, attorney, advisor, representative or other agent of
Seller, Fund 14-A, Fund 14-B, Jones Intercable, Jones or any of their respective
Affiliates shall be deemed to be a breach of this Section 7.10(a) by Seller.
Notwithstanding the foregoing, nothing contained in this Section 7.10(a) shall
prevent Jones Intercable from furnishing non-public information to, or entering
into discussions or negotiations with, any Person in connection with an
unsolicited bona fide Superior Proposal with respect to Seller, the System or
---- ----
the Assets, if and only to the extent that (1) Jones Intercable determines in
good faith, based upon the written opinion of outside counsel to Jones
Intercable (a copy of which is delivered to Buyer) that, failing to take such
action would result in a breach of its fiduciary duties under applicable law;
and (2) prior to furnishing non-public information to, or entering into
discussions or negotiations with, such Person, Seller notifies Buyer thereof in
writing and gives Buyer an opportunity to match such Superior Proposal and (3)
prior to furnishing non-public information to such Person, Seller receives from
such Person an executed confidentiality agreement on terms no less favorable to
Seller than those contained in Seller's confidentiality agreement with Buyer.
For purposes of this
-42-
Agreement, "SUPERIOR PROPOSAL" means any bona fide, written, unsolicited offer
or proposal relating to (i) a merger or other business combination involving
Seller, or (ii) the acquisition in any manner of any significant equity interest
in, or a substantial portion of the Assets of Seller, in each case other than
the transactions contemplated by this Agreement.
(b) Jones Intercable shall not (i) withdraw or modify, or propose to
withdraw or modify, the adoption, approval or recommendation by Jones Intercable
of this Agreement; or (ii) approve or recommend, or propose to approve or
recommend, any Superior Proposal by any Person other than Buyer, unless (1)
Jones Intercable determines in good faith, based upon the written opinion of
outside counsel to Jones Intercable, that failure to take such action would
result in a breach of its fiduciary duties under applicable law and (2) such
Superior Proposal is determined in good faith (based upon a written opinion of
an investment banking firm of national reputation) by Jones Intercable to be
more favorable to the limited partners of Fund 14-A and Fund 14-B than the
transactions provided for in this Agreement.
(c) Seller will promptly (and in no event later than three Business Days
after receipt of the relevant Superior Proposal), notify (which notice shall be
provided orally and in writing and shall identify the Person making the Superior
Proposal and set forth the material terms thereof) Buyer after receipt of any
Superior Proposal meeting the standard set forth in clause (1) of Section
7.10(a) and will keep Buyer fully informed of the status and details of any such
Superior Proposal. Seller shall give Buyer at least three days' advance notice
of any information to be supplied to, and at least five days' advance notice of
any agreement to be entered into with, any person making such Superior Proposal.
SECTION 7.11. SEC FILINGS. (a) Jones Intercable shall prepare and as
-----------
soon as practicable, and in any event within 30 days after the date of this
Agreement, file with the SEC a proxy statement (the "PRELIMINARY PROXY
STATEMENT") comprising preliminary proxy materials of Fund 14-B under the
Exchange Act with respect to the transactions contemplated by this Agreement,
and will thereafter use its best efforts to respond to any comments of the SEC
with respect thereto and to cause a definitive proxy statement (including all
supplements and amendments thereto, the "PROXY STATEMENT") and proxy to be
mailed to the partners of Fund 14-B as promptly as practicable.
(b) Jones Intercable will notify Buyer promptly of the receipt of any
comments from the SEC or its staff or any other government official and of any
requests by the SEC or its staff or any other government official for amendments
or supplements to the Preliminary Proxy Statement or for additional information.
SECTION 7.12. JONES INTERCABLE RECOMMENDATION. Subject to Section
-------------------------------
7.10(b), the Proxy Statement shall include the affirmative recommendation of
Jones
-43-
Intercable that the partners of Fund 14-B approve the transactions contemplated
by this Agreement.
SECTION 7.13. VOTE OF PARTNERS OF FUND 14-B. Jones Intercable shall
-----------------------------
take all action necessary, in accordance with applicable law and its partnership
agreement, to conduct a vote of the limited partners of Fund 14-B as promptly as
practicable to consider the adoption and approval of this Agreement and the
transactions contemplated hereby. The partnership vote required shall be the
vote required pursuant to the partnership agreement of Fund 14-B. Jones
Intercable (subject, in the case of a Superior Proposal, to its fiduciary duty,
as advised by written opinion of outside counsel) shall, subject to compliance
with applicable law, use commercially reasonable efforts to solicit from the
limited partners of Fund 14-B, proxies in favor of adoption and approval of the
transactions contemplated by this Agreement and to take all other commercially
reasonable action necessary to secure the vote of such partners required to
effect the transactions contemplated hereby. Jones Intercable agrees to vote in
favor of this Agreement and the transactions contemplated hereby (subject, in
the case of a Superior Proposal, to its fiduciary duty as advised by written
opinion of outside counsel).
SECTION 7.14. SCHEDULES. Five business days prior to the Closing Date,
---------
Seller shall deliver to Buyer new Schedules 3.12(a), 3.12(c), 3.16, 3.22(b),
----------------- ------- ---- --------
3.24(a), 3.24(e) and 3.24(f) to this Agreement that are amended or supplemented
- -------- ------- -------
to update the information contained therein in order to reflect any changes in
the information contained therein resulting from events occurring after the date
hereof and prior to the Closing Date.
SECTION 7.15. JONES INTERCABLE GUARANTEE. Jones Intercable shall,
--------------------------
contemporaneously with the execution of this Agreement, execute and deliver to
Buyer, the Guarantee, in the form attached hereto as Exhibit B.
SECTION 7.16. FEES FOR ENVIRONMENTAL ASSESSMENTS. Seller shall pay
----------------------------------
Buyer, on the earlier of the Closing Date or the date of termination of this
Agreement, one-half of Buyer's cost of conducting Environmental Assessments of
the Owned Real Property and the Leased Real Property.
SECTION 7.17. TERMINATION OF REVOLVING CREDIT AND TERM LOAN AGREEMENTS
--------------------------------------------------------
AND SECURITY INTERESTS. Seller shall, on or prior to the Closing Date,
- ----------------------
terminate the Revolving Credit and Term Loan Agreement, dated as of September
30, 1988, by and among Seller, The Bank of Nova Scotia ("BNS") and PNC Bank,
National Association, formerly known as Provident National Bank ("PNC"), as
amended, and all amounts due thereunder shall be paid in full, and any related
notes, security agreements, mortgages or other agreements to which the Seller is
a party shall be terminated (collectively, the "BANK LOAN DOCUMENTS").
