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EXHIBIT 2.14(b)
CONFORMED COPY
REORGANIZATION AGREEMENT
AMONG
CHARTER COMMUNICATIONS, INC.
ON THE ONE HAND
AND
TCI TKR OF ALABAMA, INC. AND TCI SOUTHEAST, INC.
ON THE OTHER HAND
DATED AS OF
FEBRUARY 26, 2001
ALABAMA
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TABLE OF CONTENTS
PAGE
1. Definitions. ................................................................. 1
1.1. 1992 Cable Act ........................................................ 1
1.2. Affiliate ............................................................. 1
1.3. Assets ................................................................ 2
1.4. AT&T .................................................................. 2
1.5. Average Trading Price ................................................. 2
1.6. Basic Services ........................................................ 2
1.7. Books and Records ..................................................... 2
1.8. Business .............................................................. 3
1.9. Business Day .......................................................... 3
1.10. Charter Class A Common Stock .......................................... 3
1.11. Charter Class A Per Share Value ....................................... 3
1.12. Closing ............................................................... 3
1.13. Closing Date .......................................................... 3
1.14. Closing ............................................................... 3
1.15. Communications Act .................................................... 3
1.16. Contracts ............................................................. 3
1.17. Encumbrance ........................................................... 4
1.18. Environmental Law ..................................................... 4
1.19. Equipment ............................................................. 4
1.20. Equivalent Basic Subscribers (or EBSs) ................................ 4
1.21. Excluded Assets ....................................................... 5
1.22. Expanded Basic Service ................................................ 7
1.23. FCC ................................................................... 7
1.24. Franchises ............................................................ 7
1.25. GAAP .................................................................. 7
1.26. Governmental Authority ................................................ 7
1.27. Hazardous Substances .................................................. 7
1.28. Intangibles ........................................................... 8
1.29. Intangibles ........................................................... 8
1.30. Legal Requirement ..................................................... 8
1.31. FCC ................................................................... 8
1.32. Losses ................................................................ 8
1.33. Material Adverse Effect ............................................... 9
1.34. Maximum Per Share Value ............................................... 9
1.35. Minimum Per Share Value ............................................... 9
1.36. MVPD .................................................................. 9
1.37. Pay TV ................................................................ 9
1.38. Permitted Encumbrances ................................................ 9
1.39. Person ................................................................ 10
1.40. Real Property ......................................................... 10
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1.41. Required Consents ..................................................... 10
1.42. Service Area .......................................................... 10
1.43. System Employees ...................................................... 10
1.44. System ................................................................ 10
1.45. Taxes ................................................................. 10
1.46. Third Party ........................................................... 11
1.47. Trading Day ........................................................... 11
1.48. Transaction ........................................................... 11
1.49. Valuation Period ...................................................... 11
1.50. Other Definitions ..................................................... 11
2. Contribution, Purchase and Sale of Assets; Assumed Obligations and Liabilities. 13
2.1. Contribution .......................................................... 13
2.2. Assumed Obligations and Liabilities ................................... 13
2.3. Transfer of Company Interests ......................................... 14
3. Share Consideration. ......................................................... 14
3.1. Share Consideration ................................................... 14
3.2. Adjustments to Prevent Dilution ....................................... 14
3.3. Adjustments to Purchase Price ......................................... 15
3.4. Determination of Adjustments .......................................... 17
4. Representations and Warranties of Seller. .................................... 19
4.1. Organization and Qualification ........................................ 19
4.2. Authority and Validity ................................................ 19
4.3. No Conflict; Required Consents ....................................... 19
4.4. Assets ................................................................ 20
4.5. Franchises and Licenses ............................................... 20
4.6. Contracts ............................................................. 21
4.7. Real Property ......................................................... 22
4.8. Environmental Matters ................................................. 23
4.9. Compliance with Legal Requirements .................................... 23
4.10. Patents, Trademarks and Copyrights .................................... 24
4.11. Financial Statements .................................................. 24
4.12. Absence of Certain Changes ............................................ 25
4.13. Legal Proceedings ..................................................... 25
4.14. Tax Returns; Other Reports ............................................ 25
4.15. Employment Matters .................................................... 26
4.16. System Information .................................................... 27
4.17. Finders and Brokers ................................................... 28
4.18. Disclosure ............................................................ 28
4.19. Securities Law Matters ................................................ 28
4.20. Investment Company .................................................... 28
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4.21. Seller Tax Matters .................................................... 29
5. Buyer's Representations and Warranties. ...................................... 29
5.1. Organization and Qualification ........................................ 29
5.2. Authority and Validity ................................................ 29
5.3. No Conflicts; Required Consents ....................................... 29
5.4. Finders and Brokers ................................................... 30
5.5. Legal Proceedings ..................................................... 30
5.6. Securities Law Matters ................................................ 30
5.7. Investment Company .................................................... 30
5.8. Balance Sheet ......................................................... 30
5.9. Delivery of Share Consideration ....................................... 31
5.10. SEC Filings; Financial Information .................................... 31
5.11. Buyer Tax Matters ..................................................... 31
6. Additional Covenants. ........................................................ 32
6.1. Access to Premises and Records ........................................ 32
6.2. Continuity and Maintenance of Operations; Financial Statements ........ 32
6.3. Employee Matters ...................................................... 36
6.4. Leased Vehicles; Other Capital Leases ................................. 41
6.5. Consents .............................................................. 41
6.6. Title Commitments and Surveys ......................................... 43
6.7. HSR Notification ...................................................... 44
6.8. Notification of Certain Matters ....................................... 44
6.9. Risk of Loss; Condemnation ............................................ 44
6.10. Transfer Taxes; Ad Valorem Obligations ................................ 45
6.11. Updated Schedules ..................................................... 46
6.12. Use of Seller's Name .................................................. 47
6.13. Transitional Billing Services ......................................... 47
6.14. Transition of High Speed Data Services ................................ 47
6.15. Certain Notices ....................................................... 48
6.16. Satisfaction of Conditions ............................................ 48
6.17. Bulk Transfers ........................................................ 48
6.18. Programming Matters ................................................... 48
6.19. Cooperation as to Rates and Fees ...................................... 48
6.20. Cooperation on Pending Litigation ..................................... 49
6.21. Confidentiality ....................................................... 50
6.22. Lien Searches ......................................................... 51
6.23. Further Assurances .................................................... 51
6.24. Expired Leases ........................................................ 51
6.25. Environmental Assessment .............................................. 51
6.26. No Offers ............................................................. 52
6.27. Taxes ................................................................. 52
6.28. Distant Broadcast Signals ............................................. 52
6.29. System Telephone Services ............................................. 53
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6.30. Implementation of Voting Trust or other Restructuring ................. 53
6.31. Formation of Company .................................................. 54
6.32. Dissolution of Seller ................................................. 54
6.33. Buyer Tax Covenants ................................................... 54
6.34. Sale of Charter Class A Common Stock .................................. 54
7. Conditions to Closing. ....................................................... 54
7.1. Conditions to the Obligations of Buyer and Seller ..................... 54
7.2. Conditions to the Obligations of Buyer ................................ 55
7.3. Conditions to Obligations of Seller ................................... 57
8. Closing. ..................................................................... 57
8.1. Time and Place of Closing ............................................. 57
8.2. Seller's Delivery Obligations ......................................... 57
8.3. Buyer's Delivery Obligations .......................................... 58
9. Termination. ................................................................. 59
9.1. Events of Termination ................................................. 59
9.2. Liabilities in Event of Termination ................................... 59
10. Survival of Representations and Warranties; Indemnification. ................. 60
10.1. Survival of Representations and Warranties ............................ 60
10.2. Indemnification by Seller ............................................. 60
10.3. Indemnification by Buyer .............................................. 60
10.4. Third Party Claims .................................................... 61
10.5. Limitations on Indemnification - Seller ............................... 62
10.6. Limitations on Indemnification - Buyer ................................ 63
10.7. Sole Remedy ........................................................... 63
10.8. Treatment of Indemnity and Other Payments ............................. 63
11. Miscellaneous. ............................................................... 63
11.1. Parties Obligated and Benefited ....................................... 63
11.2. Notices ............................................................... 64
11.3. Attorneys' Fees ....................................................... 65
11.4. Right to Specific Performance ......................................... 65
11.5. Disclaimer of Warranty ................................................ 65
11.6. Waiver ................................................................ 65
11.7. Captions .............................................................. 65
11.8. Choice of Law ......................................................... 65
11.9. Terms ................................................................. 65
11.10. Rights Cumulative ................................................. 66
11.11. Further Actions ....................................................... 66
11.12. Time .................................................................. 66
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11.13. Late Payments ......................................................... 66
11.14. Counterparts .......................................................... 67
11.15. Entire Agreement ...................................................... 67
11.16. Severability .......................................................... 67
11.17. Construction .......................................................... 67
11.18. Expenses .............................................................. 67
11.19. Commercially Reasonable Efforts ....................................... 67
11.20. Guaranty and Suretyship Matters ....................................... 67
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Bill of Sale and Assignment and Assumption Agreement
Exhibit B Form of Escrow Agreement
Exhibit C Bill of Sale for Company Interests
Exhibit D Form of Seller's Counsel Opinion
Exhibit E Form of Buyer's Counsel Opinion
Exhibit F Form of Registration Rights Agreement
Schedule 1.21 Excluded Assets
Schedule 1.38 Permitted Encumbrances
Schedule 1.44 Systems and Service Area
Schedule 4.3 Required Consents
Schedule 4.4 Encumbrances; Exceptions to Operating Condition of Equipment
Schedule 4.5 Franchises and Licenses
Schedule 4.6 Contracts
Schedule 4.7 Real Property
Schedule 4.8 Environmental Matters
Schedule 4.9 Section 626 Exceptions
Schedule 4.12 Absence of Certain Changes
Schedule 4.13 Legal Proceedings
Schedule 4.14 Tax Matters
Schedule 4.15 Employment Matters
Schedule 4.16 System Information
Schedule 6.2 Permitted Activities
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REORGANIZATION AGREEMENT
This Reorganization Agreement ("Agreement") is made as of the 26th day
of February, 2001, by and among TCI Southeast, Inc., a Delaware corporation
("AT&T Parent"), TCI TKR of Alabama, Inc., a Delaware corporation ("Seller"),
and Charter Communications, Inc., a Delaware corporation ("Buyer").
RECITALS
A. This Agreement sets forth the terms upon which Seller will convey, or
cause to be conveyed, to a newly-formed Delaware limited liability company
wholly owned by Seller ("Company") substantially all of the assets of the
Business (as defined below), and Seller will thereafter transfer to Buyer all of
its interest in Company.
B. Seller and Buyer intend that, for federal income tax purposes, the
acquisition and transfer contemplated by this Agreement will qualify as a
"reorganization" under the provisions of Section 368(a) of the Code, and the
rules and regulations promulgated thereunder.
C. This Agreement is being made concurrently with that Asset
Purchase Agreement among Marcus Cable of Alabama, L.L.C., on the one hand,
and TCI of Selma, Inc., TCI of Lee County, Inc., TCI Cablevision of Alabama,
Inc., Alabama T.V. Cable, Inc., and AT&T Parent, on the other (the "Related
Agreement").
D. The purpose of this Agreement is to set forth the definitive
terms upon which such transfers will take place.
AGREEMENTS
In consideration of the above recitals and the mutual agreements stated in
this Agreement, the parties agree as follows:
1. DEFINITIONS.
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms, when used in this Agreement, will have the meanings set forth
below:
1.1. 1992 Cable Act. The Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
1.2. Affiliate. With respect to any Person, any other Person
controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a Person, whether through
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the ownership of voting securities or voting interests, by contract or
otherwise. For purposes of this Agreement, At Home Corporation and its
subsidiaries and Liberty Media Corporation and its subsidiaries will not
be treated as Affiliates of Seller.
1.3. Assets. All assets, properties, privileges, contracts,
licenses, permits, franchises, authorizations, rights, interests, claims
and other properties, real and personal, tangible and intangible, of every
type and description (a) that are owned, leased, held for use or used in
the Business, and (b) in which Seller or any of its Affiliates has any
right, title or interest or in which Seller or any of its Affiliates
acquires any right, title or interest on or before the Closing Time. The
Assets include the Franchises, Licenses, Intangibles, Contracts, Equipment
(including Equipment used by AT&T Broadband Network Solutions, Inc.
("NSI"), solely in connection with the provision of services associated
with the Systems or reflected in the Financial Statements, including under
the Contracts between NSI and Third Parties listed on SCHEDULE 4.6), Books
and Records, Real Property and deposits relating to the Business that are
held by Third Parties for the account of Seller or for security for
Seller's performance of its obligations, but excluding any Excluded Assets
and any assets disposed of prior to the Closing Date in the ordinary
course of business and not in violation of this Agreement.
1.4. AT&T. AT&T Broadband, LLC, a Delaware limited liability
company.
1.5. Average Trading Price. With respect to the Charter Class A
Common Stock, the average for the Valuation Period of (i) the last
reported sales prices, regular way, as reported on the principal national
securities exchange on which such securities are listed or admitted for
trading on each Trading Day during the Valuation Period or (ii) if such
securities are not listed or admitted for trading on any national
securities exchange, the last reported sales prices, regular way, as
reported on the Nasdaq National Market or, if such securities are not
listed on the Nasdaq National Market, the average of the highest bid and
lowest asked prices on each such Trading Day as reported on the Nasdaq
Stock Market, or (iii) if such securities are not listed or admitted to
trading on any national securities exchange, the Nasdaq National Market or
the Nasdaq Stock Market, the average of the highest bid and lowest asked
prices on each such Trading Day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization (subject to adjustments to prevent dilution as
provided in Section 3.2).
1.6. Basic Services. The lowest tier of service offered to
subscribers of a System.
1.7. Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, as-built System maps, reports, lists,
title policies and title reports, plans, surveys, procedures and processes
and all other files of
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correspondence, lists, records, agreements, amendments, notices, consents
and reports to the extent concerning the Assets or the Business, including
subscribers and prospective subscribers of the Systems, signal and program
carriage and dealings with Governmental Authorities with respect to the
Systems, including all reports filed with respect to the Systems by or on
behalf of Seller or any of its Affiliates with the FCC and statements of
account filed with respect to the Systems by or on behalf of Seller or any
of its Affiliates with the U.S. Copyright Office, but excluding all
corporate records, all financial and tax records not solely related to the
operation of the Systems, and all documents, reports and records relating
to any of the System Employees.
1.8. Business. The cable television business and other
revenue-generating businesses and operations relating to the Systems that
are conducted by Seller or any of its Affiliates through the Systems.
1.9. Business Day. Any day other than Saturday, Sunday or a day on
which banking institutions in Denver, Colorado or New York, New York are
required or authorized to be closed.
1.10. Charter Class A Common Stock. Shares of Class A Common Stock
of Charter.
1.11. Charter Class A Per Share Value. Either (a) the Average
Trading Price, or (b) if the Average Trading Price is less than the
Minimum Per Share Value, the Minimum Per Share Value, or (c) if the
Average Trading Price is greater than the Maximum Per Share Value, the
Maximum Per Share Value.
1.12. Closing. The consummation of the transactions contemplated by
this Agreement, as described in Section 8.
1.13. Closing Date. The date on which the Closing occurs.
1.14. Closing Time. 11:59 p.m., local time at the location of the
Assets, as applicable, on the Closing Date.
1.15. Communications Act. The Communications Act of 1934, as
amended, and the rules and regulations of the FCC promulgated thereunder
and currently in effect. Section 626 of the Communications Act refers to
47 U.S.C. section 546.
1.16. Contracts. All contracts, bonds, indentures, leases, notes,
certificates, options, warrants, rights and other instruments, documents,
obligations and agreements (in each case, other than Franchises, Licenses
and those relating to Real Property), whether written or oral, to which
Seller or any of its Affiliates is a party and which relate to the
operation of the Business, including the lease agreements for Equipment,
pole attachment agreements, underground conduit agreements, retransmission
consent agreements, and multiple dwelling bulk billing or commercial
service agreements.
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1.17. Encumbrance. Any mortgage, lien, security interest, security
agreement, conditional sale or other title retention agreement,
consignment or bailment given for purposes of security, indenture, pledge,
option, encumbrance, deed of trust, constructive trust or other trust,
claim, attachment, charge, assessment, restriction on transfer or any
exception to or defect in title or other ownership (legal or equitable)
interest (including reservations, rights of way, possibilities of
reverter, encroachments, protrusions, easements, rights of entry, rights
of first refusal, rights of first offering, restrictive covenants,
conditions, leases and licenses) of any kind, which constitutes an
interest in property, whether arising pursuant to any Legal Requirement,
License, Franchise, Contract or otherwise.
1.18. Environmental Law. Any applicable Legal Requirement relating
to pollution or governing the protection of the environment, including
CERCLA, OSHA, and RCRA and including Legal Requirements relating to
emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment (including ambient air, surface water,
ground water or land) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
handling or presence of Hazardous Substances.
1.19. Equipment. All electronic devices, trunk and distribution
coaxial and optical fiber cable, headend amplifiers, line amplifiers,
drops, power supplies, conduit, vaults and pedestals, grounding and pole
hardware, towers (other than towers on owned Real Property which are
fixtures thereon and a part thereof), tower equipment, distribution
systems, microwave equipment, subscriber's devices (including converters,
encoders, transformers behind television sets and fittings), headend
hardware (including origination, earth stations, transmission and
distribution system), test equipment, vehicles, office equipment,
computers and billing equipment, furniture, fixtures, supplies, inventory
and other tangible personal property owned or leased by Seller or any of
its Affiliates and used in the Business.
1.20. Equivalent Basic Subscribers (or EBSs). As of any date of
determination and for each Service Area served by a System, the sum of (a)
the total number of private residential customer accounts that are billed
by individual unit for at least Basic Services (regardless of whether such
accounts are in single-family homes or in individually billed units in
apartment buildings or other multi-unit buildings), but exclusive of
"second connects" and "additional outlets" as such terms are commonly
understood in the cable television industry; and (b) the quotient of (i)
the total monthly billings for sales of Basic Services and Expanded Basic
Services by such System for such Service Area during the most recent
billing period ended prior to the date of calculation to commercial,
bulk-billed and other accounts not billed by individual unit (whether on a
discounted or non-discounted basis), but excluding billings in excess of a
single month's charges for any account, divided by (ii) the standard
monthly combined rate (without discount of any kind) charged by such
System for such Service Area to individually billed subscribers for Basic
Services and
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Expanded Basic Services offered by such System in effect during such
billing period. For purposes of calculating the number of EBSs, there will
be excluded: (A) all accounts billed by individual unit that are, and all
billings to any commercial, bulk-billed and other accounts not billed by
individual unit that are, more than 60 days past due in the payment of any
amount in excess of the lesser of $7.50 or the standard rate charged for
Basic Services at the time of determination; (B) any accounts billed by
individual unit and all commercial, bulk-billed and other accounts not
billed by individual unit that, as of the date of calculation, have not
paid in full the charges for at least one full month of the subscribed
service; (C) that portion of the billings to all accounts billed by
individual unit included in clause (b) above and any commercial
bulk-billed and other accounts not billed by individual unit representing
an installation or other non-recurring charge, a charge for equipment or
for any outlet or connection other than the first outlet or first
connection in any individually billed unit or, with respect to a bulk
account, in any residential unit (e.g., an individual apartment or rental
unit), a charge for any tiered service other than Expanded Basic Services
(whether or not included within Pay TV), any charge for Pay TV or a
pass-through charge for sales Taxes, line-itemized franchise fees, fees
charged by the FCC and the like; (D) any individually billed unit and all
billings to any commercial, bulk-billed and other accounts not billed by
individual unit whose service is pending disconnection for any reason; (E)
any individually billed unit and all billings to any commercial,
bulk-billed and other accounts not billed by individual unit that was
solicited within the 60-day period preceding the Closing Date to purchase
such services by promotions or offers of discounts other than those
ordinarily made by Seller; and (F) any account for which Basic Services
are provided free of charge.
