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EXHIBIT 2.14(f)
CONFORMED COPY
ASSET PURCHASE AGREEMENT
AMONG
CHARTER COMMUNICATIONS ENTERTAINMENT I, LLC
A DELAWARE LIMITED LIABILITY COMPANY
AND
ST. LOUIS TELE-COMMUNICATIONS, INC., A MISSOURI CORPORATION
TCI CABLE PARTNERS OF ST. LOUIS, L.P., A COLORADO LIMITED PARTNERSHIP
TCI CABLEVISION OF MISSOURI, INC., A MISSOURI CORPORATION
TCI OF ILLINOIS, INC., AN ILLINOIS CORPORATION
TCI TKR OF CENTRAL FLORIDA, INC., A FLORIDA CORPORATION AND
TCI HOLDINGS, INC., A DELAWARE CORPORATION
ON THE OTHER HAND
DATED AS OF
FEBRUARY 26, 2001
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TABLE OF CONTENTS
PAGE
1. Definitions........................................................... 1
1.1. Affiliate....................................................... 1
1.2. Assets.......................................................... 1
1.3. AT&T............................................................ 2
1.4. Basic Services.................................................. 2
1.5. Books and Records............................................... 2
1.6. Business........................................................ 2
1.7. Business Day.................................................... 2
1.8. Closing......................................................... 2
1.9. Closing Date.................................................... 2
1.10. Closing......................................................... 3
1.11. Communications Act.............................................. 3
1.12. Contracts....................................................... 3
1.13. Encumbrance..................................................... 3
1.14. Environmental Law............................................... 3
1.15. Equipment....................................................... 3
1.16. Equivalent Basic Subscribers (or EBSs).......................... 4
1.17. Excluded Assets................................................. 5
1.18. Expanded Basic Service.......................................... 6
1.19. FCC............................................................. 7
1.20. Franchises...................................................... 7
1.21 GAAP............................................................ 7
1.22. Governmental Authority.......................................... 7
1.23. Hazardous Substances............................................ 7
1.24. Intangibles..................................................... 7
1.25. Intangibles..................................................... 8
1.26. Legal Requirement............................................... 8
1.27. FCC............................................................. 8
1.28. Losses.......................................................... 8
1.29. Material Adverse Effect......................................... 8
1.30. Pay TV.......................................................... 8
1.31. Permitted Encumbrances.......................................... 9
1.32. Person.......................................................... 9
1.33. Real Property................................................... 9
1.34. Required Consents............................................... 9
1.35. Service Area.................................................... 10
1.36. System Employees................................................ 10
1.37. System.......................................................... 10
1.38. Taxes........................................................... 10
1.39. Third Party..................................................... 10
1.40. Other Definitions............................................... 10
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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....................................................... 19
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...................................... 23
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
5.5. Finders and Brokers............................................. 26
5.6. 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
6.3. Employee Matters................................................ 31
6.5. Consents,....................................................... 36
6.6. Title Commitments and Surveys................................... 39
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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
7. Conditions to Closing................................................. 49
7.1. Conditions to the Obligations of Buyer and Seller............... 49
7.2. Conditions to the Obligations of Buyer.......................... 50
7.3. Conditions to Obligations of Seller............................. 51
8. Closing............................................................... 52
8.1. Conditions to Obligations of Seller............................. 52
8.2. Seller's Delivery Obligations................................... 52
8.3. Buyer's Delivery Obligations.................................... 53
9. Termination........................................................... 54
9.1. Events of Termination........................................... 54
9.2. Liabilities in Event of Termination............................. 54
10. Survival of Representations and Warranties; Indemnification........ 54
10.1. Survival of Representations and Warranties...................... 54
10.2. Indemnification by Seller....................................... 55
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..................................................... 58
11. Miscellaneous...................................................... 58
11.1. Parties Obligated and Benefited................................. 58
11.2. Notices......................................................... 58
11.3. Attorneys' Fees................................................. 59
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11.4. Right to Specific Performance................................... 59
11.5. Waiver.......................................................... 59
11.6. Captions........................................................ 60
11.7. Choice of Law................................................... 60
11.8. Terms........................................................... 60
11.9. Rights Cumulative............................................... 60
11.10 Further Actions................................................. 60
11.11 Time............................................................ 61
11.12 Late Payments................................................... 61
11.13 Counterparts.................................................... 61
11.14 Entire Agreement................................................ 61
11.15 Severability.................................................... 61
11.16 Construction.................................................... 61
11.17 Expenses........................................................ 62
11.18 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
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 TCI Holdings, Inc. ("TCI Parent") and the
Affiliates of AT&T whose names appear on the signature page of this Agreement
(collectively, "Seller"), and Charter Communications Entertainment I, LLC, a
Delaware limited liability company ("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.