-44-
SECTION 7.18. TITLE DEFECTS. Within 45 days after the execution of this
-------------
Agreement, Seller shall obtain and deliver to Buyer (a) current commitments to
issue title insurance policies for all Owned Real Property ("TITLE COMMITMENTS")
issued by or on behalf of a title insurance company reasonably satisfactory to
Buyer (the "TITLE COMPANY") and containing policy limits and other terms
reasonably acceptable to Buyer, committing to insure each parcel of the Owned
Real Property, subject only to Permitted Liens, and (b) a survey on each such
parcel of Owned Real Property in such form as is necessary to obtain the title
insurance to be issued pursuant to the Title Commitment with the standard
printed exceptions relating to survey matters deleted (the "SURVEYS"). The cost
to obtain the Title Commitments and Surveys and other documents required by the
Title Company to issue such policies will be paid by Seller. If Buyer notifies
Seller within 20 days of its receipt of both the Title Commitments and the
Surveys of any Lien (other than Permitted Liens) or other matter affecting title
to the Owned Real Property (each, a "TITLE DEFECT"), Seller shall exercise
commercially reasonable efforts to remove each such Title Defect prior to the
Closing. For purposes of the preceding sentence, the expenditure by Seller of an
amount not exceeding $125,000 (the "CURE AMOUNT") shall be deemed to be
commercially reasonable efforts by Seller to remove all Title Defects, and
Seller agrees that if the expenditure of the Cure Amount is necessary to remove
all Title Defects, it will, at Buyer's option, either expend the Cure Amount to
remove all Title Defects prior to Closing, or pay the Cure Amount directly to
Buyer at Closing. In the event that Buyer has directly received the Cure Amount
from Seller pursuant hereto, the condition to Closing set forth in Section
11.2(l) shall be deemed satisfied.
SECTION 7.19. LEASE RENEWAL. Seller and its Affiliates shall not take
-------------
any action that would result in the renewal of the Lease Agreement, dated
February 28, 1984, with the City of Dania.
SECTION 7.20. PAGING RESELLER AGREEMENT. Seller shall use its
-------------------------
commercially reasonable efforts to:
(a) obtain from PageMart, Inc., a waiver of PageMart, Inc.'s right of
first refusal to purchase end user accounts under Section 12 of the Paging
Reseller Agreement between Jones Intercable and PageMart, Inc., dated September
1, 1995 (the "PAGING RESELLER AGREEMENT"), with respect to the consummation of
the transactions under this Agreement; and
(b) obtain from PageMart, Inc. a modification of Section 12 of the Paging
Reseller Agreement, which shall provide that Section 12 shall not apply with
respect to the sale or transfer of end user accounts in conjunction with the
sale of the System or the Assets.
SECTION 7.21. RETRANSMISSION CONSENT AGREEMENTS. Seller shall use its
---------------------------------
commercially reasonable efforts to obtain the written consent of Wabash Valley
-45-
Broadcasting Corp. for the retransmission of channel WFTX to each of the Big
Cypress Indian reservation, the Brighton Indian reservation, the Hollywood
Indian reservation and the Immokalee Seminole Indian reservation, pursuant to a
retransmission consent agreement, which agreement shall not contain any
conditions to be fulfilled by Seller in exchange for such retransmission
consent.
ARTICLE 8
COVENANTS OF BOTH PARTIES
Buyer and Seller agree that:
SECTION 8.1. BEST EFFORTS; FURTHER ASSURANCES. (a) Subject to the
--------------------------------
terms and conditions of this Agreement, Buyer and Seller will each use its best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. Seller and Buyer
each agree to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and to vest in Buyer good and marketable title to
the Assets (whether before or after the Closing).
(b) Seller hereby constitutes and appoints, effective as of the Closing
Date, Buyer and its successors and assigns as the true and lawful attorney of
Seller with full power of substitution in the name of Buyer or in the name of
Seller, but for the benefit of Buyer (i) to collect for the account of Buyer any
of the Assets and (ii) to institute and prosecute all proceedings which Buyer
may in its sole discretion deem proper in order to assert or enforce any right,
title or interest in, to or under the Assets, and to defend or compromise any
and all actions, suits or proceedings in respect of the Assets. Buyer shall be
entitled to retain for its own account any amounts collected pursuant to the
foregoing powers, including any amounts payable as interest in respect thereof.
SECTION 8.2. CERTAIN FILINGS. Seller and Buyer shall cooperate with one
---------------
another (a) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any of the
Contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (b) in taking such actions or making any such filings,
furnishing information required in connection therewith and seeking timely to
obtain any such actions, consents, approvals or waivers. Without limitation,
Seller and Buyer shall each make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act no later than fifteen (15) Business Days
from the date hereof; and each such filing shall request early termination of
the waiting period imposed by the HSR Act. Buyer shall not be
-46-
required to agree to any consent decree or order in connection with any
objections of the Department of Justice or the Federal Trade Commission to the
transactions contemplated by this Agreement.
SECTION 8.3. PUBLIC ANNOUNCEMENTS. No party hereto shall make any
--------------------
public announcements or otherwise communicate with any news media with respect
to this Agreement or any of the transactions contemplated hereby without prior
consultation with the other parties as to the timing and content of any such
announcement; provided however, that nothing contained herein shall prevent any
party from promptly making all filings with Governmental Authorities as may, in
its judgment, be required or advisable in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby or as required by any Legal Requirement.
ARTICLE 9
TAX MATTERS
SECTION 9.1. TAX DEFINITIONS. The following terms, as used herein, have
---------------
the following meanings:
"CODE" means the Internal Revenue Code of 1986, as amended.
"POST-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending after the Closing Date.
"PRE-CLOSING TAX PERIOD" means any Tax period (or portion thereof) ending
on or before the close of business on the Closing.
"TAX" means any net income, alternative or add-on minimum tax,
documentary stamp tax, escheat, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, capital, paid-up capital, profits, greenmail,
license, withholding on amounts paid to or by Seller or the Business, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom duty or other tax, governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Authority (domestic or foreign) responsible for the imposition of
any such tax.
SECTION 9.2. TAX REPRESENTATIONS. Seller hereby represents and warrants
-------------------
to Buyer that:
-47-
(a) Seller has timely paid all Taxes payable by it for the Pre-Closing
Tax Period which are required to be paid on or prior to the Closing Date, the
non-payment of which could result in a Lien on any Asset, could otherwise
adversely affect the Business or could result in Buyer or any Affiliate of Buyer
becoming liable or responsible therefor.
(b) Seller has established, in accordance with GAAP, adequate reserves
for the payment of, and will timely pay all Tax liabilities, assessments,
interest and penalties which arise from or with respect to the Assets or the
operation of the Business and are incurred in or attributable to the Pre-Closing
Tax Period, the non-payment of which could result in a Lien on any Asset, could
otherwise adversely affect the Business or could result in Buyer or any
Affiliate of Buyer becoming liable therefor.
(c) Seller has not received any written notice of audit, deficiency or
assessment with respect to any Tax, the nonpayment of which could result in a
Lien on any Asset, could otherwise adversely affect the Business or could result
in Buyer or any Affiliate of Buyer becoming liable therefor.
(d) Schedule 9.2 sets forth the states with which Seller has filed any
------------
Tax return relating to the Business.
SECTION 9.3. TAX COOPERATION AND OTHER TAX MATTERS. (a) Buyer and
-------------------------------------
Seller agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the Assets
and the Business as is reasonably necessary for the filing of all Tax returns,
and making of any election related to Taxes, the preparation for any audit by
any taxing authority, and the prosecution or defense of any claim, suit or
proceeding relating to any Tax return. Seller and Buyer shall cooperate with
each other in the conduct of any audit or other proceeding related to Taxes
involving the Business for any Pre-Closing Tax Period.
