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EXHIBIT 2.14(c)
CONFORMED COPY
ASSET PURCHASE AGREEMENT
AMONG
FALCON CABLE SYSTEMS COMPANY II, L.P.
ON THE ONE HAND
AND
AT&T BROADBAND, LLC, COMMUNICATION SERVICES, INC., OHIO
CABLEVISION NETWORK, INC., TCI CABLEVISION OF CALIFORNIA, INC. AND
TCI WASHINGTON ASSOCIATES, L.P.
ON THE OTHER HAND
DATED AS OF
FEBRUARY 26, 2001
NEVADA/CALIFORNIA
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TABLE OF CONTENTS
PAGE
1. Definitions........................................................... 1
1.1. 1992 Cable Act................................................. 1
1.2. Affiliate...................................................... 1
1.3. Assets......................................................... 1
1.4. AT&T........................................................... 2
1.5. Basic Services................................................. 2
1.6. Books and Records.............................................. 2
1.7. Business....................................................... 2
1.8. Business Day................................................... 2
1.9. Closing........................................................ 2
1.10. Closing Date................................................... 2
1.11. Closing........................................................ 3
1.12. Communications Act............................................. 3
1.13. Contracts...................................................... 3
1.14. Encumbrance.................................................... 3
1.15. Environmental Law.............................................. 3
1.16. Equipment...................................................... 3
1.17. Equivalent Basic Subscribers (or EBSs)......................... 4
1.18. Excluded Assets................................................ 5
1.19. Expanded Basic Service......................................... 6
1.20. FCC............................................................ 6
1.21. Franchises..................................................... 6
1.22. GAAP........................................................... 7
1.23. Governmental Authority......................................... 7
1.24. Hazardous Substances........................................... 7
1.25. Intangibles.................................................... 7
1.26. Intangibles.................................................... 7
1.27. Legal Requirement.............................................. 8
1.28. FCC............................................................ 8
1.29. Losses......................................................... 8
1.30. Material Adverse Effect........................................ 8
1.31. MVPD........................................................... 8
1.32. Pay TV......................................................... 8
1.33. Permitted Encumbrances......................................... 8
1.34. Person......................................................... 9
1.35. Real Property.................................................. 9
1.36. Required Consents.............................................. 9
1.37. Service Area................................................... 9
1.38. System Employees............................................... 10
1.39. System......................................................... 10
1.40. Taxes.......................................................... 10
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1.41. Third Party.................................................... 10
1.42. Other Definitions.............................................. 10
2. Purchase and Sale of Assets; Assumed Obligations and Liabilities...... 11
2.1. Purchase and Sale of Assets.................................... 11
2.2. Assumed Obligations and Liabilities............................ 11
3. Consideration......................................................... 12
3.1. Purchase Price................................................. 12
3.2. Adjustments to Purchase Price.................................. 12
3.3. Determination of Adjustments................................... 14
3.4. Allocation of Purchase Price................................... 16
4. Representations and Warranties of Seller.............................. 16
4.1. Organization and Qualification................................. 16
4.2. Authority and Validity......................................... 16
4.3. No Breach or Violation......................................... 17
4.4. Assets......................................................... 17
4.5. Franchises and Licenses........................................ 18
4.6. Contracts...................................................... 18
4.7. Real Property.................................................. 19
4.8. Environmental Matters.......................................... 20
4.9. Compliance with Legal Requirements............................. 21
4.10. Patents, Trademarks and Copyrights............................. 22
4.11. Financial Statements........................................... 22
4.12. Absence of Certain Changes..................................... 22
4.13. Legal Proceedings.............................................. 23
4.14. Tax Returns; Other Reports..................................... 23
4.15. Employment Matters............................................. 23
4.16. System Information............................................. 25
4.17. Finders and Brokers............................................ 25
4.18. Disclosure..................................................... 25
5. Buyer's Representations and Warranties................................ 25
5.1. Organization and Qualification................................. 25
5.2. Authority and Validity......................................... 26
5.3. No Conflicts; Required Consents................................ 26
5.4. Finders and Brokers............................................ 26
5.5. Legal Proceedings.............................................. 26
6. Additional Covenants.................................................. 26
6.1. Access to Premises and Records................................. 26