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, Teleport Communications Group Inc. and
its subsidiaries and AT&T Network Services, an operating division of AT&T
Corp. (collectively with Teleport Communications Group Inc. and its
subsidiaries "TCG") will not be treated as Affiliates of Seller.
1.3. Assets. All assets, properties, privileges, contracts,
licenses, permits, franchises, authorizations, rights, interests, claims
and other properties, real and personal, tangible and intangible, of every
type and description (a) that are owned, leased, held for use or used in
the Business, and (b) in which Seller
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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 but
excluding the local exchange telephony business of Seller operated in the
AT&T 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
Affiliate 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, or TCG used or held for use other than primarily in connection
with the Business; 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. Contracts with TCG not disclosed on Schedule 4.6 to
this Agreement;
1.18.19. Intercompany receivables;
1.18.20. Except as set forth on SCHEDULE 4.6, all
retransmission consents and must carry agreements; and
1.18.21. 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.
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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 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.
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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 and Tom Hopfinger, 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.
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1.33. Permitted Encumbrances. The following Encumbrances: (a) liens
for Taxes, assessments and governmental charges not yet due and payable;
(b) zoning laws and ordinances and similar Legal Requirements; (c) any
right reserved to any Governmental Authority to regulate the affected
property (including restrictions stated in the Franchises and Licenses);
(d) in the case of any leased Asset, (i) the rights of any lessor and (ii)
any Encumbrance granted by any lessor of such leased Asset; (e) inchoate
materialmens', mechanics', workmen's, repairmen's or other like inchoate
Encumbrances arising in the ordinary course of business which constitute
Assumed Obligations and Liabilities; (f) in the case of owned Real
Property, any easements, rights-of-way, servitudes, permits, restrictions
and minor imperfections or irregularities in title which do not
individually or in the aggregate materially interfere with the right or
ability to use, own, enjoy or operate the Real Property as currently being
used and which do not impair the value of the Real Property or interfere
with Seller's ability or right to convey good, marketable and indefeasible
fee simple title to the owned Real Property (or in the case of leased or
other Real Property, the 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.
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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.
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
AT&T Parent preamble
Bill of Sale 8.2(a)
Buyer preamble
Buyer's Welfare Plans 6.3.5
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)
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Term Section
---- -------
Final Adjustments Report 3.3.2
Financial Statements 4.11
Franchise Consent Ratio 7.2.4
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
NSI 1.3
Offer/No Offer Schedule 6.3.1
Preliminary Adjustments Report 3.3.1
Prime Rate 11.13
Purchase Price 3.1
Past Service 6.3.5
Phase I Assessment 6.25.1
Phase II Assessment 6.25.1
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 3.2.7
Survival Period 10.1
System Employee Schedule 6.3.1
Taking 6.9.2
Threshold Amount 10.5
Transaction Documents 4.2
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 $905,000,000 (Nine Hundred And Five Million Dollars)
(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 $180,000 in
respect of deferred revenue related to the portion of the Business
conducted by NSI.
3.2.7.The Purchase Price will be decreased by the dollar
amount equal to the product of (i) the Subscriber Shortfall multiplied by
(ii) $3,348 (Three Thousand, Three Hundred Forty Eight Dollars). 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 as of the Closing Time is less than 267,597 (Two Hundred Sixty
Seven Thousand, Five Hundred Ninety Seven).
3.2.8.The adjustments provided for in this Section 3.2 will be
made without duplication. 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.
3.2.9.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
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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 $3,000,000 or if Buyer fails to
provide a notice of disagreement with Seller's estimates of such
adjustments within the requisite time provided, the estimates of such
adjustments set forth in the Preliminary Adjustments Report or (c) if the
parties do not reach such an agreement on the estimated amount of the
adjustments set forth in the Preliminary Adjustments Report prior to the
Closing Date and the amount in dispute is greater than $3,000,000, 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) $5,000,000, 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
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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 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
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which Seller is a party. The execution and delivery by Seller of this
Agreement has been duly authorized by all requisite entity action. The
execution and delivery by Seller of the Transaction Documents to which
Seller is a party, the performance by Seller of its obligations under and
the consummation by Seller of the transactions contemplated by this
Agreement and the Transaction Documents to which Seller is a party have
been, or will by the Closing Date be, duly authorized by all requisite
entity action. This Agreement is, and when executed and delivered by
Seller the Transaction Documents will be, the valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms, except insofar as enforceability may be affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect affecting creditors' rights generally or
by principles governing the availability of equitable remedies.