(b) All real property taxes, personal property taxes and similar ad
--
valorem obligations levied with respect to the Assets for a taxable period which
- -------
includes (but does not end on) the Closing Date shall be apportioned between
Seller and Buyer as of the Closing Date based on the number of days of such
taxable period included in the Pre-Closing Tax Period and the number of days of
such taxable period included in the Post-Closing Period. Seller shall be liable
for the proportionate amount of such taxes that is attributable to the Pre-
Closing Tax Period, and Buyer shall be liable for the proportionate amount of
such taxes that is attributable to the Post-Closing Tax Period. Within 90 days
after the Closing, Seller and Buyer shall present a statement to the other
setting forth the amount of reimbursement to which each is entitled under this
Section 9.3(b) together with such supporting evidence as is
-48-
reasonably necessary to calculate the proration amount. The proration amount
shall be paid by the party owing it to the other within 15 days after delivery
of such statement to the extent that the amount has not been taken into account
as "Current Assets" or "Total Liabilities," as the case may be, in determining
the adjustments to the Purchase Price under Section 2.5(b). Thereafter, Seller
shall notify Buyer upon receipt of any bill for real or personal property taxes
relating to the Assets, part or all of which are attributable to the Post-
Closing Tax Period, and shall promptly deliver such bill to Buyer who shall pay
the same to the appropriate taxing authority, provided that if such bill covers
the Pre-Closing Tax Period, to the extent that the proportionate amount has not
been taken into account as "Total Liabilities" in determining the adjustments to
the Purchase Price under Section 2.5(b), Seller shall also remit prior to the
due date of assessment to Buyer payment for the proportionate amount of such
bill that is attributable to the Pre-Closing Tax Period. Buyer shall notify
Seller upon receipt of any bill for real or personal property taxes relating to
the Assets, part or all of which are attributable to the Pre-Closing Tax Period,
and shall promptly deliver such bill to Seller who, to the extent that the
amount due under such bill has not been taken into account as "Total
Liabilities" in determining the adjustments to the Purchase Price under Section
2.5(b) and such amount relates solely to the Pre-Closing Tax Period, shall pay
the same to the appropriate taxing authority, provided that if such bill covers
the Pre-Closing Tax Period and the Post-Closing Tax Period, to the extent that
the porportionate amount has not been taken into account as "Total Liabilities"
in determining the adjustments to the Purchase Price under Section 2.5(b),
Seller shall remit to Buyer prior to the due date of assessment, payment for the
proportionate amount of such bill that is attributable to the Pre-Closing Tax
Period. In the event that either Seller or Buyer shall thereafter make a
payment for which it is entitled to reimbursement under this Section 9.3(b), and
to the extent that the amount has not been taken into account as "Current
Assets" or "Total Liabilities," as the case may be, in determining the
adjustments to the Purchase Price under Section 2.5(d), the other party shall
make such reimbursement promptly but in no event later than 30 days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement. Any payment
required under this Section and not made within 10 days delivery of the
statement shall bear interest at the rate per annum determined, from time to
time, under the provisions of Section 6621(a)(2) of the Code for each day until
paid.
(c) In the case of any Taxes (other than any real property taxes,
personal property taxes and similar ad valorem obligations) that are payable for
-- -------
a taxable period that includes (but does not end on) the Closing Date, the
amount of such Taxes attributable to the Pre-Closing Tax Period shall be deemed
equal to the amount which would be payable if the relevant taxable period ended
on the Closing Date.
-49-
(d) Any transfer, documentary stamp tax, sales, use or other Taxes
assessed upon or with respect to the transfer of the Assets to Buyer and any
recording or filing fees with respect thereto shall be the responsibility of
Seller.
(e) At the Closing, Seller shall deliver to Buyer a certificate as
required by Treasury regulations Section 1.1445 to the effect that Seller is not
a "foreign person" as defined in Section 1445 of the Code.
(f) Seller shall not take or omit to take any action out of the ordinary
course of business or inconsistent with past practice if such action or omission
would have the effect of increasing the Tax liability relating to the Business,
the Buyer, or any of Buyer's Affiliates.
(g) Seller shall, on or prior to Closing, obtain Florida tax clearance
with respect to the sale of the Assets, pursuant to Fla. Rule 12A-1.055.
ARTICLE 10
EMPLOYEE BENEFITS
SECTION 10.1. EMPLOYEE BENEFITS DEFINITIONS. The following terms, as
-----------------------------
used herein, having the following meanings:
"EMPLOYEE PLANS" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, which (i) is subject to any provision of
ERISA, (ii) is maintained, administered or contributed to by Seller or any of
its Affiliates (as defined below) and (iii) covers any employee of the Business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any entity means any other entity which, together
with Seller, would be treated as a single employer under Section 414 of the
Code.
"MULTIEMPLOYER PLAN" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
SECTION 10.2. EMPLOYEE BENEFIT REPRESENTATIONS. Seller hereby
--------------------------------
represents and warrants to Buyer that:
(a) Neither Seller nor any ERISA Affiliate of Seller has ever been a
party to, contributed to, or been obligated to contribute to a Multiemployer
Plan. No Employee Plan is subject to Title IV of ERISA. Neither Seller nor any
of Seller's
-50-
Affiliates has incurred any liability under Title IV of ERISA arising in
connection with the termination of any plan covered or previously covered by
Title IV of ERISA that could become, after the Closing Date, an obligation of
Buyer or any of its Affiliates.
(b) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
from its adoption to date, and each trust forming a part thereof is exempt from
tax pursuant to Section 501(a) of the Code.
(c) Schedule 10.2(c) includes a list of each employment, severance or
----------------
other similar contract, arrangement or policy (written or oral) and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation or sick benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) is not an Employee Plan, (ii) is
entered into, maintained or contributed to, as the case may be, by Seller or any
of its Affiliates and (iii) covers any U.S. employee of the Business. Such
contracts, plans and arrangements as are described above, copies or descriptions
of all of which have been made available or furnished previously to Buyer are
hereinafter referred to collectively as the "BENEFIT ARRANGEMENTS." Each
Benefit Arrangement has been maintained in substantial compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangement.
(d) With respect to the employees of the Business, there are no employee
post-retirement medical or health plans in effect, except as required by Section
4980B of the Code.
(e) The Assets are not now nor will they after the passage of time be
subject to any Lien imposed under Code Section 412(n) by reason of the failure
of Seller or its Affiliates to make timely installments or other payments
required by Code Section 412.
(f) Except as set forth on Schedule 10.2(f), no Transferred Employee will
----------------
become entitled to any retirement, severance or similar benefit or enhanced
benefit solely as a result of the transactions contemplated hereby.
(g) Except as set forth on Schedule 10.2(g) attached hereto, each
----------------
Employee Plan complies and has been administered in all material respects in
accordance with the applicable provisions of ERISA and the Code, including,
without limitation, the satisfaction of all applicable reporting, disclosure,
fiduciary and tax qualification requirements under ERISA and the Code. All
statements and disclosures made on documents or forms filed or distributed
pursuant to the applicable reporting
-51-
and disclosure requirements under ERISA and the Code have been true and complete
in all material respects and have been filed or distributed timely. No excise
tax liability has been incurred with respect to any Employee Plan. Each
Employee Plan is, and has been, operated and administered in accordance with the
appropriate written plan documents.
(h) All communications with respect to each Employee Plan by any person
having the requisite authority to make such communciations, reflect and always
have reflected accurately the plan documents and operations of each such
Employee Plan. To the knowledge of Seller, there have been no written
statements or communications and no oral statements or communications made to
any Employee of the Business in any form by any Person (including, without
limitation, any officer, director or other employee) (having the requisite
authority to do so) of the Seller or its Affiliates) which provide for or could
be construed as a contract or promise by either Seller or any ERISA Affiliate to
provide for any pension, welfare or other insurance type benefits to any
employee of the Business, whether before or after retirement, other than
benefits under the Benefit Plans or Benefit Arrangements.