6.2. Continuity and Maintenance of Operations; Financial Statements. 27
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6.3. Employee Matters............................................... 31
6.4. Leased Vehicles; Other Capital Leases.......................... 36
6.5. Consents....................................................... 36
6.6. Title Commitments and Surveys.................................. 39
6.7. HSR Notification............................................... 40
6.8. Notification of Certain Matters................................ 40
6.9. Risk of Loss; Condemnation..................................... 40
6.10. Transfer Taxes................................................. 41
6.11. Updated Schedules.............................................. 42
6.12. Use of Seller's Name........................................... 43
6.13. Transitional Billing Services.................................. 43
6.14. Transitional of High Speed Data Services....................... 43
6.15. Certain Notices................................................ 43
6.16. Satisfaction of Conditions..................................... 44
6.17. Bulk Transfers................................................. 44
6.18. Programming Matters............................................ 44
6.19. Cooperation as to Rates and Fees............................... 44
6.20. Cooperation on Pending Litigation.............................. 45
6.21. Confidentiality................................................ 46
6.22. Lien Searches.................................................. 46
6.23. Further Assurances............................................. 47
6.24. Expired Leases................................................. 47
6.25. Environmental Assessment....................................... 47
6.26. No Offers...................................................... 48
6.27. Taxes.......................................................... 48
6.28. Distant Broadcast Signals...................................... 48
6.29. System Telephone Services...................................... 49
7. Conditions to Closing................................................. 49
7.1. Conditions to the Obligations of Buyer and Seller.............. 49
7.2. Conditions to the Obligations of Buyer......................... 49
7.3. Conditions to Obligations of Seller............................ 51
8. Closing............................................................... 51
8.1. Time and Place of Closing...................................... 51
8.2. Seller's Delivery Obligations.................................. 52
8.3. Buyer's Delivery Obligations................................... 53
9. Termination........................................................... 53
9.1. Events of Termination.......................................... 53
9.2. Liabilities in Event of Termination............................ 54
10. Survival of Representations and Warranties; Indemnification........... 54
10.1. Survival of Representations and Warranties..................... 54
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10.2. Indemnification by Seller...................................... 54
10.3. Indemnification by Buyer....................................... 55
10.4. Third Party Claims............................................. 55
10.5. Limitations on Indemnification - Seller........................ 56
10.6. Limitations on Indemnification - Buyer......................... 57
10.7. Sole Remedy.................................................... 57
10.8. Treatment of Indemnity and Other Payments...................... 57
11. Miscellaneous......................................................... 57
11.1. Parties Obligated and Benefited................................ 57
11.2. Notices........................................................ 58
11.3. Attorneys' Fees................................................ 59
11.4. Right to Specific Performance.................................. 59
11.5. Disclaimer of Warranty......................................... 59
11.6. Waiver......................................................... 59
11.7. Captions....................................................... 60
11.8. Choice of Law.................................................. 60
11.9. Terms.......................................................... 60
11.10. Rights Cumulative.............................................. 60
11.11 Further Actions................................................ 60
11.12 Time........................................................... 61
11.13 Late Payments.................................................. 61
11.14 Counterparts................................................... 61
11.15 Entire Agreement............................................... 61
11.16 Severability................................................... 61
11.17 Construction................................................... 61
11.18 Expenses....................................................... 62
11.19 Commercially Reasonable Efforts................................ 62
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Bill of Sale and Assignment and Assumption Agreement
Exhibit B Form of Escrow Agreement
Exhibit C Form of Seller's Counsel Opinion
Exhibit D Form of Buyer's Counsel Opinion
Schedule 1.18 Excluded Assets
Schedule 1.33 Permitted Encumbrances
Schedule 1.39 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
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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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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of the 26th day
of February, 2001, by and among AT&T and the Affiliates of AT&T whose names
appear on the signature page of this Agreement (collectively, "Seller"), and
Falcon Cable Systems Company II, L.P. ("Buyer").
RECITALS
A. The parties desire to effect the transfer of substantially all
of the assets of the Business (as defined below) owned by Seller to Buyer for
cash.
B. The purpose of this Agreement is to set forth the definitive
terms upon which such transfer will take place.