4.3. No Conflict; Required Consents. Subject to obtaining the
Required Consents, all of which are disclosed on SCHEDULE 4.3, and the
receipt of any consent required or the expiration or termination of the
applicable waiting period under the HSR Act, the execution and delivery by
Seller, the performance of Seller under, and the consummation by Seller of
the transactions contemplated by, this Agreement and the Transaction
Documents to which Seller 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
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perform all of the Assumed Obligations and Liabilities. Except as
disclosed on SCHEDULE 4.4, all of the Equipment is in good operating
condition and repair, ordinary wear and tear excepted, and is adequate for
the operation of the Business.
4.5. Franchises and Licenses. Except as disclosed on SCHEDULE 4.5,
Seller is not bound or affected by any (a) "franchise," as such term is
defined in Section 602 of the Communications Act (47 U.S.C. 522), in
connection with the operation of the Business, (b) license, authorization
or permit issued by the FCC that relates to the Systems or the operation
of the Business or (c) any licenses, authorizations or permits of any
other Governmental Authority (other than those described in clauses (a) or
(b)) which are individually or in the aggregate material to the Business
or the Systems. Seller has provided Buyer with access to true and complete
copies of each Franchise and License disclosed on SCHEDULE 4.5. SCHEDULE
4.5 discloses the specific Seller bound or affected by each Franchise. To
the extent that SCHEDULE 4.5 fails to disclose the specific Seller bound
or affected by each item listed thereon or any license, authorization or
permit of any Governmental Authority, Seller will provide such information
to Buyer within 30 days after the date of this Agreement. Except as
disclosed on SCHEDULE 4.5, the Franchises and Licenses are currently in
full force and effect under all applicable Legal Requirements according to
their terms and Seller is not in breach or default of any terms or
conditions thereunder and no event has occurred that, with notice or lapse
of time or both would constitute a breach, violation or default thereunder
by Seller. Except as disclosed on SCHEDULE 4.5, there is no legal action,
governmental proceeding or investigation, pending or, to 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 other 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.
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4.6. Contracts. All Contracts are disclosed on SCHEDULE 4.6, except
for: (a) subscription agreements with individual residential subscribers
or commercial establishments for the cable services provided by the
Systems in the ordinary course of business; (b) miscellaneous service
Contracts with Seller's vendors terminable at will or upon notice of 30
days or less without penalty; (c) Contracts not involving any monetary
obligation in excess of $25,000; (d) bank financing documents; (e)
Contracts constituting Excluded Assets; and (f) Contracts relating to
services provided by Seller to residents of multiple dwelling unit
complexes or to commercial accounts. Without limiting the foregoing,
SCHEDULE 4.6 discloses all programming agreements, wireline crossing
agreement, pole attachment agreements, fiber leases, Contracts between
Seller and its Affiliates, retransmission consent agreements, capital
leases of personal property and agreements limiting the right of the
Systems to compete, except, in each case, such Contracts that are Excluded
Assets. Seller has provided Buyer with access to true and complete copies
of each of the written Contracts disclosed on SCHEDULE 4.6 and will
provide Buyer access to all other Contracts (including descriptions of
oral Contracts) of Seller within 30 days after the date of this Agreement.
Seller will further provide Buyer with a complete list of all multiple
dwelling unit complexes served by the Systems as of the date specified in
such list. Each Contract is in full force and effect and constitutes the
valid, legal, binding and enforceable obligation of Seller, and Seller is
not in breach or default of any terms or conditions thereunder. To
Seller's Knowledge no other party thereto is, in breach or default of any
material terms or conditions thereunder.
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
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default of any terms or conditions of any written instrument relating
thereto and, to Seller's Knowledge, no other party thereto is in material
breach or default of any terms or conditions of any such written
instrument.
4.7.2. There are no leases or other agreements, oral or
written, granting to any Person other than Seller the right to occupy or
use any Real Property, except as disclosed on SCHEDULE 4.7. Seller has
provided Buyer with access to true and complete copies of each of the
written leases and other agreements disclosed on SCHEDULE 4.7, including
all amendments and addenda thereto. Each parcel of Real Property owned or
leased by Seller, any improvements constructed thereon and their current
use, conforms in all material respects to (a) all applicable Legal
Requirements, and (b) all restrictive covenants, if any, or other
Encumbrances affecting all or part of such Real Property.