(i) Neither Seller nor any ERISA Affiliate has contributed to a non-
conforming group health plan (as that term is defined in Code section 5000(c))
or incurred any tax liability under Code section 5000(a).
(j) Neither Seller nor any Affiliate shall make or cause to be made to
any employee of the Business, and there has not been made to any former employee
of the Business, any payment in the form of wages or other consideration
pursuant to any employment agreement or Benefit Plan that was (in the case of
payments made prior to Closing) or will (in the case of payments made after
Closing), constitute in the aggregate an "excess parachute payment" (within the
meaning of Section 280G(b) of the Code) as a consequence in whole or in part of
this Agreement, or thereafter, as a consequence of any change in the ownership
or effective control of the Business or any change in the owenership of a
substantial portion of the Business's assets.
(k) Seller or its ERISA Affiliates have made all payments and
contributions to all Employee Plans on a timely basis as required by the terms
of each such plan and any applicable law or regulation. All such payments and
contributions have been deducted fully by Seller or its Affiliates for federal
income tax purposes. Such deductions have not been challenged or disallowed by
any Governmental Authority and Seller has no reason to believe that such
deductions are not properly allowable. Seller and its ERISA Affiliates have
funded or will fund each Benefit Plan in accordance with the terms of each such
plan and have paid all applicable premiums on any insurance contract funding any
Employee Plan.
SECTION 10.3. EMPLOYEES AND OFFERS OF EMPLOYMENT. (a) Buyer may, but
----------------------------------
shall have no obligation to, offer employment to any of the current employees of
-52-
the Business pursuant to this Section 10.3(a). Not less than seventy-five (75)
days prior to the Closing Date, Seller shall provide to Buyer a list of all
then-Active Employees of the Business, showing then-current positions and rates
of compensation. Not less than forty-five (45) days prior to the Closing Date,
Buyer will notify Seller in writing which employees will be hired by Buyer or
its Affiliates ("BUYER'S LIST"). On the Closing Date, Buyer shall offer
employment to all Active Employees of the Business on Buyer's List; provided,
--------
that Buyer may terminate at any time after the Closing Date the employment of
any employee who accepts such offer; and, provided further, that in the case of
an employee who is on short term disability leave, an authorized leave of
absence (including a leave of absence under the Family and Medical Leave Act),
military service or lay-off with recall rights as of the Closing Date, such
offer of employment shall be made as of the date that such leave, military
service or lay-off ends. For purposes of this Article 10, the term "ACTIVE
EMPLOYEE" shall also include any Person who, on the Closing Date, is actively
employed by Seller and who is on short-term disability leave, authorized leave
of absence (including a leave of absence under the Family and Medical Leave
Act), military service or lay-off with recall rights as of the Closing Date, but
shall exclude any other inactive or former employee including any Person who has
been on long-term disability leave or unauthorized leave of absence or who has
terminated his or her employment, retired or died on or before the Closing Date.
Any such offers shall be at such salary or wage and benefit levels and on such
other terms and conditions as Buyer shall in its sole discretion deem
appropriate. The employees who accept and report for work with Buyer on the day
after closing are hereinafter collectively referred to as the "TRANSFERRED
EMPLOYEES". Seller will not take, and will cause each of its subsidiaries not
to take, any action which would impede, hinder, interfere or otherwise compete
with Buyer's effort to hire any Transferred Employees. Buyer shall not assume
responsibility for any Transferred Employee until such employee commences
employment with Buyer.
(b) With respect to each Transferred Employee:
(i) Buyer shall recognize, for purposes of eligibility to
participate in its "employee welfare benefit plans" (as that term is defined in
ERISA section 3(1)), the service of any Transferred Employee with Seller or its
ERISA Affiliates prior to the Closing Date.
(ii) Buyer shall recognize, for purposes of eligibility to
participate, early commencement of benefits, and vesting (but not for purposes
of benefit accrual) under its "employee pension benefit plans" (as that term is
defined in ERISA section 3(2)), the service of any Transferred Employee with
Seller or its ERISA Affiliates prior to the Closing Date.
-53-
(iii) Seller and Buyer agree that the responsibilities for
payroll taxes with respect to transferred Employees shall be assigned under the
Alternative Procedure described in Section of 5 of Rev. Proc. 96-60.
SECTION 10.4. SELLER'S EMPLOYEE BENEFIT PLANS. (a) Seller shall retain
-------------------------------
all obligations and liabilities under the Employee Plans and Benefit
Arrangements in respect of each employee or former employee (including any
beneficiary thereof) who is not a Transferred Employee. Accrued benefits or
account balances of Transferred Employees under the Seller's Employee Plans and
Benefit Arrangements shall be fully vested as of the Closing Date.
(b) With respect to the Transferred Employees (including any beneficiary
or dependent thereof), Seller shall retain (i) all liabilities and obligations
arising under any group life, accident, medical, dental or disability plan or
similar arrangement (whether or not insured) to the extent that such liability
or obligation relates to contributions or premiums accrued (whether or not
payable), or to claims incurred (whether or not reported), on or prior to the
Closing Date, (ii) all liabilities and obligations arising under any worker's
compensation arrangement to the extent such liability or obligation relates to
the period prior to the Closing Date, including liability for any retroactive
worker's compensation premiums attributable to such period and (iii) all other
liabilities and obligations arising under the Employee Plans and the Benefit
Arrangements to the extent any such liability or obligation relates to the
period prior to the Closing Date, including, without limitation, liabilities and
obligations in respect of accruals through the Closing Date under any bonus plan
or arrangement, any vacation plans, arrangements and policies.
(c) With respect to any Transferred Employee (including any beneficiary
or dependent thereof) who enters a hospital or is on short-term disability under
any Benefit Arrangement on or prior to the Closing Date and continues in a
hospital or on short-term disability after the Closing Date, Seller shall be
responsible for claims and expenses incurred both before and after the Closing
Date in connection with such Person, to the extent that such claims and expenses
are covered by a Benefit Arrangement, until such time, (if any) that, in the
case of a Transferred Employee, such Person resumes full-time employment with
Buyer or one of its Affiliates and, in the case of any beneficiary or dependent
of a Transferred Employee, such Person's hospitalization has terminated.
Notwithstanding the foregoing, with respect to any medical expenses and other
costs relating to pregnancies and maternity leave, Seller shall be responsible
for all claims (whether or not reported) and expenses incurred during the period
prior to and ending on the Closing Date.
(d) Seller shall be responsible, and Buyer shall have no responsibility,
for all severance obligations to all employees who do not become Transferred
Employees.
-54-
(e) Seller shall be responsible for satisfying obligations under Part 6
of Subtitle B of Title I of ERISA and Section 4980B of the Code, to provide
continuation coverage and notice of such coverage to employees of the Business
and their eligible dependents who suffer a "qualifying event" on or prior to the
Closing Date.
(f) Seller shall be responsible for satisfying obligations under Part 7
of Subtitle B of Title I of ERISA and Section 9801 and 4980D of the Code, to
provide certifications of coverage to employees of the Business and their
eligible dependents who become entitled to such certifications as a result of a
termination of coverage or employment occurring on or prior to the Closing Date.