C. This Agreement is being made concurrently with that
Reorganization Agreement between TCI Cablevision of Nevada, Inc., TCI West,
Inc., and Charter Communications, Inc. (the "Related Agreement").
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 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
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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. Basic Services. The lowest tier of service offered to
subscribers of a System.
1.6. 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 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.
1.7. 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.
1.8. 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.
1.9. Closing. The consummation of the transactions
contemplated by this Agreement, as described in Section 8.
1.10. Closing Date. The date on which the Closing occurs.
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1.11. Closing Time. 11:59 p.m., local time at the location of
the Assets, as applicable, on the Closing Date.
1.12. 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.
1.13. 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.
1.14. 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.
1.15. 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.
1.16. 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,
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inventory and other tangible personal property owned or leased by
Seller or any of its Affiliates and used in the Business.
1.17. 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 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.
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1.18. Excluded Assets. All:
1.18.1. 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;
1.18.2. 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;
1.18.3. Insurance policies and rights and claims
under insurance policies (except as otherwise provided in Section 6.9);
1.18.4. Bonds, letters of credit, surety instruments
and other similar items;
1.18.5. 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;
1.18.6. 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 1.18.14;
1.18.7. Subscriber billing Contracts and related
equipment if not owned by Seller or any of its Affiliates;
1.18.8. 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 1.18.8;
1.18.9. 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 3.2,
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;
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1.18.10. Except as set forth on SCHEDULE 4.6, any
employment, compensation, bonus, deferred compensation, consulting,
collective bargaining agreements, agency or management Contracts;
1.18.11. 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);
1.18.12. Capital and vehicle leases;
1.18.13. 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;
1.18.14. 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;
1.18.15. 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;
1.18.16. Contracts and related accounts receivable
for providing DMX service to commercial accounts via direct broadcast
satellite;
1.18.17. Contracts for telephony services to be
provided to subscribers of the Systems through the Assets;
1.18.18. Intercompany receivables; and
1.18.19. The assets specifically disclosed on
SCHEDULE 1.18.
1.19. 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.
1.20. FCC. The Federal Communications Commission and any
successor Governmental Authority.
1.21. Franchises. The franchises, permits and similar
authorizations included among the Assets (other than Licenses)
described on SCHEDULE 4.5, and
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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.
1.22. GAAP. Generally accepted accounting principles as in
effect from time to time in the United States of America.
1.23. 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.
1.24. 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 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.
1.25. 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.
1.26. 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, Marsha Berkbigler, Frank
Mingolla, Lafawn Vannest,
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Robert Withers and Judge Smith, or (b) any of the general managers (or
holders of positions of equivalent responsibility) of the Systems.
1.27. 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.
1.28. 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.
1.29. Losses. Any claims, losses, liabilities, damages,
penalties, costs and expenses, including interest that may be imposed
in connection therewith, expenses of investigation, reasonable fees and
disbursements of counsel and other experts and settlement costs.
1.30. 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.
1.31. 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).
1.32. 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.
1.33. Permitted Encumbrances. The following Encumbrances: (a)
liens for Taxes, assessments and governmental charges not yet due and
payable;
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(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 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 1.33.
1.34. Person. Any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability
company, Governmental Authority or other entity.
1.35. 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.
1.36. 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 Buyer, and (b) Buyer 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.
1.37. Service Area. The municipalities and counties in and
around which Seller operates the Systems and the Business, which are
disclosed on SCHEDULE 1.39.
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1.38. System Employees. All employees of Seller or of any
Affiliate of Seller who are primarily engaged in the operation of the
Business.
1.39. Systems. The cable television systems listed on SCHEDULE
1.39, which operate in and around the Service Area.
1.40. 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
any penalties, additions to Tax or additional amounts applicable
thereto, whether disputed or not.
1.41. Third Party. Any Person other than Seller or Buyer and
their respective Affiliates.
1.42. 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
Bill of Sale 8.2(a)
Buyer preamble
Buyer's Welfare Plans 6.3.5(a)(ii)
CARS 1.28
Code 8.2(e)
Disagreement Notice 3.3.1
ERISA 4.15.1
ERISA Affiliate 4.15.2
Escrow Agent 3.3.1
Escrow Amount 3.3.1
FAA 6.2.5(xv)
FCC Rate Forms 6.2.5(vii)
Final Adjustments Report 3.3.2
Final Allocation 3.4
Financial Statements 4.11
Franchise Consent Ratio 7.2.4
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Term Section
---- -------
FTC 6.7
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
Past Service 6.3.5(a)(ii)
Phase I Assessment 6.25.1
Phase II Assessment 6.25.1
Preliminary Adjustments Report 3.3.1
Prime Rate 11.13
Purchase Price 3.1
Qualified Intermediary 11.1
Related Agreement recitals
Retained Assets 6.5.4
Retained Assets Management Agreement 6.5.4
Retained Franchises 6.5.4
Retained Purchase Price 6.5.4
Seller preamble
Seller Plans 4.15.2
Subscriber Shortfall 3.2.6
Survival Period 10.1
System Employee Schedule 6.3.1
Taking 6.9.2
Threshold Amount 10.5
Transaction Documents 4.2
Transfer Tax Returns 6.10.1
Transitional Billing Services 6.13
Transitional HSD Services 6.14
Underpayment 3.3.3
WARN 6.3.2
2. PURCHASE AND SALE OF ASSETS; ASSUMED OBLIGATIONS AND LIABILITIES.
2.1. Purchase and Sale of Assets. Subject to the terms and
conditions set forth in this Agreement, at the Closing Time, Seller
will sell to Buyer, and Buyer will purchase from Seller, free and clear
of all Encumbrances (except Permitted Encumbrances), the Assets.
2.2. Assumed Obligations and Liabilities. At the Closing Time,
Buyer will assume, and after the Closing Time, Buyer will pay,
discharge and perform, the following (the "Assumed Obligations and
Liabilities"): (a) those obligations
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and liabilities accruing and relating to periods after the Closing Time
under or with respect to the Assets assigned and transferred to Buyer
at the Closing; (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 3.2 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 3.2; (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 3.2; and (d) all other obligations and liabilities accruing and
relating to periods after the Closing Time and arising out of Buyer'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 borrowed money or under which any Encumbrance securing
such indebtedness has been or may be imposed on any Asset.
3. CONSIDERATION.
3.1. Purchase Price. Buyer will pay to Seller for the Assets
total cash consideration of $185,200,000 (the "Purchase Price"),
subject to adjustment as provided in Section 3.2. The Purchase Price
will be paid at the Closing by wire transfer of immediately available
funds pursuant to wire instructions delivered by Seller to Buyer no
later than two Business Days prior to the Closing Date:
3.2. Adjustments to Purchase Price. The Purchase Price will be
adjusted as follows:
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3.2.1. 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.
3.2.2. 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.
3.2.3. 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.
3.2.4. 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 Buyer following the Closing, and such deposits
will become the property of Buyer.
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3.2.5. 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).
3.2.6. The Purchase Price will be decreased by the
dollar amount equal to the product of (i) 34.62% of the Subscriber
Shortfall multiplied by (ii) $3,429. 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 154,440.
3.2.7. The adjustments provided for in this Section
3.2 will be made without duplication under this Agreement or the
Related Agreement. In addition, none of the adjustments provided for in
this Section 3.2 will be made with respect to any Excluded Asset or
with respect to any item of income or expense related to an Excluded
Asset.
3.2.8. The net amount of the adjustments calculated
under this Section 3.2, as preliminarily determined pursuant to Section
3.3.1, will be added or subtracted, as applicable, to the Purchase
Price at the Closing.
3.3. Determination of Adjustments. Preliminary and final
adjustments to the Purchase Price will be determined as follows:
3.3.1. 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 3.2, 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 3.2 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
$1,000,000 or if Buyer fails to provide a notice of
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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 $1,000,000, 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) $1,750,000, whichever is less (the "Escrow Amount"). If the
Purchase Price to be paid at Closing is determined under (c) above,
Buyer will deposit the Escrow Amount 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).
3.3.2. 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 to all records
that Buyer has in its possession and which are necessary for Seller to
prepare the Final Adjustments Report.
3.3.3. 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 3.3.1, then Buyer and Seller will instruct the
Escrow Agent to release to Seller the amount of the Underpayment, and
to release to Buyer any remaining funds in the escrow account. If
either (i) the amounts released to Seller from the escrow account are
less than the amount of the Underpayment or (ii) no deposit to the
escrow account was made pursuant to Section 3.3.1, Buyer will pay to
Seller an amount equal to the Underpayment minus the amount, if any,
released to Seller from the escrow account. 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 funds, if any, in the escrow account
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to Buyer and Seller will pay to Buyer an amount equal to the excess of
the Purchase Price, as finally determined, over the estimated Purchase
Price paid at the Closing. Any such 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.
3.4. Allocation of Purchase Price. No later than 120 days
after Closing, Buyer will deliver to Seller a written estimate of the
allocation of the Purchase Price, as finally determined pursuant to
Section 3.3, and the Assumed Obligations and Liabilities, among the
Assets, as such Assets existed immediately prior to the Closing Time.
The parties will use reasonable good faith efforts to agree on the
final allocation of the Purchase Price and the Assumed Obligations and
Liabilities among the Assets within 60 days after delivery of Buyer's
estimate of such allocation (the "Final Allocation"). In determining
the Final Allocation, the Purchase Price and the Assumed Obligations
and Liabilities will be allocated between the tangible assets and the
Franchises acquired by Buyer by allocating to the tangible assets
amounts equal to the book value of such tangible assets on the Closing
Date and the remainder to the Franchises. Each Seller and Buyer will
timely file any forms required to be filed under Section 1060 of the
Code and any corresponding provision of state or local tax law. In
addition, Seller and Buyer each agree (i) to file all Tax returns and
determine all Taxes (including, without limitation, for purposes of
Section 1060 of the Code) in accordance with and based upon the Final
Allocation and (ii) not to take any position inconsistent with such
Final Allocation in any audit or judicial or administrative proceeding
or otherwise.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
All of the entities comprising Seller jointly and severally represent
and warrant to Buyer, as of the date of this Agreement and as of the Closing, as
follows:
4.1. Organization and Qualification. Each entity comprising
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. Each entity comprising Seller is duly qualified to do
business and is in good standing under the laws of each jurisdiction
where it operates the Business.
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
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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 is a party do not and will not:
(a) conflict with or violate any provision of the organizational
documents of Seller; (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 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 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
Buyer 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,
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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 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
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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.
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 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 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 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,
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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 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
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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.
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
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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 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
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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 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, 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. 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.
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
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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 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. 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
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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.
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 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.
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 limited
partnership duly organized, validly existing and in good standing under
the laws of California 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.
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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 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.
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
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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 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
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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 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 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
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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;
(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;
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(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 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
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will not, without Buyer's consent, enter into any settlement of any
litigation that will bind Buyer or any System to any material
obligation following the Closing, impose any liability on Buyer
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, 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. 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 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 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
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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 Buyer 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 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, Buyer will
have no 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 as of or
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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 Buyer, 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, Buyer will not have 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 the Buyer 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.
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6.3.5. (a) Notwithstanding anything to the contrary
herein, Buyer will:
(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 Buyer will not 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 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.
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(b) Notwithstanding anything set forth in
Section 6.3.5(a), Buyer will have no obligation to System Employees who
are Employees on Approved Leave of Absence until they become employees
of Buyer pursuant to Section 6.3.1 hereof.
6.3.6. If Buyer discharges any Hired Employee without
cause within 90 days after the Closing Date, then Buyer will 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 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, 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 will not 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
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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 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 Buyer 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 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 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 Buyer 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
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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 enter
into a new agreement with such licensing authority, in which case Buyer
will use its commercially reasonable efforts to negotiate such an
agreement 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 (except Required Consents for the transfer of Franchises
which will be governed by Section 6.5.4) 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. If all of the conditions to the Closing have
been met and the parties have not received 100% of the Required
Consents for Franchises, then, at the Closing, Seller will transfer,
convey and assign to Buyer all of the Assets, and the Closing will
occur with respect to all of the Assets, other than (a) any Franchises
for which Required Consents have not been obtained (the "Retained
Franchises"), and (b) any Assets that are located in the Franchise area
for such Retained Franchises and that relate exclusively to such
Retained Franchises (together with the Retained Franchises, the
"Retained Assets"). The portion of the Purchase Price to be given as
consideration for the Retained Assets (which portion will be calculated
as a pro rata portion of the Purchase Price based on the number of
Equivalent Basic Subscribers in the Service Areas covered by the
Retained Franchises), but in any event not to exceed 10% of the
Purchase Price (the "Retained Purchase Price") will be deposited in
escrow with the Escrow Agent pursuant to an escrow agreement
substantially in the form of EXHIBIT B. Following the Closing, the
parties will continue to use commercially reasonable efforts to obtain
Required Consents for any Retained Franchises in accordance with the
terms of this Agreement for a period of 120 days. Within 10 Business
Days after obtaining the Required Consent for a Retained Franchise, or
upon the expiration of 120 days after the Closing, whichever will first
occur, Seller will transfer, convey and assign the Retained Assets
relating to such Retained Franchise to Buyer and the Parties will cause
the Escrow Agent to deliver to Seller the Retained Purchase Price (or
portion thereof related to the Retained Assets being transferred) and
all interest accruing thereon. Prior to the Closing,
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Buyer and Seller will negotiate in good faith to reach agreement on a
management agreement pursuant to which Buyer will manage all Retained
Assets (except to the extent such management will cause either Party to
violate any Legal Requirement), which management agreement will also
contain any required signal sharing arrangements (the "Retained Assets
Management Agreement"). The Parties will negotiate in good faith to
resolve the operation of any Retained Assets that may not, pursuant to
applicable Legal Requirement, be managed by Buyer pursuant to the
foregoing. The Retained Assets Management Agreement will provide that
Buyer will bear all expenses relating to the Retained Assets and the
operation thereof and will receive the net cash flow from the Retained
Assets as its management fee. The Retained Assets Management Agreement
will provide that its term will continue with respect to each Retained
Asset until Seller transfers such Retained Asset to Buyer in accordance
with this Section 6.5.4. The adjustments pursuant to Section 3.2 will
be made as of the Closing Date for the Retained Assets as if they were
transferred on the Closing Date. In addition, Buyer will become liable
for the Assumed Obligations and Liabilities with respect to the
Retained Assets as of the Closing Date, and all representations and
warranties (except as to those Required Consents that have not been
obtained) made in connection with the Retained Assets will be made as
of the Closing Date rather than any subsequent transfer date. Buyer may
further make any indemnification claims permitted under Section 10 with
respect to the Retained Assets as though the Retained Assets were
transferred at the Closing. If the provisions of this Section 6.5.4
become operative, the parties agree to use commercially reasonable
efforts and act in good faith in taking such actions and negotiating
such additional provisions or other agreements, including amendments to
this Agreement, as may be necessary or appropriate to carry out the
intent of this Section 6.5.4. Buyer and Seller will each pay one-half
of the expense of defending any legal challenges alleging the
premature, unlawful or invalid transfer of any of the Retained
Franchises, including reasonable attorneys' fees and consultants' fees;
provided, however, that the actual amount of any judgments obtained by
a Governmental Authority resulting from (a) the transfer of any
Retained Assets, Retained Franchise, or actual working control of
either without proper consent or (b) any action taken by Buyer as
manager of the Retained Assets; and further provided that any amounts
paid to reinstate any Retained Franchise revoked as a result of either
such event will be borne solely by Buyer. If a Retained Franchise is
revoked for any reason, there will be no compensation or other
remuneration paid by any party to another party as a result of such
revocation.
6.5.5. 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 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
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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.
6.5.6. 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 standard form of
indemnification for any mechanic's or materialmen's lien affecting such
Real Property which is not an Assumed Obligation and Liability.
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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 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
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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 Buyer, or the
rights to such proceeds will be assigned by Seller to Buyer 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 Buyer the Assets or interests
that are the subject of the Taking, (c) at the Closing, Seller will
assign to Buyer 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 Buyer such further assurances of such rights
and assignment with respect to the Taking as Buyer 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.
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
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in which the Closing Date occurs and are otherwise not accounted for in
the adjustment to Purchase Price set forth in Section 3.2 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 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.
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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 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.
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
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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 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 Buyer will not 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
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.
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(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
to bear any liability or would adversely affect the rates to be charged
by Buyer. 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 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 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 cooperate with and assist Seller and its
Affiliates, upon reasonable request and at Seller's expense, by
undertaking commercially reasonable efforts to make 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
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response to any complaint, claim, inquiry, order or requirements of any
Governmental Authority or other Third Party. No action undertaken by
Buyer 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.
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
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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 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.
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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 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
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
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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.
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 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
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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 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 132,600.
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
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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-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
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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 (the "Bill of Sale");
(b) A special or limited warranty deed 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 Buyer, 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;
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(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 attached as EXHIBIT C;
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) The Purchase Price required to be paid
at the Closing, as adjusted in accordance with this Agreement;
(b) The Bill of Sale 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 attached as EXHIBIT D; 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
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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.
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 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 the representations and warranties relating to Seller's title to,
and the absence of Encumbrances (other than Permitted Encumbrances) on,
the Assets 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
will jointly and severally 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
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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 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.
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 expenses of such separate
counsel that are reasonably related to matters covered
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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 will not
be liable 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 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, $2,700,000 (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 will be jointly and severally 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 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. Seller will not be liable for
punitive damages assessed for Buyer's conduct. The maximum aggregate
amount that Seller and its Affiliates 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 $53,500,000. 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 3.3; (ii) Seller's breach of its representations
and warranties that it has title to, and the absence of Encumbrances
(other than 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)).
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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
$53,500,000. 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 3.3; (iii) Buyer's
obligation to assume and perform the Assumed Obligations and
Liabilities; or (iv) 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) 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 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; provided, however, either party
may assign its rights to an Affiliate so long as the assigning party
continues to be bound by the terms of this
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Agreement. In addition, Seller may assign its rights under this
Agreement (but not obligations) to a qualified intermediary within the
meaning of Code Section 1.1031(k)-1(g)(4)(iii) ("Qualified
Intermediary") and Buyer will cooperate with Seller as may be
reasonably necessary in connection with such assignment and the
deferred tax-free exchange to be accomplished in connection therewith,
including acknowledging the execution of a written agreement between
Seller and the Qualified Intermediary. Notwithstanding the foregoing,
Buyer's cooperation and Seller's attempt at such an exchange will not
extend to any act or omission which may have the effect of (i)
impairing the title to the Assets; (ii) impairing Buyer's rights and
remedies under this Agreement (including Buyer's rights to
indemnification, to the assurances provided by Seller's representations
and warranties, to close the transaction contemplated by the Agreement
within the time and in the manner specified), (iii) increasing Buyer's
obligations or liability hereunder or resulting in any additional cost,
expense or liability to Buyer. Buyer may demand reasonable assurances
from Seller to such effect prior to entering into any agreement or
consenting to any assignment of Seller's rights or obligations
hereunder. Further, Seller covenants and agrees that (i) the
restructuring of the subject transaction to qualify for exchange
treatment will not prevent nor delay the Closing beyond the date set
forth in the Agreement, (ii) Buyer will not be required to take title
to any property other than the Assets, (iii) Seller's attempt to effect
a tax deferred exchange will in no event be a condition to the Closing,
and (iv) Seller will, and hereby agrees to, indemnify, defend and hold
Buyer harmless from and against any and all Losses threatened against,
suffered or incurred by Buyer by reason of any such cooperation and/or
Seller's attempt at exchange treatment.
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
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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
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.
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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 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
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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 Buyer 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 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.
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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.
[SIGNATURE PAGE FOLLOWS]
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The parties have executed this Agreement as of the day and year first
above written.
FALCON CABLE SYSTEMS COMPANY II, L.P.
By: /s/ Curtis S. Shaw
-----------------------------------
Curtis S. Shaw
Senior Vice President
AT&T BROADBAND, LLC
COMMUNICATION SERVICES, INC.
OHIO CABLEVISION NETWORK, INC.
TCI CABLEVISION OF CALIFORNIA, INC.
TCI WASHINGTON ASSOCIATES, L.P.
Each by: /s/ Alfredo Di Blasio
------------------------------
Alfredo Di Blasio
Authorized Signatory
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