4.7.3. Except as disclosed on SCHEDULE 4.7, each parcel of
owned Real Property and each parcel of leased Real Property (a) has access
to and over public streets or private streets for which Seller has a valid
right of ingress and egress, (b) conforms in its current use and occupancy
in all material respects to all zoning requirements and (c) conforms in
its current use in all material respects to all restrictive covenants, if
any, or other Encumbrances affecting all or part of such parcel. There are
no pending or, to Seller's Knowledge, threatened condemnation actions or
special assessments or proceedings for changes in the zoning with respect
to such Real Property or any part thereof and 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.
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4.8.2. Seller has provided Buyer with complete and correct
copies of (a) all studies, reports, surveys or other materials in Seller's
possession or to which Seller has access relating to the actual or alleged
presence, use, generation, release or disposal of Hazardous Substances at,
on, under or affecting the Real Property, (b) all notices or other
materials in Seller's possession or to which Seller has access that were
received from any Governmental Authority respecting any Environmental Laws
relating to the current or past ownership, use or operation of the Real
Property or activities at the Real Property and (c) all notices and other
materials in Seller's possession or to which Seller has access relating to
any litigation or claim relating to the Real Property or other Assets or
concerning any Environmental Law.
4.9. Compliance with Legal Requirements. Except as set forth on
SCHEDULE 4.9:
4.9.1. The ownership, leasing and use of the Assets as they
are currently owned, leased and used, and the conduct of the Business as
it is currently conducted, do not violate or infringe in any material
respect any Legal Requirements currently in effect (other than Legal
Requirements described in Section 4.9.4, as to which the representations
and warranties set forth in that subsection will exclusively apply).
Seller has not received any notice of, and Seller has no Knowledge of, any
basis for the allegation of any such violation or infringement.
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
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to the Systems. Seller has used commercially reasonable good faith efforts
to establish rates charged to subscribers, effective since September 1,
1993, that would be allowable under the Communications Act, and rules and
regulations promulgated by the FCC, and any authoritative interpretation
thereof now or then in effect, whether or not such rates were subject to
regulation at that date by any Governmental Authority, including any state
regulatory agency, local franchising authority and the FCC.
Notwithstanding the foregoing, Seller makes no representation or warranty
that either the rates charged to subscribers of the Systems would be
allowable under any rules and regulations of the FCC or any authoritative
interpretation thereof, promulgated after the Closing Date.
4.9.5. All necessary FAA approvals have been obtained and all
necessary FCC tower registrations have been filed with respect to the
height and location of towers used in connection with the operation of the
Systems, and such towers are being operated in compliance in all material
respects with applicable FCC and FAA rules.
4.10. Patents, Trademarks and Copyrights. To the Knowledge of
Seller, the operation of the Business as currently conducted does not
violate or infringe upon the rights of any Person in any copyright,
trademark, service mark, patent, license, trade secret or similar
intellectual property right.
4.11. Financial Statements. Seller has delivered to Buyer correct
and complete copies of its unaudited balance sheets and unaudited
statements of 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
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December 31, 2000, there has been no material change in accounting
principles or practices with respect to the Business or revaluation by
Seller of the Assets for financial reporting, property tax or other
purposes.
4.13. Legal Proceedings. Except as disclosed on SCHEDULE 4.13, (a)
there is no judgment or order outstanding, or any action, suit, complaint,
proceeding or investigation by or before any Governmental Authority or any
arbitrator pending, or to Seller's Knowledge, threatened, involving or
affecting all or any part of the Business or Seller, except as would not
reasonably be expected to materially adversely affect the Systems or the
Business; (b) there are no claims, actions, suits, proceedings or
investigations pending or, to Seller's Knowledge, threatened, by or before
any Governmental Authority, or any arbitrator, by, against, affecting or
relating to Seller which, if adversely determined, would restrain or
enjoin the consummation of the transactions contemplated by this Agreement
or declare unlawful the transactions or events contemplated by this
Agreement or cause any of such transactions to be rescinded; and (c) there
are no current rate proceedings, must-carry complaints or other actions,
suits, complaints, proceedings or investigations pending against Seller
alleging noncompliance by the Systems of any Franchise or License.
4.14. Tax Returns; Other Reports. Seller has duly and timely filed
all federal, state, local and foreign Tax returns and other Tax reports
required to be filed by Seller, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or
report, the failure of 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. 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 liability
company duly organized, validly existing and in good standing under the
laws of Delaware and has all requisite power and authority to carry on its
business as currently conducted and to own, lease, use and operate its
assets. Buyer is duly qualified to do business and is in good standing
under the laws of each jurisdiction in which the character of the
properties owned, leased or operated by it or the nature of the activities
conducted by it makes such qualification necessary.
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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 30% 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 their
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.
6.30. Telephony Agreement. The Buyer and Seller will negotiate in
good faith to reach mutually acceptable terms, so that the local exchange
telephony business of Seller operated in the Systems (the "Telephony
Business") will be transferred to the Buyer, at, or as soon as practicable
after, Closing without the payment of additional consideration or any
adjustment to the Purchase Price for the associated assets in exchange for
the Buyer assuming agreed upon agreements and permits related to the
Telephony Business.
6.31. Additional TCG Obligations. Prior to the Closing Date, Seller
will not agree to build additional facilities for TCG or permit TCG to
overlash or interconnect with the Systems pursuant to the Amended and
Restated Facilities Agreements between Sellers and TCG and their
Affiliates referenced in Schedule 4.6 hereto (the "ARFAs") without the
consent of Buyer, not to be unreasonably withheld; provided, however, in
no event shall Seller be required, pursuant to this SECTION 6.31, to take
any action (or omit to take any action) which would be a breach of the
ARFA.
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
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contemplated by this Agreement. No action, suit or proceeding is pending
or threatened by any federal Governmental Authority which would prevent or
make illegal the transactions contemplated by this Agreement.
7.2. Conditions to the Obligations of Buyer. The obligations of
Buyer to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, at or before the Closing, of the following
conditions, which may be waived by Buyer (subject to Section 10.3(d)) to
the extent not prohibited by applicable Legal Requirements:
7.2.1. Accuracy of Representations and Warranties. The
representations and warranties of Seller in this Agreement are true,
complete and correct (without regard to any materiality or similar
qualifications contained therein), at and as of the Closing with the same
effect as if made at and as of the Closing, except (i) for changes, if
any, permitted or contemplated by this Agreement, (ii) to the extent a
different date is specified therein, in which case such representation and
warranty is true and correct as of such date and (iii) to the extent that
all misstatements, omissions and inaccuracies in the representations and
warranties of Seller, in the aggregate, do not have and could not
reasonably be expected to have a Material Adverse Effect.
7.2.2. Performance of Agreements. Seller in all material
respects has performed and complied with each obligation, agreement,
covenant and condition required by this Agreement to be performed or
complied with by Seller at or prior to the Closing.
7.2.3. Deliveries. Seller has delivered the items and
documents required to be delivered by it pursuant to this Agreement,
including those required under Section 8.2.
7.2.4. Required Consents. Except as otherwise provided in
Section 6.5.2, Seller will have received and delivered to Buyer in form
and substance reasonably satisfactory to Buyer, all of the Required
Consents marked with an asterisk (*) on SCHEDULE 4.3 (including those
incorporated by reference) and 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 with valid franchises or extensions
expiring no less than one year following Closing 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
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Systems (the "Franchise Consent Ratio") is equal to or greater than 70%.
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 229,755 (Two Hundred Twenty Nine
Thousand, Seven Hundred Fifty Five).
7.2.6. No Material Adverse Changes. During the period from
December 31, 2000, through and including the Closing Date, there will not
have occurred and be continuing any event or events having, individually
or in the aggregate, a Material Adverse Effect.
7.2.7. Franchise Renewals. Each Franchise for which (a) a
valid notice of renewal pursuant to the formal renewal procedures
established by Section 626 of the Communications Act has not been timely
delivered to the appropriate Governmental Authority and (b) with respect
to which the appropriate Governmental Authority has not confirmed in
writing that the procedure established by Section 626 nonetheless will
apply to the renewal or extension of such Franchise, will have been
renewed or extended for a period expiring no earlier than three years
after the Closing Date.
7.2.8. At Home Agreement. Seller will have caused At Home
Corporation to execute and deliver to Buyer an Affiliation Agreement,
which Affiliation Agreement, in combination with the Transitional HSD
Services, will permit Buyer to provide high speed data services to
subscribers for six months following Closing and will be on terms
consistent with At Home Corporation's then-standard terms and conditions
offered to Third Party MSOs, which terms will be no less favorable than
either (at At Home Corporation's election) Buyer's or Buyer's Affiliate's
then-current At Home Affiliation Agreement for its Fort Worth, Texas cable
system or Buyer's or Buyer's Affiliate's then-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
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any, permitted or contemplated by this Agreement and except to the extent
a different date is specified therein, in which case such representation
and warranty is true and correct as of such date.
7.3.2. Performance of Agreements. Buyer in all material
respects has performed and complied with each obligation, agreement,
covenant and condition required by this Agreement to be performed or
complied with by Buyer at or prior to the Closing.
7.3.3. Deliveries. Buyer has delivered the payment, items and
documents required to be delivered by it pursuant to this Agreement,
including those required under Section 8.3.
8. CLOSING.
8.1. Time and Place of the Closing. The Closing will be held on a
date specified by Seller which is no less than five nor more than 10
Business Days following the date all conditions to the Closing contained
in this Agreement (other than those based on acts to be performed at the
Closing) have been satisfied or waived; provided, however, either party
may postpone the Closing Date until the last day of the month in which all
such conditions are satisfied or waived. The Closing will be held at 9:00
a.m., local time, at Seller's counsel's office located at 633 Seventeenth
Street, Suite 3000, Denver, Colorado 80202, or at such other place and
time as Buyer and Seller may agree.
8.2. Seller's Delivery Obligations. At the Closing, Seller will
deliver (or cause to be delivered) to Buyer the following:
(a) A Bill of Sale and Assignment and Assumption
Agreement in substantially the form of EXHIBIT A to this Agreement (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;
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(d) A certificate, dated the Closing Date, signed by an
officer of Seller, stating, solely in his or her capacity as such officer,
that the conditions set forth in Sections 7.2.1 and 7.2.2 are satisfied;
(e) A FIRPTA Non-Foreign Seller Certificate from Seller
certifying that it is not a foreign person within the meaning of Section
1445 of the Internal Revenue Code of 1986, as amended (the "Code")
reasonably satisfactory in form and substance to Buyer;
(f) Evidence reasonably satisfactory to Buyer that all
Encumbrances (other than Permitted Encumbrances) affecting or encumbering
the Assets have been terminated, released or waived, as appropriate, or
original, executed instruments in form reasonably satisfactory to Buyer
effecting such terminations, releases or waivers;
(g) Copies of all Required Consents which have been
obtained by the Seller prior to Closing;
(h) All Books and Records, delivery of which will be
deemed made to the extent such Books and Records are then located at any
of the offices of the Systems included in the Real Property;
(i) An opinion of Sherman & Howard L.L.C., counsel for
Seller, in substantially the form of EXHIBIT 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 of EXHIBIT D; and
(e) Such other documents as Seller may reasonably
request in connection with the transactions contemplated by this
Agreement.
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9. TERMINATION.
9.1. Events of Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time
prior to the Closing:
9.1.1. By the mutual written consent of Buyer and Seller;
9.1.2. By either party, upon written notice to the other
party, if the transactions contemplated by this Agreement to take place at
the Closing have not been consummated by the date which is 12 months after
the date of this Agreement, for any reason other than (i) a breach or
default by such party in the performance of any of its obligations under
this Agreement or (ii) the failure of any representation or warranty of
such party to be accurate; or
9.1.3. By either party at any time upon written notice to the
other, if the other is in material breach or default of any of its
covenants, agreements or other obligations in this Agreement or in any
Transaction Document and fails to cure such breach or default (a) within
the 30-day period following such written notice or, (b) if such breach or
default is incapable of being cured within such 30-day period and the
defaulting party promptly initiates and diligently pursues such cure to
completion upon receipt of such notice, within a reasonable period of
time.
9.2. Liabilities in Event of Termination. If this Agreement is
terminated pursuant to Section 9.1, all obligations of the parties under
this Agreement will terminate except for the parties respective
obligations under Section 6.21 and 11.18. Notwithstanding a party's right
to pursue remedies for breach of contract upon termination of this
Agreement in accordance with Section 9.1, no remedies for breaches of
representations and warranties will be available if this Agreement is
terminated pursuant to Section 9.1. Furthermore, if the Closing does not
occur, no party will be liable for any incidental, consequential,
exemplary, special, or punitive damages in connection with any claim for
breach of this Agreement.
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
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to as the "Survival Period." The liabilities of the parties under their
respective representations and warranties will expire as of the expiration
of the applicable Survival Period; provided, however, that such expiration
will not include, extend or apply to any representation or warranty, the
breach of which has been asserted by a party in a written notice to the
breaching party before such expiration. The covenants and agreements of
the parties in this Agreement and the Transaction Documents will survive
the Closing and will continue in full force and effect without limitation.
10.2. Indemnification by Seller. Following the Closing, Seller and
AT&T Parent, jointly and severally, will indemnify, defend and hold
harmless Buyer and its shareholders and its and their respective
Affiliates, and the shareholders, directors, officers, partners, members,
employees, agents, successors and assigns of any of such Persons and any
Person claiming by or through any of them, from and against all Losses of
or to Buyer or any such other indemnified Person resulting from or arising
out of (a) any breach of any representation or warranty made by Seller in
this Agreement (without regard to any materiality or similar
qualifications contained therein), (b) any breach of any covenant,
agreement or obligation of Seller contained in this Agreement, and (c) any
liability or obligation of Seller or relating to the Business not included
in the Assumed Obligations and Liabilities.
10.3. Indemnification by Buyer. Following the Closing, Buyer will
indemnify, defend and hold harmless Seller and Seller's shareholders,
directors, officers, partners, members, employees, agents, successors and
assigns, and any Person claiming by or through any of them, from and
against all Losses of or to Seller or any such other indemnified Person
resulting from or arising out of (a) any breach of any representation or
warranty made by Buyer in this Agreement (without regard to any
materiality or similar qualifications contained therein), (b) any breach
of any covenant, agreement or obligation of Buyer contained in this
Agreement, (c) the failure by Buyer to assume and perform the Assumed
Obligations and Liabilities, and (d) if Buyer waives the condition to
Closing contained in Section 7.2.4 that the Franchise Consent Ratio equal
or exceed 70%, 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
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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 by
the indemnity provided in this Section 10 will be paid by the Indemnifying
Party, provided that the Indemnifying Party will not be obligated to pay
the expenses of more than one separate counsel in each jurisdiction for
each Indemnified Party so entitled to separate counsel. Expenses of
counsel to the Indemnified Party will be reimbursed on a current basis by
the Indemnifying Party if such expenses are a liability of the
Indemnifying Party and if there is no dispute as to the applicability of
indemnification. No Indemnified Party will settle or compromise any such
Action for which it is entitled to indemnification under this Agreement
without the prior written consent of the Indemnifying Party (not to be
unreasonably withheld), unless the Indemnifying Party has failed, after
reasonable notice, to undertake control of such Action in the manner
provided in this Section 10.4. No Indemnifying Party will settle or
compromise any such Action without the prior written consent of the
Indemnified Party (not to be unreasonably withheld); provided, however, in
any Action (i) in which any relief other than the payment of money damages
is sought against any Indemnified Party or (ii) in the case of any Action
relating to the Indemnified Party's liability for any Tax, if the effect
of such settlement would be an increase in the liability of the
Indemnified Party for the payment of any Tax for any period beginning
after the Closing Date, the consent of the Indemnified Party may be
withheld by the Indemnified Party in its sole and absolute discretion.
10.5. Limitations on Indemnification - Seller. Seller and AT&T
Parent will not be liable, in the aggregate, for indemnification arising
under Section 10.2(a) for any Losses of or to Buyer or any other person
entitled to indemnification from Seller or AT&T Parent unless the amount
of such Losses for which Seller and AT&T Parent would, but for the
provisions of this Section 10.5, be liable plus the amounts for which
Seller's Affiliates would be liable under Section 10.2(a) of the Related
Agreement (disregarding the provisions of
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Section 10.5 of the Related Agreement) exceeds, on an aggregate basis,
$4,550,000 (Four Million, Five Hundred Fifty Thousand Dollars) (the
"Threshold Amount,") provided that in determining whether the Threshold
Amount has been exceeded, there will not be included any Losses arising
from any single claim that is less than $10,000. If the Threshold Amount
is exceeded, Seller and AT&T Parent will be liable, jointly and severally,
for the full amount of all Losses (including any single claims for Losses
of less than $10,000), which amount will be due and payable within 15 days
after the later of (a) the date Seller receives a statement therefor and
(b) the date an Action with respect to such Losses is settled or decided
in accordance with section 10.4. Neither Seller nor AT&T Parent will be
liable for punitive damages assessed for Buyer's conduct. The maximum
aggregate amount that Seller and its Affiliates (including AT&T Parent)
will be required to pay for indemnification arising under Section 10.2(a)
of this Agreement in respect of all claims by all indemnified parties is
$90,500,000 (Ninety Million, Five Hundred Thousand Dollars).
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)).
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 in respect of all claims
by all indemnified parties is $90,500,000 (Ninety Million Five Hundred
Thousand Dollars). 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),
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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.
11.2. Notices. Any notice, request, demand, waiver or other
communication required or permitted to be given under this Agreement will
be in writing and will be deemed to have been duly given only if delivered
in person or by first class, prepaid, certified mail, or sent by courier
or, if receipt is confirmed, by telecopier:
To Buyer at: c/o Charter Communications, Inc.
12444 Powerscourt Drive, Suite 100
St. Louis, Missouri 63124
Attention: Curtis S. Shaw, Esq.
Senior Vice President, General Counsel
& Secretary
Fax: (314) 965-8793
With a copy (which will not constitute notice) to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Attention: Alvin G. Segel, Esq.
Fax: (310) 203-7199
To Seller at: c/o AT&T Broadband, LLC
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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.
11.20.Guaranty and Suretyship Matters. AT&T Parent acknowledges
that, notwithstanding that it is not a party to this Agreement (other than
with respect to Article 10), it will receive, in connection with the
consummation of the transactions contemplated by this Agreement, fair and
adequate consideration for its indemnification obligations under this
Agreement, AT&T Parent therefore agrees that it will be deemed for all
purposes to be a primary obligor under each of such obligations, and not a
guarantor or surety. Notwithstanding the foregoing, to the extent that any
of the covenants or agreements in this Agreement are determined by a court
of competent jurisdiction to be a guaranty (in such case, the "Guaranty")
by AT&T Parent of indemnity obligations (in such case, the "Guaranteed
Obligations") of any other person or entity (in such case the "Underlying
Obligor"), then, such Guaranty will be continuing, absolute and
unconditional (subject only to the applicable terms and conditions of this
Agreement) and, to the maximum extent permitted by applicable law, AT&T
Parent hereby:
11.20.1. Authorizes any beneficiary of such Guaranty (the
"Beneficiary"), from time to time in such Beneficiary's sole discretion,
and without notice to or demand upon AT&T Parent (i) to amend, extend,
waive, restructure or otherwise modify the Guaranteed Obligations in whole
or in part, (ii) to release, compromise, collect, settle or otherwise
liquidate the Guaranteed Obligations in whole or part, (iii) to take,
hold, exchange, enforce, waive, release and otherwise deal with collateral
for the Guaranteed Obligations, and (iv) to add, release or substitute any
one or more endorser(s) or other guarantor(s) for the Guaranteed
Obligations.
11.20.2. Agrees that: (i) if any one or more of the foregoing
actions are taken; (ii) if there is any change in the structure or
existence of the Underlying Obligor; or (iii) if there occurs any other
action, event or circumstance whatsoever which constitutes or might be
deemed to constitute an equitable or legal discharge of an Underlying
Obligor with respect to the Guaranteed Obligations or of AT&T Parent with
respect to the Guaranty, whether in bankruptcy or otherwise; then (in the
case of each of (i), (ii) and (iii)), such action, event or circumstance
shall not impair, reduce, release or
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otherwise mitigate AT&T Parent's liability under the Guaranty or the
Guaranteed Obligations;
11.20.3. Waives its rights to assert against any Beneficiary
as a defense (legal or equitable), setoff, counterclaim or cross-claim in
connection with the Guaranty, any defense (legal or equitable), setoff,
counterclaim or cross-claim AT&T Parent may now or in the future have
against the Underlying Obligor or any other person or entity;
11.20.4. Waives all defenses, counterclaims and setoffs
arising from the present or future lack of perfection, sufficiency,
validity or enforceability of the Guaranteed Obligations or any security
therefor or documents relating thereto;
11.20.5. Waives any defense arising by reason of any claim or
defense based upon an election of remedies by a Beneficiary;
11.20.6. Waives all notices of acceptance, presentments,
demand for performance, protests, diligence, notices of nonperformance or
default, and all other notices or formalities which AT&T Parent may
otherwise be entitled to under applicable law;
11.20.7. Waives all rights to require a Beneficiary to
prosecute or seek enforcement of any remedies against an Underlying
Obligor or any other person or entity liable on account of the Guaranteed
Obligations, or to require a Beneficiary to seek to enforce or resort to
any remedies with respect to any security interests, liens, encumbrances,
collateral or other security for the Guaranteed Obligations; and
11.20.8. Agrees that AT&T Parent will have no right of
subrogation, reimbursement, exoneration or contribution against the
Underlying Obligor with respect to the Guaranty, and irrevocably waives
any such rights and any rights to participate in any security now or
hereafter held by a Beneficiary in connection with the Guaranteed
Obligations.
[SIGNATURE PAGE FOLLOWS]
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The parties have executed this Agreement as of the day and year first
above written.
BUYER:
Charter Communications
Entertainment I, LLC, a Delaware
limited liability company
By: /s/ Curtis S. Shaw
----------------------------------
Curtis S. Shaw
Senior Vice President
SELLER
St. Louis Tele-Communications, Inc., a
Missouri corporation
TCI Cable Partners of St. Louis,
L.P., a Colorado limited partnership
By: Heritage Cablevision of
Massachusetts, Inc., its
general partner
TCI Cablevision of Missouri, Inc., a
Missouri corporation
TCI of Illinois, Inc., an Illinois
corporation
TCI TKR of Central Florida, Inc., a
Florida corporation
TCI Holdings, Inc., a Delaware
corporation
Each By: /s/ Alfredo Di Blasio
-----------------------------
Alfredo Di Blasio,
Authorized Signatory
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