SECTION 10.5. NO THIRD PARTY BENEFICIARIES. No provision of this
----------------------------
Article shall create any third party beneficiary or other rights in any employee
or former employee (including any beneficiary or dependent thereof) of Seller or
of any of its subsidiaries in respect of continued employment (or resumed
employment) with either Buyer or the Businesses or any of their Affiliates and
no provision of this Article 10 shall create any such rights in any such Persons
in respect of any benefits that may be provided, directly or indirectly, under
any Employee Plan or Benefit Arrangement or any plan or arrangement which may be
established by Buyer or any of its Affiliates. No provision of this Agreement
shall constitute a limitation on rights to amend, modify or terminate after the
Closing Date any such plans or arrangements of Buyer or any of its Affiliates.
ARTICLE 11
CONDITIONS TO CLOSING
SECTION 11.1. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
-------------------------------------------
obligations of Buyer and Seller to consummate the Closing are subject to the
satisfaction or waiver of the following conditions:
(a) Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated.
(b) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing.
(c) Buyer and Seller shall have received all Required Consents in
connection with the Material Contracts (other than for pole agreements) and all
Franchise Approvals, and no such Franchise Approval or Required Consent shall
have been revoked.
-55-
(d) The limited partners of Fund 14-B shall have voted to approve the
transactions contemplated by this Agreement in accordance with their respective
partnership agreements.
SECTION 11.2. CONDITIONS TO OBLIGATION OF BUYER. The obligation of
---------------------------------
Buyer to consummate the Closing is subject to the satisfaction or waiver of the
following further conditions:
(a)(i) Seller shall have performed in all material respects all of its
obligations hereunder required to be performed by it on or prior to the Closing
Date, (ii) the representations and warranties of Seller contained in this
Agreement and in any certificate or other writing delivered by Seller pursuant
hereto, shall have been true as of the date hereof and shall be true at and as
of the Closing Date in all material respects, as if made at and as of such date,
except for changes permitted or contemplated by this Agreement and insofar as
any representation or warranty is made specifically as of the date of this
Agreement or other specified earlier date, and (iii) Buyer shall have received a
certificate signed by an appropriate executive officer of Seller to the
foregoing effect.
(b) Buyer shall have received an opinion of Elizabeth Steele, Vice
President and General Counsel of Jones Intercable and counsel to Seller, dated
the Closing Date, in form and substance reasonably satisfactory to Buyer.
(c) Buyer shall have received an opinion of Cole, Raywid & Braverman,
Seller's FCC counsel, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer.
(d) The System shall have as of the Closing Date, at least (i) an Average
Number of Basic Subscribers equal to 53,805, (ii) 91,800 Homes Passed, and (iii)
Average Monthly Revenue Per Basic Subscriber of at least $33.29. If Buyer shall
waive the condition set forth in this paragraph (d), Buyer shall nevertheless be
entitled to the benefit of the adjustments to the Purchase Price described in
Article 2, including without limitation to the full extent set forth in Section
2.5(b).
(e) There shall have been no material adverse change in the business,
assets, condition (financial or otherwise) or results of operations of the
Business, including without limitation, as to the System's rate regulation
position (provided that, certification of a local franchising authority shall
not, by itself, constitute a material adverse change in the business, assets,
condition (financial or otherwise) or results of operation of the Business),
other than (i) a change arising out of general economic conditions in the United
States, (ii) any change affecting the United States cable industry as a
whole,including any change arising from legislation, litigation, rulemaking or
regulation, any of which affects the United States cable industry as a whole or
(iii) competition caused by or arising from any Multi-Channel Video Service
-56-
providers who are currently competing with, have the legal authorization,
pursuant to a franchise or license, to compete with, or have announced their
intention to compete with the Seller, and which are set forth on Schedule 3.27.
-------------
(f) Buyer shall have entered into, or received a valid assignment of, a
retransmission consent agreement with each broadcaster whose signal is carried
on the System at the Closing who did not make a so-called "must carry" election
under the Cable Act on terms and conditions reasonably acceptable to Buyer.
(g) Buyer shall have entered into license agreements for pole attachments
with each of the parties (other than Seller) to the license agreements for pole
attachments listed on Schedule 3.12 or provided for or made alternative
-------------
arrangements reasonably acceptable to Buyer for use of such pole attachments
without violation of any Legal Requirement.
(h) Buyer shall have conducted an Environmental Assessment of the Owned
Real Property, which audit will identify and delineate, to the fullest extent
possible, all Environmental Liabilities in connection with such Owned Real
Property and which Assessment shall be satisfactory to the Buyer in its
reasonable discretion. For purposes of this provision, an "ENVIRONMENTAL
ASSESSMENT" means: (1) a Phase I report in accordance with a scope of work
provided by Buyer, and (2) if warranted by the facts discovered in the Phase I
report, in Buyer's sole discretion, a Phase II report in order to identify the
existence and extent of Hazardous Substances at the Owned Real Property or in
buildings or other structures on such Owned Real Property. Such a Phase II
report shall include, but shall not be limited to, the physical sampling and
analytical analysis necessary to determine the existence and extent of
particular types of contamination.
(i) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall restrain, prohibit or otherwise interfere with
the effective operation or enjoyment by Buyer of all or any material portion of
the Assets.
(j) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Closing shall have been instituted by any Person before any arbitrator or
Governmental Authority and be pending.
(k) Buyer shall have received evidence satisfactory to it that the Bank
Loan Documents have been terminated, and that any security interest granted and
any Financing Statements (or any amendments, modifications or continuations
thereof) issued in favor of either of BNS or PNC in connection with the Bank
Loan Documents have been terminated.
-57-
(l) With respect to each Title Defect, either (i) the Title Company shall
have agreed to delete such Title Defect from the Title Commitments endorsement,
or (ii) the parties shall have entered into a written agreement containing
Seller's commitment to remedy the Title Defect on terms satisfactory to Buyer,
in its sole discretion.
(m) Sunbeam Television Corp., licensee of television station WSVN -Ft.
Lauderdale shall have entered into a retransmission consent agreement with Buyer
in the form attached hereto as Schedule 11.2(m).
----------------
(n) Wabash Valley Broadcasting Corp. shall have entered into a
retransmission consent agreement with the Seller, whereby Seller shall receive
consent to transmit the channel WFTX to each of the Big Cypress Indian
reservation, the Brighton Indian reservation, the Hollywood Indian reservation
and the Immokalee Seminole Indian reservation, which retransmission consent
agreement shall not contain any conditions to be fulfilled by Seller in exchange
for such retransmission consent.
SECTION 11.3. CONDITIONS TO OBLIGATION OF SELLER. The obligation of
----------------------------------
Seller to consummate the Closing is subject to the satisfaction or waiver of the
following further conditions:
(a) (i) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date, (ii) the representations and warranties of Buyer contained in this
Agreement and in any certificate or other writing delivered by Buyer pursuant
hereto, shall have been true as of the date hereof and shall be true at and as
of the Closing Date in all material respects, as if made at and as of such date
and (iii) Seller shall have received a certificate signed by an appropriate
executive officer of Buyer to the foregoing effect.
(b) The adjustment to the Purchase Price pursuant to Section 2.5(b)(iii)
shall not exceed the amount of $7,000,704; provided however, that in the event
the adjustment to the Purchase Price pursuant to Section 2.5(b)(iii) exceeds the
amount of $7,000,704 and Buyer agrees to limit the amount of the adjustment to
the Purchase Price pursuant to Section 2.5(b)(iii) to an amount equal to
$7,000,704, then the condition set forth in this Section 11.3(c) shall be deemed
waived by Seller.
