
<PAGE>   1
                                                                Exhibit 10.18(a)

                         FALCON TELECABLE, A CALIFORNIA
                               LIMITED PARTNERSHIP




                             -----------------------

                      NOTE PURCHASE AND EXCHANGE AGREEMENT

                          Dated as of October 21, 1991

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              11.56% Series A Subordinated Notes due March 31, 2001
              11/56% Series B Subordinated Notes due March 31, 2001
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               FALCON TELECABLE, A CALIFORNIA LIMITED PARTNERSHIP
                            474 South Raymond Avenue,
                                    Suite 200
                               Pasadena, CA 91105
                      NOTE PURCHASE AND EXCHANGE AGREEMENT

              11.56% Series A Subordinated Notes due March 31, 2001
              11/56% Series B Subordinated Notes due March 31, 2001


                                                    Dated as of October 21, 1991


The Mutual Life Insurance
Company of New York
MONY Life Insurance Company
of America
1740 Broadway
New York, NY  10019
Attention:  MONY Capital Management


Dear Sirs:

         Falcon Telecable, a California limited partnership (herein called the
"Company"), hereby agrees with you as follows:

SECTION 1.        The Notes.

         Section 1.1. Authorization. The Company has duly authorized the
issuance and sale, on the terms hereinafter provided, of $20,000,000 aggregate
principal amount of its 11.56% Series A Subordinated Notes due March 31, 2001
(herein called collectively the "Series A Notes" and individually a "Series A
Note") and $15,000,000 aggregate principal amount of its 11.56% Series B
Subordinated Notes due March 31, 2001 (herein called collectively the "Series B
Notes" and individually a "Series B Note", and together with the Series A Notes,
collectively the "Notes"). Each Note will be in a denomination of not less than
$100,000 or any larger integral multiple of $1,000, and the interest accruing
thereon will be payable in semiannual installments on the last day of March and
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September ("Interest Payment Dates") in each year commencing with the interest
payment date next succeeding the date of such Note.

         Each Series A Note will have a final maturity of March 31, 2001, will
bear interest (computed on the basis of a 360-day year of twelve 30-day months)
on the unpaid portion of the principal amount thereof at the rate of 11.56% per
annum, from the date of the Note until such unpaid portion of such principal
amount shall have come due and payable (whether at maturity, by acceleration or
otherwise), on any overdue portion of such principal amount and premium, if any,
at the rate of 12.56% per annum until paid and, to the extent not prohibited by
applicable law, on any overdue installment of interest at the rate of 12.56% per
annum until paid, and will be substantially in the form set forth in Exhibit A
to this Agreement. Each Series B Note will have a final maturity of March 31,
2001, will bear interest (computed on the basis of a 360-day year of twelve 30-
day months) on the unpaid portion of the principal amount thereof at the rate of
11.56% per annum, from the date of the Note until such unpaid portion of such
principal amount shall have become due and payable (whether at maturity, by
acceleration or otherwise), on any overdue portion of such principal amount and
premium, if any, at the rate of 12.56% per annum until paid and, to the extent
not prohibited by applicable law, on any overdue installment of interest at the
rate of 12.56% per annum until paid, and will be substantially in the form set
forth in Exhibit B to this Agreement.

         Section 1.2. Deferral of Interest Payments. Notwithstanding anything
contained in Section 1.1 or in the Series A Notes, 100% of the interest due and
payable on the Series A Notes on the first six Interest Payment Dates and such
portion of the interest due and payable on the Series A Notes on the seventh and
eighth Interest Payment Dates as shall exceed interest accruing at a rate of 8%
per annum shall be deferred (in each case, the "Deferred Interest") and on each
such Interest Payment Date on which the payment of interest has been deferred,
an amount equal to the amount of Deferred Interest with respect to each Series A
Note shall be added to the unpaid principal amount of such Series A Note.
Deferred Interest added to the principal of a Series A Note shall bear interest
at the same rate as the original principal amount of such Series A Note bears
interest, and shall be due and payable when the original principal amount of the
Series A Notes becomes due and payable, whether at maturity or at a date fixed
for prepayment or by acceleration or otherwise.

         Section 1.3. Issuance of Series B Notes in Exchange for Outstanding
11.52% Subordinated Notes; Purchase and Sale of Series A Notes; Closings. The
Company has theretofore issued pursuant to a Note Purchase Agreement dated as of
June 15, 1988 between the Company and The Mutual Life Insurance Company of New
York ("Mutual")




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and there remain outstanding on the date hereof, $15,000,000 aggregate principal
amount of the Company's 11.52% Subordinated Notes due July 1, 1998 (the "11.52%
Subordinated Notes"). Subject to the terms and conditions herein set forth, the
Company hereby agrees to sell to Mutual $20,000,000 principal amount of Series A
Notes, and to issue in exchange for the 11.52% Subordinated Notes $12,500,000
principal amount of Series B Notes to Mutual (with $2,500,000 principal amount
thereof to be registered in the name of Mutual's nominee, GIPEN & Co.) and
$2,500,000 principal amount of Series B Notes to MONY Life Insurance Company of
America ("MONY America") and, in reliance on the representations and warranties
of the Company herein contained, Mutual agrees to purchase from the Company,
such aggregate principal amount of Series A Notes at the purchase price of 100%
of such principal amount, and Mutual and MONY America agree to exchange such
outstanding 11.52% Subordinated Notes for Series B Notes in a like outstanding
principal amount. The purchase, sale and exchange of the Notes shall take place
on October 25, 1991 or such later date, not later than November 27, 1991, as may
be agreed upon in writing by the Company and you (Mutual and MONY America,
together with any of their nominees being called the "Purchasers"). Such
purchase and sale shall herein be called the "Closing" and the date on which the
Closing takes place shall herein be called the "Closing Date".

         The Closing shall take place at the offices of The Mutual Life
Insurance Company of New York, 1740 Broadway, New York, NY, or such other place
in the City of New York as the Company and the Purchasers may mutually agree, at
10:00 A.M., New York City time on the Closing Date, at which time the Company
shall deliver to Mutual one Series A Note (or, if Mutual shall have so requested
prior to the Closing Date, Notes in the denominations authorized by Section
1.1), dated the Closing Date, in an aggregate principal amount equal to the
principal amount of the Series A Notes to be purchased by Mutual on the Closing
Date, and one Series B Note in the principal amount of $10,000,000 payable to
The Mutual Life Insurance Company of New York, one Series B Note in the
principal amount of $2,500,000 payable to GIPEN & Co. and one Series B Note in
the principal amount of $2,500,000 payable to MONY Life Insurance Company of
America (or, if either of you shall have so requested prior to the Closing Date,
Series B Notes in the denominations authorized by Section 1.1) dated the Closing
Date, in an aggregate principal amount equal to the aggregate principal amount
of 11.52% Subordinated Notes being surrendered on the Closing Date in exchange
therefor. Each Note shall be payable to the respective Purchaser purchasing such
Note or to such other Person and Persons designated as its nominee. The Company
will pay, on the Closing Date, by wire transfer to the holders of the 11.52%
Subordinated Notes pursuant to the instructions for payment contained in
Schedule I hereto, interest accrued and unpaid to the date of Closing on the
11.52% Subordinated Notes being surrendered.




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         Section 1.4. Use of Proceeds. The purchase price of the Series A Notes
being purchased on the Closing Date shall be paid in cash or in consideration of
the redemption by the Company of the limited partnership interest held by
Mutual.

SECTION 2.        Prepayments.

         Section 2.1. Optional Prepayments. The Company may at its option,
prepay the Series A Notes at any time and may prepay the Series B Notes at any
time on or after June 30, 1993, in whole or in part in a principal amount of
$100,000 or any larger integral multiple of $1,000, at 100% of the principal
amount of the Notes so to be prepaid, plus accrued interest thereon to the date
fixed for such prepayment, without premium in the case of a prepayment of the
Series A Notes and plus a premium equal to the Make-Whole Amount in the case of
a prepayment of the Series B Notes.

         Section 2.2. Prepayment Upon Company's Dissolution. In addition to any
optional prepayments which may be mad pursuant to Section 2.1, if the Company
shall have been dissolved in accordance with the Partnership Agreement, the
Company may during the process of dissolution and termination of the Company
prepay all, but not less than all, of the outstanding Notes at a price equal to
100% of the principal amount of the Notes being prepaid plus interest accrued
thereon to the date of any such prepayment and, with respect to the prepayment
of Series B Notes only, together with a premium equal to the then applicable
Make-Whole Amount.

         Section 2.3. Notice of Prepayment. If the Company shall elect to prepay
any Notes or any portions thereof pursuant to Section 2.1 or 2.2, the Company
shall give notice of such prepayment to each holder of the Notes to be prepaid
not less than 30 or more than 60 days prior to the date fixed for prepayment,
specifying (i) such date, (ii) the principal amount of such Notes to be prepaid
on such date and (iii) the premium, if any, and accrued interest applicable to
the prepayment.

         Section 2.4. Notes Due and Interest Ceases on Prepayment Date. On each
date fixed for prepayment in a notice given pursuant to Section 2.3, there shall
become due and payable, and the Company shall be obligated to prepay, the
principal amount of each Note, or portion thereof to be prepaid, plus interest
accrued on such principal amount, or portion thereof, to the prepayment date,
plus the applicable premium, if any. If any Note is to be prepaid in whole or in
part as provided in Section 2.1 or Section 2.2, then the principal amount of
such Note, or the portion thereof to be prepaid, as the case may be, shall cease
to bear interest on and after the date fixed for such prepayment, provided such
prepayment is duly made or duly provided for. If any Note is to be prepaid in
whole or in




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part as provided in Section 2.1 or Section 2.2 but such prepayment is not duly
made or duly provided for prior to or on the date fixed for such prepayment,
then such Note shall continue to bear interest on any overdue principal amount
of such Note and applicable premium, if any, and, to the extent not prohibited
by applicable law, on any overdue installment of interest thereon at the rate
set forth in Section 1.1.

         Section 2.5. Partial Prepayment Pro Rata. Upon any partial prepayment
of the Notes, the aggregate principal amount of any optional prepayment of the
Notes pursuant to Section 2.1 shall be allocated among the holders of all the
Notes at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts of all the Notes then outstanding and held
by them, with adjustments, to the extent practicable, to equalize for any prior
prepayments not in such proportion. In the event that any prepayment shall be
partly with premium and partly without premium, it shall be treated as two
separate prepayments, and there shall be two separate allocations, each on the
basis as hereinabove provided. For the purposes of this Section 2.5 only, any
Notes repurchased by the Company or Affiliates shall be deemed to be outstanding
and the Company shall be deemed to be the holder thereof, and at any date of an
allocation to be made under this Section 2.5, such repurchased or prepaid Notes
shall be deemed to have been reduced in principal amount by the pro rata portion
of any prepayment theretofore made pursuant to Section 2.1 which would have been
allocated thereto had such Notes not been so repurchased.

         Section 2.6. Surrender of Notes on Prepayment. Subject to Section 3.4,
upon any partial prepayment of a Note, such Note shall, at the option of the
holder thereof, be either (a) surrendered to the Company pursuant to Section
3.1(b) in exchange for a new Note of like tenor, executed by the Company, in a
principal amount equal to the principal amount remaining unpaid on the
surrendered Note, or (b) made available to the Company for notation thereon of
the portion of the principal so prepaid. In case the entire principal amount of
any Note is prepaid, such Note shall be surrendered to the Company for
cancellation and shall not be reissued, and no Note shall be issued in lieu of
the prepaid principal amount of any Note.

SECTION 3.        Registration, Transfer, Exchange and Replacement of Notes.

         Section 3.1. Registrations, Transfer and Exchange of Notes. (a) The
Company shall keep at its office maintained pursuant to Section 7.1 a register
for the registration of the Notes and transfers thereof. The names and addresses
of the holders of the Notes, the transfer thereof and the names and addresses of
the transferees of the Notes shall be registered in the register, transfer of
any Note shall be registered on the aforesaid register




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books unless evidenced by a written instrument of transfer, in form reasonably
satisfactory to the Company, duly executed by the registered owner in person or
by his duly authorized attorney. Subject to Section 3.4, the Company may treat
the Person in whose name any Note is registered as the holder of such Note for
all purposes of this Agreement, and the company shall not be affected by any
notice or knowledge to the contrary.

         (b) Upon surrender of any Note or Notes at its office maintained
pursuant to Section 7.1, the Company, at the request of the holder thereof,
shall execute and, in exchange therefor and upon cancellation thereof, shall
deliver, at the Company's expense (except as provided below in this Section
3.1(b)), a new Note or Notes of the same Series as the Note being surrendered
and in such denominations of not less than $100,000 or any larger integral
multiple of $1,000 as may be requested (except as may be required to reflect
payments of the principal of the Note so surrendered) and in the same aggregate
principal amount as, and dated as of the interest payment date to which interest
has been paid on, or if no interest has yet been so paid, then dated the date
of, the Note or Notes so surrendered. Each such new Note shall be payable to
such Person or Persons as such holder may request. The Company may require
payment of a sum sufficient to cover any stamp tax or Governmental charge
imposed in respect of any transfer.

         Section 3.2. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Note and (a) in the case of loss, theft, or destruction, upon
receipt by the Company of indemnity or security reasonably satisfactory to it
(except that if the holder of such Note is an insurance company or other
institution of recognized responsibility, the holder's own agreement of
indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation,
upon surrender to the Company of such mutilated Note and cancellation thereof,
the Company at its expense shall execute and deliver in lieu thereof of a new
Note of the same Series and of like tenor, in the same unpaid principal amount
as the Note being replaced and dated as of the date to which interest has been
paid on such Note, or, if no interest has yet been so paid, then dated the date
of such Note and registered in the same manner as the Note being replaced.

         Section 3.3. Delivery Expenses. If any Note shall be required to be
presented to the Company pursuant to this Agreement, the Company will pay the
cost of delivering to or from the holder's home office or offices from or to the
Company, insured to the holder's satisfaction, the Note so presented and any
Note issued in substitution or replacement for the Note so presented.





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         Section 3.4. Method and Place of Payment of Principal, Premium and
Interest. Notwithstanding any provision to the contrary in this Agreement or the
Notes, the Company will punctually pay all amounts payable with respect to the
principal of, premium, if any and interest on any Notes held by you, your
nominee or any other institutional holder of recognized responsibility or its
nominee (without any presentment thereof and without any notation of such
payment being made thereon), (a) if specified in Schedule I hereto or by written
notice to the Company, by crediting before 1:00 P.M., New York City time, by
federal funds bank wire transfer, to your or such holders designated bank
account, (b) if payment in the manner provided by the foregoing clause (a) has
not been specified and no other manner of payment has been agreed to pursuant to
the following clause (c), by check drawn upon New York Clearing House funds
payable to the order of such holder duly mailed and addressed to the address
specified with respect to such holder pursuant to Section 11.1 or (c) in such
other manner as may be agreed to in writing by you or such holder and the
Company. Except for payment of the Notes at final maturity, each payment in
respect of the Notes shall be accompanied by a notice addressed to the holder of
the Note with respect to which such payment is being made, referring to this
Agreement and such Note, stating the specific provision or provisions hereof or
thereof under which such payment is being made and setting forth the amount of
such payment attributable to prepayments of principal, interest and premium, if
any.

SECTION 4.        General Representations and Warranties.

         The Company hereby represents and warrants as follows:

         Section 4.1. Financial Statements. The Company has heretofore delivered
to you the balance sheets of the Company as at December 31, 1987, 1988, 1989 and
1990 and statements of operations and cash flows for the fiscal year of the
company ended on such dates, and the reports thereon of BDO Seidman, independent
certified public accountants, and a balance sheet of the Company as of June 30,
1991 and statements of operations and cash flows for the six-month period ended
on June 30, 1991, certified to by the chief financial officer of the Company.
Such financial statements including the related schedules and notes, have been
prepared in accordance with generally accepted accounting principles
consistently applied and, to the best of the Company's knowledge, present fairly
the financial position of the Company as of June 30, 1991 and the results of
operations for the six-month period ended on June 30, 1991, subject to customary
year-end adjustments.





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         Section 4.2. Subsidiaries. The Company has no Subsidiaries other than
Falcon/Capital Cable, a Delaware general partnership.

         Section 4.3. Due Organization and Authority. The Company (a) has been
duly organized as a limited partnership under the Partnership Agreement and is
validly existing under the laws of the State of California, (b) has all
requisite power and authority to own or hold under lease, its properties and
assets, to operate its properties and assets and to conduct its business as
currently conducted and as currently proposed to be conducted, (c) has all
requisite power and authority to execute, deliver and perform this Agreement and
to issue, sell and deliver the Notes to you and (d) has duly qualified to do
business as a foreign entity and its in good standing in each jurisdiction
wherein the character of the properties or assets owned or held under lease by
it or the nature of the business conducted by it makes such qualification
necessary.

         Section 4.4. Pending Litigation. There are no actions, suits,
proceedings, inquiries or investigations pending or, to the best knowledge of
the Company, threatened against or affecting the Company in any court or by or
before any arbitrator or Government or, to the best knowledge of the Company, is
there any basis therefor, which, if adversely determined, might materially
adversely affect the Business Condition of the Company or materially adversely
affect the ability of the Company to perform this Agreement or to pay when due,
in accordance with the terms of the Notes and this Agreement, the principal of,
and premium, if any and interest on, the Notes.

         Section 4.5. Compliance with Contractual Obligations and Requirements
of Law. (a) The Company is not in default in the performance, observance or
fulfillment of any Contractual Obligation, nor does any condition exist or has
any event occurred which constitutes, or, but for any requirement of notice or
lapse of time, or both, would constitute, an event of default by it under any
Contractual Obligation, nor is the Company in breach or violation of, or in
default under, any Requirement of Law, where such defaults in performance,
observance or fulfillment, conditions, events, breaches, violations or defaults,
individually or in the aggregate, might materially adversely affect the Business
Condition of the Company or might materially adversely affect the ability of the
Company to perform this Agreement or to pay when due, in accordance with the
terms of the Notes and this Agreement, the principal of, and premium, if any,
and interest on the Notes.

         (b) Neither the execution and delivery of this Agreement or the Notes,
nor the consummation of the transactions herein or therein contemplated, nor
compliance with the terms, conditions and provisions hereof or thereof, by the
Company:




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                  (i) will conflict with, or result in a breach or violation of,
         or constituted a default under, any Requirement of Law on the part of
         the Company or will conflict with, or result in a breach or violation
         of, or constitute a default in the performance, observance or
         fulfillment of any obligation, covenant or condition contained in, or
         will constitute, or but for any requirement of notice or lapse of time,
         or both, would constitute, an event of default by the Company under,
         any Contractual Obligation; or

                  (ii) will require any filing with, or other action involving,
         any Government Body.

         (c) The Company is not a party to any Contractual Obligation which
materially adversely affects the Business Condition of the Company or materially
adversely affects the Company's ability to perform this Agreement or to pay when
due, in accordance with the terms of the Notes and this Agreement, the principal
of, and premium, if any, and interest on, the Notes. The Company is not party to
any Contractual Obligation which restricts its rights or ability to incur
Indebtedness (other than this Agreement, the Bank Credit Agreement and the
Partnership Agreement).

         Section 4.6. Full Disclosure. Neither the financial statements referred
to in Section 4.1, nor this Agreement nor any certificate, written statement or
other document furnished or to be furnished by or on behalf of the Company to
you in connection with the negotiation of this Agreement or the sales of the
Notes contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements contained
therein or herein not misleading. There heretofore disclosed to you in writing
and which materially adversely affects, or in the future may (so far as the
Company can reasonably foresee) materially adversely affect, the Business
Condition of the Company.

         Section 4.7. Status under Federal Laws and Regulations. The Company
does not own, directly or indirectly, and does not have the present intention of
acquiring or owning in the future, any "margin security" (as such term is
defined in Regulation G of the Board of Governors of the Federal Reserve System
(12 C.F.R., Part 207), as amended). The Company will not use any part of the
proceeds from the sales of the Notes, directly or indirectly, for "purchasing or
carrying" (within the meaning of said Regulation G any such "margin security" or
for reducing or retiring any indebtedness originally incurred for such purpose.
None of the transactions contemplated by this Agreement (including, without
limitation, the direct or indirect use of the proceeds from the sales of the
Notes) will violate or result in a violation of Section 7 of the Securities




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Exchange Act of 1934 or any regulations issued thereunder, including, without
limitation, said Regulation G and Regulation T (12 C.F.R., Part 220), as
amended, and Regulation X (12 C.F.R., Part 224), as amended, of said Board of
Governors.

         Section 4.8. ERISA. (a) As used in this Section 4.8, the terms "accrued
benefits", "employee benefit plans" and "employee pension benefit plan" shall
have the respective meanings assigned to such terms in Section 3 of ERISA; the
term "accumulated funding deficiency" shall have the meaning assigned to such
term in Section 302 of ERISA and Section 412 of the Code; the term "prohibited
transaction" shall have the meaning assigned to such term in Section 4975 of the
Code and Section 406 of ERISA; and the term "reportable event" shall have the
meaning assigned to such term in Section 4043 of ERISA.

         (b) The Company has not, with respect to any employee benefit plan
established or maintained by the Company (the "Plans"), engaged in a prohibited
transaction that could subject the Company to a tax or penalty on prohibited
transactions. No Plan that is subject to Part 3 of Subtitle B of Title I of
ERISA or Section 412 of the Code had an accumulated funding deficiency, whether
or not waived, as the last day of the most recent fiscal year of such Plan
heretofore ended. No liability to the Pension Benefit Guaranty Corporation has
been, or is expected by the Company to be, incurred by the Company with respect
to any Plan other than for premium payments. There has been no reportable event
with respect to any Plan since the effective date of Section 4043 of ERISA not
otherwise disclosed in the notes to the financial statements of the Company for
the year ended December 31, 1990, and since such date no event or condition has
occurred that presents a material risk of termination of any Plan by the Pension
Benefit Guaranty Corporation. In the aggregate, the actuarially determined
present value of all accrued benefits under each Plan that is subject to Part 3
of Subtitle B of Title of ERISA or Section 412 of the Code did not exceed the
current value of assets of such Plans allocable to such benefits as of the most
recent valuation date; in making this determination, if the actuarially
determined present value of all accrued benefits under a Plan was not greater
than the current value of the assets allocable to such benefits, then the values
of that Plan's assets and benefits are not to be considered. The Company has not
contributed to any employee pension benefit plan to which an employer other than
the Company has contributed.

         (c) The execution and delivery of this Agreement, the issuance and sale
by the Company to you of Notes, and the purchase by you hereunder of Notes, will
not involve any prohibited transaction. This representation is made in reliance
upon, and subject to




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the correctness of, the representations made by you in Section 5.2 as to the
source of the funds for the purchase of the Notes to be purchased by you
hereunder.

         Section 4.9. Securities Act. The Company hereby represents that (a)
neither the Company nor any other Person acting on behalf of the Company has,
directly or indirectly, sold or disposed of, or attempted or offered to sell or
dispose of, any of the Notes or any similar securities of the Company to, or
solicited offers to buy any such Notes or similar securities from, or otherwise
approached or negotiated in respect of such Notes or similar securities with,
any Person or Persons other than you and not more than fifteen other
institutional investors, each of whom was offered a portion of the Notes or
similar securities by the Company at private sale for investment; (b) neither
the Company nor any other Person acting on behalf of the Company has offered for
sale or sold any Notes or similar securities of the Company by means of any form
of general solicitation or general advertising whatsoever; and (c) neither the
Company nor any other Person acting on behalf of the Company will hereafter take
any action with respect to the Notes or any similar securities of the Company
which would adversely affect the exemption of the sale of the Notes from the
registration provisions of the Securities Act.

SECTION 5.        Certain Representations and Warranties by the Purchasers.

         Section 5.1. Securities Act. You hereby represent that you are
purchasing the Notes to be purchased by you for your own account for investment
and with no present intention of distributing or reselling such Notes or any
part thereof, subject nevertheless, to any requirements of law that the
disposition thereof by you shall at all times be within your control but, also,
subject to the requirements upon any such disposition of the Securities Act and
the rules and regulations promulgated thereunder.

         Section 5.2. ERISA. You represent that at least one of the following
statements is an accurate representation as to the source of funds to be used by
you to pay the purchase price of the Notes purchased by you hereunder:

         (a) no part of such funds constitutes assets allocated to any separate
account maintained by you in which any employee benefit plan (or its related
trust) has any interest; or

         (b) to the extent that any part of such funds constitutes assets
allocated to any separate account maintained by you, such account is not an
account which may be deemed under ERISA directly or indirectly to constitute and
contain the assets of any employee benefit plan with respect to which the
Company is a party in interest or with




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respect to which the Notes would constitute employer securities (it being
understood that this representation is made by you in reliance upon and subject
to the accuracy of the representation of the Company set forth in Section 4.8 as
to employee benefit plans with respect to which the Company is a party in
interest and with respect to which its securities are (or were) employer
securities).

         As used in this Section 5.2, the terms "employee benefit plan", "party
in interest" and "separate account" shall have the respective meanings assigned
to such terms in Section 3 of ERISA and the term "employer security" shall have
the meaning assigned to such term in Section 416(d)(1) of ERISA.

SECTION 6.        Closing Conditions of the Purchase.

         The obligation of the Purchasers to purchase and pay for the Notes to
be delivered on the Closing Date shall be subject to the satisfaction on the
Closing Date of the following conditions precedent:

         Section 6.1. Opinion of Company Counsel. You shall have received on the
Closing Date from the Company's Counsel, Schiffmacher, Weinstein, Boldt &
Racine, a favorable opinion dated the Closing Date addressed to you,
substantially in the form set forth in Exhibit C hereto.

         Section 6.2. Opinion of Special Company FCC Counsel. You shall have
received on the Closing Date from the Company's special FCC Counsel, Fleischman
and Walsh of Washington, D.C., a favorable opinion dated the Closing Date
addressed to you, substantially in the form set forth in Exhibit D hereto.

         Section 6.3. Representations True. All representations, warranties and
statements by or on behalf of the Company contained in this Agreement or in any
certificate, written statement or document furnished by or on behalf of the
Company to you in connection with the negotiation of this Agreement, the sale of
the Notes or the Company's performance of its obligations hereunder or
thereunder, or otherwise furnished to you in compliance with this Agreement
shall be true in all material respects on and as of the Closing Date with the
same effect as though such representations, warranties and statements had been
made on and as of the Closing Date.

         Section 6.4. No Event of Default. The Company shall not have taken any
action which it would have been prohibited from taking, or omitted or permitted
the omission of any action which it would have been required to take, if the
Notes had been




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outstanding at all times since the date of this Agreement; the Company will not
upon the execution of the Notes to be delivered on the Closing Date be in
default in the performance of any of the covenants and agreements hereunder; and
no Event of Default, or event which after lapse of time would constitute an
Event of Default, shall have occurred and be continuing on the Closing Date.

         Section 6.5. Equity Redemption. The redemption of Mutual's limited
partnership interest in the Company in accordance with the Limited Partnership
Interest Redemption Agreement dated as of October 7, 1991 between the Company
and Mutual shall have been concurrently completed.

         Section 6.6. Payment of Fees. The Company shall have paid the fee
referred to in Section 12.3(a).

         Section 6.7. Proceedings, Instruments, etc. All proceedings to be taken
in connection with the transaction contemplated by this Agreement, and all
documents incidental thereto, shall be reasonably satisfactory in form, scope
and substance to you, and you shall have received copies of all documents which
you may reasonably request in connection with said transactions and copies of
the records of all proceedings of the Company in connection therewith in form,
scope and substance reasonably satisfactory to you.

         Section 6.8. Officers' Certificate. The Company shall have delivered to
you on the Closing Date a certificate or certificates, signed by the general
partner of the Company, to the effect that the facts required to exist by
Section 6.3 and 6.4 exist on the Closing Date.

SECTION 7.        Business Covenants.

         The Company covenants and agrees that so long as any Note shall be
outstanding:

         Section 7.1. Payment of Notes and Maintenance of Office. The Company
will punctually pay or cause to be paid the principal and interest (and premium,
if any) to become due in respect of the Notes according to the terms thereof and
will maintain an office at 474 South Raymond Avenue, Suite 200, Pasadena,
California 91105, or such other place in the United States as it may from time
to time specify by written notice to each holder of a Note given as provided in
Section 12.1, where notices, presentments and demands in respect of this
Agreement or the Notes may be given or made upon it.





                                      -13-
<PAGE>   15
         Section 7.2. Payment of Taxes, Claims, etc. (a) The Company and each of
its Subsidiaries will pay and discharge promptly:

                  (i) all taxes, assessments, fees and other governmental
         charges or levies imposed upon it or upon any of its properties,
         assets, income, profits or franchises before the same shall become
         delinquent; and

                  (ii) all lawful claims of materialmen, mechanics, carriers,
         warehousemen, landlords and other similar Persons for labor, materials,
         supplies and rentals which, if unpaid, might by law become a Lien or
         charge upon its properties or assets;

provided, however, that the Company shall not be required to pay any of the
foregoing if (x) the amount, applicability or validity thereof shall currently
be actively contested by appropriate proceedings (in the opinion of the
Company's counsel in any case involving over $50,000) and in good faith, (y) the
Company shall have made such reserve or other appropriate provision, if any, as
shall be required by generally accepted accounting principles and (z) insofar as
the title of the Company to, and its right to use, any of its properties or
assets may be affected thereby, such effect does not and will not have a
material and adverse effect on the Company.

         (b) The Company will pay and discharge, within the period required by
law, any liability imposed upon it pursuant to Sections 4062, 4063 and 4064 of
ERISA.

         Section 7.3. Maintenance of Properties and Existence. The Company and
each of its Subsidiaries will:

         (a) maintain its existence, rights and franchises, and maintain its
properties and assets (including properties and assets leased by it) in good
condition, reasonable wear and tear excepted, and make all needful and proper
renewals, replacements, additions, betterments and improvements to its
properties and assets (including properties and assets leased by it), to the
extent required (i) in order that the business carried on in connection
therewith may be conducted properly and efficiently at all times and (ii)
pursuant to its CATV Franchises;

         (b) keep adequately insured, by financially sound and reputable
insurers, all of its properties, assets and operations of a character usually
insured by Persons of established reputation engaged in the same or a similar
business similarly situated against loss or damage of the kinds and in amounts
customarily insured against by such Persons,




                                      -14-
<PAGE>   16
and carry, with such insurers, in customary amounts, such other insurance,
including, without limitation, public liability insurance and liability
insurance against claims for libel, slander, defamation, invasion of privacy or
other like injury as a result of its transmissions as is usually carried by
Persons of established reputation engaged in the same or a similar business
similarly situated and to the extent required pursuant to its CATV Franchises;
provided, however, that all such insurance shall be provided in such amounts and
by such methods as shall prevent the Company from becoming a co-insurer within
the terms of the policies in question;

         (c) keep proper books of record and account in which full, true and
correct entries will be made of all its business transactions in accordance with
generally accepted accounting principles;

         (d) make provision for on its books from its earnings for the fiscal
year beginning in 1991 and for each fiscal year thereafter in amounts deemed
adequate in the opinion of the Company, all proper accruals and reserves which,
in accordance with generally accepted accounting principles, should be set aside
from such earnings in connection with its business, including, without
limitation, reserves for depreciation, depletion, obsolescence and amortization
and accruals for taxes, if any, for such period; and

         (e) not be in breach or violation of or in default in the performance,
observance or fulfillment of any material obligation, covenant or condition
contained in any Contractual Obligation, including, without limitation, its CATV
Franchises, and not be in breach or violation of, or in default under, any
Requirement of Law, including, without limitation, any requirement of or under
the Communications Act or the rules, regulations or policies of the Federal
Communications Commission thereunder, to which it is subject, in either case
which breach, violation or default would materially and adversely affect the
Business Condition of the Company;

provided, however, that nothing in subsection (a) above shall prevent the
Company from selling or abandoning or terminating any right, license, permit,
consent, approval, franchise or other authorization if such sale, abandonment,
termination, liquidation or dissolution is, in the opinion of the general
partners of the Company in the best interest of the Company, is not detrimental
to the ability of the Company to pay when due, in accordance with terms of the
Notes, this Agreement, the principal of, and premium, if any, and interest on,
the Notes and is not prohibited by Section 7.8 or any other provisions of, and
would not result in the occurrence of any Event of Default (or any




                                      -15-
<PAGE>   17
event which with lapse of time would constitute an Event of Default) under, this
Agreement.

         Section 7.4. Indebtedness. Neither the Company nor any Subsidiary will
become or remain liable in respect of any indebtedness (other than the
borrowings under this Agreement and the Notes), except the following:

         (a) Indebtedness outstanding under the Bank Credit Agreement in an
aggregate principal amount at any time outstanding not exceeding $125,000,000;

         (b) Indebtedness incurred from time to time under the Bank Credit
Agreement or otherwise to pay all or any part of an installment of interest due
on the Notes, provided, however, that the cumulative amount of such incurrences
do not exceed $2,025,000;

         (c) In addition to the Indebtedness permitted under clause (a) or
clause (b) above, other Indebtedness for Money Borrowed (including Indebtedness
outstanding under the Bank Credit Agreement in excess of that permitted by
clause (a) or clause (b) above), provided, however, that (i) after giving effect
to the incurrence of any such Indebtedness the Company would be in compliance
with all the other covenants of this Agreement and (ii), if such Indebtedness is
secured by a Lien, such Indebtedness is permitted by Section 7.6;

         (d) Unsecured Current Liabilities (not the result of borrowing)
incurred in the ordinary course of business; and

         (e) Contingent liabilities permitted by Section 7.9.

         Section 7.5. Sale of Property. Neither the Company nor any Subsidiary
will sell, exchange, lease or otherwise dispose of any of its Property or enter
into any agreement to do so, except for (i) assets disposed of in the ordinary
course of business, (ii) trades of Cable Systems where the Cash Flow derived
from assets obtained thereby is at least ninety percent (90%) of the Cash Flow
derived from assets disposed of in such trade, (iii) sales of assets for cash
if, within 30 days of the completion of any sale, the cash proceeds of such sale
(net of any taxes or expenses related to such sale) are applied to the payment
of the principal of Senior Debt and (iv) other dispositions of assets as long as
the Cash Flow derived from the assets disposed of by the Company and its
Subsidiaries in any one fiscal year does not exceed an amount equal to five
percent (5%) of the Consolidated Cash Flow for that fiscal year.




                                      -16-
<PAGE>   18
         Section 7.6. Liens. Neither the Company nor any Subsidiary will create,
incur, assume or suffer to exist any Lien against or in any of the Property now
owned or hereafter acquired by it except (a) Liens existing on the date hereof
on Property of the Company securing indebtedness of the Company or on such
Property of any Subsidiary securing indebtedness of such Subsidiary, (b) Liens
in connection with workers' compensation, unemployment insurance or other social
security obligations (which phrase shall not be construed to refer to ERISA),
(c) deposits, pledges or liens to secure the performance of bids, tenders,
letters of credit, contracts (other than contracts for the payment of borrowed
money, as such term is defined in the definition of Funded Debt), leases,
statutory obligations, surety, customs, appeal, performance and payment bonds
and other obligations of like nature arising in the ordinary course of business,
(d) mechanics', workmen's, carriers', warehousemen's, materialmen's, landlords',
or other like Liens arising in the ordinary course of business with respect to
obligations which are not due or which are being contested in good faith and by
appropriate proceedings diligently conducted, (e) Liens in existence on the
Property of any Person at the time such Person becomes a Subsidiary of the
Company or of any Subsidiary by virtue of an investment made by the Company or
such Subsidiary permitted under this Agreement, (f) Liens for taxes,
assessments, fees or governmental charges or levies not delinquent or which are
being contested in good faith and by appropriate proceedings diligently
conducted, and in respect of which adequate reserves shall have been established
in accordance with Generally Accepted Accounting Principles on the books of the
Company or such Subsidiary, (g) Liens or attachments, judgements or awards
against the Company or any Subsidiary with respect to which an appeal or
proceeding for review shall be pending or a stay of execution shall have been
obtained, and which are otherwise being contested in good faith and by
appropriate proceedings diligently conducted, and in respect of which adequate
reserves shall have been established in accordance with Generally Accepted
Accounting Principles on the books of the Company or such Subsidiary, (h)
statutory Liens in favor of lessors arising in connection with Property leased
to the Company or any Subsidiary, (i) easements, rights of way, restrictions,
leases of Property to others, easements for installations of public utilities,
title imperfections and restrictions, zoning ordinances and other similar
encumbrances affecting Property which in the aggregate do not materially impair
its use for the operation of the business of the Company or such Subsidiary, (j)
Liens securing Indebtedness and other obligations of the Company under the Bank
Credit Agreement and Interest Rate Agreements and (k) Liens on Property (other
than stock of a Subsidiary) hereafter acquired by the Company or any Subsidiary
created contemporaneously with such acquisition to secure or provide for the
payment or financing of any part of the purchase price thereof, or the
assumption of any Lien in any such Property hereafter acquired existing at the
time of such acquisition, or the acquisition of any such Property




                                      -17-
<PAGE>   19
subject to any Lien without the assumption thereof, provided that each such Lien
shall attach only to the Property so acquired; provided, however, neither the
Company nor any Subsidiary shall create, incur or assume any Lien permitted
under this Section 7.6 (other than Liens permitted by clause (j) hereof) if the
Indebtedness to be secured by all Liens permitted under this Section 7.6 would
exceed 10% of then outstanding Funded Debt.

         Section 7.7. Restricted Payments. The Company will not, directly or
through any Subsidiary, declare or pay any limited or general partnership
distributions or, except for the redemption of limited partnership interests
described in Section 6.5, apply any of its Property to the voluntary purchase,
redemption or other retirement of, or set apart any sum for the voluntary
payment of any distribution on, or make any other distribution by reduction of
capital or otherwise in respect of, any units of its present or future
partnership interests, issues of common stock, preferred stock, or any other
security convertible into any of the foregoing issued by the Company hereafter
(any of the foregoing being referred to as "Restricted Payments").

         Section 7.8. Mergers, Consolidations and Acquisitions. Neither the
Company nor any Subsidiary will consolidate with or merge into or with or
otherwise be acquired by any Person, except that (i) any Subsidiary may merge
into or be consolidated with the Company and (ii) the Company or any Subsidiary
may acquire any Person or all or substantially all of the Property of any Person
which is engaged in the Cable Business or in a business reasonably related
thereto, provided that in either (i) or (ii) above the Company survives such
consolidation, merger or acquisition.

         Section 7.9. Contingent Liabilities. Neither the Company nor any
Subsidiary will assume, guarantee, indorse, contingently agree to purchase or
otherwise become liable upon the obligation of any Person (other than the
Company or any Subsidiary) except (i) by the indorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (ii) utility bonds, franchise agreement bonds, and pole
agreement bonds entered into in the ordinary course of business and (iii) other
guaranties of Indebtedness to the extent that the aggregate principal amount of
Indebtedness guaranteed under this clause (iii) does not exceed $5,000,000.

         Section 7.10. Sale and Leaseback. Neither the Company nor any
Subsidiary, will directly or indirectly, enter into any arrangement whereby it
shall sell or transfer all or any substantial part of any Property then owned by
it and shall thereupon or within one year thereafter rent or lease the Property
so sold or transferred except any such




                                      -18-
<PAGE>   20
arrangement where the sale of Property would be permitted by the provisions of
Section 7.5(iii).

         Section 7.11. Obligations as Lessee. Neither the Company nor any
Subsidiary will enter into or suffer to exist any arrangement as lessee of
Property for a term in excess of one year (including any renewal terms at the
option of the lessor) if, after giving effect thereto, (a) the aggregate of all
such rental payments (excluding (i) programming and software contracts, and (ii)
any lease permitting cancellation of the option of lessee within 60 days or less
(or, in the case of so-called pole line, conduit duct pedestal or microwave
relay agreements, within twelve months or less) after giving notice of such
cancellation, without payment by the lessee of any penalty or charge other than
the actual costs of restoring the leased property to its former condition or
returning the leased property to the lessor) payable by the Company and its
Subsidiaries for the next four fiscal quarters exceeds 5% of four times the
Company's gross revenues for the preceding three months for which statements
have been provided pursuant to Section 8.1(c) or (b) the aggregate of all such
rental payments under all of such leases for their entire remaining terms exceed
10% of four times the Company's gross revenues for the preceding three months
for which statements have been provided pursuant to Section 8.1(c).

         Section 7.12. Investments, Loans, Etc. Neither the Company nor any
Subsidiary will purchase or otherwise acquire, hold or invest in the stock of,
or any other interest in, any Person other than a Subsidiary, or make any loan
or advance to, or enter into any arrangement for the purpose of providing funds
or credit to or make any other investment, whether by way of capital
contribution or otherwise, in or with any Person other than a Subsidiary (all of
which are sometimes hereinafter referred to as "Investments") or permit any
Subsidiary so to do other than with respect to the Company or another Subsidiary
except:

                  (a) Investments in short-term certificates of deposit with the
Banks up to $2,000,000 in the aggregate;

                  (b) Investments in direct obligations of the United States of
America and agencies thereof and in commercial paper carrying the highest rating
by a nationally recognized rating bureau;

                  (c) Investments in Falcon/Capital Cable, a Delaware general
partnership, in an aggregate amount not exceeding $1,260,000; and

                  (d) Other Investments as long as (i) such Investments are
non-recourse to the Company and its Subsidiaries, (ii) 90% of the Investments
under this clause (d) are




                                      -19-
<PAGE>   21
in the Cable Business or directly related businesses, and (iii) outstanding
aggregate Investments under this clause (d) do not exceed $1,000,000.

         Section 7.13. Stock of Subsidiaries. Neither the Company nor any
Subsidiary will sell or otherwise dispose of any shares of capital stock (or any
options, rights or warrants to purchase capital stock or other Securities
exchangeable for or convertible into capital stock) of any Subsidiary (such
capital stock, options, rights, warrants and other Securities being herein
called "Subsidiary Stock") or permit any Subsidiary to issue any additional
shares of its capital stock (such Subsidiary whose Subsidiary Stock is being
disposed of or which is issuing Subsidiary Stock being herein called the
"Subject Subsidiary") except

         (a)      issuances of directors' qualifying shares;

         (b) sales and issuances of Subsidiary Stock if, immediately after
giving effect to such sale or issuance, the Company and its other Subsidiaries
would own of each class of Subsidiary Stock of the Subject Subsidiary a
percentage thereof which is not less than the percentage of outstanding shares
of common stock of the Subject Subsidiary owned by them immediately prior to
such sale or issuance; and

         (c) sales for cash of the entire Investment owned by the Company and
its Subsidiaries in a Subject Subsidiary, provided, that within 30 days of the
completion of such sale the proceeds of such sale (net of any taxes or expenses
related to such sale) are applied to the payment of the principal of Senior
Debt; and

         (d) dispositions and issuance of Subsidiary Stock in connection with a
merger or consolidation of any Subsidiary into or with a wholly-owned
Subsidiary.

         Section 7.14. Management Fees. Neither the Company nor any Subsidiary
will accrue or pay any management or similar fee to any Person other than the
Company or a Subsidiary; provided, however, that (i) the Company may pay on or
within ten days of the Closing Date not exceeding $1,350,000 of management fees
which were previously accrued and the payment thereof deferred and (ii), in
addition to the amounts permitted by clause (i), management fees for services
provided by Persons other than the Company or a Subsidiary may be accrued and
paid so long as (a) the total of such fees accrued in any fiscal year does not
exceed 5% of the Company's gross revenues after such revenues are reduced by
actual bad debt expense, (b) such fees are paid no more frequently than monthly
and (c) at the time of payment of any such fee, no Event of Default exists.





                                      -20-
<PAGE>   22
         Section 7.15. Pro Forma Debt Service Coverage. The ratio of (a)
Annualized Cash Flow calculated with Pro Forma Adjustments to (b) Consolidated
Debt Service for the immediately preceding period of four consecutive fiscal
quarters shall not at any time be less than (i) from October 1, 1991 to and
including December 31, 1992, 1 to 1, and (ii) from January 1, 1993 and
thereafter, 1.2 to 1.

         Section 7.16. Funded Debt to Cash Flow. The ratio of Consolidated
Funded Debt to Consolidated Annualized Cash Flow calculated with Pro Forma
Adjustments shall not at any time be greater than (i) from October 1, 1991 to
and including December 31, 1992, 8.5 to 1, (ii) from January 1, 1993 to and
including June 30, 1993, 8.0 to 1, (iii) from July 1, 1993 to and including
December 31, 1993, 7.5 to 1, (iv) from January 1, 1994 to and including June 30,
1994, 7.0 to 1, (v) from July 1, 1994 to and including December 31, 1995, 6.5 to
1 and (vi) from January 1, 1996 and thereafter, 6.0 to 1.

         Section 7.17. Transactions with Affiliates. Neither the Company nor any
Subsidiary will enter into any transaction with any Person controlled by or
under common control with the Company on any terms more favorable to such
affiliate than those that would be obtained in an arm's length transaction,
except as expressly permitted by the Partnership Agreement.

         Section 7.18. Defeasance. The Company will not extinguish for any
purpose any Indebtedness, including the Notes, by means of "in-substance
defeasance" in accordance with Statement of Financial Accounting Standards
Number 76 (November 1983) issued by the Financial Accounting Standards Board, or
by any other mens, except by direct and full payment to the creditor or as a
result of the legal release of liability by such creditor.

SECTION 8.        Reports.

         Section 8.1. Financial Statements. The Company will deliver to each
holder of a Note:

         (a) as soon as practicable after the end of each of the first three
quarters in each fiscal year of the Company, and in any event within 60 days
thereafter, duplicate copies of:

                  (i) the consolidated and consolidating balance sheet of the
         Company and its Subsidiaries as of the end of quarter, and





                                      -21-
<PAGE>   23
                  (ii) the consolidated and consolidating statements of
         operations, partners' equity and cash flows for such quarter and the
         portion of the fiscal year ending with such quarter of the Company and
         its Subsidiaries, setting forth in comparative form the figures for the
         corresponding periods (commencing after June 30, 1990) one year
         earlier,

all in reasonable detail and certified in a Company Certificate as having been
prepared in accordance with generally accepted accounting principles
consistently applied (without footnotes) during such periods and as being
complete and correct in all material respects, subject to changes resulting from
normal year-end audit adjustments;

         (b) as soon as practicable after the end of each fiscal year of the
Company, and in any event within 120 days thereafter, duplicate copies of

                  (i) the consolidated and consolidating balance sheet of the
         Company and its Subsidiaries as of the end of such year of the Company,
         and

                  (ii) the consolidated and consolidating statements of
         operations, partners' equity and cash flows, for such year, of the
         Company and its Subsidiaries, setting forth in each case in comparative
         form the figures for the previous fiscal year (in the case of such
         years commencing after December 31, 1991),

all in reasonable detail and (A) in the case of all such balance sheets and
statements, certified by, and accompanied by the report of a Firm of Certified
Public Accountants, and (B) in the case of all such balance sheets and
statements, certified in a Company Certificate as having been prepared in
accordance with generally accepted accounting principles consistently applied
during such periods and as being complete and correct in all material respects;

         (c) as soon as available, but in any event within 60 days of the close
of each month, duplicate copies of the consolidating statement of operations for
the Company and its Subsidiaries for such month, and statements of profit and
loss for each of the Company's regions and a statement of Annualized Cash Flow
as at the end of such month, certified in a Company Certificate as prepared in
accordance with generally accepted accounting principles consistently applied
and as being complete and correct in all material respects, subject to changes
resulting from normal year-end audit adjustments;





                                      -22-
<PAGE>   24
         (d) as soon as practicable after the end of each fiscal year of the
Company, and in any event within 120 days thereafter, duplicate copies of all
opinions of accountants and outside counsel required by Section 7.2;

         (e) promptly upon receipt thereof, one copy of each other report
(including the auditors' comment letter to management) submitted to the Company
by any certified public accountants in connection with any annual, interim or
special audit made by them of the books of the Company;

         (f) promptly upon becoming available, one copy of each financial
statement, report, notice or other document sent by the Company to other
institutional investors in the Company, and of any regular or periodic report
and any registration statement or prospectus filed by the Company with any
securities exchange or with the Securities and Exchange Commission or any
successor agency;

         (g) promptly after filing thereof with the Secretary of Labor, the
Pension Benefit Guaranty Corporation or the Internal Revenue Service, copies of
each annual report which is filed with respect to each Plan for each plan year;

         (h) forthwith upon the Company's obtaining knowledge thereof, a Company
Certificate containing a written notice of revocation or suspension of any
Federal Communications Commission operating authorization or franchise to
operate a Cable System held by the Company, together with a description of such
license, franchise or authorization, the circumstances surrounding such
revocation or, suspension, and the action of the Company proposes to take under
the circumstances; and

         (i) forthwith upon request, such other data and information as to the
Business Condition of the Company or the legal capacity of the Company to
perform this Agreement or to pay when due, in accordance with the terms of the
Notes, as at any time and from time to time may be reasonably required by any
holder of a Note.

         Recipients of any financial statements or reports or documents
delivered by the Company pursuant to this Section 8.1 may furnish such
statements, reports and documents to any regulatory authority having or claiming
to have jurisdiction over them and to the National Association of Insurance
Commissioners, and to such other Persons as they in their discretion may deem
appropriate other than, without the Company's prior consent which shall not be
unreasonably withheld, any Person whose business activities involve in a
significant degree the investment in, or the ownership of, or the operation of,
Cable Systems, and any agent of such Person. The Company agrees to furnish each




                                      -23-
<PAGE>   25
holder of a Note additional copies of the materials referred to in this Section
8.1 upon its request.

         Section 8.2. Company Certificate. Each set of financial statements
delivered to each holder of a Note pursuant to Section 8.1(a) or (b) will be
accompanied by (1) a statement setting forth the number of Basic Subscribers,
and number of Pay Units as of the end of the month or year in question and (2) a
Company Certificate stating whether there exists on the date of the certificate,
or occurred during said most recent period, any condition or event which
constituted or then constitutes, or which after lapse of time would constitute,
an Event of Default, and, if any such condition or event existed or then exists,
certifying as to the nature and period of existence thereof and the action taken
and proposed to be taken with respect thereto. Each set of financial statements
delivered to each holder of Notes pursuant to Section 8.1(a) as at the end of
the third, sixth and ninth months in each fiscal year of the Company or pursuant
to Section 8.1(b) will be accompanied by a Company Certificate certifying as to
the information (including relevant detailed calculations) required in order to
establish whether the Company was in compliance with the requirements of
Sections 7.5, 7.14, 7.15 and 7.16 (and in the case of the Company Certificate
accompanying the financial statements delivered pursuant to Section 8.1(b), the
requirements of Sections 7.3(b) and 7.11) during the most recent period covered
by the statements of operations then being furnished.

         Section 8.3. Accountants' Certificate. Each set of financial statements
delivered to any holder of a Note pursuant to Section 8.1(b) will be accompanied
by a report of a Firm of Certified Public Accountants, to the effect that, in
making their examination necessary to express an opinion on such financial
statements, such accountants obtained no knowledge of any condition or event
which constituted or then constitutes, or which after lapse of time would
constitute, an Event of Default of a nature possible to ascertain from the
financial statements of the Company or the records, documents and transactions
reviewed in connection with their audit, and, if any such condition or event
existed or then exists, specifying the nature and period of existence thereof.

         Section 8.4. ERISA Notices. The Company will deliver to each holder of
a Note, immediately upon the occurrence of any of the following, a copy of any
notices or other documents received by the Company with respect thereto, and a
written statement of a general partner of the Company describing the event
requiring such notice and the action taken and proposed to be taken by the
Company with respect thereto: (a) commencement of proceedings to terminate, or
to have a trustee appointed to administer, any Plan, (b) a reportable event with
respect to any Plan (including




                                      -24-
<PAGE>   26
termination thereof), (c) receipt by the Company of notice that a Plan that is a
multiemployer plan is in reorganization, or (d) a complete withdrawal or partial
withdrawal, within the meaning of Section 4203 or 4205, as the case may be, of
ERISA, by the Company from any multiemployer plan. As used in this Section 8.4,
the term "multiemployer plan" shall have the meaning assigned to it by Section
4001 of ERISA, and the term "reportable event" shall have the meaning assigned
to it by Section 4043 of ERISA.

         Section 8.5. Inspection. The Company will permit the representatives of
each holder of a Note, at such holder's expense (except as set forth below), to
visit and inspect any of the properties of the Company or any Subsidiary, to
examine all their respective books of account, records, reports and other papers
(and make copies and take extracts therefrom), and to discuss their respective
affairs, finances and accounts with their respective employees, officers and
independent public accountants (all of whom are hereby authorized to discuss
such affairs, finances and accounts with such representatives), all at such
reasonable times and as often as may be reasonably requested. The costs and
expenses of the Company's or such Subsidiary's employees, officers, accountants
and counsel incurred in connection with any such visit, inspection, examination
or discussion, and all costs and expenses incurred by the holders of Notes in
connection with any such visits, inspections, examinations and discussions that
take place during the existence of an Event of Default, shall be borne by the
Company and not by the holders of the Notes.

SECTION 9.        Events of Default.

         Section 9.1. Nature of Events. Each of the following conditions or
events shall constitute an "Event of Default" hereunder (whether or not such
condition or event shall be voluntary or involuntary, or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
governmental or public authority or agency):

         (a) any payment or prepayment of principal of, or any payment of
premium, if any, on, any Note is not made on or before the date such payment or
prepayment is due;

         (b) any payment of interest on any Note is not made on or before the
date such payment is due and such nonpayment continue for 5 days (unless the due
date on which such nonpayment occurs represents the fifth due date that any
payment of interest on any Note is any made when due, in which event, and
thereafter, an Event of Default under this




                                      -25-
<PAGE>   27
paragraph (b) shall arise if any payment of interest on any Note is not made on
or before the date such payment is due);

         (c) the Company fails to perform or observe any covenant or condition
contained in Section 2.2, or in Section 7;

         (d) the Company fails to comply with any other provision of this
Agreement or the Notes not referred to in clauses (a), (b) and (c) above, and
such failure continues for 30 days after notice thereof has been given to the
Company by the holder of any Note;

         (e) any representation, warranty or statement by the Company contained
in this Agreement or in any certificate, written statement or other document
furnished in connection with the negotiation of this Agreement or the sales of
the Notes, or otherwise in connection with or pursuant to this Agreement is
false or misleading in any respect material to the Business Condition of the
Company;

         (f) any CATV Franchise or CATV Franchises which produced in the
aggregate in excess of 20% of the gross revenues of the Company for the
immediately preceding fiscal year, or which accounted in the aggregate for more
than 20% of the total basic subscribers of the Company, is or are terminated or
suspended, or is or are not renewed at the expiration thereof, or is or are
voluntarily or involuntarily sold or otherwise transferred to another Person,
except as permitted by Section 7.8 (such aggregates and percentages to be
calculated by totaling the aggregates and percentages calculated each time a
termination, suspension, non-renewal, voluntary or involuntary sale or other
transfer of any such license or franchise occurs);

         (g) (i) any default shall occur in any payment when due constituting
the final or only installment of the principal (x) in respect of Indebtedness
for Money Borrowed or Security of the Company (other than the Notes) and/or a
Subsidiary in an aggregate principal amount of $1,000,000 or more, or (y) under
any agreement or agreements securing or relating to any of such Indebtedness for
Money Borrowed or Security, or (ii) any other event shall occur or any other
condition shall exist in respect of Indebtedness for Money Borrowed, which
causes, or results in any holder of such Indebtedness for Money Borrowed or any
trustee causing, the acceleration of the maturity of such Indebtedness for Money
Borrowed or Security;

         (h) any default or other event occurs or any condition exists under any
lease entered into by the Company which provides for payment of Rentals for and
during the unexpired term thereof (including renewal terms, but only if at the
sole option of the




                                      -26-
<PAGE>   28
lessor) in an aggregate amount exceeding $500,000, and the effect of such
default, event or condition is to cause the lessor under such lease to terminate
such lease or the rights of possession thereunder of the Company or to
accelerate the maturity of unaccrued Rentals thereunder;

         (i) a final judgment or judgments for the payment of money aggregating
in excess of $500,000 is or are outstanding against the Company and any one of
such judgments remains undischarged and unstayed for a period of 60 days from
the date of its entry;

         (j) the Company or any Subsidiary shall (i) be adjudicated, insolvent
or bankrupt, or cease, be unable, or admit in writing its inability, to pay its
debts as they mature, or make a general assignment for the benefit of, or enter
into any composition or arrangement with, creditors or take any corporate action
to authorize any of the foregoing; (ii) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its Property, or consent to any such relief or to the appointment of or taking
possession by any such official in an involuntarily case or other proceeding
commenced against it, or take any corporate action to authorize any of the
foregoing; (iii) be subject to an involuntary case or other proceeding commenced
against it seeking liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its Property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or (iv) permit or suffer all
or any substantial part of its Property to be sequestered or attached by court
order and such order shall remain undismissed for 60 days; or

         (k) any event shall occur or any condition shall exist relating to any
employee benefit plan which could reasonably be expected to subject the Company
or any Subsidiary under ERISA or the Internal Revenue Code of 1986, as amended,
or any successor legislation to any tax, penalty or other liabilities which
would in the aggregate, have a material effect on the business, assets or
liabilities, financial condition, results of operations or business prospects of
the Company or of the Company and its Subsidiaries taken as a whole, or on the
ability of the Company to perform its obligations hereunder and under the Notes.





                                      -27-
<PAGE>   29
         Section 9.2. Default Remedies. (i) Upon the occurrence of any Event of
Default described in Section 9.1(j) the unpaid principal amount of all Notes,
together with the interest accrued thereon shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company or (ii) upon the occurrence of any other Event of Default, the holder or
holders of at least 50% of the unpaid principal amount of the Notes at the time
outstanding may, by written notice delivered to the Company and, so long as any
Senior Debt shall be outstanding under the Bank Credit Agreement, to the Agent
(as defined in the Bank Credit Agreement) declare the unpaid principal amount of
all Notes to be, and the same shall forthwith become, on a date which is thirty
days after the receipt of such notice by the Company and such Agent, due and
payable, together with accrued interest thereon, and together with an amount
equal to the Make-Whole Amount, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company.

         No course of dealing on the part of any holder of a Note or any delay
or failure on the part of any holder of a Note to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. Without limiting the generality of Section 12.3, if the
Company fails to pay when due the principal of or premium, if any, or interest
on any Note, or otherwise to comply with this Agreement, the Company will pay
the holder of such Note, to the extent permitted by law, such further amount as
shall be sufficient to cover the cost and expenses, including but not limited to
reasonable attorneys' fees, of collecting any sums due on such Note or otherwise
enforcing any of the holder's rights.

         If, at any time after the principal of and interest accrued on any Note
is declared due and payable, and before a judgment or decree for a payment of
the money due has been obtained or an event described in Section 9.1(j) has
occurred, (a) the Company has paid (i) all overdue installments of interest on
all the Notes, (ii) the principal of and premium, if any, on any Notes which
have become due otherwise than by such declaration, and (iii) interest on such
overdue principal and premium and (to the extent permitted by applicable law) on
any overdue installments of interest at the rate of 12.56% per annum, and (b)
all Events of Default, other than nonpayment of amounts which have become due
solely by such declaration, have been cured or waived as provided in Section
12.2, such declaration and its consequences shall be deemed annulled and
rescinded. No such rescission and annulment shall affect any subsequent
declaration or impair any right consequent thereon.





                                      -28-
<PAGE>   30
         Section 9.3. Notice of Default. If any one or more Events of Default
shall occur, or if any one or more events which with lapse of time would become
one or more Events of Default shall occur, or if the holder of any Note or of
any other evidence of Indebtedness or other security of the Company or the
lessor under any lease referred to in Section 9.1(h) or the issuer or grantor of
any license or authorization referred to in Section 9.1(f) shall give any notice
or take any other action with respect to a claimed default, the Company will
forthwith give written notice thereof to all holders of Notes then outstanding
describing such Event of Default, event, notice or action and the nature of the
Event of Default, event or claimed default, and specifying what action the
Company is taking and proposes to take with respect thereto.

SECTION 10.       Subordination of the Notes

         Section 10.1. General. The Notes and all other obligations of the
Company hereunder ("Subordinated Debt") shall be subordinate and junior in right
of payment to all Senior Debt (as defined in Section 10.2), to the extent and in
the manner provided in this Section 10.

         Section 10.2. Senior Debt. As used in this Section 10, the term "Senior
Debt" shall mean all principal of and premium, if any, and interest (including,
without limitation, any interest accruing subsequent to the commencement of any
bankruptcy, insolvency, reorganization or other similar judicial proceeding with
respect to the Company whether or not such interest constitutes an allowed claim
in such proceeding) on, and all fees and other amounts owing under, (a) the
notes issued and outstanding under the Bank Credit Agreement and (b) all other
indebtedness of the Company in respect of borrowed money unless, under the
instrument evidencing the same or under which the same is outstanding, it is
expressly provided that such indebtedness is junior and subordinate to other
indebtedness and obligations of the Company. The Senior Debt shall continue to
be Senior Debt and entitled to the benefits of these subordination provisions
irrespective of any amendment, modification or waiver of any term of the Senior
Debt or extension or renewal of the Senior Debt.

         Section 10.3. Default in Respect of Senior Debt. (a) In the event the
Company shall default in the payment of any principal of, or premium, if any, or
interest on any Senior Debt when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise, then,
unless and until such default shall have been remedied or waived in writing or
shall have ceased to exist, no direct or indirect payment (in cash, property or
securities or by set-off or otherwise) shall be made or agreed to be made on
account of the Subordinated Debt, or as a sinking fund for




                                      -29-
<PAGE>   31
Subordinated Debt, or in respect of any redemption, retirement, purchase or
other acquisition of any Subordinated Debt.

         (b) Upon the happening of an event of default or any event or condition
which with the passage of time or notice or both would constitute an event of
default with respect to any Senior Debt, as defined therein or in the instrument
under which the same is outstanding, permitting the holders thereof to
accelerate the maturity thereof (other than under circumstances when the terms
of Section 10.3(a) are applicable), then, unless and until such event of default
shall have been remedied or waived in writing or shall have ceased to exist
(unless, prior thereto, a proceeding of the type referred to in Section
10.3(b)(ii) shall have been commenced), no direct or indirect payment (in cash,
property or securities or by setoff or otherwise) shall be made or agreed to be
made on account of the Subordinated Debt, or as a sinking fund for the
Subordinated Debt, or in respect of any redemption, retirement, purchase or
other acquisition of any Subordinated Debt, during any period

                  (i) if 120 days after written notice of such default or such
         event or condition shall have been given to the Company by any holder
         of Senior Debt, provided that only two notices shall be given pursuant
         to the terms of this Section 10.3(b)(i) in any 12 consecutive calendar
         months on behalf of any class of Senior Debt; or

                  (ii) in which any judicial proceeding shall be pending in
         respect of such default and a notice of acceleration of the maturity of
         such Senior Debt shall have been transmitted to the Company in respect
         of such default.

         Section 10.4.     Insolvency, etc.  In the event of

                  (i) any insolvency, bankruptcy, receivership, liquidation,
         reorganization, readjustment, composition or other similar proceeding
         relating to the Company, its creditors as such or its property,

                  (ii) any proceeding for the liquidation, dissolution or other
         winding-up of the Company, voluntary or involuntary, whether or not
         involving insolvency or bankruptcy proceedings,

                  (iii) any assignment by the Company for the benefit of
         creditors, or

                  (iv) any other marshaling of the assets of the Company.




                                      -30-
<PAGE>   32
         all Senior Debt shall first be paid in full in money or money's worth
         before any payment or distribution, whether in cash, securities or
         other property, shall be made to any holder of Subordinated Debt on
         account of any Subordinated Debt. Any payment or distribution, whether
         in cash, securities or other property (other than securities of the
         Company or any other corporation (if such corporation assumes all
         Senior Debt at the time outstanding) provided for by a plan or
         reorganization or readjustment the payment of which is subordinate, at
         least to the extent provided in this Section 10 with respect to the
         Subordinated Debt, to the payment of all Senior Debt at the time
         outstanding and to any securities issued in respect thereof under any
         such plan of reorganization or readjustment), which would otherwise
         (but for these subordination provisions) be payable or deliverable in
         respect of Subordinated Debt shall be paid or delivered directly to the
         holders of Senior Debt in accordance with priorities then existing
         among such holders until all Senior Debt shall have been paid in full
         in money or money's worth.

         Section 10.5. Payment and Distributions Received. If any payment or
distribution of any character or any security, whether in cash, securities or
other property (other than securities of the Company or any other corporation
(if such corporation assumes all Senior Debt at the time outstanding) provided
for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Section 10 with respect to
Subordinated Debt, to the payment of Senior Debt at the time outstanding and to
any securities issued in respect thereof under any plan of reorganization or
readjustment), shall be received by any holder of any Subordinated Debt in
contravention of any of the terms hereof and before all the Senior Debt shall
have been paid in full in money or money's worth, such payment or distribution
or security shall be received in trust for the benefit of, and shall be paid or
delivered and transferred to, the holders of the Senior Debt at the time
outstanding in accordance with the priorities then existing among such holders
for application to the payment of all Senior Debt remaining unpaid, to the
extent necessary to pay all such Senior Debt in full. In the event of failure of
any holder of any Subordinated Debt to endorse or assign any such payment,
distribution or security, each holder of Senior Debt is hereby irrevocably
authorized to endorse or assign the same.

         Section 10.6. No Prejudice or Impairment. No present or future holder
of any Senior Debt shall be prejudiced in the right to enforce subordination of
the Subordinated Debt by any act or failure to act on the part of the Company or
the holders of Subordinated Debt. Nothing contained herein shall impair, as
between the Company and the holder of any Subordinated Debt, the obligation of
the Company to pay to the holder




                                      -31-
<PAGE>   33
thereof the principal thereof and interest thereon as and when the same shall
become due and payable in accordance with the terms thereof, or prevent the
holder of any Subordinated Debt from exercising all rights, powers and remedies
otherwise permitted by applicable law or hereunder upon a default or Event of
Default hereunder, all subject to the rights of the holders of the Senior Debt
to receive cash, securities or other property otherwise payable or deliverable
to the holders of Subordinated Debt.

         Section 10.7. Payment of Senior Debt, Subrogation, etc. Upon the
payment in full in money or money's worth of all Senior Debt, the holders of
Subordinated Debt shall be subrogated to all rights of any holders of Senior
Debt to receive any further payments or distributions applicable to the Senior
Debt until the Subordinated Debt shall have been paid in full, and, for the
purposes of such subrogation, no payment or distribution received by the holders
of Senior Debt of cash, securities, or other property to which the holders of
Subordinated Debt would have been entitled except for this Section 10 shall, as
between the Company and its creditors other than the holders of Senior Debt, on
the one hand, and the holders of Subordinated Debt, on the other, be deemed to
be a payment or distribution by the Company on account of Senior Debt.

SECTION 11.       Interpretation of Agreement and Notes.

         Section 11.1. Definitions. For all purposes of this Agreement and the
Notes, the following definitions shall apply unless the context shall otherwise
require:

         "Affiliate" means a Person (a) which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common control
with, the Company, or (b) which beneficially owns or holds 5% or more of equity
interests in any general partner or in any Person controlling a general partner,
or (c) 5% or more of any partnership interest or class of voting securities of
which is beneficially owned or held of record by the Company, the general
partners or any Person who controls any of the general partners. The term
"control" (including the terms "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.

         "Agreement" means this Note Purchase Agreement (including the annexed
Schedules and Exhibits), as originally accepted by you, and as it may from time
to time hereafter be amended, supplemented or modified, or its terms waived, in
accordance with its terms.





                                      -32-
<PAGE>   34
         "Annualized Cash Flow" means the Consolidated Cash Flow of the Company
and its Subsidiaries for the most recent three month period for which statements
have been supplied pursuant to Section 8.1(c) times four.

         "Bank Credit Agreement" means the Amended and Restated Revolving Credit
and Term Loan Agreement dated as of November 12, 1991, among the Company, the
banks signatory thereto as lenders and The Toronto-Dominion Bank Trust Company,
as agent, as further amended, supplemented or otherwise modified from time to
time, including any amendment, supplement, or modification to effect the
refunding or refinancing of the indebtedness outstanding thereunder.

         "Board of Directors" means, with respect to any corporation, the board
of directors or other governing body thereof.

         "Business Day" means any day on which the Banks are open to the public
for the transaction of their normal banking business in New York, San Francisco,
and Chicago.

         "Business Condition" means, with respect to any Person, such Person's
business, operations, properties, earnings, reasonably foreseeable prospects, or
financial condition.

         "Cable Business" means the business of owning and operating a Cable
System or Systems.

         "Cable System" means all related licenses, franchises and permits
issued under federal, state or local laws from time to time which authorize a
Person to receive or distribute, or both, by cable, satellite or other
technology, audio and visual signals within a geographical area for the purpose
of providing entertainment or other services, together with all agreements with
public utilities and microwave transmission companies, pole attachment, use,
access or rental agreements, utility easements and all other Property owned or
used in connection with the entertainment and services provided pursuant to,
said licenses, franchises and permits.

         "Cash Flow" shall mean the sum of the (i) net income (other than gains
and losses and the taxes associated therewith arising from sales of Cable
Systems), plus (ii) the amount of interest expense, non-cash charges in respect
of depreciation, amortization, and deferred taxes, other non-cash charges and
management fees.





                                      -33-
<PAGE>   35
         "CATV Franchise" means a franchise or other license issued by a
Governmental Body which grants to the Company permission to operate a Cable
System within a particular geographic area.

         "Closing Date" has the meaning set forth in Section 1.3.

         "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder, as from time to time in effect.

         "Communications Act" means the Communications Act of 1934, as amended,
and the rules and regulations thereunder, as from time to time in effect.

         "Company" has the meaning set forth in the first paragraph of this
instrument.

         "Company Certificate" means a certificate executed and delivered on
behalf of the Company by one of the general partners of the Company or, if there
be a chief operating officer or chief financial officer of the Company, by such
chief operating officer or chief financial officer.

         "Consolidated" means the Company and its Subsidiaries taken as a whole.

         "Consolidating" means the Company and its Subsidiaries taken
separately.

         "Contractual Obligations" means any obligation, covenant or condition
contained in any evidence of Indebtedness or any agreement or instrument under
or pursuant to which such evidence of Indebtedness has been issued or created,
or any other agreement or instrument to which the Company is a party or by which
the Company or any of its properties or assets are bound.

         "Current Liabilities" means (i) all Indebtedness payable on demand or
maturing within one year from the date such Indebtedness is incurred and which
is not renewable or extendable at the option of the debtor to a date more than
one year from the date such indebtedness is incurred and (ii) all other items
(including taxes accrued as estimated) which in accordance with Generally
Accepted Accounting Principles are included as current liabilities; provided
that Current Liabilities shall not include (x) any serial maturities, mandatory
prepayments or sinking fund payments in respect of Indebtedness which has a
final maturity more than one year from the date such Indebtedness is incurred or
is renewable or extendable at the option of the debtor to a date more than one
year from the date such Indebtedness is incurred or (y) payments received from
subscribers as




                                      -34-
<PAGE>   36
deposits or prepayments of charges for service in advance of such service being
fully rendered.

         "Debt Service" means, in respect of any period, all payments of
interest and fees on Funded Debt which are payable in cash or in Indebtedness of
the Company constituting Senior Debt and which, whether or not paid during such
period, have accrued during such period. Where any item of interest varies or
depends upon a floating rate of interest, such rate, for purposes of calculating
Debt Service, shall be computed on the basis of the interest rate in effect at
the time of determination of Debt Service.

         "Deferred Interest" has the meaning set forth in Section 1.2.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations issued thereunder, as from time to time
in effect.

         "Event of Default" means one of the Events of Default enumerated in
Section 9.1.

         "Firm of Certified Public Accountants" means BDO Seidman or any one of
Ernst & Young, Coopers & Lybrand, Arthur Anderson & Co., Deloitte & Touche, KPMG
Peat Marwick or Price, Waterhouse & Co. (and any other firm of certified public
accountants of nationally recognized stature and responsibility which is
satisfactory to the holders of 66 2/3% in aggregate unpaid principal amount of
the Notes outstanding), if and so long as any such firm is independent with
respect to the Person or Persons whose financial statements are being examined
by it in accordance with the Agreement.

         "Funded Debt" means with respect to any Person (i) all Indebtedness for
Money Borrowed of such Person as reflected on a balance sheet of such Person,
but including, whether or not reflected on such balance sheet, the full amount
of potential reimbursement obligations with respect to letters of credit and
purchase money notes payable to sellers of Cable Systems, which matures one year
or more from the date of the creation thereof or is directly or indirectly
renewable or extendable, at the option of the debtor, by its terms or by the
terms of any instrument or agreement relating thereto, to a date one year or
more from the date of the creation thereof, or arises under a revolving credit
or similar agreement obligating the lender or lenders thereunder to extend
credit over a period of one year or more, and excluding, however characterized,
Indebtedness in respect of utility bonds, franchise agreement bonds and pole
agreement bonds and in respect of deferred revenue from initial installments in
customer premises in excess of the direct selling costs of such installations,
plus (ii) all guarantees, to the extent not otherwise included in (i) above, of
the Indebtedness of other Persons of the type which, if




                                      -35-
<PAGE>   37
a primary obligation of the first named Person, would be included within Funded
Debt of such first named Person under (i) above. Guarantees are to be included
in the calculation of Funded Debt as though the Person thereby secondarily
obligated was obligated to perform under the payments schedule of the underlying
Indebtedness.

         "General Partner" means Falcon Telecable Investors Group, a California
limited partnership or any successor thereto as a general partner of the Company
or any additions as a general partner of the Company, in each case as are, or as
are required to be, named as a general partner of the Company in its Certificate
of Limited Partnership, as amended.

         "Generally Accepted Accounting Principles" means generally accepted
accounting principles as from time to time in effect, which shall include the
official interpretations thereof by the Financial Accounting Standards Board and
in the Statement of Position of the American Institute of Certified Public
Accountants entitled "Accounting for Cable Television Companies," consistently
applied.

         "Governmental Body" means any court or any federal, state, municipal or
other department, commission, board, bureau, agency, public authority,
instrumentality or any arbitrator.

         "Indebtedness" means all items (other than partners' equity and
deferred credits arising from acquisition of any Subsidiary and all items in
respect of minority interests in Subsidiaries), which in accordance with
Generally Accepted Accounting Principles would be included in determining total
liabilities as shown on the liability side of a balance sheet as at the date on
which Indebtedness is to be determined. Indebtedness shall also include, whether
or not so reflected, (i) indebtedness, obligations, and liabilities secured by
any mortgage, pledge or lien existing on property owned subject to such
mortgage, pledge or lien whether or not the indebtedness secured thereby shall
have been assumed and (ii) all contingent liabilities.

         "Indebtedness for Money Borrowed" means any Indebtedness (a) for
borrowed money or (b) evidenced by a promissory note, debenture conditional sale
agreement or other like written obligation to pay money, or (c) in respect of
the net aggregate rentals under any lease which under Generally Accepted
Accounting Principles would be required to be capitalized or (d) guaranties of
any of the aforesaid types of Indebtedness of other Persons.

         "Interest Rate Agreement" means any interest rate protection agreement,
interest rate future, interest rate option, interest rate swap, interest rate
cap or other interest rate




                                      -36-
<PAGE>   38
hedge arrangement, to or under which the Company or any of its Subsidiaries is a
party or a beneficiary.

         "Investment" has the meaning set forth in Section 7.12.

         "Lien" means any mortgage, pledge, assignment, lien, charge,
encumbrance or security interest of any kind or the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement.

         "Make-Whole Amount" means with respect to any prepayment or payment of
the Notes as to which a Make-Whole Amount is payable, the excess of (i) the
present value, discounted semi-annually at the Discount Rate, of the required
principal prepayments, if any, of such Notes thereafter required to be made
under Section 2.1, the payments at stated final maturity and remaining scheduled
interest payments on and in respect of such Notes from the respective dates on
which such principal payments and prepayments and interest payments are payable,
with all such discounts to be computed on the basis of a 360-day year of twelve
30-day months, over (ii) the principal amount of such Notes being prepaid.
"Discount Rate" means an interest rate computed in accordance with generally
accepted accounting principles equal to the applicable Treasury Yield; the
"applicable Treasury Yield" shall be determined by reference to the most recent
Federal Reserve Statistical Release H.15 (519) which has become publicly
available at least two business days prior to the date fixed for the payment of
Notes in question (or, if such Statistical Release is no longer published, any
publicly available source of similar market data), and shall be the most recent
weekly average yield on actively traded U.S. Treasury securities adjusted to a
constant maturity equal to the then remaining Weighted Average Life to Maturity
of the Notes of the respective series being paid pursuant to Section 2.1, 2.2,
or 9.2 (the "Remaining Life"); provided that if the Remaining Life of the Notes
being prepaid pursuant to this Section is not equal to the constant maturity of
a U.S. Treasury security for which a weekly average yield is given, the
applicable Treasury Yield shall be obtained by linear interpolation (calculated
to the nearest one-twelfth of a year) from the weekly average yield of U.S.
Treasury securities for which such yields are given.

         "Mutual" has the meaning set forth in Section 1.3.

         "MONY America" has the meaning set forth in Section 1.3.

         "Notes" has the meaning set forth in Section 1.1.





                                      -37-
<PAGE>   39
         "Partnership Agreement" means the Second Amended and Restated Agreement
of Limited Partnership entered into as of October 1991 by and among Falcon
Telecable Investors Group, a California limited partnership, as General Partner,
and the limited partners signatory thereto.

         "Person" means any individual, firm, partnership, joint venture,
corporation, association, business enterprise, trust, Governmental Body or other
entity, whether acting in an individual, fiduciary, or other capacity.

         "Plan" has the meaning set forth in Section 4.8(b).

         "Pro Forma Adjustments" means, with respect to any calculation of
Annualized Cash Flow, the inclusion or exclusion from the Consolidated Cash Flow
of the Company and its Subsidiaries of the Cash Flow of any Person or Cable
System acquired or disposed of within such proximity to the date of calculation
that the Cash Flow of such Person or Cable System is not otherwise included or
excluded, as the case may be, in the three most recent monthly statements
delivered pursuant to Section 8.1(a). In the case of any acquisition, the Cash
Flow of such acquired Person or Cable System to be included in the Consolidated
Cash Flow of the Company and its Subsidiaries shall be calculated as follows:
(a) it shall be based upon the most recent three months for which financial
statements for such Person or Cable System have been or are available; (b) it
shall be increased by the additional Cash Flow that would have been derived
during the most recent three months for which financial statements for such
Person or Cable System are available had there been in effect for those three
months any rate increases that are documented and that are to be implemented
upon the acquisition; (c) it shall exclude overhead expenses of such Person or
Cable System for such period reasonably demonstrated to the holders of the Notes
to be duplicative in light of such acquisition and exclude Cash Flow from any
Cable System disposed of for the relevant period before its disposition; and (d)
it shall then be reduced by one-third for each month for which the Cash Flow of
such Person or Cable System is otherwise included in the monthly statements
delivered pursuant to Section 8.1(a). In the case of a disposition, the Cash
Flow of the Person or Cable System disposed of, to the extent Cash Flow of such
Person or Cable System is included in the consolidated Cash Flow of the Company
and its Subsidiaries for the relevant period, shall be deducted from the
consolidated Cash Flow of the Company and its Subsidiaries.

         "Pro Forma Debt Service" means the largest sum of the Debt Service
required to be made for the twelve months following the month in which any
calculation is made.





                                      -38-
<PAGE>   40
         "Property" means all types of real, personal, tangible, intangible or
mixed property.

         "Requirements of Law" means any term, condition or provision of any
law, or of any rule, regulation, order, writ, injunction or decree of any court
or other governmental or public authority or agency, domestic or foreign, or of
any decision or ruling of any arbitrator, or of the partnership agreement of the
Company.

         "Restricted Payments" has the meaning set forth in Section 7.7.

         "Security" means any stock, treasury stock, note, bond, debenture,
evidence of Indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral-trust certificate, reorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights or, in general, any
interest or instrument commonly known as a "security" or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
Guaranty of, or warrant or right to subscribe to or purchase, any of the
foregoing.

         "Senior Debt" has the meaning set forth in Section 10.2.

         "Subsidiary" means any corporation, association, partnership, joint
venture or other business entity of which the Company and/or any subsidiary of
the Company either (a) in respect of a corporation, owns more than 50% of the
outstanding stock having ordinary voting power to elect a majority of the board
of directors or similar managing body, irrespective of whether or not at the
time the stock of any class or classes shall or might have voting power by
reason of the happening of any contingency, or (b) in respect of an association,
partnership, joint venture or other business entity, is the general partner or
is entitled to share in more than 50% of the profits, however determined.

         Section 11.2. Accounting Terms. All accounting terms herein which are
not expressly defined herein shall have the meanings respectively given to them
in accordance with generally accepted accounting principles in effect at the
time of application of such accounting terms for the purposes of this Agreement.

         Section 11.3. New York Law. The Agreement and the Notes issued
hereunder shall be governed by and construed in accordance with the laws of the
State of New York.





                                      -39-
<PAGE>   41
         Section 11.4. Table of Contents and Headings. The table of contents and
the headings of the Sections and subsections of this Agreement are intended for
convenience of reference only and not to constitute a part hereof or otherwise
to be indicative of the scope of content of the Sections or subsections of this
Agreement.

         Section 11.5. Survival of Representations and Warranties. All
covenants, agreements, representations and warranties made herein or in
certificates, written statements or other documents furnished by or on behalf of
the Company or any Affiliates to you in connection with the negotiation of this
Agreement or the sales of the Notes, or otherwise in connection with or pursuant
to this Agreement, shall be considered to have been relied upon by you and shall
survive the issuance and delivery of Notes to you and the payment therefor,
regardless of any investigation made by you or on your behalf. All statements in
such certificates, written statements or other documents shall constitute
representations and warranties of the Company hereunder.

         Section 11.6. Successors and Assigns. All covenants, agreements,
representations and warranties made by the Company herein shall, whether so
expressed or not, bind the successors and assigns of the Company and inure to
the benefit of your successors and assigns. All provisions of this Agreement are
intended to be for the benefit of all holders, from time to time, of the Notes
issued pursuant hereto, and shall be enforceable by any such holder, whether or
not an express assignment to such holder of rights under this Agreement shall
have been made by you or any of your successors or assigns.

         Section 11.7. Independence of Covenants. Each covenant made by the
Company herein is independent of each other covenant so made. The fact that the
operation of any such covenant permits a particular action or condition to be
taken or to exist does not mean that such action or condition is not prohibited,
restricted or conditioned by the operation of the provisions of any other
covenant herein. Any illegality or unenforceability of any provision of this
Agreement or of the Notes shall not affect or impair the legality or
enforceability of the remaining provisions of this Agreement or of the Notes.

SECTION 12.       Miscellaneous.

         Section 12.1. Communications. Whether or not expressly so stated in any
provisions of this Agreement, but subject to Section 3.4, all notices, demands,
or other communications provided for under this Agreement or under the Notes
shall be in writing and shall be deemed to have been given or made upon actual
delivery to, or, when mailed




                                      -40-
<PAGE>   42
by registered or certified mail, postage prepaid, upon the earlier of receipt at
or the third day after the date of mailing to:

         (a) (if to any of the Purchasers) the applicable address for notices
set forth in Schedule I, as such address may be changed from time to time by
written notice to the Company.

         (b) (if to the Company) to the Company, at 474 South Raymond Avenue,
Suite 200, Pasadena, CA 91105, Attention: Michael Menerey, or to such other
address as the Company as such from time to time in accordance with Section 7.1
shall have given written notice to the holders of the Notes; or

         (c) (if to any holder of a Note) the address of such holder as its
appears on the registration books maintained as provided in Section 3.1 (which
address, in the case of a Purchaser, shall be initially the applicable address
for notices specified in Schedule I), as such address may be changed by such
holder from time to time by written notice to the Company.

         Section 12.2. Amendment and Waiver. (a) No term, covenant agreement or
condition of this Agreement may be amended, supplemented or modified, or
compliance therewith waived (either generally or in a particular instance and
either retroactively or prospectively), except pursuant to one or more written
instruments signed by the holders of not less than 66 2/3% in aggregate unpaid
principal amount of the Notes at the time outstanding and delivered to the
Company; provided, however, that no such amendment, supplement, modification or
waiver shall, without the consent in writing of the holders of all of the Notes
at the time outstanding, subordinate or change the amount of, or extend the date
of final maturity of, the principal of any of the Notes, or change the amount
of, or the time for the making of, any prepayment of principal of any of the
Notes, or reduce or extend the time of payment of interest on any of the Notes,
or reduce the amount of any premium payable upon any prepayment or payment of
the Notes, or change the percentage of holders of Notes required to approve any
such amendment, supplement or modification or to effectuate any such waiver. Any
amendment, supplement, modification or waiver pursuant to this Section 11.2
shall apply equally to all the holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Company.

         (b) The Company will give prompt notice to all holders of the Notes of
the effectiveness of any amendment, supplement, modification or waiver entered
into in accordance with the provisions of this Section 12.2. Such notice shall
state the terms of



                                      -41-
<PAGE>   43
any such amendment, supplement, modification or waiver and shall be accompanied
by at least two conformed copies (which may be composite conformed copies) of
each written instrument which embodies such amendment, supplement, modification
or waiver.

         Section 12.3. Expenses. Whether or not the transactions contemplated by
this Agreement shall be consummated, the Company will (a) pay a loan
documentation and processing fee of $9,500 by check to The Mutual Life Insurance
Company of New York; (b) pay all other expenses incident to such transactions
and all reasonable expenses of all holders of Notes incident to any amendment,
supplement, modification or waiver of the terms or provisions of this Agreement,
or of the Notes, and to any such amendment, supplement, modification or waiver
proposed or initiated by the Company, whether or not effected, including in each
case, but not limited to, your or such holders' out-of-pocket expenses, the cost
of delivery of your or such holders' Notes (and insurance with respect to such
delivery) to your or such holders' home office or offices or the office or
offices of your or such holders' nominee or nominees, and the fees and
disbursements of your or such holders' special counsel, if any, and any local
counsel whom they may deem it advisable to retain or cause to be retained; (c)
(without limiting the generality of clause (b) above) pay all reproduction costs
in connection therewith or in connection with any amendment, supplement,
modification or waiver or any such proposed amendment, supplement, modification
or waiver; (d) pay any and all taxes in connection with the issuance, sale and
delivery of the Notes and in connection with any amendment, supplement,
modification or waiver of this Agreement or the Notes and save the Purchasers
and any subsequent holders of the Notes harmless without limitation as to time
against any and all liabilities (including any interest or penalty for
non-payment or delay in payment) with respect to all such taxes (other than
transfer taxes on a transfer of Notes); and (e) pay all expenses (including
counsel fees and disbursements) incurred in connection with the enforcement of
this Agreement or the Notes (including restructuring of the terms hereof in the
nature of a "work-out". The obligations of the Company under this Section 12.3,
and any and all other obligations of the Company under this Agreement for
expenses and costs, shall survive the payment of prepayment of the Notes and the
termination of the Agreement.

         Section 12.4. Limited Recourse Against the Partners. (a) The remedies
of the holders of the Notes, including without limitation any remedy which could
be exercised upon the occurrence of an Event of Default, shall be limited to the
extent that no Excluded Person shall have any personal liability as a general
partner or limited partner of the Company with respect to the Notes or this
Agreement, and in no event shall any Excluded Person be personally liable as a
general partner or limited partner for any deficiency judgment in respect of any
Note; provided, however, that the provisions of this




                                      -42-
<PAGE>   44
Section 12.4 shall not impair the ability of the holder of any Note (i) from
proceeding against the Company, (ii) from realizing on the assets of the Company
or (iii) proceeding against any General Partner with respect to actions such
General Partner caused the Company to take involving the Company's obligations
under this Agreement which would constitute fraud, gross negligence or willful
misconduct by such General Partner.

         (b) The Purchasers, and each future holder of Notes by its acceptance
of a Note issued pursuant hereto, acknowledge and agree that Excluded Persons
are express third party beneficiaries of this Section 12.4, and that the
provisions hereof may be enforced by any Excluded Persons directly against any
holder from time to time of the Notes. For purposes of this Section 12.4, the
term "Excluded Person" means, at any time, (i) each current or former general or
limited partner of the Partnership, (ii) each current or former general or
limited partner of any Person referred to in clause (i) above, and (iii) each
partner, director, trustee or other fiduciary, officer, employee, stockholder or
controlling Person of any Person referred to in clause (i) or (ii) above.

         Section 12.5. Legal Holidays. Whenever any payment hereunder or under
any of the Notes shall be due on a day on which banking institutions at the
place for such payment are authorized or obligated by law to close (a "legal
holiday"), such payment shall become due on the next succeeding day which is not
a legal holiday.


                                      -43-
<PAGE>   45
         If the foregoing is satisfactory to you, will you please sign the form
of acceptance on the enclosed counterparts of this instrument and forward the
same to the undersigned, whereupon this instrument will become a binding
agreement between us.

                              Very truly yours,

                              FALCON TELECABLE, A CALIFORNIA
                              LIMITED PARTNERSHIP

                              By:      Falcon Telecable Investors Group, a
                                       California Limited Partnership, Its
                                       General Partner

                              By:      Falcon Holding Group, Inc., a California
                                       Corporation, Its General Partner

                              By:      /s/  Stanley S. Ifskowitch



The foregoing instrument is hereby
accepted as of the date first above
written

THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK

By:               /s/ Peter W. Oliver
                  Peter W. Oliver
                  Managing Director

MONY LIFE INSURANCE COMPANY
OF AMERICA

By:               /s/ Peter W. Oliver
                  Peter W. Oliver
                  Authorized Agent




                                      -44-