1.21. Excluded Assets. All:
1.21.1. Programming Contracts (including music programming
Contracts and Contracts with Starz!/Encore), cable guide Contracts
(including TV Guide and interactive programming guide Contracts), and
Contracts to which other cable systems of Seller or its Affiliates are
subject (including the NCE Agreement, Contracts between Seller and its
Affiliates and NSI, master retransmission consent Contracts, master
billing Contracts and master multiple dwelling unit Contracts (but not any
subordinate multiple dwelling unit Contracts that incorporate the terms of
such master Contracts by reference)), other than any such Contracts (or
interests therein) listed on SCHEDULE 4.6;
1.21.2. Seller Plans (as defined in Section 4.15.2) and any
cash, reserve, trust or funding arrangement held or set aside for the
payment of benefits under such Seller Plans;
1.21.3. Insurance policies and rights and claims under
insurance policies (except as otherwise provided in Section 6.9);
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1.21.4. Bonds, letters of credit, surety instruments and other
similar items;
1.21.5. Except for petty cash to the extent transferred to
Buyer, cash and cash equivalents, including cash relating to subscriber
prepayments and deposits, and notes receivable;
1.21.6. Subject to Buyer's rights under Section 6.12,
trademarks, trade names, service marks, service names, logos, patents,
copyrights and other intellectual property or proprietary rights of Seller
or any of its Affiliates, except for software which is not an Excluded
Asset under Section 1.21.14;
1.21.7. Subscriber billing Contracts and related equipment if
not owned by Seller or any of its Affiliates;
1.21.8. Assets, rights and properties of Seller or its
Affiliates used or held for use other than primarily in connection with
the business operations of the Systems; provided, however, notwithstanding
the foregoing, Assets which produce revenues that are set forth on the
Financial Statements will not constitute Excluded Assets pursuant to this
Section 1.21.8;
1.21.9. Except (a) accounts receivable and (b) any other
claim, right or interest to the extent reflected in the adjustment to the
Purchase Price determined pursuant to Section 3.3, all claims, rights and
interests in and to any refunds of, or amounts credited against, Taxes or
fees of any nature, including franchise and copyright fees, or any other
claims against Third Parties, relating to the operation of the Systems
prior to the Closing Time;
1.21.10. Except as set forth on SCHEDULE 4.6, any employment,
compensation, bonus, deferred compensation, consulting, collective
bargaining agreements, agency or management Contracts;
1.21.11. All Business documents and records not included in
the Books and Records (provided that copies of personnel files will be
made available to Buyer for a period of three years after the Closing Date
upon reasonable request by Buyer accompanied by a waiver and release from
the employee whose records are sought in form and substance reasonably
satisfactory to Seller);
1.21.12. Capital and vehicle leases;
1.21.13. Advertising sales agency or representation Contracts
providing any Third Party or Affiliate of Seller the right to sell
available advertising time for a System (including any Contract with
National Cable Communications or Cable Networks, Inc.), other than any
such Contract disclosed on SCHEDULE 4.6;
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1.21.14. Proprietary software of Seller or its Affiliates and
licenses relating to Third Party software and maintenance agreements with
respect thereto, other than transferable licenses relating to Third Party
software installed on computers included in the Assets;
1.21.15. Contracts for Internet access or on-line service
arrangements that provide to any Third Party or Affiliate of Seller the
right to use the transmission capacity of a System to provide Internet
access or other on-line services over such System, other than those
disclosed on SCHEDULE 4.6;
1.21.16. Contracts and related accounts receivable for
providing DMX service to commercial accounts via direct broadcast
satellite;
1.21.17. Contracts for telephony services to be provided to
subscribers of the Systems through the Assets;
1.21.18. Intercompany receivables; and
1.21.19. The assets specifically disclosed on SCHEDULE 1.21.
1.22. Expanded Basic Service. Any video programming provided over a
System, regardless of service tier, other than Basic Services, any new
product tier and Pay TV.
1.23. FCC. The Federal Communications Commission and any successor
Governmental Authority.
1.24. Franchises. The franchises, permits and similar authorizations
included among the Assets (other than Licenses) described on SCHEDULE 4.5,
and all rights and benefits of Seller and its Affiliates pertaining
thereto, including the rights and benefits arising under Section 626 of
the Communications Act to the extent applicable to Franchises.
1.25. GAAP. Generally accepted accounting principles as in effect
from time to time in the United States of America.
1.26. Governmental Authority. (a) The United States of America; (b)
any state, commonwealth, territory or possession of the United States of
America and any political subdivision thereof (including counties,
municipalities and the like); or (c) any agency, authority or
instrumentality of any of the foregoing, including any court, tribunal,
department, bureau, commission, board or quasi-governmental authority.
1.27. Hazardous Substances. Any pollutant, contaminant, chemical,
industrial, toxic, hazardous or noxious substance or waste which is
regulated by a Governmental Authority, including (a) any petroleum or
petroleum compounds (refined or crude), flammable substances, explosives,
radioactive materials or any other materials or pollutants; (b) any
"hazardous waste" as defined by the
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Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. Sections
6901 et seq.), as aMended, and the rules and regulations promulgated
thereunder; (c) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Sections 9601 et seq.) (CERCLA), as amended, and the rules and regulations
promulgated thereunder; (d) any substance regulated by the Toxic
Substances Control Act (TSCA) (42 U.S.C. Sections 2601 et seq.), or the
Federal InsectIcide, Fungicide and Rodenticide Act (FIFRA) (7 U.S.C.
Sections 136 et seq.), each as amended, and the rules and regulations
promulgated thereunder; (e) asbestos or asbestos-containing material of
any kind or character; (f) polychlorinated biphenyls; (g) any substances
regulated under the provisions of Subtitle I of RCRA relating to
underground storage tanks; and (h) any materials or substances designated
as "hazardous substances" pursuant to the Clean Water Act (33 U.S.C. Sec.
1251 et seq.); (i) any substance the presence, use, handling, treatment,
storage or disposal of which is regulated or prohibited by any
Environmental Law (j) any other substance which by any Environmental Law
requires special handling, reporting or notification of any Governmental
Authority in its collection, storage, use, treatment or disposal or (k)
any other substance which is regulated by or pursuant to any Environmental
Law.
1.28. Intangibles. Subscriber lists, accounts receivable, claims
(excluding any claims relating to Excluded Assets), goodwill, if any, and
any other intangible asset owned or held by Seller and used in the
Business.
1.29. Knowledge. The actual knowledge of a particular matter of (a)
one or more of the principal corporate personnel of Seller involved in the
transactions contemplated by this Agreement, including Alfredo Di Blasio,
Dan Buchanan, Karla Tartz, and Jeff Walker, or (b) any of the general
managers (or holders of positions of equivalent responsibility) of the
Systems.
1.30. Legal Requirement. Any statute, ordinance, code, law, rule,
regulation, permit, approval, order or other written requirement, standard
or procedure enacted, adopted or applied by any Governmental Authority,
including any judgment, writ, order, injunction, award or decree of any
court, judge, justice or magistrate, including any bankruptcy court or
judge or the arbitrator in any binding arbitration.
1.31. Licenses. The intangible cable television channel distribution
rights, cable television relay service ("CARS"), business radio and other
licenses, earth station registrations, authorizations, consents or permits
issued by the FCC or any other Governmental Authority and related to the
Business, including material state and local business licenses, including
those described on SCHEDULE 4.5 (other than the Franchises) and all rights
and benefits of Seller and its Affiliates pertaining thereto.
1.32. Losses. Any claims, losses, liabilities, damages, penalties,
costs and expenses, including interest that may be imposed in connection
therewith,
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expenses of investigation, reasonable fees and disbursements of counsel
and other experts and settlement costs.
1.33. Material Adverse Effect. A material adverse effect on the
Assets, the Business, the operations, condition (financial or otherwise)
or results of operations of the Systems taken as a whole, or on the
ability of Seller to perform its obligations under this Agreement, but
without taking into account any effect resulting from (i) changes in
conditions (including economic conditions, changes in FCC regulations or
federal governmental actions, legislation or regulations) that are
applicable to the economy or the cable television industry on a national
basis, (ii) any changes in technology affecting the Business, or (iii) any
competition from the direct broadcast satellite industry.
1.34. Maximum Per Share Value. An amount agreed to by the Parties,
subject to adjustment as specified in Section 3.2.2.
1.35. Minimum Per Share Value. An amount agreed to by the Parties,
subject to adjustment as specified in Section 3.2.2.
1.36. MVPD. A distributor of cable television services, multichannel
multi-point distribution service, direct broadcast satellite service or
television receive only satellite programming, who makes available for
purchase, by subscribers or customers, multiple channels of video
programming, other than Persons distributing such services only to
multiple dwelling unit or other commercial customers (including hotels,
motels, resorts, hospitals, dormitories, prisons, restaurants, bars and
similar establishments).
1.37. Pay TV. Premium programming services selected by and sold to
subscribers of the Systems on an a la carte basis for fees in addition to
the fee for Basic Services or Expanded Basic Services.
1.38. Permitted Encumbrances. The following Encumbrances: (a) liens
for Taxes, assessments and governmental charges not yet due and payable;
(b) zoning laws and ordinances and similar Legal Requirements; (c) any
right reserved to any Governmental Authority to regulate the affected
property (including restrictions stated in the Franchises and Licenses);
(d) in the case of any leased Asset, (i) the rights of any lessor and (ii)
any Encumbrance granted by any lessor of such leased Asset; (e) inchoate
materialmens', mechanics', workmen's, repairmen's or other like inchoate
Encumbrances arising in the ordinary course of business which constitute
Assumed Obligations and Liabilities; (f) in the case of owned Real
Property, any easements, rights-of-way, servitudes, permits, restrictions
and minor imperfections or irregularities in title which do not
individually or in the aggregate materially interfere with the right or
ability to use, own, enjoy or operate the Real Property as currently being
used and which do not impair the value of the Real Property or interfere
with Seller's ability or right to convey good, marketable and indefeasible
fee simple title to the owned Real Property (or in the case of leased or
other Real Property, the
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right to convey such leasehold or other interest); (g) any Encumbrance
(other than an Encumbrance securing a monetary obligation) that does not
individually or in the aggregate interfere with the continued use of the
Assets subject thereto in the operation of the Business as currently being
used; and (h) those Encumbrances disclosed on SCHEDULE 1.38.
1.39. Person. Any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.40. Real Property. The Assets owned or leased by Seller or any of
its Affiliates and used or useful in the Business consisting of realty,
including appurtenances, improvements (including towers and headend
storage buildings) and fixtures located on such realty, and any other
interests in real property, including fee interests, leasehold interests
and easements, rights of access, licenses, wire crossing permits, rights
of entry (but not including interests in real property granted in
Contracts in connection with services provided by Seller to the residents
or occupants of such real property, including access and service Contracts
with the owners of multiple dwelling unit complexes), options and rights
of first refusal.
1.41. Required Consents. All authorizations, approvals and consents
required under or in connection with any Legal Requirement or under any
Assets, Franchises, Licenses, Real Property or Contracts required to be
disclosed on SCHEDULE 4.6, for (a) Seller to transfer the Assets and the
Business to Company (b) Seller to transfer the Company Interests to Buyer,
and (c) Company to conduct the Business and to own, lease, use and operate
the Assets and Systems at the places and in the manner in which the
Business is conducted and the Systems are operated as of the date of this
Agreement and on the Closing Date.
1.42. Service Area. The municipalities and counties in and around
which Seller operates the Systems and the Business, which are disclosed on
SCHEDULE 1.44.
1.43. System Employees. All employees of Seller or of any Affiliate
of Seller who are primarily engaged in the operation of the Business.
1.44. Systems. The cable television systems listed on SCHEDULE 1.44,
which operate in and around the Service Area.
1.45. Taxes. All levies and assessments of any kind or nature
imposed by any Governmental Authority, including all income, sales, use,
offer, registration, ad valorem, value added, alternative or add-on
minimum (including taxes under Section 59A of the Code), franchise,
severance, net or gross proceeds, withholding, payroll, employment, social
security (or similar), unemployment, disability, excise, real or personal
property taxes and levies or assessments related to unclaimed property,
together with any interest thereon and
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any penalties, additions to Tax or additional amounts applicable thereto,
whether disputed or not.
1.46. Third Party. Any Person other than Seller or Buyer and their
respective Affiliates.
1.47. Trading Day. A day on which the principal national securities
exchange on which the Charter Class A Common Stock is listed or admitted
to trading, or the Nasdaq National Market or the Nasdaq Stock Market, as
applicable, if such securities are not listed or admitted to trading on
any national securities exchange, is open for the transaction of business
(unless such trading shall have been suspended for the entire day) or, if
such securities are not listed or admitted to trading on any national
securities exchange, the Nasdaq National Market or the Nasdaq Stock
Market, any day other than a Saturday, Sunday, or other day on which
commercial banking institutions in New York, New York are required or
authorized by law to remain closed.
1.48. Transaction. The purchase, sale and reorganization transaction
contemplated by this Agreement.
1.49. Valuation Period. The 30 full Trading Days ending on the
second to last Trading Day prior to the Closing Date (i.e., if the Closing
Date were June 29, 2001, the last Trading Day of the Valuation Period
would be June 27, 2001).
1.50. Other Definitions. The following terms are defined in the
Sections indicated:
Term Section
---- -------
Action 10.4
Agreement preamble
Antitrust Division 6.7
Apportioned Obligations 6.10.2
Approved Leave of Absence 6.3.1
Assumed Obligations and Liabilities 2.2
AT&T Parent preamble
Beneficiary 11.20.1
Buyer preamble
Buyer's Welfare Plans 6.3.5(a)(ii)
CARS 1.31
Code 8.2(e)
Company recitals
Company Interests 2.3
Current Filings 5.10.1
Disagreement Notice 3.4.1
ERISA 4.15.1
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Term Section
---- -------
ERISA Affiliate 4.15.2
Escrow Agent 3.4.1
Escrow Amount 3.4.1
Escrowed Shares 3.4.1
FAA 6.2.5(xv)
FCC Rate Forms 6.2.5(vii)
Final Adjustments Report 3.4.2
Financial Statements 4.11
Franchise Consent Ratio 7.2.4
FTC 6.7
Guaranteed Obligations 11.20
Guaranty 11.20
HSR Act 6.7
Hired Employee 6.3.1
Indemnified Party 10.4
Indemnifying Party 10.4
NCE Agreement 6.3.7
New Properties 6.11
NSI 1.3
Offer/No Offer Schedule 6.3.1
Ownership Rules 6.30
Past Service 6.3.5(a)(ii)
Phase I Assessment 6.25.1
Phase II Assessment 6.25.1
Preliminary Adjustments Report 3.4.1
Prime Rate 11.13
Purchase Price 3.1
Registration Rights Agreement 8.3(b)
Related Agreement recitals
Seller preamble
Seller Plans 4.15.2
Share Consideration 3.1
Subscriber Shortfall 3.3.6
Survival Period 10.1
System Employee Schedule 6.3.1
Taking 6.9.2
Threshold Amount 10.5
Transaction Documents 4.2
Transfer Tax Return 6.10.1
Transitional Billing Services 6.13
Transitional HSD Services 6.14
Underlying Obligor 11.20
Underpayment 3.4.3
WARN 6.3.2
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2. CONTRIBUTION, PURCHASE AND SALE OF ASSETS; ASSUMED OBLIGATIONS AND
LIABILITIES.
2.1. Contribution. Subject to the terms and conditions set forth in
this Agreement, at the Closing Time, Seller will transfer to Company, and
Company will acquire from Seller, free and clear of all Encumbrances
(except Permitted Encumbrances), the Assets.
2.2. Assumed Obligations and Liabilities. Upon the contribution
described in Section 2.1, Company will assume, and after the Closing Time,
Company will pay, discharge and perform, the following (the "Assumed
Obligations and Liabilities"): (a) those obligations and liabilities
accruing and relating to periods after the Closing Time under or with
respect to the Assets assigned and transferred to Company; (b) those
obligations and liabilities of Seller to subscribers and customers of
Seller's Business for (i) subscriber deposits held by Seller as of the
Closing Date related to the Systems in the amount for which Buyer received
credit under Section 3.3 and (ii) customer, advertising and other advance
payments held by Seller as of the Closing Date related to the Systems in
the amount for which Buyer received credit under Section 3.3; (c) all
obligations and liabilities accruing and relating to the Business prior to
the Closing Time but only to the extent that Buyer received a credit
pursuant to Section 3.3; and (d) all other obligations and liabilities
accruing and relating to periods after the Closing Time and arising out of
Company's ownership of the Assets or operation of the Systems after the
Closing Time, except to the extent that such obligations or liabilities
relate to any Excluded Asset. All obligations and liabilities, contingent,
fixed or otherwise, arising out of or relating to the Assets or the
Systems other than the Assumed Obligations and Liabilities will remain and
be the obligations and liabilities solely of Seller including any
obligation, liability or claims relating to or arising pursuant to (w)
Taxes (including franchise fees) arising out of or relating to the Assets
or the Business and with respect to periods or portions thereof ending on
or prior to the Closing Time, (x) refunds of rates, charges or late fees
arising out of or relating to the Assets or the Business and with respect
to periods through and including the Closing Time, (y) any claim, action,
suit, proceeding, arbitration, investigation or hearing, any tolling,
settlement or license agreement with respect to any of the foregoing, or
any other activity or procedure, or any notice of any of the foregoing
which could result in any judgment, writ, order, injunction, award or
decree of any court, judge, justice or magistrate, including any
bankruptcy court or judge or the arbitrator in any binding arbitration,
and any order of or by any Governmental Authority arising out of or
relating to the Assets or the Business and commenced, or related to an
event occurring, on or prior to the Closing Time, or (z) credit, loan or
other agreements arising out of or relating to the Assets or the Business
and pursuant to which Seller or any of its Affiliates has created,
incurred, assumed or guaranteed indebtedness for
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borrowed money or under which any Encumbrance securing such indebtedness
has been or may be imposed on any Asset.
2.3. Transfer of Company Interests. Subject to the terms and
conditions set forth in this Agreement, at the Closing Time and
immediately following the contribution described in Section 2.1, Seller
will sell to Buyer, and Buyer will purchase from Seller, all of the
outstanding membership interests in Company (the "Company Interests") free
and clear of all Encumbrances (other than Permitted Encumbrances) in
exchange for the Share Consideration. The shares of Charter Class A Common
Stock representing the Share Consideration will be registered in the name
of Seller, provided that Seller will be entitled to have the shares
registered in the name of its parent upon completion of the liquidation
and dissolution of Seller as contemplated by Section 6.32.
3. SHARE CONSIDERATION.
3.1. Share Consideration. For purposes of this Agreement, the "Share
Consideration" will be the number of shares of Charter Class A Common
Stock equal to the quotient (rounded upward to the nearest whole number)
of (a) the $151,700,000 (the "Purchase Price"), as adjusted pursuant to
Section 3.3 and (b) the Charter Class A Per Share Value.
3.2. Adjustments to Prevent Dilution. The Share Consideration will
be subject to any or all of the following adjustments as applicable:
3.2.1.If Buyer should split or combine the Charter Class A
Common Stock or pay a stock dividend or other stock distribution in
Charter Class A Common Stock or otherwise effect any transaction or
announce its intention to do any of the foregoing that changes the Charter
Class A Common Stock into any other securities or make any other dividend
or distribution on the Charter Class A Common Stock, and the record date
applicable to such event occurs during the Valuation Period or after the
Valuation Period and prior to the Closing Date, then the Average Trading
Price will be appropriately adjusted to reflect such split, combination,
transaction, dividend or other distribution.
3.2.2. The Minimum Per Share Value and Maximum Per Share Value
will be subject to any or all of the following adjustments, as applicable:
(i) If from the date of this Agreement to the Closing
Date, Buyer (a) pays a dividend or makes a distribution on any outstanding
shares of Buyer's capital stock in shares of Charter Class A Common Stock,
(b) subdivides the then-outstanding shares of Charter Class A Common Stock
into a greater number of shares of Charter Class A Common Stock or (c)
combines the then-outstanding shares of Charter Class A Common Stock into
a smaller number of shares of Charter Class A Common Stock, then the
Minimum Per Share Value and the Maximum Per Share Value then in effect
will be adjusted by multiplying each by a fraction, the numerator of which
is the number of shares of Charter
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Class A Common Stock outstanding immediately before the event giving rise
to such adjustment, and the denominator of which is the number of shares
of Charter Class A Common Stock outstanding immediately after such event.
(ii) If from the date of this Agreement to the Closing
Date, Buyer pays a dividend or makes a distribution on all outstanding
shares of Charter Class A Common Stock in the form of cash, securities
(including warrants or other rights) or other assets (other than any
dividend or distribution in the form of Charter Class A Common Stock),
then the Minimum Per Share Value and the Maximum Per Share Value then in
effect will be adjusted by multiplying each by a fraction, the numerator
of which is the Average Trading Price of Charter Class A Common Stock
(calculated using the 30 Trading Day period ending on the record date of
such dividend or distribution rather than the Valuation Period) less the
amount of cash or the fair market value on such record date (as reasonably
determined by Buyer's Board of Directors) of the portion of the securities
or other assets so to be distributed that is applicable to one share of
Charter Class A Common Stock, and the denominator of which is the Average
Trading Price of Charter Class A Common Stock (calculated using the 30
Trading Day period ending on the record date of such dividend or
distribution rather than the Valuation Period).
3.3. Adjustments to Purchase Price. The Purchase Price will be
adjusted as follows:
3.3.1. Adjustments on a pro rata basis as of the Closing Time
will be made for all prepaid expenses other than inventory (but only to
the extent the full benefit of such prepaid expenses will be realizable
within twelve (12) months after the Closing Date), accrued expenses
(including real and personal property Taxes), copyright fees and franchise
or license fees or charges, prepaid income, subscriber prepayments and
accounts receivable related to the Business, all as determined in
accordance with GAAP consistently applied, and to reflect the principle
that all expenses and income attributable to the Business for the period
through and including the Closing Time are for the account of Seller, and
all expenses and income attributable to the Business for the period after
the Closing Time are for the account of Buyer. Notwithstanding the
foregoing, the Purchase Price will only be increased by 98% of the
accounts receivable; provided, further, that Seller will receive no credit
for (a) any accounts receivable resulting from cable television services
or Internet access or high speed data services of which more than $7.50 is
60 days or more past due from the billing date as of the Closing Date, (b)
any accounts receivable resulting from advertising sales of which any
portion is 120 days or more past due from the date of invoice as of the
Closing Date, and (c) accounts receivable from customers whose accounts
are inactive as of the Closing Date. For purposes of making "past due"
calculations under clause (a) of the preceding sentence, the billing
statements of a System will be deemed to be due and payable on the first
day of the period during which the service to which such billing
statements relate is provided.
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3.3.2. The Purchase Price will be decreased by the amount of
all advance payments to, or funds of Third Parties on deposit with, Seller
as of the Closing Time and relating to the Business, including advance
payments and deposits by subscribers served by the Business for
converters, encoders, decoders, cable modems, cable television services
and related sales.
3.3.3. The Purchase Price will be decreased by the amount of
the economic value of all accrued vacation time that Buyer credits after
the Closing Time to Hired Employees pursuant to Section 6.3, where
economic value is the amount equal to the cash compensation that would be
payable to each such Hired Employee at his or her level of compensation on
the Closing Date for a period equal to such credited accrued vacation.
3.3.4. The Purchase Price will be increased by the amount of
all deposits relating to the Business and the operation of the Systems
that are held by Third Parties as of the Closing Time for the account of
Seller which relate to the Systems or are held as security for Seller's
performance of its obligations, including deposits on leases and deposits
for utilities, but excluding those which are or relate to Excluded Assets
or the full benefit of which will not be available to Company following
the Closing, and such deposits will become the property of Company.
3.3.5. The Purchase Price will be decreased by an amount equal
to the excess (if any) of the total amount of capital expenditures set
forth on the Systems' capital budget (a copy of which has been provided to
Buyer) over the actual amount of capital expenditures as of the Closing
Time made for such projects since December 31, 2000. The Purchase Price
will be increased by an amount equal to the capital expenditures not
included in such capital budget and incurred by Seller at Buyer's request
in accordance with Section 6.2.2(y).
3.3.6. The Purchase Price will be decreased by the dollar
amount equal to the product of (i) 43.34% of the Subscriber Shortfall
multiplied by (ii) $2,371. For purposes of this Agreement, the "Subscriber
Shortfall" equals the number, if any, by which the aggregate of the
Equivalent Basic Subscribers for the Systems and the "Equivalent Basic
Subscribers" for the "Systems," as described in the Related Agreement, as
of the Closing Time is less than 146,124.
3.3.7. The adjustments provided for in this Section 3.3 will
be made without duplication under this Agreement or the Related Agreement.
In addition, none of the adjustments provided for in this Section 3.3 will
be made with respect to any Excluded Asset or with respect to any item of
income or expense related to an Excluded Asset.
3.3.8. The net amount of the adjustments calculated under this
Section 3.3, as preliminarily determined pursuant to Section 3.4.1, will
be added or subtracted, as applicable, to the Purchase Price at the
Closing.
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3.4. Determination of Adjustments. Preliminary and final adjustments
to the Purchase Price will be determined as follows:
3.4.1. Not later than a date Seller reasonably believes is at
least five Business Days prior to the Closing, Seller will deliver to
Buyer a report (the "Preliminary Adjustments Report"), showing in detail
the good faith preliminary determination of the adjustments referred to in
Section 3.3, which have been calculated as of the Closing Time (or as of
any other date and time agreed by the parties) and appropriate documents
substantiating the adjustments proposed in the Preliminary Adjustments
Report. Buyer will have three Business Days following receipt of the
Preliminary Adjustments Report to review such Report and supporting
information and to notify Seller of any disagreements of Buyer with
Seller's estimates. If Buyer provides a notice of disagreement (the
"Disagreement Notice") with Seller's estimates of the adjustments referred
to in Section 3.3 within such three Business Day period, Buyer and Seller
will negotiate in good faith to resolve any such dispute and to reach an
agreement prior to the Closing Date on such estimated adjustments as of
the Closing Time. The basis for determining the Purchase Price to be paid
at the Closing will be (a) the estimate so agreed upon by Buyer and
Seller, (b) if the parties do not reach such an agreement on the estimated
amount of the adjustments set forth in the Preliminary Adjustments Report
prior to the Closing Date and the amount in dispute is less than or equal
to $1,350,000 or if Buyer fails to provide a notice of disagreement with
Seller's estimates of such adjustments within the requisite time provided,
the estimates of such adjustments set forth in the Preliminary Adjustments
Report or (c) if the parties do not reach such an agreement on the
estimated amount of the adjustments set forth in the Preliminary
Adjustments Report prior to the Closing Date and the amount in dispute is
greater than $1,350,000, the estimates of such adjustments set forth in
the Preliminary Adjustments Report less (i) an amount equal to the excess
(if any) of (A) the Purchase Price based on the adjustments proposed by
Seller set forth in the Preliminary Adjustments Report, over (B) the
Purchase Price based on Buyer's estimate of such adjustments set forth in
the Disagreement Notice or (ii) $2,250,000, whichever is less (the "Escrow
Amount"). If the Purchase Price to be paid at Closing is determined under
(c) above, Buyer will deposit shares of Charter Class A Common Stock equal
to the Escrow Amount divided by the Charter Class A Per Share Value,
rounded to the nearest whole share (the "Escrowed Shares") into an escrow
account (which will be held by Chase Manhattan Bank or other escrow agent
which is mutually acceptable to Buyer and Seller (the "Escrow Agent") and
governed by an escrow agreement substantially in the form of EXHIBIT B).
3.4.2. Within 90 days after the Closing Date, Seller will
deliver to Buyer a report (the "Final Adjustments Report") showing in
detail the final determination of all adjustments which were not
calculated as of the Closing Time and containing any corrections to the
Preliminary Adjustments Report, together with appropriate documents
substantiating the adjustments proposed in the Final Adjustments Report.
Buyer will provide Seller with reasonable access
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to all records that Buyer has in its possession and which are necessary
for Seller to prepare the Final Adjustments Report.
3.4.3. Within 30 days after receipt of the Final Adjustments
Report, Buyer will give Seller written notice of Buyer's objections, if
any, to the Final Adjustments Report. If Buyer timely makes any such
objection, the parties will agree on any items, if any, which are not in
dispute within 30 days after Seller's receipt of Buyer's notice of
objections to the Final Adjustments Report. Any disputed amounts will be
determined by the accounting firm of Deloitte & Touche, which will be
obligated to determine such amounts within 90 days after the dispute is
submitted to it, and the determination of which will be conclusive. Seller
and Buyer will bear equally the fees and expenses payable to such firm in
connection with such determination. If the Purchase Price, as finally
determined, exceeds the estimated Purchase Price actually paid to Seller
at the Closing (such excess, the "Underpayment") and Buyer made a deposit
into escrow pursuant to Section 3.4.1, then Buyer and Seller will instruct
the Escrow Agent to release to Seller the number of Escrowed Shares equal
to the amount of the Underpayment divided by the Charter Class A Per Share
Value, rounded to the nearest whole share, and to release to Buyer any
remaining Escrowed Shares in the escrow account. If either (i) the number
of Escrowed Shares released to Seller from the escrow account are less
than the amount of the Underpayment divided by the Charter Class A Per
Share Value or (ii) no deposit to the escrow account was made pursuant to
Section 3.4.1, Buyer will issue and deliver to Seller Charter Class A
Common Stock in an amount equal to the Underpayment divided by the Charter
Class A Per Share Value, rounded to the nearest whole share, less the
Escrowed Shares, if any, released to Seller from the escrow account. To
the extent necessary to permit the Escrow Agent to comply with its release
obligations, Buyer will reissue the Escrowed Shares in several stock
certificates of differing denominations. If the estimated Purchase Price
paid at the Closing exceeds the Purchase Price, as finally determined,
then Buyer and Seller will instruct the Escrow Agent to release all
Escrowed Shares, if any, in the escrow account to Buyer and Seller will
pay to Buyer an amount in cash equal to the excess of the Purchase Price,
as finally determined, over the estimated Purchase Price paid at the
Closing. Any such cash payments will be made by wire transfer of
immediately available funds to the other party within three Business Days
after the final determination of all disputed items. For purposes of this
Section 3.4.3, if after Closing and prior to such settlement, any event
has occurred that would have resulted in adjustments pursuant to Section
3.2 if it had occurred prior to Closing, then the Charter Class A Per
Share Value used to determine the number of shares delivered under this
Section 3.4.3 will be adjusted in the same manner as it would have been
had such events occurred prior to Closing.
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4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer, as of the date of this Agreement
and as of the Closing, as follows:
4.1. Organization and Qualification. Seller is duly organized,
validly existing and in good standing under the laws of the state of its
organization and has all requisite power and authority to own, lease and
use the Assets as they are currently owned, leased and used and to conduct
the Business as it is currently conducted. Seller is duly qualified to do
business and is in good standing under the laws of each jurisdiction where
it operates the Business. When formed, Company will be a limited liability
company duly formed, validly existing and in good standing under the laws
of the State of Delaware, and will be treated for federal income tax
purposes as a disregarded entity with respect to Seller under Treasury
Regulations Section 301.7701-3(b)(1)(ii).
4.2. Authority and Validity. Seller has all requisite power and
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement and all other
documents and instruments to be executed and delivered in connection with
the transactions contemplated by this Agreement (collectively, the
"Transaction Documents") to which Seller is a party. The execution and
delivery by Seller of this Agreement has been duly authorized by all
requisite entity action. The execution and delivery by Seller of the
Transaction Documents to which Seller is a party, the performance by
Seller of its obligations under and the consummation by Seller of the
transactions contemplated by this Agreement and the Transaction Documents
to which Seller is a party have been, or will by the Closing Date be, duly
authorized by all requisite entity action. This Agreement is, and when
executed and delivered by Seller the Transaction Documents will be, the
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, except insofar as enforceability
may be affected by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting creditors'
rights generally or by principles governing the availability of equitable
remedies.
4.3. No Conflict; Required Consents. Subject to obtaining the
Required Consents, all of which are disclosed on SCHEDULE 4.3, and the
receipt of any consent required or the expiration or termination of the
applicable waiting period under the HSR Act, the execution and delivery by
Seller, the performance of Seller under, and the consummation by Seller of
the transactions contemplated by, this Agreement and the Transaction
Documents to which Seller or Company is a party do not and will not: (a)
conflict with or violate any provision of the organizational documents of
Seller or Company; (b) violate any Legal Requirement in any material
respect; (c) require any consent, waiver, approval or authorization of, or
any filing with or notice to, any Governmental Authority or other Person;
or (d) (i) violate, conflict with or constitute a breach of or default
under (without regard to requirements of notice, lapse of time or
elections of
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other Persons or any combination thereof), (ii) permit or result in the
termination, suspension or modification of, (iii) result in the
acceleration of (or give any Person the right to accelerate) the
performance of Seller under, or (iv) result in the creation or imposition
of any Encumbrance under, any Contract, Franchise or License or any other
instrument evidencing any of the Assets, or any instrument or other
agreement by which any of the Assets is bound or affected, except for
purposes of clauses (c) or (d), above, any consents, waivers, approvals or
authorizations required under any bulk Contracts relating to multiple
dwelling units with less than 250 units.
4.4. Assets. Seller has, and immediately prior to the transfer of
the Company Interests to Buyer, Company will have, good and marketable
title in and to (or, in the case of Assets that are leased, valid
leasehold interests in) the Assets (other than Real Property, as to which
the representations and warranties in Section 4.7 apply). The Assets are
free and clear of all Encumbrances, except (a) Permitted Encumbrances, (b)
rights of first refusal stated in the Franchises and Licenses, each of
which will be waived by the Person holding such right prior to the
Closing, and (c) Encumbrances disclosed on SCHEDULE 4.4. Except for the
Excluded Assets, the Assets are all the assets necessary to permit Company
to conduct the Business and to operate the Systems substantially as the
Business is being conducted and the Systems are being operated on the date
of this Agreement and in compliance with all applicable Legal Requirements
and to perform all of the Assumed Obligations and Liabilities. Except as
disclosed on SCHEDULE 4.4, all of the Equipment is in good operating
condition and repair, ordinary wear and tear excepted, and is adequate for
the operation of the Business.
4.5. Franchises and Licenses. Except as disclosed on SCHEDULE 4.5,
Seller is not bound or affected by any (a) "franchise," as such term is
defined in Section 602 of the Communications Act (47 U.S.C. 522), in
connection with the operation of the Business, (b) license, authorization
or permit issued by the FCC that relates to the Systems or the operation
of the Business or (c) any licenses, authorizations or permits of any
other Governmental Authority (other than those described in clauses (a) or
(b)) which are individually or in the aggregate material to the Business
or the Systems. Seller has provided Buyer with access to true and complete
copies of each Franchise and License disclosed on SCHEDULE 4.5. SCHEDULE
4.5 discloses the specific Seller bound or affected by each Franchise. To
the extent that SCHEDULE 4.5 fails to disclose the specific Seller bound
or affected by each item listed thereon or any license, authorization or
permit of any Governmental Authority, Seller will provide such information
to Buyer within 30 days after the date of this Agreement. Except as
disclosed on SCHEDULE 4.5, the Franchises and Licenses are currently in
full force and effect under all applicable Legal Requirements according to
their terms and Seller is not in breach or default of any terms or
conditions thereunder and no event has occurred that, with notice or lapse
of time or both would constitute a breach, violation or default thereunder
by Seller. Except as disclosed on SCHEDULE 4.5, there is no legal action,
governmental proceeding or investigation, pending or, to
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Seller's Knowledge, threatened, to terminate, suspend or modify any
Franchise or License. Except as set forth on SCHEDULE 4.5, (a) the
Franchises contain all of the commitments of Seller to the applicable
Governmental Authority granting such Franchises with respect to the
construction, ownership and operation of the Systems, and (b) other than
as set forth in the Franchises, Seller has not made any commitment to any
local franchising authority to make any expenditure or capital addition or
betterment to any System or the Assets that will not be fulfilled or
satisfied prior to the Closing Time. As of the date of this Agreement,
except as disclosed on SCHEDULE 4.5, and other than any satellite master
antenna television system which serves fewer than 1000 dwelling units and
direct broadcast satellite television, with respect to each area in which
the Systems currently provide cable television service: (a) no Third Party
is operating a cable television system or other non-satellite MVPD other
than a System in such area; (b) no construction programs have been
substantially undertaken, or, to the Knowledge of Seller, are proposed to
be undertaken, by any municipality or Third Party wireline cable
television operator in the Service Area, (c) no franchise has been, or, to
the Knowledge of Seller, is proposed to be, granted to any Third Party in
the Service Area, other than franchises included in the Assets; and (d) to
the Knowledge of Seller, no Third Party MVPD has applied for a cable
television franchise or open video system or similar authorization to
serve such area.
4.6. Contracts. All Contracts are disclosed on SCHEDULE 4.6, except
for: (a) subscription agreements with individual residential subscribers
or commercial establishments for the cable services provided by the
Systems in the ordinary course of business; (b) miscellaneous service
Contracts with Seller's vendors terminable at will or upon notice of 30
days or less without penalty; (c) Contracts not involving any monetary
obligation in excess of $25,000; (d) bank financing documents; (e)
Contracts constituting Excluded Assets; and (f) Contracts relating to
services provided by Seller to residents of multiple dwelling unit
complexes or to commercial accounts. Without limiting the foregoing,
SCHEDULE 4.6 discloses all programming agreements, wireline crossing
agreement, pole attachment agreements, fiber leases, Contracts between
Seller and its Affiliates, retransmission consent agreements, capital
leases of personal property and agreements limiting the right of the
Systems to compete, except, in each case, such Contracts that are Excluded
Assets. Seller has provided Buyer with access to true and complete copies
of each of the written Contracts disclosed on SCHEDULE 4.6 and will
provide Buyer access to all other Contracts (including descriptions of
oral Contracts) of Seller within 30 days after the date of this Agreement.
Seller will further provide Buyer with a complete list of all multiple
dwelling unit complexes served by the Systems as of the date specified in
such list. Each Contract is in full force and effect and constitutes the
valid, legal, binding and enforceable obligation of Seller, and Seller is
not in breach or default of any terms or conditions thereunder. To
Seller's Knowledge no other party thereto is, in breach or default of any
material terms or conditions thereunder.
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4.7. Real Property.
4.7.1. All of the Assets consisting of Real Property interests
are disclosed on SCHEDULE 4.7. To the extent that SCHEDULE 4.7 fails to
disclose the specific Seller holding each interest listed thereon, Seller
will provide such information to Buyer within 30 days after the date of
this Agreement. Except as otherwise disclosed on SCHEDULE 4.7, Seller is
the sole owner (both legal and equitable) and holds, or at the time of the
Closing Company will hold, good and marketable fee simple absolute title
to each parcel of Real Property disclosed as being owned by Seller on
SCHEDULE 4.7 or is otherwise owned by Seller and all buildings, structures
and improvements thereon and has the valid and enforceable right to use
and possess such owned Real Property and improvements, in each case free
and clear of all Encumbrances except for Permitted Encumbrances. Seller
has, and at the Closing Company will have, valid and enforceable leasehold
interests in the Real Property disclosed as being leased by Seller on
SCHEDULE 4.7 or is otherwise leased by Seller and, with respect to other
Real Property not owned or leased by Seller, Seller has, and at the
Closing Company will have, the valid and enforceable right to use all
other Real Property pursuant to the easements, licenses, rights-of-way or
other rights disclosed on SCHEDULE 4.7 or is otherwise used by Seller, and
all improvements thereon owned by Seller and included in the Assets, in
each case free and clear of all Encumbrances except for Permitted
Encumbrances. With respect to leasehold interests and other material
interests in Real Property, Seller is not in breach or default of any
terms or conditions of any written instrument relating thereto and, to
Seller's Knowledge, no other party thereto is in material breach or
default of any terms or conditions of any such written instrument.
4.7.2. There are no leases or other agreements, oral or
written, granting to any Person other than Seller the right to occupy or
use any Real Property, except as disclosed on SCHEDULE 4.7. Seller has
provided Buyer with access to true and complete copies of each of the
written leases and other agreements disclosed on SCHEDULE 4.7, including
all amendments and addenda thereto. Each parcel of Real Property owned or
leased by Seller, any improvements constructed thereon and their current
use, conforms in all material respects to (a) all applicable Legal
Requirements, and (b) all restrictive covenants, if any, or other
Encumbrances affecting all or part of such Real Property.
4.7.3. Except as disclosed on SCHEDULE 4.7, each parcel of
owned Real Property and each parcel of leased Real Property (a) has access
to and over public streets or private streets for which Seller has a valid
right of ingress and egress, (b) conforms in its current use and occupancy
in all material respects to all zoning requirements and (c) conforms in
its current use in all material respects to all restrictive covenants, if
any, or other Encumbrances affecting all or part of such parcel. There are
no pending or, to Seller's Knowledge, threatened condemnation actions or
special assessments or proceedings for changes in the zoning with respect
to such Real Property or any part thereof and
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Seller has not received any notice of the desire of any Governmental
Authority or other entity to take or use any Real Property or any part
thereof. Seller has complied in all material respects with all notices or
orders to correct violations of Legal Requirements issued by any
Governmental Authority having jurisdiction against or affecting any of the
Real Property.
4.8. Environmental Matters.
4.8.1. Except as disclosed on SCHEDULE 4.8: (a) to the
Knowledge of Seller, the Real Property currently complies in all material
respects with Environmental Laws; (b) neither the Real Property owned by
Seller nor, to the Knowledge of Seller, the Real Property leased by Seller
is the subject of any court order, administrative order or decree arising
under any Environmental Law; and (c) the Real Property has not been used
by Seller for the generation, storage, discharge or disposal of any
Hazardous Substances except as permitted under Environmental Laws. Except
as disclosed on SCHEDULE 4.8, Seller has not received any written notice
from any Governmental Authority alleging that the Real Property is in
violation of any Environmental Law, and no claim based on any
Environmental Law has been asserted to Seller in writing in the past or is
currently pending or, to the Knowledge of Seller, threatened, with respect
to any Real Property.
4.8.2. Seller has provided Buyer with complete and correct
copies of (a) all studies, reports, surveys or other materials in Seller's
possession or to which Seller has access relating to the actual or alleged
presence, use, generation, release or disposal of Hazardous Substances at,
on, under or affecting the Real Property, (b) all notices or other
materials in Seller's possession or to which Seller has access that were
received from any Governmental Authority respecting any Environmental Laws
relating to the current or past ownership, use or operation of the Real
Property or activities at the Real Property and (c) all notices and other
materials in Seller's possession or to which Seller has access relating to
any litigation or claim relating to the Real Property or other Assets or
concerning any Environmental Law.
4.9. Compliance with Legal Requirements. Except as set forth on
SCHEDULE 4.9:
4.9.1. The ownership, leasing and use of the Assets as they
are currently owned, leased and used, and the conduct of the Business as
it is currently conducted, do not violate or infringe in any material
respect any Legal Requirements currently in effect (other than Legal
Requirements described in Section 4.9.4, as to which the representations
and warranties set forth in that subsection will exclusively apply).
Seller has not received any notice of, and Seller has no Knowledge of, any
basis for the allegation of any such violation or infringement.
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4.9.2. A valid request for renewal has been duly and timely
filed under Section 626 of the Communications Act with the proper
Governmental Authority with respect to all Franchises that have expired
prior to, or will expire within 30 months after, the date of this
Agreement. Seller has not received notice from any Governmental Authority
that it has determined or intends to deny renewal of any Franchise to
which Seller is a party.
4.9.3. Seller has complied, and the Business is in material
compliance with the Communications Act and the rules and regulations of
the FCC, including all regulatory filings required thereunder and the
technical standards set forth in Part 76, Subpart K, and with Section 111
of the U.S. Copyright Act of 1976 and the applicable rules and regulations
of the U.S. Copyright Office and the Register of Copyrights, including the
filing of all required Statements of Account with respect to each System
since Seller's acquisition of such System.
4.9.4. Notwithstanding the foregoing and except as
specifically limited herein, to Seller's Knowledge, each System is in
compliance with the provisions of the Communications Act and FCC
regulations, including provisions pertaining to signal leakage, utility
pole make ready, grounding and bonding of cable television systems (in
each case as the same is currently in effect). Seller has complied with
the must carry, retransmission consent, and commercial leased access
provisions of the Communications Act and FCC regulations as they relate to
the Systems. Seller has used commercially reasonable good faith efforts to
establish rates charged to subscribers, effective since September 1, 1993,
that would be allowable under the Communications Act, and rules and
regulations promulgated by the FCC, and any authoritative interpretation
thereof now or then in effect, whether or not such rates were subject to
regulation at that date by any Governmental Authority, including any state
regulatory agency, local franchising authority and the FCC.
Notwithstanding the foregoing, Seller makes no representation or warranty
that either the rates charged to subscribers of the Systems would be
allowable under any rules and regulations of the FCC or any authoritative
interpretation thereof, promulgated after the Closing Date.
4.9.5. All necessary FAA approvals have been obtained and all
necessary FCC tower registrations have been filed with respect to the
height and location of towers used in connection with the operation of the
Systems, and such towers are being operated in compliance in all material
respects with applicable FCC and FAA rules.
4.10. Patents, Trademarks and Copyrights. To the Knowledge of
Seller, the operation of the Business as currently conducted does not
violate or infringe upon the rights of any Person in any copyright,
trademark, service mark, patent, license, trade secret or similar
intellectual property right.
4.11. Financial Statements. Seller has delivered to Buyer correct
and complete copies of its unaudited balance sheets and unaudited
statements of
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operations for the Systems as of and for the periods ended December 31,
1999 and December 31, 2000 (the "Financial Statements"). The Financial
Statements are in accordance with the books and records of Seller and
fairly present, in all material respects, Seller's financial position and
results of operations as of the dates and for the periods indicated,
subject to normal year-end adjustments, allocations and accruals (none of
which are deemed to be material to the operating cash flow of Seller). The
Financial Statements reflect the fully allocated costs of operating the
Systems, including all employee costs associated with operating the
Systems. The Financial Statements have been prepared in accordance with
GAAP, applied on a consistent basis throughout the periods covered
thereby, except that they do not (a) reflect income taxes, (b) contain a
statement of cash flows, (c) contain footnotes, or (d) fully reflect the
allocation of AT&T Corp.'s purchase price to acquire Tele-Communications,
Inc. for the 1999 period. Such purchase price allocations would primarily
affect franchise costs, property and equipment, depreciation and
amortization.
4.12. Absence of Certain Changes. Except as disclosed on SCHEDULE
4.12, since December 31, 2000: (a) no event or circumstance has occurred
which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect; (b) Seller has operated the Business only
in the usual, regular and ordinary course; and (c) there has been no sale,
assignment or transfer of any material Assets, or any theft, damage,
removal, destruction or casualty loss of any material property. As of the
date of this Agreement, since December 31, 2000, there has been no
material change in accounting principles or practices with respect to the
Business or revaluation by Seller of the Assets for financial reporting,
property tax or other purposes.
4.13. Legal Proceedings. Except as disclosed on SCHEDULE 4.13, (a)
there is no judgment or order outstanding, or any action, suit, complaint,
proceeding or investigation by or before any Governmental Authority or any
arbitrator pending, or to Seller's Knowledge, threatened, involving or
affecting all or any part of the Business or Seller, except as would not
reasonably be expected to materially adversely affect the Systems or the
Business; (b) there are no claims, actions, suits, proceedings or
investigations pending or, to Seller's Knowledge, threatened, by or before
any Governmental Authority, or any arbitrator, by, against, affecting or
relating to Seller which, if adversely determined, would restrain or
enjoin the consummation of the transactions contemplated by this Agreement
or declare unlawful the transactions or events contemplated by this
Agreement or cause any of such transactions to be rescinded; and (c) there
are no current rate proceedings, must-carry complaints or other actions,
suits, complaints, proceedings or investigations pending against Seller
alleging noncompliance by the Systems of any Franchise or License.
4.14. Tax Returns; Other Reports. Seller has duly and timely filed
all federal, state, local and foreign Tax returns and other Tax reports
required to be filed by Seller, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or
report, the failure of
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which to be filed or paid could adversely affect or result in the
imposition of an Encumbrance upon the Assets or create any transferee or
other liability upon Buyer or Company, except such amounts as are being
contested diligently and in good faith. Except as disclosed on SCHEDULE
4.14, Seller has received no notice of, nor does Seller have any Knowledge
of, any deficiency, assessment or audit, or proposed deficiency,
assessment or audit from any taxing Governmental Authority which could
affect or result in the imposition of an Encumbrance upon the Assets or
create any transferee or other liability upon Buyer or Company. Except as
disclosed on SCHEDULE 4.14, the Assets are not subject to any joint
venture, partnership or other arrangement or contract which is treated as
a partnership for Federal Income tax purposes. Each material election with
respect to income Taxes is set forth on SCHEDULE 4.14.
4.15. Employment Matters.
4.15.1. Seller has complied in all material respects with all
applicable Legal Requirements relating to the employment of labor,
including the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), continuation coverage requirements with respect to group health
plans, and those relating to wages, hours, collective bargaining,
unemployment insurance, worker's compensation, equal employment
opportunity, discrimination, immigration control and the payment and
withholding of Taxes.
4.15.2. For purposes of this Agreement, "Seller Plans" means
(a) each employee benefit plan (as defined in Section 3(3) of ERISA),
other than any defined benefit plan subject to Title IV of ERISA or any
multiemployer plan (as defined in Section 3(37) of ERISA), which is
sponsored or maintained by Seller or its ERISA Affiliates or to which
Seller contributes, and which benefits System Employees, or (b) each
multiemployer plan (as defined in Section 3(37) of ERISA) or defined
benefit plan subject to Title IV of ERISA sponsored or maintained by
Seller or any of Seller's ERISA Affiliates or to which Seller or any of
its ERISA Affiliates is obligated to contribute. The Seller Plans in which
any System Employee participates are disclosed on SCHEDULE 4.15.2. None of
Seller, any Seller Plan other than a multiemployer plan (as defined in
Section 3(37) of ERISA), or, to the Knowledge of Seller, any Seller Plan
that is a multiemployer plan (as defined in Section 3(37) of ERISA), is in
material violation of any provision of ERISA or the Code for which Buyer
will have any liability after the Closing Date. No (i) "reportable event"
described in Sections 4043(c)(1), (2), (3), (5), (6), (7), (10) and (13)
of ERISA, (ii) non-exempt "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code), (iii) "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or (iv) "withdrawal
liability" (as determined under Section 4201 et seq. of ERISA) has
occurred or exists and is continuing with respect to any Seller Plan.
"ERISA Affiliate" means, as to any Person, any trade or business, whether
or not incorporated, which together with such Person would be deemed a
single employer as determined under Section 4001 of ERISA. There are no
Liens against the Assets under Section 412(n) of the Code or Sections
302(f) or 4068
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of ERISA. At the Closing, Buyer will have no obligation to contribute to,
or any liability in respect of, any Seller Plan, or any similar
employment, severance or other arrangement or policy (whether written or
oral) providing for insurance coverage (including self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits (except as provided in this
Agreement), fringe benefits or retirement benefits, or for profit sharing,
deferred compensation, bonuses, stock options, stock appreciation or other
forms of incentive compensation or post-retirement insurance, compensation
or benefits, sponsored or maintained by Seller or any of its ERISA
Affiliates, or to which Seller or any of its ERISA Affiliates is obligated
to contribute.
4.15.3. Except as disclosed on SCHEDULE 4.15, as of the date
of this Agreement, no collective bargaining agreements are applicable to
any System Employee and Seller has no duty to bargain with any labor
organization with respect to any System Employees. None of the collective
bargaining agreements applicable to any System Employee require Seller to
impose the collective bargaining agreement upon Buyer or Company. Except
as disclosed on SCHEDULE 4.15, as of the date of this Agreement, there are
not pending, or to Seller's Knowledge, threatened, any labor disputes,
unfair labor practice charges, material labor arbitration proceedings or
labor grievances against Seller, any demand for recognition or any other
request or demand from a labor organization for representative status with
respect to any System Employee. Except as disclosed on SCHEDULE 4.15,
Seller has no employment agreements, either written or oral, with any
System Employee. Except as disclosed on SCHEDULE 4.15, there are no work
stoppages, strikes or other concerted activities by employees of Seller
pending, or to Seller's Knowledge, threatened against Seller.
4.16. System Information. With respect to each of the Systems,
disclosed on SCHEDULE 4.16 are (a) the approximate number of plant miles
(aerial and underground) for the System, (b) the minimum bandwidth
capability, channel capacity and two-way capability of each headend, (c)
the stations and signals carried by the System and (d) the channel
position of each such signal and station (including a designation of which
broadcast stations are distributed pursuant to a retransmission consent
and which are distributed pursuant to a must-carry election), which
information is true and correct in all material respects, in each case as
of the applicable dates specified therein and subject to any
qualifications set forth therein. Also disclosed on SCHEDULE 4.16 are the
approximate number of homes passed by the System, and the number of
subscribers of the System as of the applicable dates and calculated
pursuant to the methodology specified therein. Seller has delivered to
Buyer information on the channel lineups and the monthly rates charged for
each class of service for the Systems (including installation charges),
which information is true and correct in all material respects, in each
case as of the applicable dates specified therein and subject to any
qualifications set forth therein.
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4.17. Finders and Brokers. Other than Daniels & Associates (whose
fees will be paid by Seller), Seller has not employed any financial
advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection
with the transactions contemplated by this Agreement for which Buyer or
Company could be liable.
4.18. Disclosure. Any item required to be disclosed on more than one
Schedule to this Agreement will be deemed properly disclosed on another
Schedule if it is disclosed on any Schedule to this Agreement, as long as
such disclosure includes an appropriate cross-reference or it is
reasonably apparent from the face and context of the item disclosed that
it should be disclosed on such other Schedule.
4.19. Securities Law Matters. Seller understands and acknowledges
that the Share Consideration has not been registered or qualified under
the federal or applicable state securities laws and the Share
Consideration is being transferred to Seller in reliance upon applicable
exemptions from such registration and qualification requirements. Seller
is an "accredited investor" within the meaning of the federal securities
laws and acknowledges it has been furnished with or afforded access to,
and has had the opportunity to ask questions and receive answers
concerning, all information pertaining to the Share Consideration. The
Share Consideration is being acquired by Seller for investment only and
not with a view to any resale or other distribution thereof. Seller
understands that each share of Charter Class A Common Stock included in
the Share Consideration is a "restricted security" within the meaning of
the federal securities laws and agrees that it will not offer to sell or
otherwise dispose of the Share Consideration in violation of the
registration and qualification requirements of the federal and applicable
state securities laws. The certificates for the Charter Class A Common
Stock included in the Share Consideration will bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT OR, IN THE
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE, TRANSFER, PLEDGE
OR HYPOTHECATION DOES NOT VIOLATE THE PROVISIONS THEREOF.
4.20. Investment Company. Seller is not, and upon consummation of
the transactions contemplated by this Agreement will not be, an
"Investment Company" required to register as such under the Investment
Company Act of 1940, as amended.
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4.21. Seller Tax Matters.
4.21.1. Seller (i) has neither agreement to make nor is
required to make any adjustment under Section 481 of the Code by reason of
a change in accounting method and (ii) is not a "consenting corporation"
within the meaning of Section 341(f)(1) of the Code.
4.21.2. Seller has not made any payments, is not obligated to
make any payments, nor is a party to any contract, agreement or
arrangement covering any current or former employee or consultant of
Seller that under certain circumstances could require it to make or give
rise to any payments that are not deductible as a result of the provisions
set forth in Section 280G of the Code or the Treasury Regulations
thereunder or would result in an excise tax to the recipient of any such
payment under Section 4999 of the Code.
4.21.3. Seller has no material federal tax attributes.
5. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants to Seller, as of the date of this Agreement
and as of the Closing, as follows:
5.1. Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware and has all requisite power and authority to carry on its
business as currently conducted and to own, lease, use and operate its
assets. Buyer is duly qualified to do business and is in good standing
under the laws of each jurisdiction in which the character of the
properties owned, leased or operated by it or the nature of the activities
conducted by it makes such qualification necessary.
5.2. Authority and Validity. Buyer has all requisite power and
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement and the
Transaction Documents. The execution and delivery by Buyer of, the
performance by Buyer of its obligations under, and the consummation by
Buyer of the transactions contemplated by, this Agreement and the
Transaction Documents to which Buyer is a party have been duly authorized
by all requisite entity action. This Agreement is, and when executed and
delivered by Buyer, the Transaction Documents will be, the valid and
binding obligations of Buyer, enforceable in accordance with their
respective terms, except insofar as enforceability may be limited or
affected by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect affecting creditors' rights
generally or by principles governing the availability of equitable
remedies.
5.3. No Conflicts; Required Consents. Subject to the receipt of any
consent or the expiration or termination of the applicable waiting period
under the HSR Act, and assuming the Required Consents have been obtained,
the execution and delivery by Buyer, the performance of Buyer under, and
the
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consummation by Buyer of the transactions contemplated by, this Agreement
and the Transaction Documents to which Buyer is a party do not and will
not: (a) violate any provision of the organizational documents of Buyer;
(b) violate any material Legal Requirement; or (c) require any consent,
waiver, approval or authorization of, or any filing with or notice to, any
Person.
5.4. Finders and Brokers. Buyer has not employed any financial
advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection
with the transactions contemplated by this Agreement for which Seller
could be liable.
5.5. Legal Proceedings. There are no claims, actions, suits,
proceedings or investigations pending or, to Buyer's knowledge,
threatened, by or before any Governmental Authority, or any arbitrator,
by, against, affecting or relating to Buyer which, if adversely
determined, would restrain or enjoin the consummation of the transactions
contemplated by this Agreement or declare unlawful the transactions or
events contemplated by this Agreement or cause any of such transactions to
be rescinded.
5.6. Securities Law Matters. Buyer understands and acknowledges that
the Company Interests have not been registered or qualified under the
federal or applicable state securities laws and the Company Interests are
being sold to and purchased by Buyer in reliance upon applicable
exemptions from such registration and qualification requirements. Buyer is
an "accredited investor" within the meaning of the federal securities laws
and acknowledges it has been furnished with or afforded access to, and has
had the opportunity to ask questions and receive answers concerning, all
information pertaining to the Company Interests. The Company Interests are
being acquired by Buyer for investment only and not with a view to any
public distribution thereof. Buyer understands that the Company Interests
are "restricted securities" within the meaning of the federal securities
laws and agrees that it will not offer to sell or otherwise dispose of the
Company Interests in violation of the registration and qualification
requirements of the federal and applicable state securities laws.
5.7. Investment Company. Buyer is not, and upon consummation of the
transactions contemplated by this Agreement will not be, an "Investment
Company" required to register as such under the Investment Company Act of
1940, as amended.
5.8. Balance Sheet. Buyer has delivered, or at or before the Closing
will deliver, to the Sellers a true and complete copy of an audited
consolidated balance sheet of Buyer and its consolidated subsidiaries as
of December 31, 2000. As of the date of this Agreement, all cable
television operations of Buyer and its Affiliates are conducted through
Buyer or one or more of its direct or indirect subsidiaries or joint
ventures or other Persons in which Buyer holds an equity interest.
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5.9. Delivery of Share Consideration. The Share Consideration being
issued hereunder, when issued and delivered in accordance with the terms
of this Agreement for the consideration expressed herein, will be duly
authorized, validly issued, fully paid and nonassessable. The delivery of
such Share Consideration pursuant to this Agreement will transfer to the
Sellers good and valid title to such Share Consideration, free and clear
of all Encumbrances and any other limitations or restrictions (including
any restrictions on the right to vote, sell or otherwise dispose of such
interest), other than the transfer restrictions imposed by applicable
Legal Requirements or set forth in the Registration Rights Agreement.
5.10. SEC Filings; Financial Information.
5.10.1. Buyer has made available to Seller (a) Buyer's
Registration Statement No. 333-41486 including the Prospectus contained
therein and all amendments thereto and prospectus supplements thereto
prior to the date of this Agreement, (b) Buyer's Form 10-Q for each of the
quarters ended June 30, 2000, September 30, 2000, and December 31, 2000,
(c) all Form 8-Ks filed subsequent to December 31, 2000, and (d) Buyer's
Registration Statement No. 333-54394 including all amendments thereto (the
"Current Filings"). The Current Filings, as of the date of the filing
thereof, did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
5.10.2. The financial information of Buyer and its
subsidiaries contained in the Current Filings fairly present in all
material respects, as of the dates thereof and for the periods then ended,
the financial condition and results of operation of Buyer and its
consolidated subsidiaries in conformity with GAAP (except as indicated in
the notes thereto), subject to normal year-end adjustments with respect to
unaudited financial statements.
5.11. Buyer Tax Matters.
5.11.1. Buyer has no plan or intention to sell or otherwise
dispose of any of the assets of the Company acquired in the Transaction,
except for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code or Treasury Reg.
Section 1.368-2(k)(1) or Treasury Reg. Section 1.368-1(d)(4)(iii).
5.11.2. Buyer or a party related to Buyer within the meaning
of Treasury Reg. Section 1.368-1(e)(3) has no plan or intention to acquire
any of the Charter Class A Common Stock issued in the Transaction.
5.11.3. Except as contemplated by this Agreement, neither
Buyer nor any of its Affiliates has taken or agreed to take any action,
nor do its executive officers have any actual knowledge of any fact or
circumstance, in
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each case that would prevent the Transaction from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
6. ADDITIONAL COVENANTS.
6.1. Access to Premises and Records. Between the date of this
Agreement and the Closing Date, upon reasonable advance notice from Buyer
to Seller, Seller will give Buyer and its representatives reasonable
access during normal business hours to all the premises and the Books and
Records of the Business, to all the Assets, to the general managers of the
Systems, and to other AT&T corporate personnel to the extent reasonably
necessary to effect a transition of the operations of the Systems to Buyer
following the Closing, and will furnish to Buyer and its representatives
all information regarding the Business, the Assets and, to the extent
reasonably necessary to effect any transition with respect to any Excluded
Assets, the Excluded Assets, as Buyer may from time to time reasonably
request. No investigation will affect or limit the scope of any of the
representations, warranties, covenants and indemnities of the other in
this Agreement or in any Transaction Document or limit liability for any
breach of any of the foregoing. Buyer will use commercially reasonable
efforts to give Seller prompt notice of Buyer's discovery of any event or
condition that could constitute such a breach. All requests for access to
AT&T corporate personnel will be made to Patty Conroy, at 303-858-3609.
6.2. Continuity and Maintenance of Operations; Financial Statements.
Except as Buyer may otherwise consent in writing (which consent, when
requested in connection with any conduct described in Sections 6.2.1,
6.2.2, 6.2.3 or 6.2.7, will not be withheld unreasonably), until the
Closing:
6.2.1.Seller will conduct the Business in good faith and
operate the Systems only in the ordinary course consistent in all material
respects with past practices, and will use commercially reasonable
efforts, to the extent consistent with such conduct and operation, to (a)
preserve the Business intact, including preserving existing relationships
with franchising authorities, suppliers, customers and others having
business dealings with Seller relating to the Business and (b) keep
available the services of the System Employees (but will be under no
obligation to incur any costs in addition to what Seller is currently
incurring to do so).
6.2.2.Seller will maintain the Assets in good repair, order
and condition (ordinary wear and tear excepted), will maintain Equipment
and inventory for the Systems at normal historical levels consistent with
past practices (as adjusted to account for abnormally high inventory
levels related to construction activity), will maintain in full force and
effect, policies of insurance with respect to the Business in such amounts
and covering such risks as customarily maintained by operators of cable
television systems of similar size and geographic location as the Systems,
and will maintain its books, records and accounts in the ordinary manner
on a basis consistent with past practices. Seller
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will (a) only report and write off accounts receivable in accordance with
past practice, (b) withhold and pay when due all Taxes relating to System
Employees, the Assets or the System, (c) maintain service quality of the
Systems at a level at least consistent with past practices, (d) file with
the FCC all reports required to be filed under applicable FCC rules and
regulations, and (e) comply in all material respects with all Legal
Requirements with respect to the Systems. Seller will (x) undertake
capital programs contemplated by the System's capital budget, (y) exercise
good faith efforts to expend the amount described on its capital budget in
accordance with the categories described with respect to each such capital
program and (z) undertake capital programs reasonably requested by Buyer,
provided that such requests do not, in the aggregate, require capital
expenditures in excess of $10,000,000, and would not reasonably be
expected to cause Seller to breach any Contract by which it is bound or
any Legal Requirement or hinder or delay the Closing.
6.2.3.Seller will not, except as disclosed on SCHEDULE 6.2:
(a) sell, transfer or assign any portion of the Assets other than sales in
the ordinary course of business; (b) modify, terminate, renew (other than
in the ordinary course or as required by this Agreement) suspend or
abrogate any Franchises, Licenses or material Contracts (other than those
constituting Excluded Assets); (c) enter into any non-ordinary course
Contract or commitment involving an expenditure in excess of $50,000
individually, or $500,000 in the aggregate, other than Contracts or
commitments which are cancellable on 30 days' notice or less without
penalty and other than as contemplated by this Agreement; (d) modify its
procedures for disconnection and discontinuation of service to subscribers
whose accounts are delinquent; (e) except in accordance with an AT&T-wide
plan or program (in which case Seller will give prior notice to Buyer)
increase the compensation or materially change any benefits (other than
severance benefits) available to System Employees, except as required
pursuant to existing written agreements, or in the ordinary course of
business consistent with past practice; (f) create, assume or permit to
exist any Encumbrance (other than Permitted Encumbrances) on any of the
Assets, other than any Encumbrance which will be released at or prior to
the Closing; (g) make any Cost of Service Election; (h) enter into any
agreement with or commitment to any competitive access provider and/or
local exchange company or any internet access or on-line services provider
with respect to the use or lease of any of the Assets; (i) enter into any
collective bargaining agreement covering the System Employees who are not
now covered by a collective bargaining agreement or enter into any new
bonus, stock option, profit sharing, compensation, pension, welfare,
retirement, employment or similar agreement that would create any
liability to Buyer or Company after the Closing Date, except where
required by any Legal Requirement; (j) decrease the rate charged for any
level of Basic Services, Expanded Basic Services or any Pay TV, except to
the extent required by any Legal Requirement or, except as expressly
permitted by SCHEDULE 6.2 or in connection with any rebuild, add, delete,
retier or repackage any analog programming services, in each case except
to the extent required under the 1992 Cable Act or any other Legal
Requirement; provided, however, that if rates are
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decreased in order to so comply, Seller will provide Buyer with copies of
any FCC forms (even if not filed with any Governmental Authority) used to
determine that the new rates were required; (k) engage in any marketing,
subscriber installation, collection or disconnection practices outside the
ordinary course of business or inconsistent with past practice; (l) enter
into, modify or amend any Contract for any fiber or fiber capacity lease
or use arrangements; (m) offer telephony or related services in Systems
where such services are not offered as of the date of this Agreement; or
(n) convert any of the Systems to any billing system or otherwise change
billing arrangements for any of the Systems.
6.2.4.Seller will deliver to Buyer true and complete copies of
any monthly and quarterly financial statements and operating reports with
respect to the Business which are prepared by or for Seller in the
ordinary course of business at any time between the date of this Agreement
and the Closing Date, including System level and consolidated state level
expanded and detailed statements of operating income and cash flow with
respect to the Business. Seller will further promptly deliver to Buyer any
other reasonable financial information related to the Systems requested by
Buyer. Prior to Closing, Seller will provide prompt notice to Buyer of any
change in accounting principles or practices with respect to the Business
or revaluation by Seller of the Assets for financial reporting, property
tax or other purposes.
6.2.5.Within 30 days after the date of this Agreement, or with
respect to items that are prepared, filed or received by Seller after the
date hereof, within 5 Business Days after the date of preparation, filing
or receipt, Seller will provide to Buyer true and complete copies of each
of the following items (unless previously provided):
(i) each Franchise and License related to the Systems;
(ii) all pending applications relating to any Franchise
or License pending before any Governmental Authority;
(iii) a list setting forth the expiration date of all
Franchises, Licenses, Authorizations and permits listed on Schedule 4.5;
(iv) any pending notice received from any Governmental
Authority that it has determined or intends to terminate, modify or deny
renewal of any Franchise to which Seller is a party;
(v) all pending requests for renewal with respect to any
Franchise filed under Section 626 of the Communications Act;
(vi) any relevant documentation supporting an exemption
from the rate regulation provisions of the 1992 Cable Act claimed by
Seller with respect to the Systems;
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(vii) the most recent applicable FCC Forms 328, 329,
393, 1200, 1205, 1210, 1215, 1220, 1235 and 1240 and other FCC rate forms
(collectively, the "FCC Rate Forms"), if any, filed with any Governmental
Authority with respect to any of the Systems;
(viii) all historical FCC Rate Forms filed with any
Governmental Authority with respect to any of the Systems where there is a
rate issue pending (including any accounting order or rate order on
appeal);
(ix) all other reports, filings and correspondence made
or filed with the FCC or pursuant to the FCC rules and regulations filed
after the date which is one year prior to the date of this Agreement;
(x) all complaints, petitions, answers, responses and
other filings made with or by any Governmental Authority in connection
with any rate orders issued by such Governmental Authority or any appeal
therefrom with respect to any Franchise or any System;
(xi) all documentation relating to any System with
respect to the carriage of broadcast signals under current must-carry and
retransmission consents;
(xii) any social contract entered into with the FCC in
respect of any System with regard to rate regulation, subscriber refunds
and other matters;
(xiii) all reports, filings and correspondence with
respect to any System made or filed with the U.S. Copyright Office or
pursuant to the U.S. Copyright Office rules and regulations on or after
the date which is three years prior to the date of this Agreement;
(xiv) a schedule setting forth the ownership, height
(with and without appurtenances), location (address, latitude, longitude
and ground elevation), structure type and FCC call signs of each tower
used in connection with the operation of the Systems;
(xv) all available Federal Aviation Administration
("FAA") final determinations (if applicable) and FCC registrations for all
such towers;
(xvi) all Contracts and Real Property agreements related
to the Systems;
(xvii) a list of all headends, Franchises and
unfranchised communities indicating the number of basic subscribers served
in each; and
(xviii) a schedule setting forth (i) the cities, towns,
villages, boroughs and counties served by each system; (ii) the
approximate number of
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single family and residential and commercial MDUs passed by each Franchise
and System; and (iii) the FCC CUID numbers for each Franchise.
6.2.6. Each month, Seller will deliver to Buyer, a schedule
indicating the then current status of the Required Consents marked with an
asterisk on SCHEDULE 4.3 and what action has been taken by Seller with
respect to obtaining such Required Consents. Beginning 60 days after the
date of this Agreement, Seller will provide weekly updates (by telephone,
electronic mail or in writing) to Buyer regarding the status of such
Required Consents.
6.2.7. Seller will use its commercially reasonable efforts to
challenge and contest any litigation brought against or otherwise
involving Seller that could result in the imposition of Legal Requirements
that could cause the conditions to the Closing not to be satisfied, or to
settle such litigation. Seller will not, without Buyer's consent, enter
into any settlement of any litigation that will bind Buyer, Company or any
System to any material obligation following the Closing, impose any
liability on Buyer or Company following the Closing, or otherwise breach
any representation or covenant contained in this Agreement.
6.2.8. Seller will cause its appropriate Affiliates to be
bound by and comply with the provisions of this Section 6.2 to the extent
such Affiliates own, operate or manage any of the Assets or Systems.
6.2.9. In the event that Seller is notified of any proposal
with respect to the creation, deletion or modification of any so called
"open access" provision that would be applicable to any System, whether
imposed by a Franchise, state or local law, or state or local regulation,
mandating that the franchisee permit one or more Internet service
providers that are not affiliated with the franchisee to offer service
over the franchisee's System facilities, Seller will provide Buyer with
notice of such proposal, will provide Buyer with information regarding
such proposal as Buyer reasonably requests, and will permit Buyer to
provide input to AT&T regarding AT&T's negotiations and discussions with
respect to such proposal.
6.3. Employee Matters.
6.3.1. Except as set forth in this Section 6.3.1, Buyer may,
but will have no obligation to, cause Company or its Affiliate to employ
or offer employment to, any or all System Employees. Within 30 days after
the date of execution of this Agreement, Seller will provide to Buyer a
schedule of all System Employees by work location as of a recent date,
showing the original hire date, the then-current positions and rates of
compensation, rate type (hourly or salary) and scheduled hours per week,
and whether the employee is subject to an employment agreement, a
collective bargaining agreement or represented by a labor organization
(the "System Employee Schedule"). Buyer will maintain the System Employee
Schedule in strict confidence. The System Employee Schedule will be
updated as necessary to reflect new hires or other personnel changes.
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Within 60 days after receipt of the System Employee Schedule, or such
other date as the parties may agree, Buyer will provide Seller in writing
a schedule of the System Employees Buyer will cause Company to offer to
employ following the Closing (the "Offer/No Offer Schedule"), subject only
to the pre-hire evaluations permitted by this Section 6.3.1. Buyer will
cause Company to provide in writing notification of such offer, subject
only to the pre-hire evaluations permitted by this Section 6.3.1, to each
System Employee included on the Offer/No Offer Schedule no later than 30
days prior to the Closing. Seller agrees, and will cause its appropriate
Affiliates, to cooperate in all reasonable respects with Buyer to allow
Buyer or its Affiliates to evaluate its System Employees to make hiring
decisions. In this regard, Buyer will have the opportunity to make such
appropriate pre-hire investigation of the System Employees, as Buyer deems
necessary, including the right to review personnel files and the right to
interview such employees during normal working hours so long as such
interviews are conducted after notice to Seller and do not unreasonably
interfere with Seller's operations and such investigations and interviews
do not violate any Legal Requirement. Seller agrees, and will cause its
appropriate Affiliates, to cooperate in all reasonable respects with Buyer
to allow Buyer or its Affiliates to evaluate its System Employees to make
hiring decisions so long as Buyer provides notice to Seller and such
evaluation does not unreasonably interfere with Seller's operations and
such evaluations do not violate any law or Contract. All offers for
initial employment with Company will be for employment with substantially
similar responsibilities at a geographic location within a 35-mile radius
of such System Employee's primary place of employment and same base
compensation such System Employee is receiving as of the Closing Date.
Seller acknowledges that nothing in this Agreement will restrict Buyer
from changing a Hired Employee's job description, responsibilities,
location, salary or benefits following the Closing. To the extent consent
is required by applicable law, Seller will use good faith efforts to
obtain the consent of each of its System Employees to allow Buyer to
review personnel files in connection with the foregoing. Buyer or its
Affiliates may, if it wishes, condition any offer of employment upon the
employee's passing a pre-employment drug screening test, the completion of
a satisfactory background check and, if the employee is on Approved Leave
of Absence, upon the employee's return to active service (with or without
reasonable accommodations) within 12 weeks after the Closing Date or, if
earlier, on the first Business Day following expiration of the employee's
Approved Leave of Absence. For purposes of this Agreement, employees on
"Approved Leave of Absence" means employees absent from work on the
Closing Date and unable to perform their regular job duties by reason of
illness or injury under approved plans or policies of the employer (other
than employee's absence for less than five days due to short term illness
or injury not requiring written approval by the employer) or otherwise
absent from work under approved or unpaid leave policies of the employer.
Buyer will bear the expense of such examination but Seller will, upon
reasonable notice, cooperate in the scheduling of such examinations so
long as the examinations do not unreasonably interfere with Seller's
operations. The
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selection of employees to be offered employment by Buyer will be made at
the sole and absolute discretion of Buyer. As of the Closing Date, neither
Buyer, Company nor any of their Affiliates will have any obligation to
Seller, its Affiliates or to the Seller's employees, with regard to any
employee it has determined not to hire. As of the Closing Date, Seller
will, and will cause its appropriate Affiliates to, terminate the
employment of all System Employees that are hired by Buyer or its
Affiliates (the "Hired Employees") as of the Closing Date. Notwithstanding
any of the foregoing, from the date hereof until the Closing, and other
than in connection with offers of employment to such employees to take
effect at the Closing, Buyer agrees not to solicit for employment prior to
the Closing (other than through general advertisements), without the
written consent of the other, any System Employee.
6.3.2. As of the Closing Date, Seller will be responsible for
and will cause to be discharged and satisfied in full or, with respect to
Seller Plans, will have adequately funded or reserved for, all amounts due
and owing to each System Employee (whether or not such employees are hired
by Buyer or Company as of or after the Closing) with respect to and in
accordance with the terms of all compensation plans or Seller Plans,
including without limitation, any compensation including salaries,
commissions, deferred compensation, severance (if applicable), insurance,
pension, profit sharing, disability payment, medical, sick pay, holiday,
accrued and unused vacation in excess of the amount Buyer assumes pursuant
to this Section, payments under any incentive compensation or bonus
agreement, in each case, which has accrued on or prior to the Closing Date
and other compensation or benefits to which they are entitled for periods
prior to the Closing Date (and, for Employees on Approved Leave of
Absence, until their termination by Seller, or its appropriate Affiliate,
or their employment by Company, or its appropriate Affiliate, as set forth
in Section 6.3.1). Seller will satisfy any legal obligation with respect
to continuation of group health coverage required pursuant to Section
4980B of the Code or Section 601, et seq., of ERISA with respect to all
System Employees whose employment with Seller or any of Seller's ERISA
Affiliates terminates on or before the Closing Date. Any liability under
the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section
2101, et seq. ("WARN") with regard to any employee terminated on or prior
to the Closing Date, or not hired by Buyer on or after the Closing Date,
will, as a matter of contract between the parties, be the responsibility
of Seller. Buyer will cooperate with Seller and Seller's Affiliates, if
requested, in the giving of WARN notices on behalf of the other party.
6.3.3. Buyer and Seller hereby acknowledge and agree that,
pursuant to the authority of Revenue Ruling 2000-27, the transactions
contemplated by this Agreement will result in a permissible distribution
event under Section 401(k) of the Code from any Seller Plan designed to
satisfy the requirements of Section 401(k) of the Code.
6.3.4. Except as otherwise expressly provided pursuant to the
terms of this Agreement, neither Buyer, Company nor any of their
Affiliates will have
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or assume any obligation or liability under or in connection with any
Seller Plan. In regard to any System Employee on an Approved Leave of
Absence, such responsibility for benefit coverage of such System Employee,
and liability for payment of benefits, will remain that of Seller, or the
appropriate Affiliate of Seller, until such employee becomes an employee
of Company after the Closing pursuant to Section 6.3.1 or is terminated by
Seller or its appropriate Affiliate. For purposes of this Agreement, the
following claims and liabilities will be deemed to be incurred as follows:
(i) medical, dental and/or prescription drug benefits upon the rendering
of the medical, dental, pharmacy or other services giving rise to the
obligation to pay such benefits except with respect to such benefits
provided in connection with a continuous period of hospitalization, which
will be deemed to be incurred at the time of admission to the hospital;
(ii) life, accidental death and dismemberment and business travel accident
insurance benefits and workers' compensation benefits, upon the occurrence
of the event giving rise to such benefits; and (iii) salary continuation
or other short-term disability benefits, or long-term disability, upon
commencement of the disability giving rise to such benefit.
6.3.5. (a) Notwithstanding anything to the contrary herein,
Buyer will, or will cause Company to:
(i) upon receipt of a schedule showing the vacation
balances and value of such balances of each Hired Employee (as defined
below), which schedule will be delivered by Seller to Buyer within 10 days
after the Closing, credit each Hired Employee the amount of vacation time
(but not sick time) permitted to be accrued by employees of Buyer in
accordance with Buyer's standard practices (to a maximum of four weeks)
accrued and unused by him or her as a System Employee through and
including the Closing Date to the extent Buyer has received an adjustment
to the Purchase Price therefor; provided, however, that if any Hired
Employee has accrued vacation time in excess of the amount transferred to
Buyer, then Seller will, and will cause its appropriate Affiliate to, pay
to such employee the amount of such excess and neither Buyer, Company nor
any of their Affiliates will assume any liability or obligation in respect
of such excess;
(ii) give each Hired Employee credit for such employee's
past service with Seller and its Affiliates as of the Closing Date as
reflected on the System Employee Schedule (which may include past service
with any prior owner or operator of the Systems) ("Past Service") for
purposes of eligibility to participate in Buyer's employee welfare benefit
(including medical, dental, flexible spending accounts, accident, life
insurance plans and programs, disability plans, and other employee welfare
benefits) plans (the "Buyer's Welfare Plans") that are generally available
to similarly situated employees of Buyer and such employees' dependents;
(iii) give each Hired Employee credit for such
employee's Past Service for purposes of participation and vesting under
Buyer's employee
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401(k) plan, provided that Buyer will not be obligated to establish a
special entry date under such plan for Hired Employees;
(iv) give each Hired Employee credit for such employee's
Past Service with Seller and its Affiliates as of the Closing Date for any
waiting periods under Buyer's Welfare Plans that are generally available
to similarly situated employees of Buyer and except to the extent any
Hired Employees were subject to any limitations on benefits for any
preexisting conditions or requirements for evidence of insurability under
Seller's Plans, not subject any Hired Employees to such limitations,
provided that the treatment is covered under Buyer's group health plans;
and
(v) credit each Hired Employee under any Buyer group
health plan for any deductible amount and out of pocket expenses and
similar limits applicable and previously met by such Hired Employee as of
the Closing Date under any of the group health plans of Seller or its
Affiliates for the plan year in which the transfer of employment occurs.
(b) Notwithstanding anything set forth in Section
6.3.5(a), Company will have no obligation to System Employees who are
Employees on Approved Leave of Absence until they become employees of
Company pursuant to Section 6.3.1 hereof.
6.3.6. If Buyer or Company discharges any Hired Employee
without cause within 90 days after the Closing Date, then Buyer will cause
Company to pay severance pay to such Hired Employee in accordance with
Seller's severance benefit plan in effect as of the Closing, taking into
account such Hired Employee's Past Service as well as such Hired
Employee's period of employment with Buyer for purposes of calculating
severance pay under such plan. Seller will reimburse Buyer upon request if
and to the extent such severance pay exceeds the severance pay that would
have been payable under Seller's severance benefit plan in effect as of
the date of this Agreement. Following such 90-day period, each Hired
Employee will be covered under the Buyer's severance benefit plan and
Buyer will count the period of employment with Buyer as well as such Hired
Employee's Past Service for purposes of calculating benefits under such
plan. For purposes of this Agreement, "cause" means (a) conviction
(including a plea of guilty or nolo contendere) of a crime involving
theft, fraud, dishonesty or moral turpitude, (b) intentional or grossly
negligent disclosure of confidential or trade secret information of Buyer
(or any of its Affiliates) to anyone who is not entitled to receive such
information; (c) gross omission or gross dereliction of any statutory or
common law duty of loyalty to Buyer or any of its Affiliates; (d) willful
violation of Buyer's code of conduct or other written policies or
procedures; or (e) repeated failure to carry out the duties of the
employee's position despite specific instruction to do so.
6.3.7. If Seller has, or acquires, a duty to bargain with any
labor organization with respect to any of System Employees, then Seller
will (i) give
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prompt written notice of such development to Buyer, including notice of
the date and place of any negotiating sessions as they are planned or
contemplated and permit Buyer to have a representative present at all
negotiating sessions with such labor organization and at all meetings
preparatory thereto (including making Buyer's representative a
representative of Seller's delegation if required by the labor
organization), and (ii) not, without Buyer's written consent, enter into
any contract with such labor organization that purports to bind Buyer or
Company, including any successor clause or other clause that would have
this purpose or effect. Seller acknowledges and agrees that Buyer has not
agreed to be bound, and that neither Buyer nor Company will be bound,
without an explicit assumption of such liability or responsibility by
Buyer, by any provision of any collective bargaining agreement or similar
contract with any labor organization to which Seller or any its Affiliates
is or may become bound. Except as may be required on the part of Seller or
its Affiliates by operation of law or under the Neutrality and Consent
Agreement effective July 1, 1999 by and among CWA, IBEW and certain
business operating units and divisions of AT&T Corp. and modified
effective May 10, 2000, and September 21, 2000 (as so modified, the "NCE
Agreement") (a true, correct and complete copy of which, including
modifications, has been provided to Buyer), and then only upon written
notice to Buyer of any proposed action or non-action and after
consultation in good faith with Buyer, Seller will take no action or
engage in any inaction which might obligate or require Buyer or Company to
recognize or bargain with any labor organization on behalf of Systems
Employees. Nothing in this Section 6.3.7 will be deemed a waiver of
Seller's attorney-client privilege.
6.3.8. Nothing in this Section 6.3 or elsewhere in this
Agreement will be deemed to make any employee of Seller a third party
beneficiary of this Agreement.
6.4. Leased Vehicles; Other Capital Leases. Seller will pay the
remaining balances on any leases for vehicles or capital leases included
in the Equipment and will deliver title to such vehicles and other
Equipment free and clear of all Encumbrances (other than Permitted
Encumbrances) to Company at the Closing.
6.5. Consents.
6.5.1. Prior to the Closing, Seller will use commercially
reasonable efforts to obtain in writing, as promptly as possible and at
its expense, all the Required Consents, in form and substance reasonably
satisfactory to Buyer and will deliver to Buyer copies of such Required
Consents after they are obtained by Seller; provided, that Seller will use
a form of letter or application prepared by Buyer (subject to reasonable
review and comment by Seller); provided that in no event will Seller
request the consent of any Third Party or Affiliate later than 45 days
following the date hereof. All documents delivered or filed with any
Governmental Authority or any Person by or on behalf of Seller pursuant to
this Section 6.5, when so delivered or filed, will be correct, current and
complete in
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all material respects. Buyer will cooperate with Seller to obtain all
Required Consents, but Buyer will not be required to accept or agree or
accede to any modifications or amendments to, or changes in, or the
imposition of any condition to the transfer to Company (and the subsequent
sale of the Company Interests to Buyer) of any Contract, Franchise or
written instrument evidencing Real Property that are not reasonably
acceptable to Buyer. Prior to the Closing, Seller will (i) use
commercially reasonable efforts to give any notices required by the terms
of the Contracts, Franchises, Real Property agreements and Licenses to be
given prior to Closing and (ii) cooperate in good faith with Buyer in
connection with requests for consents (other than Required Consents)
required by the terms of the Contracts, Franchises, Real Property
agreements and Licenses to be obtained. Notwithstanding the foregoing,
Buyer will comply with the reasonable requests of Seller and, to the
extent required, negotiate in good faith with any Third Party, as
commercially reasonable for Seller to assign to Company in part the rights
and obligations under any master Contract disclosed on SCHEDULE 4.6.
6.5.2. Notwithstanding the provisions of Section 6.5.1, Seller
will not have any further obligation to obtain Required Consents: (a) with
respect to Contracts relating to pole attachments where the licensing
party will not, after Seller's exercise of commercially reasonable
efforts, consent to an assignment of such Contract but requires that Buyer
or Company enter into a new agreement with such licensing authority, in
which case Buyer will use its commercially reasonable efforts to negotiate
such an agreement for Company to enter into prior to (but contingent on)
the Closing or as soon as practicable thereafter and Seller will cooperate
with and assist Buyer in obtaining such agreements; (b) for any business
radio license which Seller reasonably expects can be obtained within 120
days after the Closing and so long as such business radio license is
eligible for automatic special temporary authorization under FCC rules
with respect thereto; and (c) with respect to leased Real Property, if
Seller obtains and makes operational prior to Closing substitute leased
Real Property that is reasonably satisfactory to Buyer and on terms
reasonably satisfactory to Buyer.
6.5.3. If and to the extent that Seller fails to obtain all
Required Consents identified with an asterisk (*) on SCHEDULE 4.3 on or
prior to the Closing (whether or not Buyer will have waived satisfaction
of the condition to Closing set forth in Section 7.2.4), then, for a
period of 15 months following the Closing, Seller with respect to such
Systems and Assets will continue to use commercially reasonable efforts to
obtain in writing as promptly as possible such Required Consents and will
deliver copies of the same, reasonably satisfactory in form and substance,
to Buyer.
6.5.4. Buyer will prepare and deliver to Seller no later than
the date of this Agreement, Buyer's portion of FCC Forms 394 with respect
to each Franchise for which a Required Consent must be obtained as set
forth on SCHEDULE 4.3. Seller will prepare Seller's portion of such Forms
for each such Franchise on or before the date of this Agreement. Seller
and Buyer will
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cooperate in the preparation of such Forms and will execute such Forms and
Seller will deliver them to the appropriate Governmental Authority on or
before February 28, 2001. In connection with such delivery, Seller will
request and retain proofs of delivery and will promptly deliver copies of
such proofs to Buyer. Without the prior consent of Buyer, Seller will not
agree with any Governmental Authority to extend or to toll the time limits
applicable to such Governmental Authority's consideration of any FCC Form
394 filed with such Governmental Authority. Seller will use commercially
reasonable efforts to (i) provide advance notice to Buyer of any meetings
or conferences (whether in person or by conference call) with Governmental
Agencies concerning such Forms, and (ii) to permit Buyer to participate in
such meetings or conferences on its own behalf.
6.5.5. Prior to the Closing and subject to Section 6.2, Seller
will use commercially reasonable efforts to obtain a renewal or extension
of any Franchise (for a period expiring no earlier than three years after
the Closing Date) for which a valid notice of renewal pursuant to the
formal renewal procedures established by Section 626 of the Communications
Act has not been timely delivered to the appropriate Governmental
Authority (as identified in SCHEDULE 4.9) and no written confirmation has
been received from such Governmental Authority that the procedures
established by Section 626 of the Communications Act nonetheless will be
applicable with respect to the renewal or extension of such Franchise.
6.6. Title Commitments and Surveys. After the execution of this
Agreement, Buyer may obtain, at its sole expense, (a) commitments for
owner's title insurance policies on all Real Property owned by Seller and
on easements which provide access to each such parcel of Real Property,
and (b) an ALTA survey on each parcel of Real Property for which a title
insurance policy is to be obtained. Seller will provide reasonable
assistance in connection with Buyer obtaining such commitments and
surveys, as Buyer may request from time to time. All such commitments and
surveys will be obtained within 60 days of the date of this Agreement. If
Buyer notifies Seller in writing within 15 days after the date Buyer
receives the commitment or survey with respect to a parcel of owned or
leased Real Property that the commitment or survey discloses a condition
that constitutes a breach, or any facts which could be reasonably expected
to result in a breach, of the representations of Seller contained in
Section 4.7 or any condition that would prohibit Seller from transferring
title to such Real Property free and clear of Encumbrances (other than
Permitted Encumbrances), then Seller will promptly commence further
investigation and use commercially reasonable efforts to at its expense to
cure the condition prior to Closing. If Seller, having used such
commercially reasonable efforts, is unable to cure the condition prior to
Closing and Closing will occur, then any claim for indemnification that
Buyer may have with respect to the condition may be brought without the
requirement that such claims meet or exceed the Threshold Amount. Seller
agrees to provide Buyer's title company with a
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standard form of indemnification for any mechanic's or materialmen's lien
affecting such Real Property which is not an Assumed Obligation and
Liability.
6.7. HSR Notification. As soon as practicable after the execution of
this Agreement, but in any event no later than 30 days after such
execution, Seller and Buyer will each complete and file, or cause to be
completed and filed, any notification and report required to be filed
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), with respect to the transactions contemplated by this
Agreement; and each such filing will request early termination of the
waiting period imposed by the HSR Act. The parties will use their
commercially reasonable efforts to respond as promptly as reasonably
practicable to any inquiries received from the Federal Trade Commission
(the "FTC") and the Antitrust Division of the Department of Justice (the
"Antitrust Division") for additional information or documentation and to
respond as promptly as reasonably practicable to all inquiries and
requests received from any other Governmental Authority in connection with
antitrust matters. Each party will cooperate to prevent inconsistencies
between their respective filings and between their respective responses to
all such inquiries and requests, and will furnish to each other such
necessary information and reasonable assistance as the other may
reasonably request in connection with its preparation of necessary filings
or submissions under the HSR Act. The parties will use their respective
commercially reasonable efforts to overcome any objections which may be
raised by the FTC, the Antitrust Division or any other Governmental
Authority having jurisdiction over antitrust matters. Notwithstanding the
foregoing, neither Buyer nor Seller will be required to make any
significant change in the operations or activities of their respective
business (or any material assets employed therein) or that of any of their
respective Affiliates, if such party determines in good faith that such
change would be materially adverse to the operations or activities of such
business (or any material assets employed therein), provided such business
has significant assets, net worth, or revenue. Each party will pay its own
filing fees under the HSR Act in connection with the transactions
contemplated by this Agreement.
6.8. Notification of Certain Matters. Seller will promptly notify
Buyer of any fact, event, circumstance or action (a) which, if known on
the date of this Agreement, would have been required to be disclosed to
Buyer pursuant to this Agreement or (b) the existence or occurrence of
which would cause any of Seller's representations or warranties under this
Agreement not to be correct and complete as of the Closing Date.
6.9. Risk of Loss; Condemnation.
6.9.1. Seller will bear the risk of any loss or damage to the
Assets resulting from fire, theft or other casualty (except reasonable
wear and tear) at all times prior to the Closing. If any such loss or
damage is so substantial as to prevent normal operation of any material
portion of the Systems or the replacement or restoration of the lost or
damaged property within 45 days after
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the occurrence of the event resulting in such loss or damage, Seller will
immediately notify Buyer of that fact and Buyer, at any time within 10
days after receipt of such notice, may elect by written notice to Seller
either (a) to waive such defect and proceed toward consummation of the
transactions contemplated by this Agreement in accordance with terms of
this Agreement or (b) terminate this Agreement. If Buyer elects so to
terminate this Agreement, Buyer and Seller will be discharged of any and
all obligations hereunder. If Buyer elects to consummate the transactions
contemplated by this Agreement notwithstanding such loss or damage and
does so, there will be no adjustment in the consideration payable to
Seller on account of such loss or damage, but all insurance proceeds
payable as a result of the occurrence of the event resulting in such loss
or damage will be delivered by Seller to Company, or the rights to such
proceeds will be assigned by Seller to Company if not yet paid over to
Seller.
6.9.2. If, prior to the Closing, all or any part of or
interest in the Assets is taken or condemned as a result of the exercise
of the power of eminent domain, or if a Governmental Authority having such
power informs Seller or Buyer that it intends to condemn all or any part
of the Assets (such event being called, in either case, a "Taking"), then
(a) Buyer will have the sole right, in the name of Seller, if Buyer so
elects, to negotiate for, claim, contest and receive all damages with
respect to the Taking, (b) Seller will be relieved of its obligation to
convey to Company the Assets or interests that are the subject of the
Taking, (c) at the Closing, Seller will assign to Company all of Seller's
rights to all damages payable with respect to such Taking and will pay to
Buyer all damages previously paid to Seller with respect to the Taking,
and (d) following the Closing, Seller will give Company such further
assurances of such rights and assignment with respect to the Taking as
Company may from time to time reasonably request. The foregoing will not
affect or limit the scope of any representation or warranty of Seller in
this Agreement or limit Buyer's right to rely on such representation or
warranty as a condition of Closing to the extent set forth in this
Agreement.
6.10. Transfer Taxes; Ad Valorem Obligations.
6.10.1. Any state or local sales, use, transfer, or
documentary transfer Taxes or fees or any other charge imposed by any
Governmental Authority (other than any of Seller's income, franchise,
gross receipts, corporation, excess profits, rental, devolution, or
payroll tax by whatsoever authority imposed or howsoever designated)
arising from or payable by reason of the transfer of the Assets
contemplated by this Agreement will be borne equally by Buyer and Seller.
Tax returns required to be filed in respect of Transfer Taxes ("Transfer
Tax Returns") will be prepared and filed by the party that has the primary
responsibility under applicable law for filing such Transfer Tax Returns.
If neither party has primary responsibility for filing a Transfer Tax
Return, then Seller will be responsible for preparing and filing any such
Transfer Tax Return.
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6.10.2. Each party hereto will cooperate in assuring that all
real property taxes, personal property taxes and similar ad valorem
obligations that are levied with respect to the Assets or the Business for
assessment periods in which the Closing Date occurs and are otherwise not
accounted for in the adjustment to Purchase Price set forth in Section 3.3
of the Agreement or excluded pursuant to Section 2.2(w) (collectively, the
"Apportioned Obligations") and any refund or rebate thereof, will be
apportioned between Seller and Buyer as of the Closing Date based on the
number of days in any such period falling on or before the Closing Date,
on one hand, and after the Closing Date, on the other hand (it being
understood that Seller is responsible for the portion of each such
Apportioned Obligation attributable to the number of days from the most
recent lien date to and including the Closing Time and Buyer is
responsible for the portion of each such Apportioned Obligation
attributable to the period after the Closing Time). An adjustment will be
made to the Purchase Price to reflect any payment of Apportioned
Obligations that have been made by Seller on or prior to the Closing Date
that are apportioned to Buyer hereunder. The parties hereto will
cooperate, including during times of audit by taxing Governmental
Authorities, to avoid payment of duplicate or inappropriate Taxes or other
ad valorem obligations of any kind or description which related to the
Assets or the Business, and each party will furnish, at the request of the
other, proof of payment of any such Taxes or ad valorem obligations or
other documentation that is a prerequisite to avoiding payment of a
duplicate or inappropriate Tax or other ad valorem obligations.
6.11. Updated Schedules. Not less than 10 Business Days prior to the
Closing, Seller will deliver to Buyer revised copies of the Schedules to
this Agreement, which will have been updated and marked to show any
changes occurring between the date of this Agreement and the date of
delivery. Seller will update all Schedules, regardless of whether the
original Schedule is as of a certain date; provided that SCHEDULE 4.16
will be updated to a reasonable date between the date of this Agreement
and the Closing Date. Such updates are for informational purposes only,
and for purposes of determining whether Seller's representations,
warranties and covenants in this Agreement are true and correct at
Closing, all references to the Schedules will mean the version of the
Schedules attached to this Agreement on the date of signing.
Notwithstanding the foregoing, if the effect of any such updates to
Schedules is to disclose any one or more additional properties,
privileges, rights, interests or claims, in each case acquired after the
date of this Agreement ("New Properties") as Assets that would have been
(if owned on the date of this Agreement) required by this Agreement to
have been disclosed by Seller in its original Schedules and that were
acquired by Seller after the date of this Agreement in breach of this
Agreement, then Buyer, at or before Closing, will have the right (to be
exercised by written notice delivered to Seller at least two days prior to
the Closing Date) to cause any one or more of such New Properties to be
designated as and deemed to constitute Excluded Assets for all purposes
under this Agreement. Notwithstanding anything to the contrary contained
in this Agreement, and except as set forth in the preceding sentence with
respect to New Properties, the
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waiver of any condition to Closing by a party who has knowledge of a
breach by the other party will not be deemed a waiver of any rights and
remedies with respect to such breach under this Agreement.
6.12. Use of Seller's Name. Seller and its Affiliates will retain
all rights with respect to the names "AT&T," "Tele-Communications, Inc."
and "TCI" or any and all derivations thereof after the Closing. Buyer will
cause Company to remove or delete such names or any and all derivations
thereof from the Business and Assets as soon as reasonably practicable,
but in any event by the 120th day following the Closing. Seller and its
Affiliates will take no action to enforce their intellectual property
rights in such names during such 120-day period, provided Buyer complies
with the terms of this Section 6.12 Notwithstanding the foregoing, nothing
in this Section 6.12 will require Buyer to remove or discontinue using any
such name or mark that is affixed to converters or other items in customer
homes or properties on the Closing Date, or as are used in a similar
fashion which makes such removal or discontinuation impracticable.
6.13. Transitional Billing Services. Seller will provide to Buyer,
upon request, access to and the right to use its billing system computers,
software and related fixed assets in connection with the Systems for a
period of up to six months following the Closing to allow for conversion
of existing billing arrangements, including billing and related
arrangements regarding internet access services being provided to
customers of a System on the Closing Date ("Transitional Billing
Services"). Buyer will notify Seller at least 30 days prior to the Closing
as to whether it desires Transitional Billing Services from Seller. All
Transitional Billing Services, if any, that are requested by Buyer will be
provided on terms and conditions reasonably satisfactory to each party;
provided, however, that the amount to be paid by Buyer for such
Transitional Billing Services will not exceed the out-of-pocket cost to
Seller of providing such Transitional Billing Services. Seller will notify
Buyer of the cost to Seller of providing such Transitional Billing
Services within 10 Business Days after receiving Buyer's notice requesting
the provision of such Transitional Billing Services.
6.14. Transition of High Speed Data Services. Seller will provide to
Buyer, upon request, transitional services for a period of up to six
months following the Closing to allow for conversion of existing high
speed data services provided by the Systems, which services may include
billing, technical and customer support ("Transitional HSD Services").
Buyer will notify Seller at least 60 days prior to the Closing as to
whether it desires Transitional HSD Services from Seller. All Transitional
HSD Services, if any, and the scope of such Transitional HSD Services that
are requested by Buyer will be provided on terms and conditions reasonably
satisfactory to each party; provided, however, that the amount to be paid
by Buyer for such Transitional HSD Services will not exceed the
out-of-pocket cost to Seller of providing such Transitional HSD Services.
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6.15. Certain Notices. Seller will duly and timely file a valid
request for renewal under Section 626 of the Communications Act with the
proper Governmental Authority with respect to all Franchises of the
Business that will expire within 33 months after any date between the date
of this Agreement and the Closing Date.
6.16. Satisfaction of Conditions. Each party will use commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions
to the obligations of the other party to consummate the transactions
contemplated by this Agreement, as set forth in Section 7, by no later
than June 15, 2001.
6.17. Bulk Transfers. Buyer and Seller each waive compliance by the
other with Legal Requirements relating to bulk transfers that may be
applicable to the transactions contemplated hereby.
6.18. Programming Matters. Buyer will cause Company to execute and
deliver to Seller such documents and take such actions as may be
reasonably requested by Seller to comply with the requirements of Seller's
programming Contracts and channel line-up requirements with respect to
divestitures of cable television systems. Seller will execute and deliver
such documents as may be reasonably requested by Buyer to comply with the
requirements of Buyer's programming Contracts and channel line-up
requirements with respect to acquisitions of cable television systems.
Neither party will be required to make any payments to the other's
programmers in the fulfillment of its obligations under this Section 6.18;
provided, however, that neither Buyer nor Company will be required to
provide specific programming or channels or to assume any liability with
respect to or in connection with the programming agreements of Seller or
any of its Affiliates.
6.19. Cooperation as to Rates and Fees.
6.19.1. After the Closing, notwithstanding the terms of
Section 10.4, Buyer will have the right at its own expense to assume
control of the defense of any rate proceeding with respect to the Systems
that remains pending as of the Closing or that arises after the Closing
but relates to the pre-Closing operation of the Systems. Buyer will
promptly notify Seller regarding the commencement of any such rate
proceeding relating to the pre-Closing operation of the Systems. In any
such rate proceeding involving the Systems, Seller will cooperate in such
proceeding and promptly deliver to Buyer all information reasonably
requested by Buyer as necessary or helpful in such proceeding.
(a) If Buyer elects to assume control of the defense of
any such rate proceeding, then (i) Seller will have the right to
participate, at its expense, in the defense in such rate proceeding, and
(ii) Buyer will have the right to settle any rate proceeding relating to
the pre-Closing operation of the Systems unless under such settlement
Seller would be required to bear liability with
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respect to the pre-Closing time period, in which event such settlement
will require Seller's prior written consent, which consent will not be
unreasonably withheld, conditioned or delayed.
(b) If Buyer does not elect to assume control of the
defense of any such rate proceeding, then (i) Buyer will have the right to
participate, at its expense, in the defense in such rate proceeding, and
(ii) without the prior consent of Buyer (which will not be unreasonably
withheld, conditioned or delayed), Seller will not settle such rate
proceeding if such settlement would require Buyer or Company to bear any
liability or would adversely affect the rates to be charged by Buyer or
Company. In any such rate proceeding involving the Systems, Buyer will
cooperate in such proceeding and promptly deliver to Seller all
information in its possession that is reasonably requested by Seller as
necessary or helpful in such proceeding.
6.19.2. Prior to Closing, Seller will not settle or permit to
be settled any rate proceeding with respect to the Systems or Franchises
without the consent of Buyer, which consent will not be unreasonably
withheld or delayed, unless the proposed settlement includes injunctive or
other relief that adversely affects the Assets or its or Company's ability
to operate such Systems substantially in the manner in which they are
operated on the date of this Agreement (other than changing the rates in
question), in which case consent may be withheld or delayed in Buyer's
sole discretion.
6.19.3. If Seller is required, following the Closing, pursuant
to any Legal Requirement, settlement or otherwise, to reimburse or provide
in-kind or another form of consideration to any subscribers of the Systems
in respect of any subscriber payments previously made by them, including
fees for cable television service, equipment charges, late fees and
similar payments, Buyer agrees that it will cause Company to make such
reimbursement or provide such in-kind or other form of consideration
through Buyer's billing system on terms reasonably specified by Seller,
and Seller will reimburse Buyer for all such payments and other
consideration made by Buyer following the Closing and for Buyer's
reasonable out-of-pocket expenses incurred in connection therewith. Such
reimbursement will be reflected in the Final Adjustments Report, to the
extent then known. For expenses incurred after completion of the Final
Adjustments Report, Seller will reimburse Buyer within 60 days after
receipt of a statement therefor. Seller and Buyer will provide each other
with all information in its possession that is reasonably required by such
other party in connection with such reimbursement.
6.20. Cooperation on Pending Litigation. With respect to any defense
or prosecution of any litigation or legal proceeding with respect to the
Systems that relates to the period prior to the Closing Time and for which
Seller and its Affiliates are responsible pursuant to this Agreement,
Buyer will cause Company to cooperate with and assist Seller and its
Affiliates, upon reasonable request and at Seller's expense, by
undertaking commercially reasonable efforts to make
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witnesses available and provide all information in its possession
(including access to employees with information regarding such proceedings
and access to books and records that may relate to the proceedings) that
Seller and its Affiliates may reasonably require in connection with such
litigation or legal proceedings or in response to any complaint, claim,
inquiry, order or requirements of any Governmental Authority or other
Third Party. No action undertaken by Buyer or Company as requested by
Seller under this Section 6.20 will be deemed a waiver of any rights and
remedies it may have with respect to any breach under this Agreement.
6.21. Confidentiality.
6.21.1. Neither Buyer nor Seller will, nor will it permit any
of its Affiliates to, issue any press release or make any other public
announcement or any oral or written statements to Seller's employees
concerning this Agreement or the transactions contemplated hereby except
as required by applicable Legal Requirements, without the prior written
consent of the other party. Each party will hold, and will cause its
employees, consultants, advisors and agents to hold, the terms of this
Agreement in confidence; provided that (a) such party may use and disclose
such information once it has become publicly disclosed (other than by such
party in breach of its obligations under this Section) or which rightfully
has come into the possession of such party (other than from the other
party) and (b) to the extent that such party may be compelled by Legal
Requirements to disclose any of such information, but the party proposing
to disclose such information will first notify and consult with the other
party concerning the proposed disclosure, to the extent reasonably
feasible. Each party also may disclose such information to employees,
consultants, advisors, agents and actual or potential lenders whose
knowledge is necessary to facilitate the consummation of the transactions
contemplated by this Agreement. The obligation by either party to hold
information in confidence pursuant to this Section will be satisfied if
such party exercises the same care with respect to such information as it
would exercise to preserve the confidentiality of its own similar
information.
6.21.2. All information concerning the Business or Assets
obtained by Buyer or its Affiliates pursuant to or in connection with
negotiation of this Agreement will be used by Buyer and its Affiliates
solely for purposes related to this Agreement and, in the case of
nonpublic information, will, except as may be required for the performance
of this Agreement or by Legal Requirement, be kept in strict confidence by
Buyer and its Affiliates in accordance with the terms of the letter
agreement dated October 24, 2000, as amended effective on the date of this
Agreement, which letter agreement, as amended, is hereby incorporated in
this Agreement by reference. Any breach of such letter agreement, as
amended, will be deemed a material breach of this Agreement.
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6.22. Lien Searches. Seller will obtain, at its expense, and deliver
to Buyer at least 45 Business Days prior to the Closing Date, the results
of a lien search conducted by a professional search company of records in
the offices of the secretaries of state in each state and county clerks in
each county where there exist any Real Property or Equipment, and in the
state and county where Seller's principal offices are located, including
copies of all financing statements or similar notices or filings (and any
continuation statements) discovered by such search company.
6.23. Further Assurances. At or after the Closing, each party at the
request of the other party, will promptly execute and deliver, or cause to
be executed and delivered, to the other party all such documents and
instruments, in addition to those otherwise required by this Agreement, in
form and substance reasonably satisfactory to the other party as the other
party may reasonably request in order to carry out or evidence the terms
of this Agreement or to collect any accounts receivable or other claims
included in the Assets.
6.24. Expired Leases. Seller will exercise commercially reasonable
efforts prior to Closing to obtain written renewals or extensions, on
terms reasonably acceptable to Buyer, for at least one year following the
Closing of all leases of Real Property that will have expired prior to the
Closing.
6.25. Environmental Assessment.
6.25.1. Seller acknowledges and agrees that Buyer may
commission, at Buyer's cost and expense, a "Phase I" environmental site
assessment of the Real Property owned by Seller (a "Phase I Assessment")
or "Phase II" assessment, or other testing or analysis of the Real
Property owned by Seller as Buyer may deem appropriate (a "Phase II
Assessment"). Seller will use its commercially reasonable efforts to
comply with any reasonable request for information made by Buyer or its
agents in connection with any such investigation, but in no event will
Seller be required under this Section 6.25.1 to disclose any materials
constituting attorney-client privileged communications. Seller covenants
that any response to any such request for information will be complete and
correct in all material respects. Seller will afford Buyer and its agents
or representatives access to all operations of Seller at all reasonable
times and in a reasonable manner in connection with any such
investigation. Any such assessment will be completed within 60 days of the
date of this Agreement. If Buyer notifies Seller in writing within 15 days
after the date Buyer receives the assessment with respect to a parcel of
owned Real Property that the assessment discloses an environmental
condition that (a) constitutes a breach, or any facts which could be
reasonably expected to result in a breach, of the representations of
Seller contained in Section 4.8 or (b) could reasonably be expected to
impair the use or value of such Real Property for the continued operations
of the Business or subject Buyer to any Losses if Buyer consummates this
Agreement, then Seller will promptly commence further investigation and
use commercially reasonable efforts to at its expense to cure the
condition prior to Closing. If
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Seller, having used such commercially reasonable efforts, is unable to
cure the condition prior to Closing and Closing will occur, then any claim
for indemnification that Buyer may have with respect to the condition may
be brought without the requirement that such claims meet or exceed the
Threshold Amount.
6.25.2. In the event this Agreement is terminated or fails to
close in accordance with its terms, Buyer agrees to repair any damage or
disturbance it causes to the Real Property in the course of such
investigative activities by returning such Real Property to approximately
the same condition as existed prior to such investigative activities.
Buyer will indemnify, defend and hold Seller free and harmless from and
against any and all claims, actions, causes of action, suits, proceedings,
costs, expenses (including reasonable attorneys' and consultants' fees and
costs), liabilities, damages, and liens of any type arising directly out
of any act or omission of Buyer or any of Buyer's representatives on or
about the Real Property in the course of such investigative activities.
However, neither of the two preceding sentences will be interpreted to
impose any obligation upon Buyer with respect to Hazardous Substances
present at, on, in, under or about, or any conditions existing on, the
Real Property at the time of such investigative activities, except to the
extent Buyer's negligence or willful misconduct causes a release of such
Hazardous Substances or otherwise exacerbates any such condition in a
manner that leads to liability under any Environmental Law.
6.25.3. All information collected and generated as a result of
the environmental due diligence authorized by Section 6.25.1 will be
subject to the terms and conditions of Section 6.21 of this Agreement.
Buyer will provide to Seller copies of all reports, assessments and other
information composed or compiled by Buyer's environmental consultants
within five (5) Business Days after Buyer's receipt of copies thereof.
6.26. No Offers. Seller (and its directors, officers, employees,
representatives and agents) will not directly or indirectly, (i) offer the
Assets, the Systems or the Business for sale, (ii) solicit, encourage or
entertain offers for such Assets, Systems or Business, (iii) initiate
negotiations or discussions for the sale of such Assets, Systems or
Business or (iv) make information about such Assets, Systems or Business
available to any Third Party in connection with the possible sale of such
Assets, Systems or Business prior to the Closing Date or the date this
Agreement is terminated in accordance with its terms.
6.27. Taxes. Seller and Buyer will reasonably cooperate in
connection with the preparation and filing of any Tax return or any
similar information statement, including any Transfer Tax Returns, for
which the other is responsible for preparing and filing with respect to
the Assets.
6.28. Distant Broadcast Signals. Unless otherwise restricted or
prohibited by any Governmental Authority, applicable Legal Requirements or
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Contract, Seller will, if requested by Buyer, delete prior to the Closing
any distant broadcast signals which Buyer determines will result in
unacceptable liability on the part of Buyer or Company for copyright
payments with respect to continued carriage of such signals after the
Closing; provided, however, that Seller may refuse to honor such a request
if such deletion could reasonably be expected to delay or otherwise
jeopardize Seller's ability to complete the transactions contemplated
herein.
6.29. System Telephone Services. Prior to Closing, Buyer will select
a vendor for the provision, and arrange for the transition, of all
telephony services (e.g., long distance, data circuits, and 800 number)
used in connection with the operation of the Systems. If Buyer fails to
effect the transition of telephony services to its selected vendor as of
the Closing Date, then Buyer will reimburse Seller for all charges
incurred by Seller after Closing with respect to telephony services used
in connection with the operation of the Systems or in the conduct of the
Business.
6.30. Implementation of Voting Trust or other Restructuring. In the
event that the ownership by Seller or its Affiliates of the Share
Consideration is reasonably determined by Buyer or Seller to be
attributable and such attribution, at or following the Closing, (a) would
result in a violation of any cross or multiple-ownership rule or
regulation promulgated by the FCC (the "Ownership Rules"), including the
Cable/Broadcast Television Ownership Rules (47 C.F.R. Section 76.501(a)),
the Cable Television Horizontal Ownership Rules, if applicable (47 C.F.R.
Section 76.503), or the Cable/MMDS Cross Ownership Rules (47 C.F.R.
Section 21.912) or (b) would prevent Seller or Buyer or any of their
respective Affiliates from engaging in the transmission of video, audio
(including telephony) and data over cable television systems owned,
operated or managed by it in any area within the United States as a result
of a potential violation of the Ownership Rules, whether by acquisition of
an existing system or original construction, the Parties will cooperate in
good faith to remedy or avoid any violation of the Ownership Rules by (a)
modifying this Agreement and taking such other actions as required for the
Share Consideration to be deposited at Closing in an FCC-approved voting
trust for the benefit of Seller and pursuant to which neither Seller,
Buyer nor any of their Affiliates will have a right to vote the Share
Consideration, (b) by seeking appropriate relief from the FCC with respect
to Seller's and its Affiliates' ownership of the Share Consideration, or
(c) such other restructuring of the transactions contemplated by this
Agreement or, following the Closing, Seller's ownership of the Share
Consideration, as is mutually reasonably acceptable to the Parties. If
such determination is made prior to the Closing, neither Party will be
required to consummate the Closing until such remedial actions are
effected. Notwithstanding the foregoing, under no circumstances will Buyer
or any of its Affiliates be required pursuant to this Section 6.30 to
purchase any of the Share Consideration or any other securities of Buyer
or its Affiliates that are owned by Seller or its Affiliates.
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6.31. Formation of Company. Seller will form Company as a
single member limited liability company solely owned by Seller and
pursuant to an operating agreement reasonably acceptable to Buyer.
Seller will cause Company not to enter into any transactions or assume
any liabilities prior to the Closing except as provided in this
Agreement.
6.32. Dissolution of Seller. Promptly following the Closing,
Seller will take such action as may be required to dissolve and
terminate its corporate existence and to liquidate completely and to
distribute directly to the holder of its common stock all of its right,
title and interest in and to its assets and liabilities, including the
Share Consideration.
6.33. Buyer Tax Covenants.
6.33.1. Buyer will continue at least one significant
historic business line of Company, or use at least a significant
portion of Company's historic business assets in a business, in each
case within the meaning of Treasury Reg. Section 1.368-1(d), except
that Buyer may transfer Company's historic business assets (i) to a
corporation that is a member of Buyer's "qualified group," within the
meaning of Treasury Reg. Section 1.368-1(d)(4)(ii), or (ii) to a
partnership if (A) one or more members of Buyer's "qualified group"
have active and substantial management functions as a partner with
respect to Company's historic business or (B) members of Buyer's
"qualified group" in the aggregate own an interest in the partnership
representing a significant interest in Company's historic business, in
each case within the meaning of Treasury Reg. Section
1.368-1(d)(4)(iii).
6.33.2. Neither Buyer nor a party related to Buyer
within the meaning of Treasury Reg.Section 1.368-1(e)(3) will acquire
any of the Charter Class A Common Stock issued in the Transaction.
6.33.3. Buyer on behalf of itself and its Affiliates
agrees that it will take no action which would cause the Transaction to
fail to qualify as a "reorganization" within the meaning of Section
368(a)(1)(C) of the Code and that it will cause its respective
Affiliates to file all Tax returns in a manner consistent with the
qualification of the Transaction as a "reorganization" within the
meaning of Section 368(a) of the Code.
6.34. Sale of Charter Class A Common Stock. Seller will not
sell or otherwise dispose of the Charter Class A Common Stock
comprising the Share Consideration except in compliance with applicable
state and federal securities laws.
7. CONDITIONS TO CLOSING.
7.1. Conditions to the Obligations of Buyer and Seller. The
obligations of each party to consummate the transactions contemplated
by this Agreement
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are subject to the satisfaction, at or before the Closing, of the
following, which may be waived by the parties to the extent not
prohibited by applicable Legal Requirements:
7.1.1. HSR Act Filings. All filings required under
the HSR Act have been made and the applicable waiting period has
expired or been terminated.
7.1.2. Absence of Legal Proceedings; Judgment. No
judgment has been entered and not vacated by any Governmental Authority
and no Legal Requirement has been enacted, promulgated or issued or
become or deemed applicable to any of the transactions contemplated by
this Agreement by any Governmental Authority, which prevents or makes
illegal the transactions contemplated by this Agreement. No action,
suit or proceeding is pending or threatened by any federal Governmental
Authority which would prevent or make illegal the transactions
contemplated by this Agreement.
7.2. Conditions to the Obligations of Buyer. The obligations
of Buyer to consummate the transactions contemplated by this Agreement
are subject to the satisfaction, at or before the Closing, of the
following conditions, which may be waived by Buyer (subject to Section
10.3(d)) to the extent not prohibited by applicable Legal Requirements:
7.2.1. Accuracy of Representations and Warranties.
The representations and warranties of Seller in this Agreement are
true, complete and correct (without regard to any materiality or
similar qualifications contained therein), at and as of the Closing
with the same effect as if made at and as of the Closing, except (i)
for changes, if any, permitted or contemplated by this Agreement, (ii)
to the extent a different date is specified therein, in which case such
representation and warranty is true and correct as of such date and
(iii) to the extent that all misstatements, omissions and inaccuracies
in the representations and warranties of Seller, in the aggregate, do
not have and could not reasonably be expected to have a Material
Adverse Effect.
7.2.2. Performance of Agreements. Seller in all material
respects has performed and complied with each obligation, agreement,
covenant and condition required by this Agreement to be performed or
complied with by Seller at or prior to the Closing.
7.2.3. Deliveries. Seller has delivered the items and
documents required to be delivered by it pursuant to this Agreement,
including those required under Section 8.2.
7.2.4. Required Consents. Except as otherwise
provided in Section 6.5.2, Seller will have received and delivered to
Buyer in form and substance reasonably satisfactory to Buyer, all of
the Required Consents marked with an asterisk on SCHEDULE 4.3
(including those incorporated by reference), all
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Required Consents for other CARS Licenses and Business Radio Licenses
over 470 MHz and all Required Consents for other tower and headend
leases; provided, however, that this condition, to the extent it
relates to Required Consents of Governmental Authorities for
Franchises, will be deemed to be satisfied when, the aggregate number
of Equivalent Basic Subscribers (i) located in areas where it is
legally permissible to operate without a franchise or that are served
pursuant to Franchises that do not require consent, or (ii) that are
located in franchise areas where the Franchise is not expired as to
which Required Consents have been obtained in form and substance
reasonably satisfactory to Buyer (or the consent of the appropriate
Governmental Authority will be deemed to have been received in
accordance with Section 617 of the Communications Act (47 U.S.C. 537)),
divided by of the total number of Equivalent Basic Subscribers for all
of the Systems (the "Franchise Consent Ratio") is equal to or greater
than 90%. For purposes of calculating the Franchise Consent Ratio, the
number of Equivalent Basic Subscribers related to each franchise and
for all of the Systems as a whole will be calculated as of April 30,
2001, or otherwise agreed upon by the parties.
7.2.5. Subscribers. The aggregate of the Equivalent
Basic Subscribers and the "Equivalent Basic Subscribers" under the
Related Agreement as of the last day of the calendar month immediately
preceding the Closing Date is not less than 125,460.
7.2.6. No Material Adverse Changes. During the period
from December 31, 2000, through and including the Closing Date, there
will not have occurred and be continuing any event or events having,
individually or in the aggregate, a Material Adverse Effect.
7.2.7. Franchise Renewals. Each Franchise for which
(a) a valid notice of renewal pursuant to the formal renewal procedures
established by Section 626 of the Communications Act has not been
timely delivered to the appropriate Governmental Authority and (b) with
respect to which the appropriate Governmental Authority has not
confirmed in writing that the procedure established by Section 626
nonetheless will apply to the renewal or extension of such Franchise,
will have been renewed or extended for a period expiring no earlier
than three years after the Closing Date.
7.2.8. At Home Agreement. Seller will have caused At
Home Corporation to execute and deliver to Buyer an Affiliation
Agreement, which Affiliation Agreement, in combination with the
Transitional HSD Services, will permit Buyer to provide high speed data
services to subscribers for six months following Closing and will be on
terms consistent with At Home Corporation's then-standard terms and
conditions offered to Third Party MSOs, which terms will be no less
favorable than either (at At Home Corporation's election), Buyer's or
Buyer's Affiliate's then-current At Home Affiliation Agreement for its
Fort Worth, Texas, cable system or Buyer's or Buyer's Affiliate's then-
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current At Home Affiliation Agreement for its Greenville/Spartanburg,
South Carolina, cable system.
7.3. Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement
are subject to the satisfaction at or before the Closing, of the
following, which may be waived by Seller, to the extent not prohibited
by applicable Legal Requirements:
7.3.1. Accuracy of Representations and Warranties.
The representations and warranties of Buyer in this Agreement, if
qualified by a reference to materiality, are true, complete and correct
and, if not so qualified, are true, complete and correct in all
material respects, at and as of the Closing with the same effect as if
made at and as of the Closing, except for changes, if any, permitted or
contemplated by this Agreement and except to the extent a different
date is specified therein, in which case such representation and
warranty is true and correct as of such date.
7.3.2. Performance of Agreements. Buyer in all
material respects has performed and complied with each obligation,
agreement, covenant and condition required by this Agreement to be
performed or complied with by Buyer at or prior to the Closing.
7.3.3. Deliveries. Buyer has delivered the payment,
items and documents required to be delivered by it pursuant to this
Agreement, including those required under Section 8.3.
8. CLOSING.
8.1. Time and Place of the Closing. The Closing will be held
on a date specified by Seller which is no less than five nor more than
10 Business Days following the date all conditions to the Closing
contained in this Agreement (other than those based on acts to be
performed at the Closing) have been satisfied or waived; provided,
however, either party may postpone the Closing Date until the last day
of the month in which all such conditions are satisfied or waived. The
Closing will be held at 9:00 a.m., local time, at Seller's counsel's
office located at 633 Seventeenth Street, Suite 3000, Denver, Colorado
80202, or at such other place and time as Buyer and Seller may agree.
8.2. Seller's Delivery Obligations. At the Closing, Seller
will deliver (or cause to be delivered) to Buyer the following:
(a) A Bill of Sale and Assignment and
Assumption Agreement in substantially the form of EXHIBIT A to this
Agreement with respect to the transfer of the Assets to, and assumption
of the Assumed Obligations and Liabilities by, Company and a Bill of
Sale in substantially the form of EXHIBIT C to this Agreement with
respect to the transfer of the Company Interests to Buyer;
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(b) A special or limited warranty deed
conveying title to Company in a form reasonably acceptable to Buyer
(and complying with applicable state laws) with respect to each parcel
of Real Property which is owned by Seller, and the improvements
thereon, duly executed and acknowledged and in recordable form,
warranting only to defend title to such owned Real Property against all
persons claiming by, through or under Seller, subject, however, to any
Permitted Encumbrances;
(c) Title certificates to all vehicles
included among the Assets (including those subject to leases), endorsed
for transfer of valid and good title to Company, free and clear of all
Encumbrances and leases (other than Permitted Encumbrances), and
separate bills of sale or other transfer documentation for such
vehicles, if required by the laws of the states in which such vehicles
are titled;
(d) A certificate, dated the Closing Date,
signed by an officer of Seller, stating, solely in his or her capacity
as such officer, that the conditions set forth in Sections 7.2.1 and
7.2.2 are satisfied;
(e) A FIRPTA Non-Foreign Seller Certificate
from Seller certifying that it is not a foreign person within the
meaning of Section 1445 of the Internal Revenue Code of 1986, as
amended (the "Code") reasonably satisfactory in form and substance to
Buyer;
(f) Evidence reasonably satisfactory to
Buyer that all Encumbrances (other than Permitted Encumbrances)
affecting or encumbering the Assets have been terminated, released or
waived, as appropriate, or original, executed instruments in form
reasonably satisfactory to Buyer effecting such terminations, releases
or waivers;
(g) Copies of all Required Consents which
have been obtained by the Seller prior to Closing;
(h) All Books and Records, delivery of which
will be deemed made to the extent such Books and Records are then
located at any of the offices of the Systems included in the Real
Property;
(i) An opinion of Sherman & Howard L.L.C.,
counsel for Seller, in substantially the form of EXHIBIT D; and
(j) Such other documents as Buyer may
reasonably request in connection with the transactions contemplated by
this Agreement.
8.3. Buyer's Delivery Obligations. At the Closing, Buyer will
deliver (or cause to be delivered) to Seller the following:
(a) A certificate representing the Share
Consideration;
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(b) A Registration Rights Agreement in
substantially the form of EXHIBIT F (the "Registration Rights
Agreement"), executed by Buyer;
(c) A certificate, dated the Closing Date,
signed by an officer of Buyer, stating, solely in his or her capacity
as such officer, that the conditions set forth in Sections 7.3.1 and
7.3.2 are satisfied;
(d) An opinion of Irell & Manella LLP,
counsel for Buyer, in substantially the form of EXHIBIT E; and
(e) Such other documents as Seller may
reasonably request in connection with the transactions contemplated by
this Agreement.
9. TERMINATION.
9.1. Events of Termination. This Agreement may be terminated
and the transactions contemplated by this Agreement may be abandoned at
any time prior to the Closing:
9.1.1. By the mutual written consent of Buyer and
Seller;
9.1.2. By either party, upon written notice to the
other party, if the transactions contemplated by this Agreement to take
place at the Closing have not been consummated by the date which is 12
months after the date of this Agreement, for any reason other than (i)
a breach or default by such party in the performance of any of its
obligations under this Agreement or (ii) the failure of any
representation or warranty of such party to be accurate; or
9.1.3. By either party at any time upon written
notice to the other, if the other is in material breach or default of
any of its covenants, agreements or other obligations in this Agreement
or in any Transaction Document and fails to cure such breach or default
(a) within the 30-day period following such written notice or, (b) if
such breach or default is incapable of being cured within such 30-day
period and the defaulting party promptly initiates and diligently
pursues such cure to completion upon receipt of such notice, within a
reasonable period of time.
9.2. Liabilities in Event of Termination. If this Agreement is
terminated pursuant to Section 9.1, all obligations of the parties
under this Agreement will terminate except for the parties respective
obligations under Section 6.21 and 11.18. Notwithstanding a party's
right to pursue remedies for breach of contract upon termination of
this Agreement in accordance with Section 9.1, no remedies for breaches
of representations and warranties will be available if this Agreement
is terminated pursuant to Section 9.1. Furthermore, if the Closing does
not occur, no party will be liable for any incidental, consequential,
exemplary, special, or punitive damages in connection with any claim
for breach of this Agreement.
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10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
10.1. Survival of Representations and Warranties. The
representations and warranties of the parties in this Agreement and the
Transaction Documents will survive the Closing until 15 months after
the Closing Date, except that (a) the representations and warranties
relating to Taxes, ERISA and environmental matters will survive until
90 days after the expiration of the applicable statute of limitations
and (b) the representations and warranties relating to Seller's title
to, and the absence of Encumbrances (other than Permitted Encumbrances)
on, the Assets and the representations and warranties contained in
Section 5.9 will survive indefinitely and will not be merged into or
otherwise limited by any deed or other conveyance document. The
applicable periods of survival of the representations and warranties
prescribed by this Section 10.1 are referred to as the "Survival
Period." The liabilities of the parties under their respective
representations and warranties will expire as of the expiration of the
applicable Survival Period; provided, however, that such expiration
will not include, extend or apply to any representation or warranty,
the breach of which has been asserted by a party in a written notice to
the breaching party before such expiration. The covenants and
agreements of the parties in this Agreement and the Transaction
Documents will survive the Closing and will continue in full force and
effect without limitation.
10.2. Indemnification by Seller. Following the Closing, Seller
and AT&T Parent, jointly and severally, will indemnify, defend and hold
harmless Buyer and its shareholders and its and their respective
Affiliates, and the shareholders, directors, officers, partners,
members, employees, agents, successors and assigns of any of such
Persons and any Person claiming by or through any of them, from and
against all Losses of or to Buyer or any such other indemnified Person
resulting from or arising out of (a) any breach of any representation
or warranty made by Seller in this Agreement (without regard to any
materiality or similar qualifications contained therein), (b) any
breach of any covenant, agreement or obligation of Seller contained in
this Agreement, and (c) any liability or obligation of Seller or
relating to the Business not included in the Assumed Obligations and
Liabilities.
10.3. Indemnification by Buyer. Following the Closing, Buyer
will indemnify, defend and hold harmless Seller and Seller's
shareholders, directors, officers, partners, members, employees,
agents, successors and assigns, and any Person claiming by or through
any of them, from and against all Losses of or to Seller or any such
other indemnified Person resulting from or arising out of (a) any
breach of any representation or warranty made by Buyer in this
Agreement (without regard to any materiality or similar qualifications
contained therein), (b) any breach of any covenant, agreement or
obligation of Buyer contained in this Agreement, (c) the failure by
Buyer to assume and perform the Assumed Obligations and Liabilities,
and (d) if Buyer waives the condition to Closing contained in Section
7.2.4 that the Franchise Consent Ratio equal or exceed 90%, the
transfer of Assets to Company or the transfer of the Company
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Interests to Buyer without having obtained the scheduled Required
Consents (or deemed consents) with respect to any Franchise; provided,
however, in no event shall clause (d) hereof be interpreted to reduce
Buyer's rights to recover with respect to any breaches by Seller of its
representations, warranties or covenants. All indemnification made by
Buyer under this Agreement will be paid in Charter Class A Common Stock
valued at the average for the 30 consecutive Trading Days ending the
day before such payment of (i) the last reported sales prices, regular
way, as reported on the principal national securities exchange on which
such securities are listed or admitted for trading on each such Trading
Day or (ii) if such securities are not listed or admitted for trading
on any national securities exchange, the last reported sales prices,
regular way, as reported on the Nasdaq National Market or, if such
securities are not listed on the Nasdaq National Market, the average of
the highest bid and lowest asked prices on each such Trading Day as
reported on the Nasdaq Stock Market, or (iii) if such securities are
not listed or admitted to trading on any national securities exchange,
the Nasdaq National Market or the Nasdaq Stock Market, the average of
the highest bid and lowest asked prices on each such Trading Day in the
domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization (subject to
adjustments to prevent dilution as provided in Section 3.2).
10.4. Third Party Claims. Promptly after the receipt by any
party of notice of any claim, action, suit or proceeding by any Person
who is not a party to this Agreement (collectively, an "Action"), which
Action is subject to indemnification under this Agreement, such party
(the "Indemnified Party") will give reasonable written notice to the
party from whom indemnification is claimed (the "Indemnifying Party").
The Indemnified Party will be entitled, at the sole expense and
liability of the Indemnifying Party, to exercise full control of the
defense, compromise or settlement of any such Action unless the
Indemnifying Party, within a reasonable time after the giving of such
notice by the Indemnified Party, (a) notifies the Indemnified Party in
writing of the Indemnifying Party's intention to assume such defense,
(b) agrees in writing to the Indemnified Party to assume and pay the
Indemnified Party's losses resulting from such Action, and (c) retains
legal counsel reasonably satisfactory to the Indemnified Party to
conduct the defense of such Action. The other party will cooperate with
the party assuming the defense, compromise or settlement of any such
Action in accordance with this Agreement in any manner that such party
reasonably may request. If the Indemnifying Party so assumes the
defense of any such Action, the Indemnified Party will have the right
to employ separate counsel and to participate in (but not control) the
defense, compromise or settlement of the Action, but the fees and
expenses of such counsel will be at the expense of the Indemnified
Party, unless (i) the Indemnifying Party has agreed to pay such fees
and expenses, (ii) any relief other than the payment of money damages
is sought against the Indemnified Party or (iii) the Indemnified Party
has been advised by its counsel that there may be one or more defenses
available to it which are different from or additional to those
available to the Indemnifying Party, and in any such case that portion
of the reasonable out of pocket fees and
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expenses of such separate counsel that are reasonably related to
matters covered by the indemnity provided in this Section 10 will be
paid by the Indemnifying Party, provided that the Indemnifying Party
will not be obligated to pay the expenses of more than one separate
counsel in each jurisdiction for each Indemnified Party so entitled to
separate counsel. Expenses of counsel to the Indemnified Party will be
reimbursed on a current basis by the Indemnifying Party if such
expenses are a liability of the Indemnifying Party and if there is no
dispute as to the applicability of indemnification. No Indemnified
Party will settle or compromise any such Action for which it is
entitled to indemnification under this Agreement without the prior
written consent of the Indemnifying Party (not to be unreasonably
withheld), unless the Indemnifying Party has failed, after reasonable
notice, to undertake control of such Action in the manner provided in
this Section 10.4. No Indemnifying Party will settle or compromise any
such Action without the prior written consent of the Indemnified Party
(not to be unreasonably withheld); provided, however, in any Action (i)
in which any relief other than the payment of money damages is sought
against any Indemnified Party or (ii) in the case of any Action
relating to the Indemnified Party's liability for any Tax, if the
effect of such settlement would be an increase in the liability of the
Indemnified Party for the payment of any Tax for any period beginning
after the Closing Date, the consent of the Indemnified Party may be
withheld by the Indemnified Party in its sole and absolute discretion.
10.5. Limitations on Indemnification - Seller. Seller and AT&T
Parent will not be liable, in the aggregate, for indemnification
arising under Section 10.2(a) for any Losses of or to Buyer or any
other person entitled to indemnification from Seller unless the amount
of such Losses for which Seller and AT&T Parent would, but for the
provisions of this Section 10.5, be liable plus the amounts for which
Seller's Affiliates would be liable under Section 10.2(a) of the
Related Agreement (disregarding the provisions of Section 10.5 of the
Related Agreement) exceeds, on an aggregate basis, $1,750,000 (the
"Threshold Amount,") provided that in determining whether the Threshold
Amount has been exceeded, there will not be included any Losses arising
from any single claim that is less than $10,000. If the Threshold
Amount is exceeded, Seller and AT&T Parent will be liable, jointly and
severally, for the full amount of all Losses (including any single
claims for Losses of less than $10,000), which amount will be due and
payable within 15 days after the later of (a) the date Seller receives
a statement therefor and (b) the date an Action with respect to such
Losses is settled or decided in accordance with section 10.4. Neither
Seller nor AT&T Parent will be liable for punitive damages assessed for
Buyer's conduct. The maximum aggregate amount that Seller and its
Affiliates (including AT&T Parent) will be required to pay for
indemnification arising under Section 10.2(a) of this Agreement and
Section 10.2(a) of the Related Agreement in respect of all claims by
all indemnified parties is $35,000,000. Notwithstanding the preceding,
neither the minimum nor maximum limits specified in this Section 10.5
will apply to: (i) the obligation to pay post-Closing adjustments
pursuant to Section 3.4; (ii) Seller's breach of its representations
and warranties that it has title to, and the absence of Encumbrances
(other than
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Permitted Encumbrances) on, the Assets owned by Seller; or (iii) any
indemnification claims pursuant to Section 10.2(b) or 10.2(c),
irrespective of whether such claims also constitute claims under
Section 10.2(a)).
10.6. Limitations on Indemnification - Buyer. Buyer will not
be liable for indemnification arising under Section 10.3(a) for any
Losses of or to Seller or any other person entitled to indemnification
from Buyer unless the amount of such Losses for which Buyer would, but
for the provisions of this Section 10.6, be liable plus the amounts for
which Buyer's Affiliates would be liable under Section 10.3(a) of the
Related Agreement (disregarding the provisions of Section 10.6 of the
Related Agreement) exceeds, on an aggregate basis, the Threshold
Amount, provided that in determining whether the Threshold Amount has
been exceeded, there will not be included any Losses arising from any
single claim that is less than $10,000. If the Threshold Amount is
exceeded, Seller will be liable for the full amount of all Losses
(including any single claims for Losses of less than $10,000), which
amount will be due and payable within 15 days after the later of (a)
the date Buyer receives a statement therefor and (b) the date an Action
with respect to such Losses is settled or decided in accordance with
section 10.4. Buyer will not be liable for punitive damages assessed
for Seller's conduct. The maximum aggregate amount that Buyer and its
Affiliates will be required to pay for indemnification arising under
Section 10.3(a) of this Agreement and Section 10.3(a) of the Related
Agreement in respect of all claims by all indemnified parties is
$35,000,000. Notwithstanding the preceding, neither the minimum nor
maximum limits specified in this Section 10.6 will apply to: (i) the
obligation to pay the Purchase Price, as adjusted; (ii) the obligation
to pay post-Closing adjustments pursuant to Section 3.4; (iii)
Company's obligation to assume and perform the Assumed Obligations and
Liabilities; (iv) Buyer's breach of its representations and warranties
in Section 5.9; or (v) any indemnification claims pursuant to Section
10.3(b), 10.3(c) or 10.3(d), irrespective of whether such claims also
constitute claims under Section 10.3(a)).
10.7. Sole Remedy. Each party acknowledges and agrees that,
should the Closing occur, its sole and exclusive remedy against the
other with respect to any breach of representation, warranty, covenant,
agreement or obligation (other than any claim based on fraud or
intentional tort and any claim arising under state or federal
securities laws) will be pursuant to the indemnification provisions set
forth in this Section 10.
10.8. Treatment of Indemnity and Other Payments. All indemnity
and other payments made under this Agreement will be treated for all
Tax purposes as adjustments to the Purchase Price.
11. MISCELLANEOUS.
11.1. Parties Obligated and Benefited. Subject to the
limitations set forth below, this Agreement will be binding upon the
parties and their respective
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permitted assigns and successors in interest and will inure solely to
the benefit of the parties and their respective permitted assigns and
successors in interest, and no other Person will be entitled to any of
the benefits conferred by this Agreement. Without the prior written
consent of the other party, no party will assign any of its rights
under this Agreement or delegate any of its duties under this
Agreement.
11.2. Notices. Any notice, request, demand, waiver or other
communication required or permitted to be given under this Agreement
will be in writing and will be deemed to have been duly given only if
delivered in person or by first class, prepaid, certified mail, or sent
by courier or, if receipt is confirmed, by telecopier:
To Buyer at: c/o Charter Communications, Inc.
12444 Powerscourt Drive, Suite 100
St. Louis, Missouri 63124
Attention: Curtis S. Shaw, Esq.
Senior Vice President, General Counsel
& Secretary
Fax: (314) 965-8793
With a copy (which will not constitute notice) to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Attention: Alvin G. Segel, Esq.
Fax: (310) 203-7199
To Seller at: c/o AT&T Broadband, LLC
188 Inverness Drive West
Englewood, Colorado 80112
Attention: Alfredo Di Blasio
Fax: (303) 858-3456
With a copy similarly addressed to the attention of Karla
Tartz, Esq., Fax: (303) 858-3487.
With a copy (which will not constitute notice) to:
Sherman & Howard, L.L.C.
633 Seventeenth Street
Suite 3000
Denver, Colorado 80202
Attention: Gregory J. Ramos, Esq.
Fax: (303) 298-0940
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Any party may change the address to which notices are required to be
sent by giving notice of such change in the manner provided in this
Section 11.2. All notices will be deemed to have been received on the
date of actual receipt.
11.3. Attorneys' Fees. In the event of any action or suit
based upon or arising out of this Agreement, the prevailing party will
be entitled to recover reasonable attorneys' fees and other costs of
such action or suit from the other party.
11.4. Right to Specific Performance. The parties acknowledge
that the unique nature of the transaction contemplated by this
Agreement renders money damages an inadequate remedy for the breach by
either party of its obligations under this Agreement, and each party
agrees that in the event of such breach, the non-breaching party will,
upon proper action instituted by it, be entitled to seek a decree of
specific performance of this Agreement.
11.5. Disclaimer of Warranty. Buyer and Seller agree that the
representations and warranties of Seller contained in this Agreement
and the Transaction Documents constitute the sole representations and
warranties of Seller to Buyer in connection with the transaction
contemplated hereby. BUYER ACKNOWLEDGES THAT EXCEPT AS SET FORTH IN
THIS AGREEMENT OR IN THE TRANSACTION DOCUMENTS, SELLER DISCLAIMS ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS OR ANY
PART THEREOF.
11.6. Waiver. This Agreement or any of its provisions may not
be waived except in writing. The failure of any party to enforce any
right arising under this Agreement on one or more occasions will not
operate as a waiver of that or any other right on that or any other
occasion.
11.7. Captions. The captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
11.8. Choice of Law. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES UNDER IT WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
THE CONFLICTS OF LAWS RULES OF DELAWARE.
11.9. Terms. Terms used with initial capital letters will have
the meanings specified, applicable to both singular and plural forms,
for all purposes of this Agreement. The word "include" and derivatives
of that word are used in this Agreement in an illustrative sense rather
than limiting sense. Whenever the context may require, any pronoun will
include the corresponding masculine, feminine and neuter forms. All
references herein to Articles, Sections, Exhibits and Schedules will be
deemed to be references to Articles and Sections of, and
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Exhibits and Schedules to, this Agreement unless the context will
otherwise require. All Exhibits and Schedules attached hereto will be
deemed incorporated herein as if set forth in full herein and, unless
otherwise defined therein, all terms used in any Exhibit or Schedule
will have the meaning ascribed to such term in this Agreement. The
words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement will refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise
expressly provided herein, any agreement, instrument or statute defined
or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from
time to time amended, modified or supplemented, including (in the case
of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references
to all attachments thereto and instruments incorporated therein. All
accounting terms not otherwise defined in this Agreement will have the
same meanings ascribed to them under generally acceptable accounting
principles as in effect from time to time in the United States,
consistently applied.
11.10. Rights Cumulative. Subject to the limitations set forth
in Section 10.7, all rights and remedies of each of the parties under
this Agreement will be cumulative, and the exercise of one or more
rights or remedies will not preclude the exercise of any other right or
remedy available under this Agreement or applicable law.
11.11. Further Actions. Seller and Buyer will execute and
deliver to the other, from time to time at or after the Closing, for no
additional consideration and at no additional cost to the requesting
party, such further assignments, certificates, instruments, records, or
other documents, assurances or things as may be reasonably necessary to
give full effect to this Agreement and to allow each party fully to
enjoy and exercise the rights accorded and acquired by it under this
Agreement. Seller will, upon Buyer's request given at any time after
the Closing through the date that is 15 months following the Closing,
provide Buyer with a duly executed assignment in recordable form for
each Real Property lease assigned to Company at Closing pursuant to the
Bill of Sale, which lease is, or as to which a memorandum of lease is,
recorded in the applicable public real property records.
11.12. Time. Time is of the essence under this Agreement. If
the last day permitted for giving of any notice or the performance of
any act required or permitted under this Agreement falls on a day which
is not a Business Day, the time for the giving of such notice or the
performance of such act will be extended to the next succeeding
Business Day.
11.13. Late Payments. If either party fails to pay the other
any amounts when due under this Agreement, the amounts due will bear
interest from the due date to the date of payment at the annual rate
publicly announced from time to
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time by The Bank of New York as its prime rate (the "Prime Rate") plus
3%, adjusted as and when changes in the Prime Rate are made.
11.14. Counterparts. This Agreement may be executed in
counterparts, each of which will be deemed an original. This Agreement
will become binding when one or more counterparts, individually or
taken together, bear the signatures of all parties to this Agreement.
Delivery of an executed signature page of this Agreement by facsimile
transmission will constitute effective and binding execution and
delivery of this Agreement.
11.15. Entire Agreement. This Agreement (including the
Schedules and Exhibits referred to in this Agreement, which are
incorporated in and constitute a part of this Agreement), other
Agreements entered into by Buyer, Seller and their respective
Affiliates as of the date of this Agreement, and the Transaction
Documents contain the entire agreement of the parties with respect to
the subject matter hereof and supersede all prior oral or written
agreements and understandings with respect to the subject matter. This
Agreement may not be amended or modified except by a writing signed by
the parties.
11.16. Severability. Any term or provision of this Agreement
which is invalid or unenforceable will be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining rights of the Person intended to be
benefited by such provision or any other provisions of this Agreement.
11.17. Construction. This Agreement has been negotiated by
Buyer and Seller and their respective legal counsel, and legal or
equitable principles that might require the construction of this
Agreement or any provision of this Agreement against the party drafting
this Agreement will not apply in any construction or interpretation of
this Agreement.
11.18. Expenses. Except as otherwise expressly provided in
this Agreement, each party will pay all of its expenses, including
attorneys' and accountants' fees, in connection with the negotiation of
this Agreement, the performance of its obligations and the consummation
of the transactions contemplated by this Agreement.
11.19. Commercially Reasonable Efforts. For purposes of this
Agreement, unless a different standard is expressly provided with
respect to any particular matter, any requirement herein that a party
use "commercially reasonable efforts" will not be deemed to require
that party to undertake extraordinary measures, including the
initiation or prosecution of legal proceedings or the payment of
amounts in excess of normal and usual filing fees and processing fees,
if any.
11.20. Guaranty and Suretyship Matters. AT&T Parent
acknowledges that, notwithstanding that it is not a party to this
Agreement (other than with respect to Article 10), it will receive, in
connection with the consummation of the
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transactions contemplated by this Agreement, fair and adequate
consideration for its indemnification obligations under this Agreement.
AT&T Parent therefore agrees that it will be deemed for all purposes to
be a primary obligor under each of such obligations, and not a
guarantor or surety. Notwithstanding the foregoing, to the extent that
any of the covenants or agreements in this Agreement are determined by
a court of competent jurisdiction to be a guaranty (in such case, the
"Guaranty") by AT&T Parent of indemnity obligations (in such case, the
"Guaranteed Obligations") of any other person or entity (in such case
the "Underlying Obligor"), then, such Guaranty will be continuing,
absolute and unconditional (subject only to the applicable terms and
conditions of this Agreement) and, to the maximum extent permitted by
applicable law, AT&T Parent hereby:
11.20.1. Authorizes any beneficiary of such Guaranty
(the "Beneficiary"), from time to time in such Beneficiary's sole
discretion, and without notice to or demand upon AT&T Parent (i) to
amend, extend, waive, restructure or otherwise modify the Guaranteed
Obligations in whole or part, (ii) to release, compromise, collect,
settle or otherwise liquidate the Guaranteed Obligations in whole or
part, (iii) to take, hold, exchange, enforce, waive, release and
otherwise deal with collateral for the Guaranteed Obligations, and (iv)
to add, release or substitute any one or more endorser(s) or other
guarantor(s) for the Guaranteed Obligations;
11.20.2. Agrees that:
(i) if any one or more of the foregoing
actions are taken;
(ii) if there is any change in the structure
or existence of the Underlying Obligor; or
(iii) if there occurs any other action,
event or circumstance whatsoever which constitutes or might be deemed
to constitute an equitable or legal discharge of an Underlying Obligor
with respect to the Guaranteed Obligations or of AT&T Parent with
respect to the Guaranty, whether in bankruptcy or otherwise;
then (in the case of each of (i), (ii) and (iii)), such action, event
or circumstance shall not impair, reduce, release or otherwise mitigate
AT&T Parent's liability under the Guaranty or the Guaranteed
Obligations;
11.20.3. Waives its right to assert against any
Beneficiary as a defense (legal or equitable), setoff, counterclaim or
cross-claim in connection with the Guaranty, any defense (legal or
equitable), setoff, counterclaim or cross-claim AT&T Parent may now or
in the future have against the Underlying Obligor or any other person
or entity;
11.20.4. Waives all defenses, counterclaims and
setoffs arising from the present or future lack of perfection,
sufficiency, validity or
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enforceability of the Guaranteed Obligations or any security therefor
or documents relating thereto;
11.20.5. Waives any defense arising by reason of any
claim or defense based upon an election of remedies by a Beneficiary;
11.20.6. Waives all notices of acceptance,
presentments, demand for performance, protests, diligence, notices of
nonperformance or default, and all other notices or formalities which
AT&T Parent may otherwise be entitled to under applicable law;
11.20.7. Waives all rights to require a Beneficiary
to prosecute or seek enforcement of any remedies against an Underlying
Obligor or any other person or entity liable on account of the
Guaranteed Obligations, or to require a Beneficiary to seek to enforce
or resort to any remedies with respect to any security interests,
liens, encumbrances, collateral or other security for the Guaranteed
Obligations; and
11.20.8. Agrees that AT&T Parent will have no right
of subrogation, reimbursement, exoneration or contribution against the
Underlying Obligor with respect to the Guaranty, and irrevocably waives
any such rights and any rights to participate in any security now or
hereafter held by a Beneficiary in connection with the Guaranteed
Obligations.
[SIGNATURE PAGE FOLLOWS]
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The parties have executed this Agreement as of the day and year first
above written.
CHARTER COMMUNICATIONS, INC.
By: /s/ Curtis S. Shaw
-------------------------------------
Curtis S. Shaw
Senior Vice President
TCI TKR OF ALABAMA, INC.
TCI SOUTHEAST, INC.
Each by: /s/ Alfredo Di Blasio
---------------------------------
Alfredo Di Blasio
Vice President
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