(c) Seller shall have received an opinion of the Deputy General Counsel
of Buyer, dated the Closing Date, in form and substance reasonably satisfactory
to Seller.
(d) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Closing shall have been instituted by any Person before any arbitrator or
Governmental Authority and be pending.
-58-
ARTICLE 12
SURVIVAL; INDEMNIFICATION
SECTION 12.1. SURVIVAL. The representations and warranties of the
--------
parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing until the eighteen month anniversary of the Closing Date, except that
the representations and warranties set forth in Sections 3.1, 3.2 and 3.9 shall
survive indefinitely and the representations and warranties set forth in Section
3.19 and Articles 9 and 10 shall survive until the later of the third
anniversary of the Closing Date or 60 days following the expiration of the
applicable statutory period of limitations (giving effect to any waiver,
mitigation or extension thereof). Notwithstanding the preceding sentence, any
representation or warranty in respect of which indemnity may be sought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the inaccuracy or breach
thereof giving rise to such right to indemnity shall have been given to the
party against whom such indemnity may be sought prior to such time.
SECTION 12.2. INDEMNIFICATION. (a) Seller hereby indemnifies Buyer and
---------------
its Affiliates against and agrees to hold each of them harmless from any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) (collectively, "LOSS") incurred
or suffered by Buyer or any of its Affiliates arising out of:
(i) any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by Seller pursuant to this Agreement;
(ii) any Excluded Liability or Excluded Asset, including without
limitation, the failure of Seller to perform any Excluded Liability or any
obligation or liability of the Business relating to the Excluded Assets; or
(iii) the failure of Seller to comply with any applicable bulk sales
laws.
(b) Buyer hereby indemnifies Seller and its Affiliates against and agrees
to hold each of them harmless from any and all Loss incurred or suffered by
Seller or any of its Affiliates arising out of:
(i) any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by the Buyer pursuant to this Agreement;
or
(ii) the failure of Buyer to perform any Assumed Liability.
-59-
SECTION 12.3. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
--------------------------------------
proceeding or claim (including any governmental investigation) shall be
instituted or asserted involving any Person in respect of which indemnity may be
sought pursuant to Section 12.2, such Person (the "INDEMNIFIED PARTY") shall
promptly notify the Person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the Indemnifying Party, upon the request of
the Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.
SECTION 12.4. ESTABLISHMENT OF LOSSES.
-----------------------
(a) The Indemnifying Party and the Indemnified Party may agree in
writing, at any time, as to the existence and amount of a Loss, and upon
execution of such agreement, such Loss shall be deemed established.
(b) A Loss shall be deemed established pursuant to Section 12.3 upon the
earlier of (i) the resolution of said claim by the Indemnifying Party with the
claimant, or (ii) the termination of the defense by the Indemnifying Party
against such claimant or the failure of the Indemnifying Party to prosecute such
defense in good faith in a diligent manner. The Indemnified Party shall be
entitled to rely upon the opinion of its counsel as to the occurrence of either
of said events.
(c) In the event an Indemnified Party asserts the existence of any Loss,
the Indemnified Party shall provide prompt written notice to the Indemnifying
Party of the nature and amount of such Loss. If the Indemnifying Party, within
a period a ten
-60-
(10) days after the giving of notice of such Loss, does not give notice to the
Indemnified Party that it contests such Loss, such assertion by the Indemnified
Party shall be deemed accepted and the amount of the Loss shall be deemed
established. In the event that an Indemnifying Party contests the assertion of
a Loss, then the contested assertion of such Loss shall be settled by
arbitration to be held in Miami, Florida, in accordance with the rules of the
American Arbitration Association then obtaining. The determination of the
arbitrator(s) shall be final, binding and conclusive upon all of the parties
hereto, and the amount of the Loss, if any, shall be deemed established.
SECTION 12.5. PAYMENT OF LOSSES. The Indemnifying Party hereby agrees
-----------------
to pay the amount of established Losses to the Indemnifying Party in cash,
within five (5) days after establishment thereof. Any amounts required to be
paid but not paid by the Indemnifying Party when due under this subsection shall
bear interest from the due date thereof until the date paid at a rate equal to
the lesser of (i) 2% over Prime Rate, or (ii) the highest legal rate permitted
by applicable law.
SECTION 12.6. LIMITATION ON INDEMNITY CLAIMS. Claims for
------------------------------
indemnification from Losses arising solely by reason of any misrepresentation or
breach or nonfulfillment of any representation, warranty or covenant shall not
be payable hereunder unless such claims exceed, on a cumulative basis, the sum
of $100,000 (the "BASKET AMOUNT") and in the event they exceed the Basket
Amount, shall be payable from the first dollar thereof. The relief to Seller
from claims as set forth in this Section shall not apply to Losses described in
Section 12.2(a)(ii) or (iii) or claims arising out of any violation of Section
7.4 of this Agreement.
ARTICLE 13
TERMINATION
SECTION 13.1. TERMINATION. This Agreement may be terminated at any time
-----------
prior to the Closing:
(a) by mutual written agreement of Seller and Buyer;
(b) by either Seller or Buyer if the Closing shall not have been
consummated on or before March 31, 1998;
(c) by the Seller (upon payment of any amount due pursuant to Section
13.3) or by Buyer if, pursuant to the partners' vote referred to in Section
7.13, the transactions contemplated hereby that require such approval shall fail
to be approved and adopted by the affirmative vote specified herein;
-61-
(d) by either Buyer or Seller if it has received any communication from
either the Department of Justice or Federal Trade Commission (such communication
to be confirmed to the Seller) indicating that either the Department of Justice
or Federal Trade Commission has authorized the institution of litigation
challenging the transactions contemplated by this Agreement under the U.S.
antitrust laws, which litigation will include a motion seeking an order or
injunction prohibiting the consummation of any of the transactions contemplated
by this Agreement.
(e) by either Seller or Buyer if there shall be any law or regulation
that makes the consummation of the transactions contemplated hereby illegal or
otherwise prohibited or if consummation of the transactions contemplated hereby
would violate any nonappealable final order, decree or judgment of any
Governmental Authority; or
The party desiring to terminate this Agreement pursuant to clauses (b),
(c), (d) or (e) shall give notice of such termination to the other parties.
SECTION 13.2. EFFECT OF TERMINATION. If this Agreement is terminated as
---------------------
permitted by Section 13.1, such termination, subject to Section 13.3, shall be
without liability of either party (or any partner, officer, employee, agent,
consultant or representative of such party) to the other parties to this
Agreement; provided that if such termination shall result from the willful
--------
failure of either party to fulfill a condition to the performance of the
obligations of the other party, failure to perform a covenant of this Agreement
or breach by either party to this Agreement of any representation or warranty or
agreement contained herein, such party shall be fully liable for any and all
Losses incurred or suffered by the other party as a result of such failure or
breach. The provisions of Section 14.3 shall survive any termination hereof
pursuant to Section 13.1.
SECTION 13.3. FEES AND EXPENSES. (a) In order to induce Buyer to enter
-----------------
into the Agreement, Seller will agree that if (i) Jones Intercable fails to vote
in favor of or fails to recommend to each of the limited partners of Fund 14-B
that they vote in favor of consummating the transactions contemplated in this
Agreement and the limited partners of Fund 14-B fail to approve the transactions
contemplated in this Agreement or (ii) the limited partners of Fund 14-B fail to
approve the transactions contemplated by this Agreement as a result of a
Superior Proposal, which Superior Proposal is received on or after the date of
the Agreement and prior to the vote of the limited partners of Fund 14-B, to
purchase the Assets and/or the System or any transaction having a similar
effect, Seller shall pay Buyer a break-up fee (the "BREAK-UP FEE") in amount
equal to the greater of (A) five percent of the Purchase Price or (B) five
percent of the purchase price under the Superior Proposal. The Break-Up Fee,
less any amount paid pursuant to Section 13.3(b), shall be paid in immediately
available funds no later than five business days after the termination of this
Agreement.
-62-
(b) In order to induce Buyer to enter into the Agreement, Seller will
agree that if the limited partners of Fund 14-B fail to approve the transactions
contemplated by the Agreement, Seller shall pay Buyer an amount equal to the
actual reasonable fees and expenses paid or payable by or on behalf of Buyer to
its attorneys, accountants, environmental consultants, management consultants,
as well as costs and expenses incurred by Buyer in connection with time spent by
its employees, in connection with the negotiation, execution and delivery of
this Agreement (the "EXPENSE FEE"). The Expense Fee shall be paid in
immediately available funds no later than five business days after receipt by
Seller of detailed written statements describing the fees and expenses.
ARTICLE 14
MISCELLANEOUS
SECTION 14.1. NOTICES. All notices, requests and other communications
-------
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Buyer, to:
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102-2148
Attention: General Counsel
Telecopy: (215) 981-7794
if to Seller, Jones Intercable, Jones Fund 14-A or Fund 14-B, to:
Cable TV Fund 14A/B Venture
c/o Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, CO 80112
Attention: President
Telecopy: (303) 799-1644
-63-
with a copy to:
Legal Department
c/o Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, CO 80112
Attention: General Counsel
Telephone: (303) 792-3111
Telecopy: (303) 799-1644
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed to have
been received on the next succeeding business day in the place of receipt.
SECTION 14.2. AMENDMENTS AND WAIVERS. (a) Any provision of this
----------------------
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 14.3. EXPENSES. Except as otherwise provided herein (including
--------
without limitation Article 13), costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense. The
HSR Act filing fee will be paid one-half by Buyer and one-half by Seller.
SECTION 14.4. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
--------
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto except that Buyer may, without the
consent of Seller, transfer or assign, in whole or from time to time in part,
the right to purchase all or a portion of the Assets, but no such transfer or
assignment will relieve Buyer of its obligations hereunder.
SECTION 14.5. GOVERNING LAW. This Agreement shall be governed by and
-------------
construed in accordance with the law of the State of Colorado (and United States
law, to the extent applicable), without regard to the conflicts of law rules of
such state.
-64-
SECTION 14.6. SPECIFIC PERFORMANCE; REMEDIES CUMULATIVE. (a) Seller
-----------------------------------------
recognizes that the Business cannot be readily obtained in the open market and
that Buyer will be irreparably injured if this Agreement is not specifically
enforced. Therefore, Buyer shall be entitled in such event, in addition to
bringing suit at law or equity for money or other damages, to obtain specific
performance of the terms of this Agreement. In any action to enforce the
provisions of this Agreement, Seller shall waive the defense that there is an
adequate remedy at law or equity and agree that Buyer shall have the right to
obtain specific performance of the terms of this Agreement.
(b) The remedies provided in this Agreement shall be cumulative and
shall not preclude the assertion by any party hereto of any other rights or the
seeking of any other remedies against the other party hereto.
SECTION 14.7. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
---------------------------
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other party hereto.
SECTION 14.8. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This
-------------------------------------------
Agreement and the Exhibits attached hereto constitute the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth herein
has been made or relied upon by either party hereto. Neither this Agreement nor
any provision hereof is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
SECTION 14.9. CAPTIONS. The captions herein are included for
--------
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
-65-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
COMCAST CORPORATION
By: /s/ Robert S. Peck
----------------------------
Title: Vice President
----------------------
CABLE TV FUND 14A/B VENTURE
By: Cable TV Fund 14-A, Ltd., a
venturer
By: Cable TV Fund 14-B, Ltd., a
venturer
By: Jones Intercable, Inc.,
their General Partner
By: /s/ James B. O'Brien
----------------------
Title: President
----------------
JONES INTERCABLE, INC.
By: /s/ James B. O'Brien
----------------------------
Title: President
----------------------
JONES INTERNATIONAL, LTD.
By: /s/ Glenn R. Jones
----------------------------
Title: CEO
----------------------
-66-
EXHIBIT A
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
KNOW ALL MEN BY THESE PRESENTS, that CABLE TV FUND 14A/B VENTURE, a
Colorado general partnership JONES INTERCABLE, INC., a Colorado corporation
("Assignor"), pursuant to that certain Asset Purchase Agreement dated as of
October 3, 1997 among COMCAST CORPORATION, a Pennsylvania corporation ("Buyer"),
Assignor, JONES INTERNATIONAL, LTD., a Colorado corporation, JONES INTERCABLE,
INC., a Colorado corporation, CABLE TV FUND 14-A, LTD., a Colorado limited
partnership and CABLE TV FUND 14-B, LTD., a Colorado limited partnership (the
"Asset Purchase Agreement"), for the consideration set forth in the Asset
Purchase Agreement and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, has this day assigned and
transferred and does hereby assign and transfer to ___________________________,
a __________ corporation ("Assignee") an assignee of Buyer, effective 11:59 p.m.
(local Florida time) on the date hereof, all of Assignor's right, title and
interest in, to and under the Authorizations and Contracts (as defined in the
Asset Purchase Agreement).
Assignee hereby accepts said assignment and hereby assumes and agrees to
perform, comply with and be bound by all terms, covenants and conditions of the
Authorizations and Contracts with respect to the period of time from and after
11:59 p.m. (local Florida time) on the date hereof, except for any such terms,
covenants or conditions which are Excluded Liabilities (as defined in the Asset
Purchase Agreement), in the same manner and with the same force and effect as if
Assignee had originally executed such documents.
Notwithstanding any other provisions of this Agreement to the contrary,
nothing contained herein shall in any way supersede, modify, replace, amend,
change, rescind, waive, exceed, expand, enlarge or in any way affect the
provisions, including the warranties, covenants, agreements, conditions,
representations or, in general any of the rights and remedies, and any of the
obligations and indemnifications of Seller or Buyer set forth in the Asset
Purchase Agreement. This Agreement is intended only to effect the assignment of
certain contracts and commitments and the assumption of certain liabilities
pursuant to the Asset Purchase Agreement and shall be governed entirely in
accordance with the terms and conditions of the Asset Purchase Agreement.
This Assignment and Assumption Agreement shall be constued in accordance
with and governed under the laws of the State of Colorado.
A-1
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other party hereto.
IN WITNESS WHEREOF, Assignor and Assignee, intending to be legally bound
hereby, have caused this instrument to be executed and delivered this _____ day
of _____________, 199_.
CABLE TV FUND 14A/B VENTURE
By: CABLE TV FUND 14-A, LTD., a
venturer
By: CABLE TV FUND 14-B, LTD., a
venturer
By: JONES INTERCABLE, INC.,
their general partner
By:____________________________
Title:_________________________
[JONES INTERCABLE, INC.
By:____________________________
Title:_________________________]
[ASSIGNEE]
By:__________________________________
Title:______________________________
A-2
EXHIBIT B
FORM OF GUARANTY
----------------
THIS GUARANTY, made as of this 3rd day of October, 1997, by Jones Intercable,
Inc., a Colorado corporation (the "Guarantor"), with an address of 9697 East
Mineral Avenue, Englewood, Colorado 80112.
WITNESSETH:
Guarantor is the general partner of Cable TV Fund 14-A, Ltd., a Colorado
limited partnership ("Fund 14-A") and Cable TV Fund 14-B, Ltd., a Colorado
limited partnership ("Fund 14-B"). Fund 14-A and Fund 14-B are the sole general
partners of Cable TV Fund 14A/B Venture, a Colorado general partnership (the
"Seller"). Each of the Seller, Fund 14-A and Fund 14-B now have and are
expected to have various liabilities and obligations to Comcast Corporation or
its assignee (the "Company") under an Asset Purchase Agreement dated as of
October 3, 1997 among the Company, the Guarantor, the Seller, Fund 14-A, Fund
14-B and Jones International, Ltd. (the "Agreement"). Terms not otherwise
defined herein shall have the meaning set forth in the Agreement. All
liabilities and obligations of the Seller, Fund 14-A and Fund 14-B to the
Company under the Agreement, both now existing and hereafter arising, are
hereinafter referred to collectively as the "Obligations." Guarantor will
benefit from the transactions pursuant to which the Obligations are incurred,
and the Company would be unwilling to enter into the Agreement without having
received this Guaranty.
NOW, THEREFORE, in consideration of the foregoing and intending to be legally
bound, Guarantor hereby agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees to the
Company the punctual payment and performance of all of the Obligations. Any sum
due by Guarantor under any provisions of this Guaranty shall thereafter bear
interest until paid at the rate which is 2% per annum in excess of the Prime
Rate or, if less, the highest rate permitted by applicable law.
2. Guarantor hereby, to the fullest extent permitted by law: waives notice
of acceptance of this Guaranty, waives presentment, demand, notice or protest of
any kind, waives giving of any notice of default or other notice to, or making
any demand on, anyone (including, without limitation, Company and Guarantor)
liable in any manner for the payment of any Obligations.
3. The obligations and agreements of Guarantor under this Guaranty are
primary, absolute, independent, irrevocable and unconditional. This is an
agreement of suretyship as well as of guaranty, and without being required to
proceed first against Seller, Fund 14-A or Fund 14-B or any other person or
entity, the Company
may proceed directly against Guarantor (without the necessity of joining Seller,
Fund 14-A or Fund 14-B in any action brought against Guarantor) whenever Seller,
Fund 14-A or Fund 14-B fails to make any payment when due relating to the
Obligations or fails to perform any Obligation now or hereafter owed to the
Company. This Guaranty shall remain in full force and effect until all
Obligations have been indefeasibly paid in full to the Company and performed and
until all such sums or other things of value received by the Company are not
subject to rescission or repayment upon the bankruptcy, insolvency or
reorganization of Seller, Fund 14-A or Fund 14-B, as applicable, and if any such
sums are rescinded or repaid, then, to such extent, Seller, Fund 14-A or Fund
14-B, as applicable, shall not, for the purposes of this Guaranty, be deemed to
have paid such amounts or things of value, and Guarantor shall remain liable for
the payment thereof.
4. The obligations of Guarantor under this Guaranty shall remain in full
force and effect, and shall not be negated or impaired, irrespective of (a) the
impossibility or the illegality of performance on the part of Seller, Fund 14-A
or Fund 14-B of the Obligations, (b) any defense that may arise by reason of the
incapacity or lack of authority of Guarantor or the failure of the Company to
file or enforce a claim against the estate of Seller, Fund 14-A or Fund 14-B, as
applicable, in any bankruptcy or other proceeding, (c) the involvement of
Seller, Fund 14-A or Fund 14-B in any bankruptcy, reorganization, insolvency or
any other proceedings, or (d) any other circumstances, occurrence or condition,
whether similar or dissimilar to any of the foregoing, which might otherwise
constitute a legal or equitable defense, discharge or release of a guarantor or
surety.
5. Guarantor represents and warrants that (a) Guarantor has the full power,
authority and legal right to enter into, execute and deliver this Guaranty; and
(b) this Guaranty is a valid and binding obligation of Guarantor, and is fully
enforceable against Guarantor in accordance with its terms. Guarantor
represents and warrants that the documents and reports which Guarantor has filed
pursuant to the requirements of the Securities Exchange Act of 1934, as amended
(the "Act"), and the rules and regulations promulgated thereunder conform in all
material respects to the requirements of the Act and such rules and regulations
and do not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
6. Any notice, demand, request or other communication which the Company may
desire to give to Guarantor with respect to this Guaranty shall be deemed
sufficient if in writing and mailed by certified or registered mail, postage
prepaid, addressed to Guarantor at the address of Guarantor set forth in the
heading of this Guaranty or such other address of which the Company has received
any notice pursuant to the provisions of this paragraph. No change of address
by Guarantor shall be effective as against the Company unless Guarantor shall
have advised the Company of the change of address by a written notice thereof
mailed to the Company by registered or certified mail, return receipt requested,
postage prepaid, and the Company shall have actually received such notice.
7. All rights and remedies of the Company under this Guaranty or law
are separate and cumulative, and the exercise of one shall not limit or
prejudice the exercise of any other such rights or remedies. The enumeration in
this Guaranty of any waivers or consents by Guarantor shall not be deemed
exclusive of any additional waivers or consents by Guarantor which may be deemed
to exist in law or equity. No delay or omission by the Company in exercising
any such right or remedy shall operate as a waiver thereof. No waiver of any
rights and remedies hereunder, and no modification or amendment of this Guaranty
shall be deemed made by the Company unless in writing and duly signed by the
Company. Any such written waiver shall apply only to the particular instance
specified therein and shall not impair the further exercise of such right or
remedy or of any other right or remedy of the Company, and no single or partial
exercise of any right or remedy under this Guaranty shall preclude any other or
further exercise thereof or any other right or remedy.
8. Guarantor will reimburse the Company, upon demand, for all reasonable
expenses incurred in connection with the collection and/or enforcement of this
Guaranty (including, without limitation, attorneys' fees) whether or not suit is
actually instituted.
9. This Guaranty shall be a continuing Guaranty and shall be binding upon
Guarantor, and Guarantor's successors and assigns, and shall inure to the
benefit of the Company and its successors and assigns. Notwithstanding the
foregoing, Guarantor may not assign any of its obligations under this Guaranty.
10. If any provision of this Guaranty is held to be invalid or unenforceable
by a court of competent jurisdiction, the other provisions of this Guaranty
shall remain in full force and effect and shall be liberally construed in favor
of the Company in order to effect the provisions of this Guaranty.
11. This Guaranty is being delivered in, and shall be governed by and
construed according to the laws of, the State of Colorado applicable to
contracts wholly performed within such jurisdiction.
12. Guarantor shall, from time to time upon request by the Company, execute,
acknowledge and deliver to the Company, promptly after such request and at no
expense to the Company, such other documents and instruments as the Company
shall request in order to effectuate the provisions of this Guaranty.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty the day and year
first above written.
JONES INTERCABLE, INC.
By:_________________________
Name:
Title: