PURCHASE AGREEMENT
DATED AS OF FEBRUARY 22, 1999
AMONG
FRONTIERVISION PARTNERS, L.P.,
AND
FVP GP, L.P., the GENERAL PARTNER, and
CERTAIN DIRECT AND INDIRECT LIMITED PARTNERS
OF FRONTIERVISION PARTNERS, L.P.,
as Sellers,
AND
ADELPHIA COMMUNICATIONS CORPORATION,
as Buyer
PURCHASE AGREEMENT
DATED AS OF FEBRUARY 22, 1999
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TABLE OF CONTENTS
Page
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Terms Defined in this Section...............................1
1.2 Terms Defined Elsewhere in this Agreement..................11
1.3 Rules of Construction......................................13
ARTICLE 2
SALE AND PURCHASE OF PURCHASED INTERESTS; ASSUMPTION OF
LIABILITIES; ADDITIONAL PURCHASE CONSIDERATION
2.1 Agreement to Sell and Buy..................................13
2.2 Assumption of Obligations..................................14
2.3 Additional Purchase Consideration for Purchased Interests..14
2.4 Escrow Deposit; Registration Rights........................15
2.5 Cash Consideration Adjustments.............................16
2.6 Payment at Closing.........................................20
2.7 Post-Closing Payment of Cash Consideration Adjustments.....20
2.8 Seller Specific Liabilities................................23
2.9 Additional Cash Consideration Adjustments..................25
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FVP
3.1 Organization and Authority of FVP..........................28
3.2 Authorization and Binding Obligation.......................28
3.3 Organization and Ownership of FrontierVision Companies.....29
3.4 Absence of Conflicting Agreements; Consents................30
3.5 Financial Statements.......................................30
3.6 Absence of Undisclosed Liabilities.........................31
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Page
3.7 Absence of Certain Changes.................................31
3.8 Franchises, Licenses, Material Contracts...................32
3.9 Title to and Condition of Real Property and Tangible
Personal Property........................................32
3.10 Intangibles................................................33
3.11 Information Regarding the Systems..........................33
3.12 Taxes......................................................36
3.13 Employee Plans.............................................36
3.14 Environmental Laws.........................................37
3.15 Claims and Litigation......................................38
3.16 Compliance With Laws.......................................38
3.17 Transactions with Affiliates...............................38
3.18 Broker.....................................................39
3.19 Securities Law Matters.....................................39
3.20 Cure.......................................................40
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
4.1 Authority of Sellers; Authorization and Binding Obligation.40
4.2 Absence of Conflicting Agreements; Consents................41
4.3 Title to Purchased Interests...............................41
4.4 Broker.....................................................42
4.5 Taxes......................................................43
4.6 Securities Law Matters.....................................43
4.7 Cure.......................................................44
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization; Authorization and Binding Obligation.........44
5.2 Authorization and Binding Obligation.......................45
5.3 Absence of Conflicting Agreements; Consents................45
5.4 Capital Structure; ACC Class A Common Stock................46
5.5 Claims and Litigation......................................46
5.6 SEC Reports................................................46
5.7 Broker.....................................................47
5.8 Investment Purpose; Investment Company.....................47
5.9 Cure.......................................................48
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Page
ARTICLE 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 Operation of Business Prior to Closing.....................48
6.2 Confidentiality; Press Release.............................52
6.3 Cooperation; Commercially Reasonable Efforts...............53
6.4 Consents...................................................53
6.5 HSR Act Filing.............................................58
6.6 Buyer's Qualifications and Financing.......................59
6.7 Discharge of Debt Documents................................59
6.8 Retention and Access to the FrontierVision Companies'
Records..................................................60
6.9 Employee Matters...........................................61
6.10 Tax Matters................................................63
6.11 FrontierVision Name........................................64
6.12 Releases...................................................65
6.13 Directors and Officers Insurance...........................65
6.14 Rate Regulatory Matters....................................65
6.15 Distribution by SPCs of Interest in General Partner;
Cancellation of SPC Notes................................66
6.16 Cooperation on Buyer SEC Matters...........................66
6.17 Stock Consideration Registration Rights Agreement..........67
6.18 State Cable Systems........................................67
6.19 Lien Searches..............................................68
6.20 Distant Signals; Copyright Matters.........................68
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
7.1 Conditions to Obligations of Buyer.........................69
7.2 Conditions to Obligations of Sellers.......................72
ARTICLE 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing....................................................74
8.2 Deliveries by Sellers......................................76
8.3 Deliveries by Buyer........................................77
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Page
ARTICLE 9
TERMINATION
9.1 Termination by Agreement...................................78
9.2 Termination by FVP.........................................78
9.3 Termination by Buyer.......................................79
9.4 Effect of Termination......................................80
9.5 Attorneys' Fees............................................81
ARTICLE 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES
10.1 Survival...................................................81
10.2 Indemnification by Sellers.................................81
10.3 Post-Closing Escrow Agreement..............................82
10.4 Indemnification by Buyer...................................83
10.5 Certain Limitations on Indemnification Obligations.........84
10.6 Procedure for Indemnification..............................87
10.7 Treatment of Indemnification Payments......................88
ARTICLE 11
MISCELLANEOUS
11.1 Fees and Expenses..........................................88
11.2 Notices....................................................89
11.3 Benefit and Binding Effect.................................90
11.4 Further Assurances ........................................90
11.5 GOVERNING LAW..............................................90
11.6 Entire Agreement...........................................91
11.7 Amendments; Waiver of Compliance; Consents.................91
11.8 Consent and Agreements of Sellers..........................91
11.9 Counterparts...............................................92
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FRONTIERVISION'S DISCLOSURE SCHEDULE
Section Description
Section 1.1 Excluded Assets; Seasonal Subscribers; Prepayment Penalties
Section 2.5 Capital Expenditures Budget; Carriage Adjustments
Section 3.3 Ownership of FrontierVision Companies
Section 3.4 FrontierVision Conflicts; Consents
Section 3.5 Financial Statements
Section 3.6 FrontierVision Liabilities
Section 3.7 Certain Developments
Section 3.8 Franchises, Licenses, Contracts
Section 3.9 Real Property and Tangible Personal Property; Encumbrances
Section 3.10 Intangibles
Section 3.11 Systems Information
Section 3.12 Tax Matters
Section 3.13 Employee Plans
Section 3.14 Environmental Matters
Section 3.15 Claims and Litigation
Section 3.16 Compliance with Laws
Section 3.17 Transactions with Affiliates
Section 3.18 Broker
Section 4.2 Sellers Conflicts; Consents
Section 4.3 Title to Purchased Interests
Section 6.1 Post-Signing Covenants
Section 6.4 Franchise Rebuild/Upgrade Requirements
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TABLE OF EXHIBITS
Exhibit Description
Exhibit A Form of Noncompetition Agreement
Exhibit B Form of Post-Closing Escrow Agreement
Exhibit C Form of Opinion of FVP's Counsel
Exhibit D Form of Opinion of Buyer's Counsel
Exhibit E Addresses of Sellers
Exhibit F Closing Net Liabilities Example Calculation
Exhibit G Form of Seller Release
Exhibit H Form of Management Release
Exhibit I Post-Closing Escrow Agreement Release Provisions Example
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as of February
22, 1999, by and among FrontierVision Partners, L.P., a Delaware limited
partnership ("FVP"), FVP GP, L.P., a Delaware limited partnership (the "General
Partner"), each party named as a "Limited Partner Seller" on the signatures
pages hereto, each party named as an "SPC Seller" on the signature pages hereto,
and Adelphia Communications Corporation, a Delaware corporation ("Buyer").
RECITALS
The General Partner owns all of the general partnership interests in FVP
and certain Subordinated Notes issued by FVP. The Limited Partner Sellers are
each limited partners of FVP and own limited partnership interests in FVP and
certain Subordinated Notes issued by FVP. Each SPC Seller owns all of the
capital stock of an SPC, which in turn is a limited partner of FVP and owns a
limited partnership interest in FVP and certain Subordinated Notes issued by
FVP. The SPC Sellers also hold certain Subordinated Notes issued by FVP.
Collectively, the Limited Partner Sellers and the SPCs own all of the limited
partnership interests in FVP, and collectively the General Partner, the Limited
Partner Sellers, the SPC Sellers and the SPCs own all of the Subordinated Notes
issued by FVP. Buyer desires to acquire from the General Partner and the Limited
Partner Sellers all of their partnership interests in FVP and Subordinated Notes
issued by FVP and desires to acquire from the SPC Sellers all of their stock in
the SPCs and Subordinated Notes issued by FVP. The General Partner, Limited
Partner Sellers and SPC Sellers (collectively, the "Sellers" and individually a
"Seller") desire to sell to Buyer all of their partnership interests in FVP or
stock in the SPCs, as described above and all of their Subordinated Notes issued
by FVP as described above, in each case for the consideration and on the terms
and conditions set forth in this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Terms Defined in this Section.
The following terms, as used in this Agreement, have the meanings set forth
in this Section:
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"ACC Class A Common Stock" means the Class A Common Stock, par value
$.01 per share, of Buyer that is authorized and designated as such in Buyer's
Certificate of Incorporation as in effect on the date of this Agreement.
"Accounts Receivable" means all rights of the FrontierVision Companies
to payment for goods or services provided prior to the Adjustment Time,
including rights to payment for cable services to customers of the Systems, the
sale of advertising, the leasing of channels, and other goods and services and
rentals.
"Adjustment Time" means (A) with respect to Adjustment Assets and
Adjustment Liabilities and other items that primarily relate to the
FrontierVision Companies as a whole, 11:59 p.m., local Denver time, on the day
immediately preceding the Closing Date, and (B) with respect to Adjustment
Assets and Adjustment Liabilities and other items that primarily relate to a
particular System, 11:59 p.m. local time for that System, on the day immediately
preceding the Closing Date.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with the specified Person.
"Assets" means all of the tangible and intangible assets that are
owned, leased or held by the FrontierVision Companies and that are used in
connection with the conduct of the business or operations of the Systems other
than the Excluded Assets and less any such Assets that are sold, transferred, or
otherwise conveyed by the FrontierVision Companies to third Persons prior to the
Closing in accordance with the provisions of this Agreement, provided that with
respect to any assets that are leased by the FrontierVision Companies or
otherwise not owned by the FrontierVision Companies, "Assets" includes only the
interest, title and rights in such assets held by the FrontierVision Companies.
"Basic Subscriber" means, with respect to any System as of any date,
each residential customer or resident of a multiple dwelling unit served by such
System who subscribes to at least broadcast basic service (either alone or in
combination with any other service and including subscribers who receive
regularly offered discounts), and who has rendered payment for one month's
service at such System's regular basic monthly subscription rate without
discount (excluding regularly offered discounts) and who does not have more than
$10.00 (excluding late charges and fees and amounts subject to a bona fide
dispute) that is two months or more past due from and including the last day of
the period to which any outstanding bill relates.
"Bulk Subscriber" means, with respect to any System, any commercial
establishment (e.g., any hotel or motel) or multiple dwelling unit establishment
(e.g., any apartment, condominium or cooperative building) served by such System
that subscribes to at least broadcast basic service (either alone or in
combination with any other service), and who has rendered payment for one
month's service
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at such customer's regular basic monthly subscription rate and who does not have
more than $10.00 (excluding late charges and fees and amounts subject to a bona
fide dispute) that is two months or more past due from and including the last
day of the period to which any outstanding bill relates.
"Cable Act" means Title VI of the Communications Act of 1934, as
amended, 47 U.S.C. Section 151 et seq., and all other provisions of the Cable
Communications Policy Act of 1984, the Cable Television Consumer Protection and
Competition Act of 1992, and the provisions of the Telecommunications Act of
1996 amending Title VI of the Communications Act of 1934, in each case as
amended and in effect from time to time.
"Capital Stock" means any and all shares, interests, or other
equivalent interests (however designated) in the equity of any Person, including
capital stock, partnership interests, and membership interests, and including
any rights, options or warrants with respect thereto.
"Charter Documents" means the articles or certificate of incorporation,
bylaws, certificate of limited partnership, partnership agreement, certificate
of formation, limited liability company operating agreement, and all other
organizational documents of any Person other than an individual.
"Closing" means the consummation of the purchase and sale of the
Purchased Interests pursuant to this Agreement in accordance with the provisions
of Article 8.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder, as amended and in effect from time
to time.
"Consents" means the consents, permits, approvals and authorizations of
Governmental Authorities and other Persons necessary to transfer the Purchased
Interests to Buyer or otherwise to consummate the transactions contemplated by
this Agreement.
"Contracts" means all leases, easements, rights-of-way, rights of
entry, programming agreements, pole attachment and conduit agreements, customer
agreements, and other agreements, written or oral (including any amendments and
other modifications thereto) to which any FrontierVision Company is a party or
which are binding upon any FrontierVision Company and that relate to any of the
Assets or the business or operations of any of the Systems or any of the
FrontierVision Companies and (A) which are in effect on the date hereof, or (B)
which are entered into by any FrontierVision Company between the date hereof and
the Closing Date.
"Copyright Act" means the Copyright Act of 1976, as amended and in
effect from time to time.
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"Credit Agreement" means the Second Amended and Restated Credit
Agreement dated as of December 19, 1997 among FrontierVision Operating Partners,
L.P., as Borrower, The Chase Manhattan Bank, as Administrative Agent, J.P.
Morgan Securities Inc., as Syndication Agent, CIBC Inc., as Documentation Agent,
and each of the other Lenders party thereto, as amended and in effect from time
to time.
"Debt Documents" means each of the loan or credit agreements, notes,
bonds, indentures and other agreements and instruments pursuant to which any
indebtedness for borrowed money or any capital lease obligation of any
FrontierVision Company (and any guarantee by a FrontierVision Company of
indebtedness for borrowed money or any capitalized lease obligation of another
Person that is not a FrontierVision Company) in an aggregate principal amount in
excess of $250,000 is outstanding or committed to.
"Deposit Escrow Agreement" means the Escrow Agreement executed
concurrently herewith by FVP, Buyer and the Escrow Agent.
"Deposit Registration Rights Agreement" means the Registration Rights
Agreement between Buyer and FVP, relating to the registration of the Escrow
Registrable Securities constituting the Deposit Escrow Property, which agreement
shall be executed on the date of this Agreement.
"Employee Plan" means any pension, retirement, profit-sharing, deferred
compensation, vacation, severance, bonus, incentive, medical, vision, dental,
disability, life insurance or any other employee benefit plan as defined in
Section 3(3) of ERISA to which any FrontierVision Company or any ERISA Affiliate
of any FrontierVision Company contributes or which any FrontierVision Company or
any such ERISA Affiliate sponsors or maintains, or by which any FrontierVision
Company or any such ERISA Affiliate is otherwise bound.
"Encumbrances" means any pledge, claim, mortgage, lien, charge,
encumbrance, or security interest of any kind or nature whatsoever.
Notwithstanding the foregoing, "Encumbrances" does not include any restriction
on transfer or assignment.
"Environmental Claim" means any written claim or notice or any
proceeding before a Governmental Authority arising under or pertaining to any
Environmental Law or Hazardous Substance.
"Environmental Law" means any Legal Requirement pertaining to land use,
air, soil, surface water, groundwater (including the protection, cleanup,
removal, remediation or damage thereof), or to the protection of public health
and safety, or any other environmental matter, including the following laws as
amended and in effect from time to time: (A) Clean Air Act (42 U.S.C. ss. 7401,
et seq.); (B) Clean Water Act (33 U.S.C. ss. 1251, et seq.); (C) Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901, et seq.); (D) Comprehensive
Environmental Response, Compensation and Liability Act (42
- 4 -
U.S.C. ss. 9601, et seq.); (E) Safe Drinking Water Act (42 U.S.C. 300f, et
seq.); and (F) Toxic Substances Control Act (15 U.S.C. ss. 2601, et seq.).
"Equivalent Subscribers" means, with respect to any System as of any
date, the sum of: (A) the number of Basic Subscribers served by such System as
of such date; (B) the number of Basic Subscribers represented by the Bulk
Subscribers served by such System as of such date, which number shall be
calculated for each class of service provided by such System by dividing (1) the
monthly billings attributable to such System's Bulk Subscribers for each such
class of service provided by such System for the calendar month immediately
preceding the date on which such calculation is made, by (2) the full,
non-discounted monthly rate charged by such System for such class of service,
respectively (excluding pass-through charges for sales taxes, line-itemized
franchise fees, fees charged by the FCC and other similar line-itemized
charges); and (C) the number of equivalent Basic Subscribers represented by the
"Seasonal Subscribers" of the FrontierVision Companies as of the date of
determination, which number will be determined as set forth in Section 1.1 of
FrontierVision's Disclosure Schedule. For purposes of the foregoing, monthly
billings shall exclude billings for a la carte or digital service tiers and for
premium services, pass-through charges for sales taxes, line-itemized franchise
fees, fees charged by the FCC and other similar line-itemized charges, and
nonrecurring charges or credits which include those relating to installation,
connection, relocation and disconnection fees and miscellaneous rental charges
for equipment such as remote control devices and converters.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder, as amended and in effect from
time to time.
"ERISA Affiliate" means a trade or business affiliated within the
meaning of Sections 414(b), (c) or (m) of the Code.
"Escrow Agent" means Bank of Montreal Trust Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder, as in effect
from time to time.
"Excluded Assets" means the assets listed as "Excluded Assets" in
Section 1.1 of FrontierVision's Disclosure Schedule.
"FCC" means the Federal Communications Commission.
"FCC Regulations" means the rules, regulations and published policies
of the FCC promulgated by the FCC with respect to the Cable Act, as in effect
from time to time.
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"Franchise Area" means any geographic area in which a FrontierVision
Company is authorized to provide cable television service pursuant to a
Franchise or provides cable television service in which a Franchise is not
required pursuant to applicable Legal Requirements.
"Franchise" means any cable television franchise and related
agreements, ordinances, permits or other authorizations issued or granted to a
FrontierVision Company by any Franchising Authority.
"Franchising Authorities" means all Governmental Authorities that have
issued or granted any Franchises relating to the operation of a System.
"FrontierVision Companies" means FVP and each of the other entities
listed as "FrontierVision Companies" in Section 3.3 of FrontierVision's
Disclosure Schedule, each of which may be referred to herein individually as a
"FrontierVision Company." None of Main Security Surveillance, Inc., The Maine
InternetWorks, Inc., or Landmark NetAccess, Inc. is a "FrontierVision Company"
as used in this Agreement, except that for the limited purposes of determining
"Adjustment Assets" and "Adjustment Liabilities" of the FrontierVision Companies
in accordance with Section 2.5, Main Security Surveillance, Inc. shall be
treated as a FrontierVision Company.
"FrontierVision's Disclosure Schedule" means FrontierVision's
Disclosure Schedule referred to in this Agreement and delivered to Buyer by FVP
and Sellers concurrently with the execution of this Agreement.
"FrontierVision Inc." means FrontierVision Inc., a Delaware
corporation.
"FrontierVision Liabilities" means, with respect to the FrontierVision
Companies on a consolidated basis, without duplication, all liabilities of the
FrontierVision Companies (as defined and determined in accordance with GAAP),
including, without limitation the following: (A) all obligations of the
FrontierVision Companies for borrowed money; (B) all obligations of the
FrontierVision Companies evidenced by bonds, debentures, notes, indentures,
mortgages, or similar instruments; and (C) all capital lease obligations of the
FrontierVision Companies. Notwithstanding the foregoing, "FrontierVision
Liabilities" shall not include: (A) any amounts in respect of performance bonds
issued by any of the FrontierVision Companies in the ordinary course of
business; (B) any amounts in the nature of prepayment penalties or premiums
resulting from the consummation of the transactions contemplated by this
Agreement or satisfaction of the Indentures, which prepayment penalties and
premiums with respect to the Debt Documents are set forth in Section 1.1 of
FrontierVision's Disclosure Schedule; and (C) the Subordinated Notes. No
liability that would otherwise be included within the meaning of "FrontierVision
Liability" as defined above shall be excluded from the definition solely
because: (A) the liability relates to an item or matter that constitutes a
Permitted Encumbrance; or (B) the liability relates to an item or matter that is
disclosed to Buyer in this Agreement or FrontierVision's Disclosure Schedule.
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"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"General Partnership Interest" means the general partnership interest
in FVP held by the General Partner.
"Governmental Authority" means any federal, state, or local
governmental authority, including any court or administrative or regulatory
agency.
"Hazardous Substance" means any pollutant, contaminant, hazardous or
toxic substance, material, constituent or waste or any pollutant or any release
thereof that is labeled or regulated as such by any Governmental Authority
pursuant to an Environmental Law, including, without limitation, petroleum or
petroleum compounds, radioactive materials, asbestos or any asbestos-containing
material, or polychlorinated biphenyls.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, and the regulations promulgated by the Federal Trade Commission with
respect thereto, as amended and in effect from time to time.
"Indentures" means: (A) the Indenture dated as of October 7, 1996,
between FrontierVision Operating Partners, L.P. and FrontierVision Capital
Corporation, as Issuers, and U.S. Bank National Association, as Trustee,
relating to the 11% Senior Subordinated Notes due 2006 (the "1996 Indenture");
(B) the Indenture dated as of September 19, 1997 between FrontierVision
Holdings, L.P. and FrontierVision Holdings Capital Corporation, as Issuers, and
U.S. Bank National Association, as Trustee, relating to the 11 7/8% Senior
Discount Notes due 2007 (the "1997 Indenture"); and (C) the Indenture dated as
of December 9, 1998 between FrontierVision Holdings, L.P. and FrontierVision
Holdings Capital II Corporation, as Issuers, and U.S. Bank National Association,
as Trustee, relating to the 11 7/8% Senior Discount Notes due 2007, Series B
(the "1998 Indenture"), in each case as amended and in effect from time to time,
each of which may be referred to herein individually as an "Indenture."
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, patents, permits, proprietary information, technical
information and data, machinery and equipment warranties, and other similar
intangible property rights and interests issued to or owned by any of the
FrontierVision Companies.
"Legal Requirements" means applicable common law and any applicable
statute, ordinance, code or other law, rule, regulation, order, technical or
other standard, requirement or procedure enacted, adopted, promulgated or
applied by any Governmental Authority, including any applicable decree or
judgment of a court of competent jurisdiction, all as in effect from time to
time.
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"Licenses" means all domestic satellite, business radio and other FCC
licenses, and all other licenses, authorizations and permits issued by any
Governmental Authority that is held by a FrontierVision Company in the business
and operations of the Systems, excluding the Franchises.
"Limited Partnership Interests" means the limited partnership interests
in FVP held by the Limited Partner Sellers.
"Loss" means any claim, loss, liability, damages, penalties, costs and
expenses (excluding any and all consequential, incidental and special damages).
"Management Release" means the "Agreement of Release" substantially in
the form of Exhibit H to be delivered to Buyer by the Persons designated on
Exhibit H at the Closing.
"Material Contract" means the Debt Documents, the Material Leases, and
any other Contract that requires payments by one of the FrontierVision Companies
(or entitles one of the FrontierVision Companies to payments) in the aggregate
of more than $100,000 during the current term of such Contract, but "Material
Contract" specifically excludes all subscription agreements with customers and
specifically excludes all pole attachment and conduit agreements.
"Material Lease" means all headend, tower and microwave site leases,
fiber leases, and any other lease designated as a "Material Lease" in Section
3.9 of FrontierVision's Disclosure Schedule.
"Noncompetition Agreement" means either of the Noncompetition
Agreements between Buyer and each of the two Persons designated on Exhibit A,
substantially in the form of Exhibit A with respect to such Person, which
agreements shall be executed and delivered on the Closing Date.
"Permitted Encumbrances" means each of the following: (A) liens for
current taxes and other governmental charges that are not yet delinquent; (B)
liens for taxes, assessments, governmental charges or levies, or claims the
non-payment of which is being diligently contested in good faith or liens
arising out of judgments or awards against the FrontierVision Companies with
respect to which at the time there shall be a prosecution for appeal or there
shall be a proceeding to review or the time limit has not yet run for such an
appeal or review with respect to such judgment or award; provided that with
respect to the foregoing liens in this clause (B), adequate reserves shall have
been set aside on the FrontierVision Companies' books, and no foreclosure,
distraint, sale or similar proceedings shall have been commenced with respect
thereto that remain unstayed for a period of 60 days after their commencement;
(C) liens of carriers, warehousemen, mechanics, laborers, and materialmen and
other similar statutory liens incurred in the ordinary course of business for
sums not yet due or being diligently contested in good faith, and for which
adequate reserves have been set aside on the FrontierVision Companies' books;
(D) liens incurred in the ordinary course of business in connection with
worker's compensation and unemployment insurance or similar laws; (E) statutory
landlords' liens; (F) with respect to the Real Property, leases, easements,
rights to access, rights-of-way, mineral rights
- 8 -
or other similar reservations and restrictions and defects of title which are
either of record or set forth in FrontierVision's Disclosure Schedule or in the
deeds or leases to such Real Property or which (except in the case of owned Real
Property, and which), either individually or in the aggregate, do not materially
and adversely affect or interfere with the ownership or use or marketability of
any such Real Property in the business and operations of the Systems as
presently conducted; and (G) any other claims or encumbrances that are described
in Section 3.9 of FrontierVision's Disclosure Schedule and that relate to
Assumed Liabilities that are not discharged in full at the Closing or that will
be removed prior to or at Closing.
"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, Governmental Authority, or other entity or organization.
"Post-Closing Escrow Agreement" means the Post-Closing Escrow Agreement
among Buyer, Sellers, and the Escrow Agent, substantially in the form of Exhibit
B but subject to Section 10.3, which agreement shall be executed and delivered
on the Closing Date.
"Purchased Interests" means the General Partnership Interest, the
Limited Partnership Interests, the SPC Stock, the Subordinated Notes held by the
General Partner, the Subordinated Notes held by the Limited Partner Sellers, and
the Subordinated Notes held by the SPC Sellers.
"Rate Regulatory Matter" shall mean, with respect to any cable
television system, any matter or any effect on such system or the business or
operations thereof, arising out of or related to the Cable Act, any FCC
Regulations heretofore adopted thereunder, or any other present or future Legal
Requirement dealing with, limiting or affecting the rates which can be charged
by cable television systems to their customers (whether for programming,
equipment, installation, service or otherwise).
"Real Property" means all of the fee and leasehold estates and, to the
extent of the interest, title, and rights of the FrontierVision Companies in the
following, buildings and other improvements thereon, easements, licenses, rights
to access, rights-of-way, and other real property interests that are owned or
held by any of the FrontierVision Companies and used or held for use in the
business or operations of the Systems, plus such additions thereto and less such
deletions therefrom arising between the date hereof and the Closing Date in
accordance with this Agreement.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder, as in effect from time
to time.
"Seller Release" means the "Agreement of Release" substantially in the
form of Exhibit G to be delivered to Buyer by each Seller at the Closing.
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"SPC" means any corporation that is a limited partner of FVP, the
Capital Stock of which corporation is being sold to Buyer pursuant to this
Agreement.
"SPC Notes" means certain promissory notes issued by certain of the
SPCs to the SPC Seller which owns all of the Capital Stock of such SPC.
"SPC Stock" means the Capital Stock of the SPCs held by the SPC
Sellers.
"Stock Consideration Registration Rights Agreement" means the
Registration Rights Agreement among Buyer and Sellers, relating to the
registration of the Stock Consideration Registrable Securities constituting the
Stock Consideration, which agreement shall be executed on the date of this
Agreement.
"Subordinated Notes" means certain Subordinated Notes issued by FVP to
the General Partner, the Limited Partner Sellers, the SPC Sellers, and the SPCs
in connection with their investments in FVP.
"Subsidiary" means, with respect to any Person, any other Person of
which the outstanding voting Capital Stock sufficient to elect at least a
majority of its board of directors or other governing body (or, if there are no
such voting interests, of which 50% or more of the Capital Stock) is owned
(beneficially or otherwise) directly or indirectly by such first Person or any
Subsidiary thereof.
"Systems" means the cable television systems owned and operated by any
FrontierVision Company or any combination of any of them, each of which may be
referred to herein individually as a "System."
"Tangible Personal Property" means all of the equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
converters, spare parts, and other tangible personal property which are owned or
leased by any of the FrontierVision Companies and used or held for use in the
conduct of the business or operations of the Systems, plus such additions
thereto and less such deletions therefrom arising between the date hereof and
the Closing Date in accordance with this Agreement.
"Tax" means any federal, state, local, or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding, or other
tax or governmental assessment, together with any interest, additions, or
penalties with respect thereto and any interest in respect of such additions or
penalties.
"Tax Return" means any tax return, declaration of estimated tax, tax
report or other tax statement, or any other similar filing required to be
submitted to any Governmental Authority with respect to any Tax.
"Transaction Documents" means this Agreement, the Deposit Escrow
Agreement, the Post-Closing Escrow Agreement, the Noncompetition Agreements,
the Deposit Registration Rights
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Agreement, the Stock Consideration Registration Rights Agreement, the Seller
Releases, the Management Releases, and the other documents, agreements,
certificates and other instruments to be executed, delivered and performed by
the parties in connection with the transactions contemplated by this Agreement.
"Upset Date" means the one year anniversary of the date of this
Agreement, as such date may be extended pursuant to the provisions of this
Agreement, including, without limitation, Sections 8.1, 9.2 and 9.3.
"Weighted Average Trading Price" means the price determined by a
fraction, the numerator of which is the sum of the results obtained by
multiplying, for each of the trading days in the period of measurement, (A) the
total number of shares of ACC Class A Common Stock or other security traded on
each of said trading days on the principal U.S. trading market (whether stock
exchange, the NASDAQ National Market System, or otherwise) on which such stock
or other security is traded, by (B) the closing sale price of such stock or
other security (as published in the Northeast Edition of The Wall Street
Journal) for each of said trading days, and the denominator of which is the
total number of shares of such stock or other security traded on the trading
days in the period of measurement.
1.2 Terms Defined Elsewhere in this Agreement.
For purposes of this Agreement, the following terms have the meanings
set forth in the sections indicated:
Term Section
- ---- -------
120-Day Period Section 7.1(d)(1)(A)
Adjustment Assets Section 2.5(b)(1)
Adjustment Liabilities Section 2.5(b)(2)
Agent Section 11.8
Assumed Employees Section 6.9(a)
Assumed Liabilities Section 2.2
Audited Financial Statements Section 3.5(a)
Buyer First Paragraph
Buyer's 10-K Section 5.6(a)
Buyer's 10-Q Section 5.6(a)
Cash Consideration Section 2.3(a)(1)
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Claimant Section 10.6(a)
Closing Cash Payment Section 2.6
Closing Equivalent Subscribers Section 2.5(a)
Closing Net Liabilities Section 2.5(b)
Deposit Escrow Property Section 2.4(a)
Designated Material Consent Franchise Section 6.4(b)
Designated Non-Material Consent Section 6.4(b)
Franchise
Escrow Registrable Securities Section 2.4(b)
Financial Statements Section 3.5(a)
Final Closing Statement Section 2.7(b)
FVP First Paragraph
GECC Section 6.7(c)
GECC Facility Consent Section 6.7(c)
General Partner First Paragraph
Indemnifying Party Section 10.6(a)
Limited Partner Seller First Paragraph
Material Consent Franchise Section 7.1(d)(1)
Material Renewal Franchise Section 6.4(c)
Net Closing Cash Payment Section 2.7(a)
Post-Closing Adjustments Escrow Section 2.7(a)
Post-Closing Adjustment Funds Section 2.7(a)
Post-Closing Indemnity Escrow Section 10.3
Post-Closing Indemnity Property Section 10.3
Preliminary Closing Statement Section 2.6
Purchase Consideration Section 2.3(a)
Renewal Franchises Section 6.1(a)(1)
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Renewal Window Section 6.4(d)
Seller Recitals
SPC Seller First Paragraph
Stock Consideration Section 2.3(a)(2)
Stock Consideration Registrable Section 6.17
Securities
Unaudited Financial Statements Section 3.5(a)
Warn Act Section 9(a)
1.3 Rules of Construction.
Words used in this Agreement, regardless of the gender and number
specifically used, shall be deemed and construed to include any other gender and
any other number as the context requires. As used in this Agreement, the word
"including" is not limiting, and the word "or" is not exclusive. Except as
specifically otherwise provided in this Agreement in a particular instance, a
reference to a Section is a reference to a Section of this Agreement, a
reference to an Exhibit is a reference to an Exhibit to this Agreement, and the
terms "hereof," "herein," and other like terms refer to this Agreement as a
whole, including the Disclosure Schedules and the Exhibits to this Agreement,
and not solely to any particular part of this Agreement. The descriptive
headings in this Agreement are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
ARTICLE 2
SALE AND PURCHASE OF PURCHASED INTERESTS;
ASSUMPTION OF LIABILITIES; ADDITIONAL PURCHASE
CONSIDERATION
2.1 Agreement to Sell and Buy.
Subject to the terms and conditions set forth in this Agreement, each
Seller hereby agrees to sell, transfer, and deliver to Buyer at the Closing, and
Buyer hereby agrees to purchase at the Closing, the Purchased Interests held by
such Seller, free and clear of all Encumbrances.
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2.2 Assumption of Obligations.
In consideration of the sale of the Purchased Interests, concurrently
with the Closing, Buyer shall assume all obligations and liabilities associated
with the Purchased Interests purchased by Buyer, whether such obligations and
liabilities arose prior to the Closing or arise after the Closing, including
(and notwithstanding any provision of applicable partnership law to the
contrary) all obligations and liabilities arising out of the ownership of the
General Partnership Interest (collectively, the "Assumed Liabilities"). After
the Closing Buyer shall cause the FrontierVision Companies to discharge all of
their obligations and liabilities, whether such obligations and liabilities
arose prior to the Closing or arise after the Closing, including all obligations
and liabilities relating to the business and operations of the Systems; provided
that Buyer shall not be deemed to have assumed directly any obligations and
liabilities of the FrontierVision Companies vis-a-vis any Person that is not a
party to this Agreement or entitled to indemnification under this Agreement. In
addition, nothing in this Section 2.2 shall impair Buyer's rights under Sections
2.5, 2.8 and 2.9 or Buyer's indemnification rights under Article 10 after the
Closing (subject in each case to the limitations provided therein).
2.3 Additional Purchase Consideration for Purchased Interests.
(a) In addition to assuming the Assumed Liabilities, Buyer
shall pay and deliver to Sellers as consideration for the sale of the Purchased
Interests (the "Purchase Consideration"):
(1) A cash payment equal to Six Hundred Million
Dollars ($600,000,000),subject to adjustment in accordance with this Article 2
(the "Cash Consideration");
(2) 7,000,000 shares of ACC Class A Common Stock
, together with the kind and amounts of securities, cash and other property that
Sellers would have held or been entitled to receive as of the Closing (whether
resulting from a stock split, subdivision, combination or reclassification of
the outstanding capital stock of Buyer, or in redemption thereof, or as a result
of any merger, consolidation, acquisition or other exchange of assets to which
Buyer may be a party or otherwise) had Sellers held such shares of ACC Class A
Common Stock as of the date of this Agreement and retained such shares, and all
securities, cash and other property distributed or issued with respect to or in
substitution or exchange therefor, during the period from the date of this
Agreement through (and including) the Closing Date (collectively, the "Stock
Consideration"). To the extent Adelphia pays cash to the Sellers pursuant to
Section 8.1(a)(4) in lieu of delivering the ACC Class A Common Stock (or other
securities, cash and property described in the preceding sentence), the term
"Stock Consideration" shall include all such cash as the context requires.
(b) The Cash Consideration (and any adjustments thereto) and
the Stock Consideration shall be allocated among the Purchased Interests and the
Sellers as determined by the Sellers and delivered to Buyer in writing at least
two days prior to the Closing. Not more than 44% of
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the aggregate Purchase Consideration shall be allocated to the purchase and sale
of the Purchased Interests held by the SPC Sellers.
2.4 Escrow Deposit; Registration Rights.
(a) Deposit of ACC Class A Shares. Simultaneously with the
execution of this Agreement, and as a material inducement to FVP and Sellers to
enter into this Agreement, Buyer shall cause 1,000,000 shares of ACC Class A
Common Stock to be issued in the name of FVP and delivered to the Escrow Agent
to be held in escrow pursuant to the terms of the Deposit Escrow Agreement,
which is to be executed concurrently herewith by Buyer, FVP, and the Escrow
Agent. The "Deposit Escrow Property" means, collectively, the 1,000,000 shares
of ACC Class A Common Stock deposited pursuant to this Section 2.4(a), together
with the kind and amounts of securities, cash and other property that Sellers
would have held or been entitled to receive as of the date the Deposit Escrow
Property is released in accordance with this Agreement (whether resulting from a
stock split, subdivision, combination or reclassification of the outstanding
capital stock of Buyer, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Buyer may be a
party or otherwise) had Sellers held such shares of ACC Class A Common Stock as
of the date of this Agreement and retained such shares, and all securities, cash
and other property distributed or issued with respect to or in substitution or
exchange therefor, during the period from the date of this Agreement through
(and including) the date the Deposit Escrow Property is released in accordance
with this Agreement, and also includes, to the extent relevant, all cash
deposited with the Escrow Agent pursuant to Section 2.4(b) and all earnings
thereon.
(b) Deposit Registration Rights Agreement. Simultaneously with
the execution of this Agreement, and as a material inducement to FVP and Sellers
to enter into this Agreement, Buyer shall execute and deliver the Deposit
Registration Rights Agreement, pursuant to which Buyer will grant FVP certain
rights as provided therein in respect of the shares of ACC Class A Common Stock
or other securities constituting the Deposit Escrow Property (the "Escrow
Registrable Securities"). As soon as practicable after the execution of this
Agreement, Buyer shall file an appropriate registration statement under the
Securities Act covering the registration of all of such Escrow Registrable
Securities. Buyer shall then use commercially reasonable efforts to cause such
registration statement to be declared effective under the Securities Act as soon
as practicable thereafter and kept effective in accordance with the provisions
of the Deposit Registration Rights Agreement, and Buyer shall otherwise comply
with the provisions of the Deposit Registration Rights Agreement. If a
registration statement covering the registration of all of such Escrow
Registrable Securities has not been declared effective under the Securities Act
(and such registration statement shall not be subject to any stop order or
proceeding seeking a stop order) on the earlier of (1) the date FVP terminates
this Agreement in accordance with Section 9.2 as a result of a willful breach of
this Agreement by Buyer (including a willful breach as described in the first
sentence of Section 9.4(c)), and (2) May 31, 1999, Buyer shall deposit with the
Escrow Agent, on the next business day, cash in an amount equal to the aggregate
fair market value of the shares of ACC Class A Common Stock or other securities
constituting the Deposit Escrow Property
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(computed on the basis of the Weighted Average Trading Price of such shares of
ACC Class A Common Stock or other securities for the ten day trading period
beginning on the thirteenth trading day prior to the date on which Buyer
deposits such cash amount pursuant to this sentence). Upon such payment by Buyer
to the Escrow Agent, all of such shares of ACC Class A Common Stock or other
securities constituting the Deposit Escrow Property shall be released and paid
over to Buyer but all cash funds, if any, included in the Deposit Escrow
Property and previously held by the Escrow Agent shall be retained by the Escrow
Agent as part of the Deposit Escrow Property.
(c) Release of Deposit Escrow Property. At the Closing, all of
the Deposit Escrow Property shall be released from escrow and returned to Buyer.
Upon termination of this Agreement prior to the Closing in accordance with
Article 9, all of the Deposit Escrow Property shall be released from escrow and
returned to Buyer except as provided in the following sentence. If FVP
terminates this Agreement in accordance with Section 9.2 as a result of a
willful breach of this Agreement by Buyer (including a willful breach as
described in the first sentence of Section 9.4(c)), all of the Deposit Escrow
Property shall be released from escrow and paid over to FVP on the next business
day, provided that FVP shall be entitled to receive all cash if the condition
specified in the last sentence of Section 2.4(b) is applicable, and FVP shall be
entitled to enforce this Section 2.4 against Buyer notwithstanding any provision
to the contrary in Section 9.4(c). On the day of the occurrence of any of the
foregoing events, FVP and Buyer will execute and deliver to the Escrow Agent
joint written instructions containing appropriate disbursement instructions
consistent with this Section 2.4(c) and the Deposit Escrow Agreement.
2.5 Cash Consideration Adjustments.
(a) Closing Equivalent Subscribers. The Cash Consideration
shall be decreased by the number, if any, by which the number of Closing
Equivalent Subscribers is less than 700,000, multiplied by $2,928. For purposes
of this Agreement, "Closing Equivalent Subscribers" means the total number of
Equivalent Subscribers for all of the Systems as of the Adjustment Time;
provided, however, that if the systems exchange transactions between the
FrontierVision Companies and InterMedia Partners of Kentucky, L.P. referred to
in Section 6.1 of FrontierVision's Disclosure Schedule are consummated prior to
the Closing hereunder, none of the subscribers served by the InterMedia systems
acquired in such transactions shall be included in Closing Equivalent
Subscribers but the number of Closing Equivalent Subscribers represented by the
subscribers served by the Systems sold to InterMedia (determined as if the
effective time of the consummation of the respective InterMedia transactions
were the Adjustment Time hereunder) shall be included in Closing Equivalent
Subscribers; and provided further, however, that the provisions of Section
6.4(e) shall apply to the extent relevant.
(b) Closing Net Liabilities. The Cash Consideration shall be
decreased by the amount, if any, by which the Closing Net Liabilities exceed
$1,150,000,000 and shall be increased by the amount, if any, by which the
Closing Net Liabilities are less than $1,150,000,000. For purposes of
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this Agreement, "Closing Net Liabilities" means Adjustment Liabilities as of the
Adjustment Time, decreased by Adjustment Assets as of the Adjustment Time.
(1) Subject to the other provisions of this
Section 2.5(b), "Adjustment Assets" means, as of any date, the sum of: (A) cash
and cash equivalents, (B) prepaid expenses, deposits, and other current assets
(other than inventory); (C) Accounts Receivable and other receivables; (D) tax
refunds due to any of the FrontierVision Companies for any tax period ending
prior to the Adjustment Time; (E) the amount of Reimbursable Capital
Expenditures; (F) the amount of the cash consideration paid by the
FrontierVision Companies in connection with the systems exchange transactions,
if consummated prior to the Closing hereunder, with InterMedia Partners of
Kentucky L.P. referred to in Section 6.1 of FrontierVision's Disclosure
Schedule; (G) the aggregate amount of any cash investments made by the
FrontierVision Companies in The Maine Internet Works, Inc. and Landmark Net
Access, Inc. after the date of this Agreement and prior to the Adjustment Time
(provided that any such investments shall not be included unless Buyer consented
to such investments); (H) the amount of the net asset, if applicable, referred
to in Section 6.7(e); and (I) the amount of the insurance premiums paid by the
FrontierVision Companies prior to the Adjustment Time as contemplated by Section
6.13, in each case of clauses (A) through (D) computed for the FrontierVision
Companies on a consolidated basis and without duplication in accordance with
GAAP and in each case of clauses (E) through (I) as agreed above. Exhibit F
referred to below in Section 2.5(c) identifies and describes the "other
receivables" referenced in clause (C) above that would be included in Adjustment
Assets if the Closing Date were the date of this Agreement. The disclosure made
pursuant to the immediately preceding sentence is for informational purposes
only.
(2) Subject to the other provisions of this
Section 2.5(b), "Adjustment Liabilities" means, as of any date, the sum of: (A)
accounts payable; (B) expenses of the FrontierVision Companies relating to the
consummation of the transactions contemplated by this Agreement, including fees
and expenses of attorneys, accountants, financial advisors and broker fees, if
such fees and expenses are paid by the FrontierVision Companies after the
Closing Date, but excluding any expenses that Buyer agrees to pay or is
obligated to pay pursuant to this Agreement; (C) accrued and unpaid expenses;
(D) subscriber's prepayments and deposits; (E) Tax payments due and payable by
any of the FrontierVision Companies to any Governmental Authority for all Tax
periods ending on or prior to the Adjustment Time; (F) all other FrontierVision
Liabilities as of the Adjustment Time; (G) subject to Section 6.18, $5,500,000
(which represents the amount by which the amount of rebuild/upgrade capital
expenditures of the FrontierVision Companies budgeted for the period beginning
October 23, 1998 and ending December 31, 1998 with respect to the Systems
acquired pursuant to the State Cable Acquisition Agreement exceeded the amount
of capital expenditures actually made by the FrontierVision Companies for such
period with respect to such Systems); (H) $2,000,000 (which represents the
amount by which the amount of rebuild/upgrade capital expenditures of the
FrontierVision Companies budgeted for the period beginning July 1, 1998 and
ending December 31, 1998 with respect to the Systems other than the Systems
acquired pursuant to the State Cable Acquisition Agreement exceeded the amount
of capital expenditures actually made by the FrontierVision Companies for such
period with respect to
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such other Systems); (I) the cash amount required to pay off vehicle leases held
by the FrontierVision Companies, if any; (J) the amount as illustrated in
Section 2.5 of FrontierVision's Disclosure Schedule as the "Net Carriage
Adjustment" and as updated for activity through the Closing Date; (K) the amount
of cash and other monetary purchase price consideration (net of reasonable
out-of-pocket transaction costs and expenses) received by the FrontierVision
Companies in connection with the sale of systems to Helicon Partners I, L.P.
consummated on January 7, 1999, plus the amount of cash and other monetary
purchase price consideration (net of reasonable out-of-pocket transaction costs
and expenses) received by the FrontierVision Companies in connection with the
sale of other systems and assets, including without limitation, the sale of the
Rockland, Maine office site real estate parcel referenced in Section 3.8 of
FrontierVision's Disclosure Schedule, if any, consummated after the date of this
Agreement and prior to the Closing Date; (L) the amount of cash and other
monetary purchase price consideration payable by the FrontierVision Companies
under the purchase contract for the Chillicothe, Ohio real estate parcel
referenced in Section 3.8 of FrontierVision's Disclosure Schedule, but only to
the extent to which such amount has not been paid by the FrontierVision
Companies prior to the Closing Date; (M) the FrontierVision Companies' share of
any out-of-pocket costs and expenses incurred in connection with relocating the
Luckey headend site referred to in Section 3.6 (Item A.2) of FrontierVision's
Disclosure Schedule, but only to the extent to which such costs and expenses
have not been paid by the FrontierVision Companies prior to the Closing; (N)
$3,937,500.00; (O) $200,000.00 (representing the amount payable in connection
with the matter disclosed in Section 3.6 (Item A.1) of FrontierVision's
Disclosure Schedule that is not covered by clause (F) above); (P) the aggregate
amount of any cash distributions received by the FrontierVision Companies from
The Maine Internet Works, Inc. and Landmark Net Access, Inc. after December 31,
1998 and prior to the Adjustment Time; (Q) the amount paid by Buyer at the
Closing with respect to FVP's Executive Deferred Compensation Plan as
contemplated by Section 6.9(f); (R) the amount, if any, required to be included
as an Adjustment Liability pursuant to Section 6.4(e); (S) the amount of the net
liability, if applicable, referred to in Section 6.7(e); (T) $10,000,000,
reduced by the aggregate amount of capital expenditures actually made by the
FrontierVision Companies during the period beginning January 1, 1999 and ending
on the Closing Date with respect to the Waterville, Ohio and Bedford, Michigan
Systems upgrade and rebuild projects listed in Section 2.5 of FrontierVision's
Disclosure Schedule; and (U) the aggregate amount of the programming costs
savings to the FrontierVision Companies as a result of the Programming Supply
Agreement with Buyer, in each case of clauses (A) through (F) computed for the
FrontierVision Companies on a consolidated basis and without duplication in
accordance with GAAP and in each case of clauses (G) through (U) as agreed
above. The parties agree that to the extent any liability qualifies as an
Adjustment Liability pursuant to more than one clause of this paragraph, it
shall be included only once and without duplication.
(3) The amount of "Reimbursable Capital
Expenditures" equals the amount by which (A) the aggregate amount of capital
expenditures actually made by the FrontierVision Companies during the period
beginning January 1, 1999 and ending on the Closing Date with respect to any of
the Systems upgrade and rebuild projects listed in Section 2.5 of
FrontierVision's Disclosure Schedule (it being understood that in no event will
any capital expenditures made to complete the New
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Philadelphia retrofit, Bangor, Amesbury, and Ironton/Ashland upgrade and rebuild
projects to the point of completion described in Section 2.5(D) of
FrontierVision's Disclosure Schedule or any capital expenditures made by the
FrontierVision Companies with respect to the Waterville, Ohio and Bedford,
Michigan Systems upgrade and rebuild projects listed in Section 2.5 of
FrontierVision's Disclosure Schedule be included in the amount for this clause
(A)) exceeds (B) the amount, if any, by which (1) the amount of Budgeted Other
Capital Expenditures exceeds (2) the amount of Actual Other Capital
Expenditures; provided that if the amount in clause (B)(2) exceeds the amount in
clause (B)(1), the amount for clause (B) shall be zero. As used in this
subsection (3), the following terms have the following meanings:
(A) "Budgeted Other Capital Expenditures"
means the aggregate cumulative amount of capital expenditures budgeted for all
of the capital expenditures categories included in all categories other than
"Upgrade/Rebuild" on the Capital Expenditures Budget for the period beginning
January 1, 1999 and ending on the Closing Date (the amount budgeted for the
month in which the Closing occurs to be prorated in the event the Closing Date
occurs on a day other than the first or last day of a month).
(B) "Actual Other Capital Expenditures"
means the aggregate amount
of capital expenditures actually made by the FrontierVision Companies during the
period beginning January 1, 1999 and ending on the Closing Date with respect to
all of the capital expenditure categories included in all categories other than
"Upgrade/Rebuild" on the Capital Expenditures Budget, computed on a basis
consistent with the accounting methodologies used to compute the Budgeted Other
Capital Expenditures, which in turn was prepared on a basis consistent with the
accounting procedures used to prepare the Financial Statements.
(C) "Capital Expenditures Budget" means the
monthly capital
expenditures budget for the FrontierVision Companies for calendar year 1999 that
is included in Section 2.5 of FrontierVision's Disclosure Schedule.
(4) To the extent consistent with GAAP, revenues and
expenses shall be
treated as prepaid or accrued so as to reflect the principle that revenues and
expenses attributable to the period prior to the Adjustment Time shall be for
the account of Sellers and revenues and expenses attributable to the period
after the Adjustment Time shall be for the account of Buyer.
(5) Deferred income Taxes of any FrontierVision
Company shall not be treated as Adjustment Assets or Adjustment Liabilities.
(6) To the extent any liability that would be an
Adjustment Liability but for the fact that all or any portion of such liability
is transferred by a FrontierVision Company (including Main Security
Surveillance, Inc. for this purpose) to and assumed by The Maine Internet Works,
Inc.
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or Landmark Net Access, Inc. prior to the Adjustment Time, such liability shall
be treated as an Adjustment Liability (but without duplication) in any event.
(c) Example Calculation. Attached hereto as Exhibit F is an
example calculation of Closing Net Liabilities for illustrative purposes only,
prepared on the basis of good faith estimates of Adjustment Assets and
Adjustment Liabilities made by FVP as if the Closing Date were January 31, 1999.
FVP makes no representation and warranty to any other party with respect to the
accuracy of Exhibit F.
2.6 Payment at Closing.
No later than seven business days prior to the date scheduled for the
Closing, FVP shall prepare and deliver to Buyer a written report (the
"Preliminary Closing Statement") setting forth FVP's estimates of Closing Net
Liabilities and Closing Equivalent Subscribers, determined in accordance with
Section 2.5 and this Section 2.6. The Preliminary Closing Statement shall be
prepared by FVP in good faith and shall be certified by FVP to be its good faith
estimate of the Closing Net Liabilities and Closing Equivalent Subscribers as of
the date thereof. FVP shall make available to Buyer such information as Buyer
shall reasonably request relating to the matters set forth in the Preliminary
Closing Statement. If Buyer does not agree with any estimated amount set forth
in the Preliminary Closing Statement, then on or prior to the third business day
prior to the date scheduled for the Closing, Buyer may deliver to FVP a written
report setting forth in reasonable detail its good faith estimates (supported by
substantial evidence) of any amount set forth in the Preliminary Closing
Statement with which Buyer disagrees. In the case of any such estimated amount
as to which Buyer delivers its own estimate on or before such third business
day, FVP and Buyer will endeavor in good faith to agree prior to the Closing on
the appropriate amount of such estimate to be used for calculating the Closing
Cash Payment (as defined below). At the Closing Buyer shall pay to Sellers the
amount of the Cash Consideration, as adjusted at Closing on the basis of the
Preliminary Closing Statement, with any changes thereto mutually agreed to
between Buyer and FVP (the "Closing Cash Payment") in accordance with the
provisions of Section 8.3(a)(2). In the case of any such estimated amount as to
which Buyer delivers its own estimate on or before such third business day and
as to which FVP and Buyer do not so agree prior to the Closing, at the Closing
the difference (if any) between the amount of the Closing Cash Payment that
would be determined using the estimates set forth in FVP's Preliminary Closing
Statement (with any changes thereto mutually agreed to between Buyer and FVP)
and the amount of the Closing Cash Payment that would be determined using the
estimates of Buyer that remain in dispute will be transferred by Buyer to the
Escrow Agent, to be held in the Post-Closing Adjustments Escrow and disbursed in
accordance with the provisions of Section 2.7.
2.7 Post-Closing Payment of Cash Consideration Adjustments.
(a) Post-Closing Adjustments Escrow. At the Closing,
Buyer, Sellers and the Escrow Agent shall execute the Post-Closing Escrow
Agreement, in accordance with which, on the
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Closing Date, in addition to any deposit to be made pursuant to Section 2.6,
Buyer will deposit $5,000,000 with the Escrow Agent to hold in escrow on behalf
of Sellers solely in order to provide a fund for any payment to which Buyer may
be entitled in accordance with Section 2.7(c) (such escrow, the "Post-Closing
Adjustments Escrow," and such $5,000,000, together with any amounts deposited in
the Post-Closing Adjustments Escrow pursuant to Section 2.6, and any earnings
thereon, the "Post-Closing Adjustment Funds"). None of the Post-Closing
Adjustment Funds will be available for any purpose other than as described above
and as described in Section 2.9 and shall not be available to satisfy any
obligation of Sellers under Article 10. The Post-Closing Adjustments Escrow will
be administered, and the Post-Closing Adjustment Funds will be held and
disbursed, in accordance with the provisions of this Section 2.7 and the
Post-Closing Escrow Agreement. The Closing Cash Payment less the amounts
deposited in the Post-Closing Adjustments Escrow pursuant to Sections 2.6 and
this 2.7(a) shall be referred to as the "Net Closing Cash Payment."
(b) Final Closing Statement. Within one hundred twenty days
after the Closing Date, Buyer shall prepare and deliver to the General Partner a
written report (the "Final Closing Statement") setting forth Buyer's final
estimates of Closing Net Liabilities and Closing Equivalent Subscribers,
determined in accordance with Section 2.5. The Final Closing Statement shall be
prepared by Buyer in good faith and shall be certified by Buyer to be, as of the
date prepared, its good faith estimate of the Closing Net Liabilities and
Closing Equivalent Subscribers. Buyer shall allow the General Partner and its
agents access at all reasonable times after the Closing Date to copies of the
books, records and accounts of the FrontierVision Companies and make available
to the General Partner such information as the General Partner reasonably
requests to allow the General Partner to examine the accuracy of the Final
Closing Statement. Within thirty days after the date that the Final Closing
Statement is delivered by Buyer to the General Partner, the General Partner
shall complete its examination thereof and may deliver to Buyer a written report
setting forth any proposed adjustments to any amounts set forth in the Final
Closing Statement. If the General Partner notifies Buyer of its acceptance of
the amounts set forth in the Final Closing Statement, or if the General Partner
fails to deliver its report of any proposed adjustments within the thirty day
period specified in the preceding sentence, the amounts set forth in the Final
Closing Statement shall be conclusive, final, and binding on the parties as of
the last day of such thirty day period. Buyer and the General Partner shall use
good faith efforts to resolve any dispute involving the amounts set forth in the
Final Closing Statement. If the General Partner and Buyer fail to agree on any
amount set forth in the Final Closing Statement within fifteen days after Buyer
receives the General Partner's report pursuant to this Section 2.7, then the
General Partner shall retain a national independent accounting firm which is
approved by Buyer to make the final determination, under the terms of this
Agreement, of any amounts under dispute. Buyer hereby approves the appointment
of any of the "Big Five" accounting firms selected by the General Partner so
long as such firm does not then serve as the independent auditor of any of the
FrontierVision Companies or the General Partner or Buyer. The selected
accounting firm shall endeavor to resolve the dispute as promptly as practicable
and such firm's resolution of the dispute shall be final and binding on the
parties, and a judgment may be entered thereon in any court of competent
jurisdiction. All of the costs and expenses of the selected accounting firm and
its services rendered pursuant to this Section 2.7 shall be borne by Buyer, on
the
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one hand, and Sellers, on the other hand, as nearly as possible in the
proportion to the amount by which the determination of all matters related to
such costs and expenses varies from the positions of Buyer and the General
Partner on all such matters. Any fees to be borne by Sellers pursuant to the
preceding sentence shall be paid out of the Post-Closing Adjustment Funds in
accordance with the provisions of Section 2.7(c).
(c) Payment of Cash Consideration Adjustments.
(1) Within three business days after the General
Partner delivers to Buyer its proposed adjustments to the Final Closing
Statement, the amounts not in dispute shall be determined and the Escrow Agent
shall release and pay over to Buyer and/or Sellers, as the case may be, the
appropriate amount of the Post-Closing Adjustment Funds not in dispute;
provided, however, that out of any amounts payable to Sellers an amount equal to
the greater of $25,000 or one percent (1%) of the amount in dispute shall
continue to be held in the Post-Closing Adjustments Escrow to cover (A) the
fees, if any, payable by Sellers pursuant to the last sentence of Section 2.7(b)
with respect to the final determination of the Cash Consideration and (B) the
fees payable by Sellers to the Escrow Agent pursuant to the Post-Closing Escrow
Agreement. For example, if (i) the Closing Cash Payment was determined to be
$600,000,000; (ii) the Net Closing Cash Payment was determined to be
$594,000,000; (iii) the Cash Consideration determined on the basis of Buyer's
Final Closing Statement was $595,000,000; and (iv) the Cash Consideration
determined on the basis of Buyer's Final Closing Statement (with any adjustments
proposed by the General Partner pursuant to Section 2.7(b)) was $597,000,000;
then $3,000,000 (i.e., $600,000,000 less $597,000,000) would be paid by the
Escrow Agent to Buyer, and $1,000,000 (i.e, $595,000,000 less $594,000,000) less
the amount of the reserve for Sellers' fees would be paid to Sellers. The
balance in the Post-Closing Adjustments Escrow would be held by the Escrow Agent
until the amount of the Cash Consideration is finally determined pursuant to
Section 2.7(b)) (whether by agreement of the parties or by final resolution of
any accounting firm). Upon and within three business days after such final
determination, the Escrow Agent shall release and pay over to Buyer and/or
Sellers, as the case may be, the appropriate amount of the Post-Closing
Adjustment Funds based upon such final determination; provided, however, that
any payments to be made to Sellers shall be reduced by the fees and expenses to
be paid by Sellers if not already reserved. To the extent there are not
sufficient monies in the Post-Closing Adjustments Escrow to distribute the
amount determined to be payable to Sellers pursuant to this Section 2.7, Buyer
will pay to Sellers in cash the amount of such deficiency within three business
days of the date of such determination. To the extent there are not sufficient
monies in the Post-Closing Adjustments Escrow to distribute the amounts
determined to be payable to Buyer pursuant to this Section 2.7, the amount of
such deficiency will be paid to Buyer from the Post-Closing Indemnity Escrow to
the extent of any Post-Closing Indemnity Property therein within three business
days of the date of such determination.
(2) If Buyer has not delivered the Final Closing
Statement to the General Partner within twenty days after the end of the 120-day
period referred to in Section 2.7(b), the Escrow Agent shall release and pay
over to Sellers all of the Post-Closing Adjustment Funds.
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(3) If the General Partner has not delivered its
report of any proposed adjustments to the Final Closing Statement within the
thirty day period following its receipt of the Final Closing Statement, the
Escrow Agent shall release and pay out the Post-Closing Adjustment Funds based
upon the Final Closing Statement delivered by Buyer.
(4) Notwithstanding the above provisions, if
Buyer has provided notice of a claim to the General Partner pursuant to Section
2.9(b), a portion of the Post-Closing Adjustment Funds sufficient to reimburse
Buyer for any such claim and to pay Sellers' share of any fees and expenses
under Section 2.9(b) shall be retained in the Post-Closing Adjustments Escrow
and shall not be distributed until such claims are finally resolved in
accordance with Section 2.9(b).
(5) All earnings attributable to each portion of
the Post-Closing Adjustment Funds shall be paid to the party entitled to such
portion of the Post-Closing Adjustment Funds in accordance with this Section 2.7
or Section 2.9 to the extent applicable (except all earnings attributable to the
portion of the Post-Closing Adjustment Funds, if any, used to pay the Sellers'
share of any fees and expenses payable out of the Post-Closing Adjustment Funds
pursuant to said Sections shall be paid to Sellers).
(6) Any amount which becomes payable pursuant to
this Section 2.7 will constitute an adjustment to the Cash Consideration for all
purposes.
(7) All payments to be made to Sellers under
this Section 2.7 shall be paid by wire or accounts transfer of immediately
available funds to one or more accounts designated by Sellers by written notice
to the Escrow Agent or Buyer, as applicable.
(8) All payments to be made to Buyer under this
Section 2.7 shall be paid by wire or accounts transfer of immediately available
funds to one or more accounts designated by Buyer by written notice to the
Escrow Agent or Sellers, as applicable.
(9) No later than the close of business on the first
business day after it is
determined in accordance with this Section 2.7 and Section 2.9 that Buyer and/or
Sellers are entitled to all or any portion of the Post-Closing Adjustment Funds,
the General Partner and Buyer will execute and deliver to the Escrow Agent joint
written instructions containing appropriate disbursement instructions consistent
with this Section 2.7 and Section 2.9 and the Post-Closing Escrow Agreement.
2.8 Seller Specific Liabilities.
(a) If it is determined at the Closing (based upon a good
faith showing by Buyer supported by substantial evidence and that is agreed to
by the SPC Seller that owns the Capital Stock of the SPC in question) that any
of the SPCs has any indebtedness or liability (other than any
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indebtedness or liability disclosed in Section 4.3 or in Section 4.3 of
FrontierVision's Disclosure Schedule) that will not otherwise be discharged at
the Closing, then the amount of Cash Consideration payable to such SPC Seller
shall be decreased by the dollar amount of such indebtedness or liability as
agreed to by such SPC Seller and Buyer. If it is determined at the Closing
(based upon a good faith showing by Buyer supported by substantial evidence and
that is agreed to by the Seller in question) that any of the Purchased Interests
held by a Seller is subject to an Encumbrance and that will not otherwise be
discharged and released at the Closing, then the amount of Cash Consideration
payable to such Seller shall be decreased by the dollar amount necessary to
discharge and release such Encumbrance as agreed to by such Seller and Buyer.
Buyer agrees to notify the appropriate Seller promptly upon becoming aware of
any matter that could give rise to a claim under this Section 2.8 that was not
disclosed in this Agreement or in FrontierVision's Disclosure Schedule. If such
Seller and Buyer cannot agree on the appropriate amount of the decrease in Cash
Consideration payable to such Seller by the time scheduled for the Closing, then
Buyer shall deposit a portion of the Closing Cash Payment equal to the amount of
Buyer's claim (together with an amount equal to the greater of $25,000 or one
percent (1%) of the amount of Buyer's claim to cover the fees, if any, payable
by such Seller pursuant to Section 2.8(b) with respect to an accounting firm's
final determination) with the Escrow Agent to hold in a separate escrow on
behalf of such Seller solely in order to provide a fund for any payment to which
Buyer may be entitled in accordance with this Section 2.8 (each such escrow, a
"Post-Closing Section 2.8 Escrow," and such deposit, together with any earnings
thereon, the "Post-Closing Section 2.8 Funds"), and the amount of the Closing
Cash Payment payable to such Seller shall be decreased by the amount so
deposited. None of the Post-Closing Section 2.8 Funds will be available for any
purpose other than as described above and shall not be available to satisfy any
obligation of Sellers under Article 10. The Post-Closing Section 2.8 Escrow will
be administered, and the Post-Closing Section 2.8 Funds will be held and
disbursed, in accordance with the provisions of this Section 2.8 and the
Post-Closing Escrow Agreement.
(b) After the Closing, Buyer and such Seller shall use good
faith efforts to resolve any dispute involving the validity and amount of any
claim made by Buyer pursuant to this Section 2.8. If such Seller and Buyer fail
to agree on the validity and amount of any such claim within fifteen days after
the Closing, then such Seller shall retain a national independent accounting
firm which is approved by Buyer to make the final determination, under the terms
of this Agreement, regarding the validity and amount of any such claim. Buyer
hereby approves the appointment of any of the "Big Five" accounting firms
selected by such Seller so long as such firm does not then serve as the
independent auditor of any of the FrontierVision Companies or the General
Partner or Buyer. The selected accounting firm shall endeavor to resolve the
dispute as promptly as practicable and such firm's resolution of the dispute
shall be final and binding on the parties, and a judgment may be entered thereon
in any court of competent jurisdiction. All of the costs and expenses of the
selected accounting firm and its services rendered pursuant to this Section 2.8
shall be borne by Buyer, on the one hand, and such Seller, on the other hand, as
nearly as possible in the proportion to the amount by which the determination of
all matters related to such costs and expenses varies from the positions of
Buyer and such Seller on all such matters.
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(c) Within three business days after any matter governed by
this Section 2.8 is finally resolved (whether by agreement of the parties or by
final resolution of an accounting firm), the amount of Post-Closing Section 2.8
Funds payable to Buyer and/or such Seller shall be released and paid over to
Buyer and/or such Seller in accordance with such final resolution. To the extent
there are not sufficient monies in the Post-Closing Section 2.8 Escrow to
distribute the amounts determined to be payable to Buyer pursuant to this
Section 2.8, the amount of such deficiency will be paid to Buyer from the
Post-Closing Indemnity Escrow to the extent of any Post-Closing Indemnity
Property therein within three business days of the date of such determination.
All payments to be made to such Seller or Buyer, as the case may be, under this
Section 2.8 shall be paid by wire or accounts transfer of immediately available
funds to one or more accounts designated by such Seller or Buyer, as the case
may be, by written notice to the Escrow Agent. No later than the close of
business on the first business day after it is determined in accordance with
this Section 2.8 that Buyer and/or a Seller is entitled to all or any portion of
the Post-Closing Section 2.8 Funds being held in a Post-Closing Section 2.8
Escrow for the benefit of Buyer and such Seller, such Seller and Buyer will
execute and deliver to the Escrow Agent joint written instructions containing
appropriate disbursement instructions consistent with this Section 2.8 and the
Post-Closing Escrow Agreement.
(d) All earnings attributable to each portion of the
Post-Closing Section 2.8 Funds shall be paid to the party entitled to such
portion of the Post-Closing 2.8 Funds in accordance with this Section 2.8
(except all earnings attributable to the portion of the Post-Closing Section 2.8
Funds, if any, used to pay a Seller's share of any fees and expenses payable out
of the Post-Closing Section 2.8 Funds pursuant to this Section 2.8 shall be paid
to such Seller).
(e) Any amount which becomes payable pursuant to this Section
2.8 will constitute an adjustment to the Cash Consideration for all purposes.
2.9 Additional Cash Consideration Adjustments.
(a) If, at any time prior to the Closing, Buyer becomes aware
of any fact, event, circumstance, or action, the existence or occurrence of
which, if not corrected or remedied prior to the Closing, would, in Buyer's good
faith and reasonable belief, and supported by substantial evidence, require the
Sellers to indemnify Buyer pursuant to Section 10.2(a) as a result of an untrue
representation or a breach of warranty by FVP contained in Sections 3.9 (with
respect to any rearrangements or rehabilitations of cable trunk only as
specified in the penultimate sentence of Section 3.9), 3.11(g) (with respect to
payment of copyright fees only), 3.11(k), 3.11(l) (with respect to payment of
pole attachment fees only), or 3.14 or as a result of the existence of an
Encumbrance on the Assets of the FrontierVision Companies that is not a
Permitted Encumbrance, Buyer shall immediately give notice to FVP of such fact,
event, circumstance or action. If Buyer desires to seek an adjustment to the
Cash Consideration in respect of such matter, Buyer shall so state in its notice
and specify in reasonable detail the factual basis for the claim and the amount
thereof. Buyer shall certify in such notice that the basis and amount
- 25 -
of the claim were determined in good faith by Buyer and such claim must be
supported by substantial evidence. Buyer agrees to make available to FVP and its
authorized representatives the information relied upon by Buyer to substantiate
the claim. If the matter is cured prior to the Closing, Buyer shall not be
entitled to any adjustment to the Cash Consideration pursuant to this Section
2.9 in respect of such matter. If Buyer and FVP agree at or prior to the Closing
to the validity and amount of such claim, the Cash Consideration shall be
reduced by such amount. If Buyer and FVP do not agree to the validity or the
amount of the claim at or prior to the Closing, then Buyer shall deposit a
portion of the Closing Cash Payment equal to the amount of Buyer's claim with
the Escrow Agent to hold in escrow on behalf of Sellers solely in order to
provide a fund for any payment to which Buyer may be entitled in respect of a
claim made under this Section 2.9(a) (such escrow, the "Post-Closing Section 2.9
Escrow," and such deposit, together with any earnings thereon, the "Post-Closing
Section 2.9 Funds"). None of the Post-Closing Section 2.9 Funds will be
available for any purpose other than as described above and shall not be
available to satisfy any obligation of Sellers under Article 10. The
Post-Closing Section 2.9 Escrow will be administered, and the Post-Closing
Section 2.9 Funds will be held and disbursed, in accordance with the provisions
of this Section 2.9 and the Post-Closing Escrow Agreement.
(b) If, at any time after the Closing and prior to end of the
120-day period following the Closing, Buyer becomes aware of any fact, event,
circumstance, or action that existed or occurred prior to the Closing and,
because it was not corrected or remedied prior to the Closing, requires, in
Buyer's good faith and reasonable belief, and supported by substantial evidence,
the Sellers to indemnify Buyer pursuant to Section 10.2(a) as a result of an
untrue representation or a breach of warranty by FVP contained in Sections 3.9
(with respect to any rearrangements or rehabilitations of cable trunk only as
specified in the penultimate sentence of Section 3.9), 3.11(g) (with respect to
payment of copyright fees only), 3.11(k), 3.11(l) (with respect to payment of
pole attachment fees only), or 3.14 or as a result of the existence of an
Encumbrance on the Assets of the FrontierVision Companies that is not a
Permitted Encumbrance, and Buyer desires to seek an adjustment to the Cash
Consideration in respect of such matter, Buyer shall promptly give notice to the
General Partner of such fact, event, circumstance or action and specify in
reasonable detail the factual basis for the claim and the amount thereof. Buyer
shall certify in such notice that the basis and amount of the claim were
determined in good faith by Buyer and such claim must be supported by
substantial evidence. An amount of Post-Closing Adjustment Funds sufficient to
reimburse Buyer for any claim made in accordance with this Section 2.9(b) and to
pay Sellers' share of any fees and expenses under Section 2.9 shall be retained
in the Post-Closing Adjustments Escrow and shall not be distributed until such
claim is finally resolved in accordance with this Section 2.9. Buyer agrees to
make available to FVP and its authorized representatives the information relied
upon by Buyer to substantiate the claim. If Buyer and FVP agree to the validity
and amount of such claim, the Cash Consideration shall be reduced by such amount
and a portion of the Post-Closing Adjustment Funds equal to such amount shall be
released and paid over to Buyer.
(c) Buyer and the General Partner shall use good faith efforts
to resolve any dispute involving the validity and amount of any claim made by
Buyer pursuant to this Section 2.9. If the
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General Partner and Buyer fail to agree on the validity and amount of any such
claim within fifteen days after the Closing (with respect to a claim made
pursuant to Section 2.9(a)) or the date the claim is made by Buyer (with respect
to a claim made pursuant to Section 2.9(b)), then the General Partner shall
retain a national independent accounting firm which is approved by Buyer to make
the final determination, under the terms of this Agreement, regarding the
validity and amount of any such claim. The selection of an accounting firm, the
resolution of a dispute submitted to an accounting firm, and responsibility for
the resulting costs and expenses with respect to any claims subject to this
Section 2.9 shall be governed by the provisions of Section 2.7(b) that govern
such matters.
(d) If the General Partner or Buyer believes any such claim is
not an appropriate matter to be determined by an accounting firm, the General
Partner or Buyer may submit the matter to binding arbitration under the
Commercial Arbitration Rules of the American Arbitration Association. Such
arbitration shall take place in Washington, D.C. unless the parties select a
different site by mutual agreement. All of the costs and expenses of arbitration
pursuant to this Section 2.9 shall be borne by Buyer, on the one hand, and
Sellers, on the other hand, as nearly as possible in the proportion to the
amount by which the determination of all matters related to such costs and
expenses varies from the positions of Buyer and the General Partner on all such
matters, unless the arbitrator finds that the position asserted by either party
is without merit, in which case such party shall bear the entire expenses of
arbitration, including reasonable attorney's fees of the other party. The
arbitration determination shall be final and binding on the parties, and a
judgment may be entered thereon in any court of competent jurisdiction.
(e) Within three business days after any matter governed by
this Section 2.9 is finally resolved (whether by agreement of the parties, by
final resolution of an accounting firm, or by final resolution by an
arbitrator), the amount of Post-Closing Section 2.9 Funds or Post-Closing
Adjustment Funds, as applicable, payable to Buyer, on the one hand, and/or
Sellers, on the other hand, shall be released and paid over to Buyer and/or
Sellers in accordance with such final resolution. To the extent there are not
sufficient monies in the Post-Closing Section 2.9 Escrow or the Post-Closing
Adjustments Escrow, as applicable, to distribute the amounts determined to be
payable to Buyer pursuant to this Section 2.9, the amount of such deficiency
will be paid to Buyer from the Post-Closing Indemnity Escrow to the extent of
any Post-Closing Indemnity Property therein within three business days of the
date of such determination. All payments to be made to Sellers or Buyer, as the
case may be, under this Section 2.9 shall be paid by wire or accounts transfer
of immediately available funds to one or more accounts designated by Sellers or
Buyer, as the case may be, by written notice to the Escrow Agent. No later than
the close of business on the first business day after it is determined in
accordance with this Section 2.9 that Buyer and/or Sellers are entitled to all
or any portion of the Post-Closing Section 2.9 Funds and/or Post-Closing
Adjustment Funds, the General Partner and Buyer will execute and deliver to the
Escrow Agent joint written instructions containing appropriate disbursement
instructions consistent with this Section 2.9 and the Post-Closing Escrow
Agreement.
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(f) All earnings attributable to each portion of the
Post-Closing Section 2.9 Funds shall be paid to the party entitled to such
portion of the Post-Closing Section 2.9 Funds in accordance with this Section
2.9 (except all earnings attributable to the portion of the Post-Closing Section
2.9 Funds, if any, used to pay the Sellers' share of any fees and expenses
payable out of the Post-Closing Section 2.9 Funds pursuant to this Section 2.9
shall be paid to the Sellers).
(g) Any amount which becomes payable pursuant to this Section
2.9 will constitute an adjustment to the Cash Consideration for all purposes.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FVP
Subject to any provisions of this Agreement limiting, qualifying or
excluding any of the representations or warranties made herein, FVP represents
and warrants to Buyer as set forth in this Article 3.
3.1 Organization and Authority of FVP.
FVP is a limited partnership duly formed, validly existing, and in good
standing under the laws of the State of Delaware. FVP has the requisite
partnership power and authority to own, lease, and operate its properties, to
carry on its business in the places where such properties are now owned, leased,
or operated and such business is now conducted, and to execute, deliver and
perform this Agreement and the other Transaction Documents to which FVP is a
party according to their respective terms.
3.2 Authorization and Binding Obligation.
The execution, delivery, and performance by FVP of this Agreement and
the other Transaction Documents to which FVP is a party have been duly
authorized by all necessary partnership action on the part of FVP. This
Agreement and the other Transaction Documents to which FVP is a party have been
duly executed and delivered by FVP (or, in the case of Transaction Documents to
be executed and delivered at Closing, when executed and delivered will be duly
executed and delivered) and constitute (or, in the case of Transaction Documents
to be executed and delivered at Closing, when executed and delivered will
constitute) the legal, valid, and binding obligation of FVP, enforceable against
FVP in accordance with their terms, except as the enforceability of this
Agreement and such other Transaction Documents may be limited by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally or by judicial
discretion in the enforcement of equitable remedies, and as rights to
indemnification may be limited by federal or state securities laws or the public
policies embodied therein.
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3.3 Organization and Ownership of FrontierVision Companies.
(a) Section 3.3 of FrontierVision's Disclosure Schedule sets
forth the name of each FrontierVision Company, including the jurisdiction of
incorporation or formation of each, as the case may be. Each FrontierVision
Company that is a corporation is a corporation duly incorporated, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each FrontierVision Company that is a limited partnership is a
limited partnership duly formed, validly existing, and in good standing under
the laws of the jurisdiction of its formation. Each FrontierVision Company that
is a limited liability company is a limited liability company duly formed,
validly existing, and in good standing under the laws of the jurisdiction of its
formation. Each FrontierVision Company is duly qualified and in good standing as
a foreign corporation, limited partnership, or limited liability company, as the
case may be, in each jurisdiction listed in Section 3.3 of FrontierVision's
Disclosure Schedule, which are all jurisdictions in which such qualification is
required, except where such failure to be so qualified would not have a material
adverse effect on the conduct of such FrontierVision Company's business. Except
as disclosed in Section 3.3 of FrontierVision's Disclosure Schedule, no
FrontierVision Company, directly or indirectly, owns, of record or beneficially,
any outstanding securities or other interest in any Person (each such Person, an
"Investment Person") or has the right or obligation to acquire, any outstanding
securities or other interest in any Person. The FrontierVision Company that owns
the Capital Stock of each such Investment Person owns such Capital Stock free
and clear of all Encumbrances.
(b) Section 3.3 of FrontierVision's Disclosure Schedule sets
forth the authorized, issued and outstanding Capital Stock of FVP and each other
FrontierVision Company and the record and beneficial owner of the issued and
outstanding Capital Stock of each of them. All of such issued and outstanding
Capital Stock of the FrontierVision Companies has been duly authorized, validly
issued, and has not been issued in violation of any federal or state securities
laws. Except as set forth in Section 3.3 of FrontierVision's Disclosure
Schedule, the owner of the Capital Stock of each FrontierVision Company owns
such Capital Stock free and clear of all Encumbrances (except that no
representation is made in this Article 3 as to any partnership interests in FVP
held by any Seller or any SPC or as to any Capital Stock of any SPC held by any
SPC Seller). Except as disclosed in Section 3.3 of FrontierVision's Disclosure
Schedule, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which any
FrontierVision Company is a party or by which any of them is bound obligating
such FrontierVision Company to issue, deliver or sell, or cause to be issued,
delivered or sold, any additional Capital Stock of such FrontierVision Company
or obligating such FrontierVision Company to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. FVP has delivered to Buyer complete and correct
copies of the Charter Documents of each FrontierVision Company as in effect on
the date hereof. Section 3.3 of FrontierVision's Disclosure Schedule describes
the Capital Stock or other investment interests held and beneficially owned by
the FrontierVision Companies with respect to the Investment Persons.
- 29 -
3.4 Absence of Conflicting Agreements; Consents.
Except for the expiration or termination of any applicable waiting
period under the HSR Act, the filing by FVP, any other FrontierVision Company,
and/or the Sellers with the SEC of any reports required to be filed in
connection with the consummation of the transactions contemplated hereby, or as
set forth in Section 3.4 of FrontierVision's Disclosure Schedule, the execution,
delivery and performance by FVP of this Agreement and the other Transaction
Documents to which FVP is a party (with or without the giving of notice, the
lapse of time, or both): (A) do not require the Consent of, notice to, or filing
with any Governmental Authority or any other Person under any Franchise, FCC
License or Material Contract; (B) will not conflict with any provision of the
Charter Documents of FVP or any other FrontierVision Company, each as currently
in effect; (C) assuming receipt of all Consents, will not conflict with, result
in a breach of, or constitute a default under any Legal Requirement to which FVP
or any of the other FrontierVision Companies is bound; (D) assuming receipt of
all Consents, will not conflict with, constitute grounds for termination of,
result in a breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of any Franchise, FCC
License, or Material Contract; and (E) will not result in the creation of any
Encumbrance upon the Assets. Notwithstanding the foregoing, FVP does not make
any representation or warranty regarding any of the foregoing that may result
from the specific legal or regulatory status of Buyer or as a result of any
other facts that specifically relate to the business or activities in which
Buyer is or proposes to be engaged other than the cable television business.
3.5 Financial Statements.
(a) FVP has furnished Buyer with true and complete copies of
the audited financial statements listed in Section 3.5 of FrontierVision's
Disclosure Schedule (collectively, the "Audited Financial Statements") and of
the unaudited financial statements listed in Section 3.5 of FrontierVision's
Disclosure Schedule (collectively, the "Unaudited Financial Statements," and
collectively with the Audited Financial Statements, the "Financial Statements"),
and such Financial Statements are by this reference incorporated into and deemed
a part of FrontierVision's Disclosure Schedule.
(b) Except as disclosed in Section 3.5 of FrontierVision's
Disclosure Schedule and except, in the case of the Unaudited Financial
Statements, for the omission of footnotes and changes resulting from customary
and recurring year-end adjustments, the Financial Statements: (1) have been
prepared from the books and records of the FrontierVision Companies to which
they relate, with no material difference between such Financial Statements and
the financial records maintained, and the accounting methods applied, by the
FrontierVision Companies for tax purposes; (2) have been prepared in accordance
with GAAP consistently applied and maintained throughout the periods indicated
(except as indicated in the notes thereto); and (3) present fairly in all
material respects the financial condition of the FrontierVision Companies to
which they relate as at their respective dates and the results of operations for
the periods then ended.
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3.6 Absence of Undisclosed Liabilities.
None of the FrontierVision Companies has any indebtedness, liability,
or obligation except for: (a) indebtedness, liabilities and obligations that are
reflected or reserved against in the latest balance sheet of such FrontierVision
Company included in the Financial Statements; (b) indebtedness, liabilities and
obligations under the Debt Documents, Contracts, Franchises, Licenses, or
Employee Plans; (c) indebtedness, liabilities and obligations that were incurred
after the date of the latest balance sheet of such FrontierVision Company
included in the Financial Statements either in the ordinary course of business
or in compliance with the covenants of FVP set forth in Section 6.1 or that (to
the extent not discharged prior to the Closing) will be included as Adjustment
Liabilities in the computation of Closing Net Liabilities (none of which
indebtedness, liabilities or obligations results from a claim or lawsuit
relating to a breach of contract, breach of warranty, tort or infringement that,
if adversely determined, would have a material adverse effect on the business,
financial condition, assets or liabilities of the FrontierVision Companies,
taken as a whole; and (d) contingent asserted and unasserted liabilities and
obligations set forth in Section 3.6 of FrontierVision's Disclosure Schedule.
3.7 Absence of Certain Changes.
(a) Since December 31, 1997, except as disclosed in the
Quarterly Reports on Form 10-Q of FrontierVision Operating Partners, L.P. for
any of the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998,
or as disclosed in the Quarterly Reports on Form 10-Q of FrontierVision
Holdings, L.P. for any of the quarters ended March 31, 1998, June 30, 1998 and
September 30, 1998, or as disclosed in any public document filed by
FrontierVision Operating Partners, L.P. or FrontierVision Holdings, L.P. with
the SEC after September 30, 1998, or as disclosed in Section 3.7 of
FrontierVision's Disclosure Schedule and except for matters occurring after the
date hereof that are permitted by the provisions of this Agreement or consented
to by Buyer, no FrontierVision Company has: (1) made any sale, assignment,
lease, or other transfer of assets other than in the ordinary course of business
with suitable replacements being obtained therefor (unless such assets were
obsolete); or (2) issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money other than
pursuant to the Debt Documents listed in Section 1.1 of FrontierVision's
Disclosure Schedule.
(b) Since December 31, 1998, except as disclosed in Section
3.7 of FrontierVision's Disclosure Schedule and except for matters occurring
after the date of this Agreement that are permitted by the provisions of this
Agreement or consented to by Buyer, no FrontierVision Company has made or
promised any material increase in compensation payable or to become payable to
any of the employees (including executive officers) of any FrontierVision
Company other than in the ordinary course of business or as contemplated under
any employment arrangement currently in effect.
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3.8 Franchises, Licenses, Material Contracts.
Section 3.8 of FrontierVision's Disclosure Schedule contains a list of
the Franchises (including the Franchising Authority which granted each Franchise
and the stated expiration date of each Franchise), FCC Licenses and Material
Contracts in effect on the date hereof, which list is true, correct and complete
in all material respects. Without material exception and subject to the last
sentence of this Section 3.8, the Franchises and the Licenses constitute all of
the authorizations of Governmental Authorities necessary or required for the
construction, maintenance and operations of the Systems as currently conducted.
FVP has delivered to Buyer true and complete copies of all Franchises, FCC
Licenses and Material Contracts as in effect on the date hereof. Subject to the
last sentence of this Section 3.8, the Franchises, FCC Licenses and Material
Contracts are in full force and effect (subject to expiration at the end of
their current term) and are valid, binding and enforceable upon the
FrontierVision Company that is a party thereto and, to FVP's knowledge, the
other parties thereto in accordance with their terms, except to the extent such
enforceability may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies. Except as disclosed in Section 3.8 of
FrontierVision's Disclosure Schedule, the FrontierVision Companies are in
material compliance with the terms of the Franchises, Licenses and Material
Contracts, and as of the date of this Agreement none of the FrontierVision
Companies has received any written notice (or to FVP's knowledge after due
inquiry of the regional managers of the Systems, oral notice) from a Franchising
Authority to the effect that any of the FrontierVision Companies are not
currently in material compliance with the terms of the Franchise granted by such
Franchising Authority. Except as set forth in Section 3.4 or 3.8 of
FrontierVision's Disclosure Schedule, none of the Franchises grants to any
Franchising Authority or any other Person any right of first refusal or right to
purchase the assets of any System that would be triggered by the consummation of
the purchase and sale of the Purchased Interests. Except as set forth in Section
3.8 of FrontierVision's Disclosure Schedule, a valid request for renewal has
been timely filed under Section 626(a) of the Cable Act with the proper
Franchising Authority with respect to each Franchise in respect of which the
statutory time period for making such filing has expired. Subject to the
provisions of Sections 6.1 and 6.4, FVP shall not have any obligation to renew
or extend any Franchises, Licenses or Material Contracts as a condition to
Buyer's obligations under this Agreement.
3.9 Title to and Condition of Real Property and Tangible Personal
Property.
Section 3.9 of FrontierVision's Disclosure Schedule lists all Real
Property parcels owned in fee by any of the FrontierVision Companies as of the
date of this Agreement (excluding easements, rights-of-way, and similar
authorizations) and describes the current use thereof. Except as disclosed in
Section 3.9 of FrontierVision's Disclosure Schedule, a copy of each deed
pursuant to which any of the FrontierVision Companies acquired a fee estate in a
Real Property parcel that is currently owned by it (including any title
insurance policies issued to such FrontierVision Company that are related to
such parcels) have been delivered to Buyer by FVP. Section 3.9 of
FrontierVision's Disclosure Schedule lists the Real Property leased by any of
the FrontierVision Companies as of the date of this Agreement and
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describes the current use thereof and indicates the stated expiration date of
the current term of such leases. Except as disclosed in Section 3.9 of
FrontierVision's Disclosure Schedule: (a) the FrontierVision Company that owns a
fee estate in a Real Property parcel has good and marketable title thereto; (b)
the FrontierVision Company that owns any material item of Tangible Personal
Property has good and valid title thereto; (c) the FrontierVision Company that
leases Real Property pursuant to any of the Material Leases has a valid
leasehold interest therein (subject to expiration of such Material Lease in
accordance with its terms); and (d) the FrontierVision Company that leases any
material item of Tangible Personal Property has a valid leasehold interest
therein (subject to expiration of such lease in accordance with its terms), in
each case of (a), (b), (c) and (d) above, free and clear of all Encumbrances
other than Permitted Encumbrances. The FrontierVision Companies own, lease or
otherwise have rights to use all real property (excluding easements,
rights-of-way and similar authorizations) and tangible personal property
necessary to operate the Systems as presently conducted by the FrontierVision
Companies in all material respects. Notwithstanding the express language of this
Section 3.9 or as may otherwise be provided in this Agreement, no representation
or warranty is being made as to title to the internal wiring, house drops, and
unrecorded dwelling-unit easements, rights of entry or rights-of-way held or
used by the FrontierVision Companies. Except for such rearrangements or
rehabilitations of a System's cable trunk as may be necessary in the ordinary
course of business for that System taken as a whole, the FrontierVision
Companies have no obligation to rearrange or rehabilitate any of such cable
trunk. Buyer acknowledges that, except as expressly warranted in this Section
3.9 and Sections 3.14, 3.15 and 3.16, all Real Property, all improvements
thereon, and all other Tangible Personal Property are being sold or assigned "as
is-where is" and Buyer shall not be entitled to make any claim against FVP or
Sellers arising out of or relating to the condition thereof.
3.10 Intangibles.
Section 3.10 of FrontierVision's Disclosure Schedule contains a
description of the material Intangibles (exclusive of those required to be
listed in Section 3.8 of FrontierVision's Disclosure Schedule), that are owned
or leased by any of the FrontierVision Companies and that are necessary for the
conduct of the business or operations of the Systems. To FVP's knowledge, except
as to potential copyright liability arising from the performance, exhibition or
carriage of any music on the Systems or as disclosed in Section 3.10 of
FrontierVision's Disclosure Schedule, it is not infringing upon any trademarks,
trade names, copyrights or similar intellectual property rights of others.
3.11 Information Regarding the Systems.
(a) Subscribers. Section 3.11 of FrontierVision's Disclosure
Schedule sets forth the approximate number of Equivalent Subscribers as of the
date indicated therein (including the approximate number of Equivalent
Subscribers served in each Franchise Area and served by each headend, in each
case as of the date indicated therein).
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(b) Operating Revenue. Section 3.11 of FrontierVision's
Disclosure Schedule sets forth the approximate "Operating Revenue" of the
Systems on a consolidated basis as of the date indicated therein, as "Operating
Revenue" is defined therein.
(c) Certain Systems Information. Section 3.11 of
FrontierVision's Disclosure Schedule sets forth the approximate number of plant
miles for each System, the approximate bandwidth capability of each System, the
channel lineup for each System, and the monthly rates charged for each class of
service offered by each System, 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.
(d) Franchise and FCC Matters. All material reports required
to be filed by any of the FrontierVision Companies with any of the Franchising
Authorities or the FCC have been duly filed and were materially correct when
filed. The FrontierVision Companies are permitted under all applicable
Franchises and FCC Regulations to distribute the television broadcast signals
distributed by the Systems (except for any inadvertent failure by the Systems to
comply with the FCC's nonduplication and syndex rules) and to utilize all
carrier frequencies generated by the operations of the Systems, and are licensed
in all material respects to operate all the facilities required by Legal
Requirements to be licensed (except where the failure to be so authorized or
licensed would not materially impair the operation of the Systems as presently
conducted).
(e) Request for Signal Carriage. Except for nonduplication and
blackout notices received in the ordinary course of business, none of the
FrontierVision Companies has received any FCC order requiring any System to
carry a television broadcast signal or to terminate carriage of a television
broadcast signal with which it has not complied, and to FVP's knowledge, except
as disclosed in Section 3.11 of FrontierVision's Disclosure Schedule, the
FrontierVision Companies have complied with all written and bona fide requests
or demands received from television broadcast stations to carry or to terminate
carriage of a television broadcast signal on a System.
(f) Rate Regulatory Matters. Section 3.11 of FrontierVision's
Disclosure Schedule sets forth a list of all Governmental Authorities that are
certified to regulate rates of the Systems pursuant to the Cable Act and FCC
Regulations as of the date of this Agreement and all Franchise Areas in which a
complaint regarding rates has been filed with the FCC as of November 12, 1998
(other than those that have been rejected by the FCC or have been withdrawn). As
of the date of this Agreement, none of the FrontierVision Companies has received
any written notice from any Governmental Authority that it has any obligation or
liability to refund to subscribers of the Systems any portion of the revenue
received by such FrontierVision Company from subscribers of the Systems
(excluding with respect to deposits for converters, encoders, decoders and
related equipment and other prepaid items). Buyer acknowledges that, except as
expressly warranted in this Section 3.11(f), FVP is not making any
representation or warranty regarding any Rate Regulatory Matter and, except as
expressly provided in
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Section 10.2(c), Buyer shall not be entitled to make any claim against FVP or
Sellers arising out of or relating to any Rate Regulatory Matter.
(g) Copyright. To the extent necessary to operate the Systems,
the FrontierVision Companies are entitled to hold and do hold the compulsory
copyright license described in Section 111 of the Copyright Act, which
compulsory copyright license is in full force and effect and has not been
revoked, canceled, encumbered or adversely affected in any material respect
except relating to any immaterial disputes which may arise after the date hereof
with respect to copyright fees payable with respect to the operation by the
FrontierVision Companies of the Systems. The FrontierVision Companies have paid
all material copyright fees that are due and payable with respect to the
operation by the FrontierVision Companies of the Systems (or have accrued a
liability with respect thereto which will be included as an Adjustment Liability
in the computation of Closing Net Liabilities) and have set aside an adequate
reserve on their books for the payment of all copyright fees that are required
to be accrued but are not yet due and payable.
(h) Insurance. The Systems and Assets are insured against
claims, loss or damage in amounts generally customary in the cable television
industry and consistent with the FrontierVision Companies' past practices.
(i) Purchase and Sale Agreements. Section 3.11 of
FrontierVision's Disclosure Schedule lists all definitive purchase and sale
agreements pursuant to which the Systems were acquired. A copy of each such
agreement has been delivered to Buyer. The FrontierVision Companies have not
collected any payment as of the date of this Agreement from any "seller" under
any of such purchase and sale agreements in respect of any indemnification claim
made against any such "seller" by the FrontierVision Companies for a breach of
any representation or warranty by any such "seller" regarding the condition of
any of the Systems acquired from any such "seller." Except as disclosed in
Section 3.11 of FrontierVision's Disclosure Schedule, no FrontierVision Company
is bound by any contractual noncompete or similar restrictive covenant. The
FrontierVision Companies have paid all amounts that are due and payable under
the purchase and sale agreements referred to above (or have accrued a liability
with respect thereto which will be included as an Adjustment Liability in the
computation of Closing Net Liabilities).
(j) Overbuilds. To FVP's knowledge, as of the date of this
Agreement, except as disclosed in Section 3.11 of FrontierVision's Disclosure
Schedule, the Systems are the only cable television systems presently servicing
the Franchise Areas (other than any cable television system owned, operated or
managed by Buyer or any Subsidiary or Affiliate of Buyer).
(k) Franchise Fees. The FrontierVision Companies have paid all
franchise fees that are due and payable with respect to the operation by the
FrontierVision Companies of the Systems (or have accrued a liability with
respect thereto which will be included as an Adjustment Liability in the
computation of Closing Net Liabilities).
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(l) Pole Attachments. The FrontierVision Companies have paid
all pole attachment fees that are due and payable with respect to the operation
by the FrontierVision Companies of the Systems (or have accrued a liability with
respect thereto which will be included as an Adjustment Liability in the
computation of Closing Net Liabilities). As of the date of this Agreement,
except as disclosed in Section 3.11 of FrontierVision's Disclosure Schedule, no
pole attachment audits are pending and the FrontierVision Companies have not
received written notice of any pending pole attachment audit.
3.12 Taxes.
The FrontierVision Companies have filed or caused to be filed all
required federal Tax Returns and all other material required Tax Returns with
the appropriate Governmental Authorities in all jurisdictions in which such Tax
Returns are required to be filed by the FrontierVision Companies (except Tax
Returns for which the filing date has been extended and such extension period
has not expired), and all Taxes shown on such Tax Returns have been properly
accrued or paid to the extent such Taxes have become due and payable. FVP has
delivered to Buyer true, correct and complete copies of the Tax Returns (in the
form filed) listed in Section 3.12 of FrontierVision's Disclosure Schedule. The
Financial Statements reflect an adequate reserve for all material unpaid Taxes
payable by the FrontierVision Companies for all Tax periods and portions thereof
through the date of such Financial Statements. Any unpaid Taxes of the
FrontierVision Companies for all periods ending prior to the Closing Date and
not reflected on such Financial Statements will be included as an Adjustment
Liability in the computation of Closing Net Liabilities. Except as disclosed in
Section 3.12 of FrontierVision's Disclosure Schedule, none of the FrontierVision
Companies has executed any waiver or extensions of any statute of limitations on
the assessment or collection of any Tax or with respect to any liability arising
therefrom. Except as disclosed in Section 3.12 of FrontierVision's Disclosure
Schedule, none of the federal, state or local income Tax Returns filed by the
FrontierVision Companies has been audited by any taxing authority. Except as set
forth in Section 3.12 of FrontierVision's Disclosure Schedule, there are no Tax
audits pending and no outstanding agreements or waiver extending the statutory
period of limitations applicable to any federal, state or local Tax Return of
any of the FrontierVision Companies for any period.
3.13 Employee Plans.
(a) Employee Plans. Section 3.13 of FrontierVision's
Disclosure Schedule contains a list of all Employee Plans (true and correct
copies of which have been delivered to Buyer). None of the FrontierVision
Companies or any of their ERISA Affiliates is or has been required to contribute
to any "multiemployer plan," as defined in ERISA Section 3(37), nor has any
FrontierVision Company or any such ERISA Affiliate (or any former ERISA
Affiliate with respect to the period in which such entity was an ERISA
Affiliate) experienced a complete or partial withdrawal, within the meaning of
ERISA Section 4203 or 4205, from such a "multiemployer plan." Except as required
under Code
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Section 4980B or ERISA Sections 601-609, no Employee Plan provides health or
medical coverage to former employees of the FrontierVision Companies. As of the
Adjustment Time the FrontierVision Companies will have accrued in accordance
with GAAP a liability for all health benefit claims filed as of such time and
all claims incurred but not reported as of such time.
(b) Qualified Plans. Except as disclosed in Section 3.13 of
FrontierVision's Disclosure Schedule, with respect to each Employee Plan, and
after taking into consideration the effect of the payments to be made with
respect to the Employee Plans: (1) each such Employee Plan that is intended to
be tax-qualified is the subject of a favorable determination letter except as
described in Section 3.13 of FrontierVision's Disclosure Schedule; (2) no
material liability to the Pension Benefit Guaranty Corporation is expected by
FVP to be incurred by the FrontierVision Companies or any of their ERISA
Affiliates (or any former ERISA Affiliate with respect to the period in which
such entity was an ERISA Affiliate) with respect to any Employee Plan; (3) no
non-exempt prohibited transaction, within the definition of Section 4975 of the
Code or Title 1, Part 4 of ERISA, has occurred which would subject the
FrontierVision Companies or any of their ERISA Affiliates (or any former ERISA
Affiliate with respect to the period in which such entity was an ERISA
Affiliate) to any material liability; (4) there is no accumulated funding
deficiency, termination or partial termination, or requirement to provide
security with respect to any Employee Plan; (5) the fair market value of the
assets of any Employee Plan would exceed the value of all liabilities and
obligations of such Employee Plan if such plan were to terminate on the Closing
Date; and (6) the transactions contemplated by this Agreement will not result in
liability under ERISA to FVP or the FrontierVision Companies or Buyer, or any of
their respective ERISA Affiliates.
(c) Labor Unions. As of the date of this Agreement, other than
as disclosed in Section 3.13 of FrontierVision's Disclosure Schedule, none of
the FrontierVision Companies is party to or bound by any collective bargaining
agreement. As of the date of this Agreement, other than as disclosed in Section
3.13 of FrontierVision's Disclosure Schedule, to the knowledge of FVP, (1) none
of the employees of the FrontierVision Companies is presently a member of any
collective bargaining unit related to his or her employment and (2) no
collective bargaining unit has filed a petition for representation of any of the
employees of the FrontierVision Companies.
3.14 Environmental Laws.
Except as disclosed in Section 3.14 of FrontierVision's Disclosure
Schedule: (a) the FrontierVision Companies' operations with respect to the
Systems comply in all material respects with all applicable Environmental Laws
as in effect on the date of this Agreement; (b) none of the FrontierVision
Companies has used the Real Property for the manufacture, transportation,
treatment, storage or disposal of Hazardous Substances except for gasoline and
diesel fuel and such use of Hazardous Substances (in cleaning fluids, solvents
and other similar substances) customary in the construction, maintenance and
operation of a cable television system and in amounts or under circumstances
that would not reasonably be expected to give rise to material liability for
remediation;
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and (c) to FVP's knowledge, the Real Property complies and has complied in all
material respects with all applicable Environmental Laws. Except as disclosed in
Section 3.14 of FrontierVision's Disclosure Schedule, as of the date of this
Agreement, no Environmental Claim has been filed or issued against the
FrontierVision Companies.
3.15 Claims and Litigation.
Except as disclosed in Section 3.15 of FrontierVision's Disclosure
Schedule, as of the date of this Agreement, there is no claim, legal action,
arbitration or other legal, administrative or tax proceeding, nor any order,
decree or judgment, in progress or pending, or to FVP's knowledge threatened in
writing, against or relating to the FrontierVision Companies, the Assets or the
business or operations of any of the Systems (other than FCC and other
proceedings generally affecting the cable television industry and not specific
to the FrontierVision Companies and other than rate complaints or certifications
filed by customers or Franchising Authorities) that would have a material
adverse effect on FVP's ability to perform its obligations under this Agreement
or that would have a material adverse effect on the business, financial
condition, assets or liabilities of any of the FrontierVision Companies.
3.16 Compliance With Laws.
Except as disclosed in Section 3.16 of FrontierVision's Disclosure
Schedule and except for any such noncompliance as has been remedied, each of the
FrontierVision Companies has complied in all material respects with, and the
Systems and the Assets are in compliance in all material respects with, all
applicable Legal Requirements (including, without limitation, the Code, ERISA,
the National Labor Relations Act, the Cable Act, FCC Regulations, and the
Copyright Act). Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, and without limiting the provisions of Section 6.14,
FVP does not make any representation or warranty with respect to compliance with
any Legal Requirements dealing with, limiting or affecting the rates which can
be charged by cable television systems to their customers (whether for
programming, equipment, installation, service or otherwise) or any other Rate
Regulatory Matter.
3.17 Transactions with Affiliates.
Except as disclosed in the Financial Statements or Section 3.17 of
FrontierVision's Disclosure Schedule, none of the FrontierVision Companies has
been involved in any business arrangement or business relationship with any
Affiliate of any of the FrontierVision Companies (other than another
FrontierVision Company), and no Affiliate of any of the FrontierVision Companies
(other than another FrontierVision Company) owns any property or right, tangible
or intangible, that is used in the business of the FrontierVision Companies
(other than in its capacity as a direct or indirect equity or debt holder of the
FrontierVision Companies).
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3.18 Broker.
Neither FVP nor any of the other FrontierVision Companies or any Person
acting on their behalf has incurred any liability for any finders' or brokers'
fees or commissions in connection with the transactions contemplated by this
Agreement except as described in Section 11.1 or disclosed in Section 3.18 of
FrontierVision's Disclosure Schedule.
3.19 Securities Law Matters.
(a) FVP represents that it is an "accredited investor" as that
term is defined in Regulation D under the Securities Act and that it has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of acquisition of the Escrow Registrable
Securities and of making an informed investment decision with respect thereto,
and understands all risks of holding the Escrow Registrable Securities for an
indefinite period of time.
(b) FVP acknowledges receipt of copies of Buyer's 10-K and
Buyer's 10-Q.
(c) FVP is aware that the Escrow Registrable Securities are
not currently registered under the Securities Act or under any state securities
laws.
(d) FVP agrees that it will not transfer the Escrow
Registrable Securities without compliance with the registration and other
provisions of all applicable securities laws and acknowledges that each
certificate representing the Escrow Registrable Securities which it receives
will be marked with an appropriate legend to such effect (which legend will be
removed in accordance with the provisions of the Deposit Registration Rights
Agreement).
(e) FVP is purchasing the Escrow Registrable Securities solely
for investment purposes, with no present intention to sell the Escrow
Registrable Securities (other than pursuant to an effective registration
statement).
(f) FVP understands that it must bear the economic risk of the
investment represented by the purchase of the Escrow Registrable Securities for
an indefinite period.
(g) FVP agrees not to offer, sell, or otherwise dispose of the
shares of the Escrow Registrable Securities at any time prior to the second
anniversary of the date FVP acquires the Escrow Registrable Securities, unless
such offer, sale, or other disposition is (1) registered under the Securities
Act, or (2) in compliance with an opinion of counsel of FVP, delivered to Buyer
and reasonably acceptable to it, to the effect that such offer, sale, or other
disposition thereof does not violate the Securities Act.
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(h) FVP acknowledges that the certificate(s) representing the
Escrow Registrable Securities delivered hereunder shall bear the following
legend (which legend will be removed in accordance with the provisions of the
Deposit Registration Rights Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED
FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE SECURITIES BE
TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT
REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE FEDERAL
OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE
EXEMPTION THEREFROM.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A REGISTRATION RIGHTS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE
CORPORATION.
3.20 Cure.
For all purposes under this Agreement, the existence or occurrence of
any events or circumstances which constitute or cause a breach of a
representation or warranty of FVP (including without limitation FrontierVision's
Disclosure Schedule) on the date such representation or warranty is made shall
be deemed not to constitute a breach of such representation or warranty if such
event or circumstance is cured on or prior to the Closing Date or the earlier
termination of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to any provisions of this Agreement limiting, qualifying or
excluding any of the representations or warranties made herein, each Seller
severally represents and warrants to Buyer (with respect to such Seller and not
with respect to any other Seller) as set forth in this Article 4.
4.1 Authority of Sellers; Authorization and Binding Obligation.
Such Seller has the requisite corporate, partnership, limited liability
company or other applicable power, authority and legal capacity to execute,
deliver and perform this Agreement and the other Transaction Documents to which
such Seller is a party according to their respective terms. The execution,
delivery, and performance by such Seller of this Agreement and the other
Transaction Documents to which such Seller is a party have been duly authorized
by all necessary action on the part
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of such Seller. This Agreement and the other Transaction Documents to which such
Seller is a party have been duly executed and delivered by such Seller (or, in
the case of Transaction Documents to be executed and delivered at Closing, when
executed and delivered will be duly executed and delivered) and constitute (or,
in the case of Transaction Documents to be executed and delivered at Closing,
when executed and delivered will constitute) the legal, valid, and binding
obligation of such Seller, enforceable against such Seller in accordance with
their terms, except as the enforceability of this Agreement and such other
Transaction Documents may be limited by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally or by judicial discretion in the
enforcement of equitable remedies, and as rights to indemnification may be
limited by federal or state securities laws or the public policies embodied
therein.
4.2 Absence of Conflicting Agreements; Consents.
Except for the expiration or termination of any applicable waiting
period under the HSR Act, the filing by FVP, any other FrontierVision Company
and/or the Sellers with the SEC of any reports required to be filed in
connection with the consummation of the transactions contemplated hereby, or as
set forth in Section 4.2 of FrontierVision's Disclosure Schedule, the execution,
delivery and performance by such Seller of this Agreement and the other
Transaction Documents to which such Seller is a party (with or without the
giving of notice, the lapse of time, or both): (A) do not require the Consent
of, notice to, or filing with any Governmental Authority or any other Person
that has not been obtained; (B) will not conflict with any provision of the
Charter Documents of such Seller (and, in the case of the SPC Sellers, the
Charter Documents of the SPC owned by such Seller) as currently in effect; (C)
assuming receipt of all Consents, will not conflict with, result in a breach of,
or constitute a default under any Legal Requirement to which such Seller (and,
in the case of the SPC Sellers, to which the SPC owned by such Seller) is bound;
(D) assuming receipt of all Consents, will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of any material agreement or instrument to which such Seller (and, in the case
of the SPC Sellers, to which the SPC owned by such Seller) is bound; and (E)
will not result in the creation of any Encumbrance upon the Purchased Interests
held by such Seller (and, in the case of the SPC Sellers, upon the limited
partnership interest in FVP held by the SPC owned by such Seller).
Notwithstanding the foregoing, no Seller makes any representation or warranty
regarding any of the foregoing that may result from the specific legal or
regulatory status of Buyer or as a result of any other facts that specifically
relate to the business or activities in which Buyer is or proposes to be engaged
other than the cable television business.
4.3 Title to Purchased Interests.
(a) The General Partner represents that it holds of record and
owns beneficially the General Partnership Interest and the Subordinated Notes
set forth by its name in Section 4.3 of FrontierVision's Disclosure Schedule,
free and clear of all Encumbrances.
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(b) Each Limited Partner Seller represents that it holds of
record and owns beneficially the Limited Partnership Interest and the
Subordinated Notes set forth by its name in Section 4.3 of FrontierVision's
Disclosure Schedule, free and clear of all Encumbrances.
(c) Each SPC Seller represents that it holds of record and
owns beneficially the Subordinated Notes listed next to its name in Section 4.3
of FrontierVision's Disclosure Schedule and that the SPC listed next to its name
in Section 4.3 of FrontierVision's Disclosure Schedule holds of record and owns
beneficially the limited partnership interest in FVP and the Subordinated Notes
set forth by such SPC's name in Section 4.3 of FrontierVision's Disclosure
Schedule, free and clear of all Encumbrances. Each SPC Seller represents that it
holds of record and owns beneficially 100% of the issued and outstanding Capital
Stock of the SPC listed next to such SPC Seller's name in Section 4.3 of
FrontierVision's Disclosure Schedule, free and clear of all Encumbrances. All of
the issued and outstanding Capital Stock of the SPC owned by such SPC Seller has
been duly authorized, validly issued, fully paid and nonassessable, and has not
been issued in violation of any federal or state securities laws. Each SPC
Seller represents that the SPC owned by such SPC Seller has not and does not own
any assets or other properties (other than the respective limited partnership
interests in FVP and the Subordinated Notes held by such SPC, and, in the case
of 1818 II Cable Corp. and Olympus Cable Corp., the respective limited
partnership interests in the General Partner held by such SPC, which interests
in the General Partner shall be distributed, directly or indirectly, to the SPC
Seller which owns such SPC immediately prior to the Closing) or conduct any
business or have any indebtedness, liabilities or obligations other than rights,
obligations, and liabilities arising under this Agreement and the partnership
agreement of FVP, the SPC Notes (which SPC Notes shall be canceled by the SPC
Seller that holds such SPC Note concurrently with the Closing) or as disclosed
in Section 4.3 of FrontierVision's Disclosure Schedule.
(d) Except as disclosed in Section 4.3 of FrontierVision's
Disclosure Schedule and except for this Agreement and rights granted under the
partnership agreement of FVP, such Seller (and, in the case of the SPC Sellers,
the SPC owned by such Seller) (1) is not party to, and has not granted to any
other Person, any options, warrants, subscription rights, rights of first
refusal or any other rights providing for the acquisition or disposition of
partnership interests or other equity interests in the FVP (and, in the case of
the SPC Sellers, in the SPC owned by such Seller), and (2) is not a party to any
voting agreement, voting trust, proxy or other agreement or understanding with
respect to the voting of any of the Purchased Interests or the Capital Stock of
any of the FrontierVision Companies.
4.4 Broker.
Neither such Seller nor any Person acting on its behalf has incurred
any liability for any finders' or brokers' fees or commissions in connection
with the transactions contemplated by this Agreement except as described in
Section 11.1.
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4.5 Taxes.
There are no Tax audits pending and no outstanding agreements or waiver
extending the statutory period of limitations applicable to any federal, state,
or local Tax Return of the SPC the capital stock of which is owned by such SPC
Seller for any period.
4.6 Securities Law Matters.
(a) Each such Seller who is an "Accredited Investor"
represents that the information provided in such Seller's "Accredited Investor
Questionnaire" delivered herewith is true, correct and complete.
(b) Such Seller, either individually or together with his
representatives and advisors, has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
acquisition of the Stock Consideration Registrable Securities and of making an
informed investment decision with respect thereto, and understands all risks of
holding the Stock Consideration Registrable Securities for an indefinite period
of time.
(c) Such Seller acknowledges receipt of copies of Buyer's 10-K
and Buyer's 10-Q.
(d) Such Seller has carefully considered and has, to the
extent such Seller believes such discussion necessary discussed with such
Seller's professional legal, tax, accounting and financial advisors the
suitability of an investment in the Stock Consideration Registrable Securities
for such Seller's particular tax and financial situation and has determined that
the Stock Consideration Registrable Securities is a suitable investment for such
Seller.
(e) Such Seller agrees that it will not transfer the Stock
Consideration Registrable Securities without compliance with the registration
and other provisions of all applicable securities laws.
(f) Such Seller is purchasing the Stock Consideration
Registrable Securities solely for investment purposes, with no present intention
to sell the Stock Consideration Registrable Securities (other than pursuant to
an effective registration statement).
(g) Such Seller understands that it must bear the economic
risk of the investment represented by the purchase of the Stock Consideration
Registrable Securities for an indefinite period.
(h) Such Seller agrees not to offer, sell, or otherwise
dispose of the shares of the Stock Consideration Registrable Securities at any
time prior to the second anniversary of the date such Seller acquires the Stock
Consideration Registrable Securities, unless such offer, sale, or other
disposition is (1) registered under the Securities Act, or (2) in compliance
with an opinion of counsel
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of the Seller, delivered to Buyer and reasonably acceptable to it, to the effect
that such offer, sale, or other disposition thereof does not violate the
Securities Act.
(i) Such Seller acknowledges that the certificate(s)
representing the Stock Consideration Registrable Securities delivered hereunder
shall be issued to such Seller with the following legend (which legend will be
removed in accordance with the provisions of the Stock Consideration
Registration Rights Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED
FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE SECURITIES BE
TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT
REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE FEDERAL
OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE
EXEMPTION THEREFROM.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A REGISTRATION RIGHTS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE
CORPORATION.
4.7 Cure.
For all purposes under this Agreement, the existence or occurrence of
any events or circumstances which constitute or cause a breach of a
representation or warranty of such Seller (including without limitation
FrontierVision's Disclosure Schedule) on the date such representation or
warranty is made shall be deemed not to constitute a breach of such
representation or warranty if such event or circumstance is cured on or prior to
the Closing Date or the earlier termination of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to FVP and each Seller as set forth in
this Article 5.
5.1 Organization; Authorization and Binding Obligation.
Buyer is a corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Delaware. Buyer has the requisite
corporate power and authority to own, lease, and
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operate its properties, to carry on its business in the places where such
properties are now owned, leased, or operated and such business is now
conducted, and to execute, deliver and perform this Agreement and the other
Transaction Documents to which Buyer is a party according to their respective
terms. Buyer is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which such qualification is required.
5.2 Authorization and Binding Obligation.
The execution, delivery, and performance by Buyer of this Agreement and
the other Transaction Documents to which Buyer is a party have been duly
authorized by all necessary corporate, shareholder or other action on the part
of Buyer. This Agreement and the other Transaction Documents to which Buyer is a
party have been duly executed and delivered by Buyer (or, in the case of
Transaction Documents to be executed and delivered at Closing, when executed and
delivered will be duly executed and delivered) and constitute (or, in the case
of Transaction Documents to be executed and delivered at Closing, when executed
and delivered will constitute) the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with their terms, except as the
enforceability of this Agreement and such other Transaction Documents may be
limited by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally or by judicial discretion in the enforcement of equitable remedies,
and as rights to indemnification may be limited by federal or state securities
laws or the public policies embodied therein.
5.3 Absence of Conflicting Agreements; Consents.
Except for the expiration or termination of any applicable waiting
period under the HSR Act and the filing by Buyer with the SEC of any reports
required to be filed in connection with the consummation of the transactions
contemplated hereby, the execution, delivery and performance by Buyer of this
Agreement and the other Transaction Documents to which Buyer is a party (with or
without the giving of notice, the lapse of time, or both): (a) do not require
any Consent, declaration to, or filing with any Governmental Authority or any
other Person; (b) will not conflict with any provision of the Charter Documents
of Buyer, as currently in effect; (c) will not conflict with, result in a breach
of, or constitute a default under any Legal Requirement to which Buyer is bound;
and (d) will not conflict with, constitute grounds for termination of, result in
a breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of any material agreement
or instrument to which Buyer is a party or bound. Notwithstanding the foregoing,
Buyer does not make any representation or warranty regarding any of the
foregoing that may result from the specific legal or regulatory status of any
Seller or any FrontierVision Company or as a result of any other facts that
specifically relate to the business or activities in which any Seller or any
FrontierVision Company is or proposes to be engaged other than the cable
television business.
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5.4 Capital Structure; ACC Class A Common Stock.
(a) All of the shares of ACC Class A Stock deposited into
escrow in accordance with the Deposit Escrow Agreement as contemplated by
Section 2.4(a): (1) have been duly authorized and validly issued, fully paid and
nonassessable, not subject to, or issued in violation of, any preemptive rights
and have not been issued in violation of any federal or state securities laws;
and (2) have the same rights and powers as all other shares of ACC Class A
Common Stock issued and outstanding as of the date of this Agreement. If
released to FVP in accordance with this Agreement, on the date of such release,
all of the securities constituting the Deposit Escrow Property: (1) shall have
been duly authorized and validly issued, fully paid and nonassessable, not
subject to, or issued in violation of, any preemptive rights and not issued in
violation of any federal or state securities laws; and (2) shall have the same
rights and powers as all other shares of ACC Class A Common Stock (or, if any of
the securities constituting the Deposit Escrow Property are not shares of ACC
Class A Stock, as all other securities of the same class and series) issued and
outstanding as of the date of this Agreement.
(b) On the Closing Date, all of the shares of ACC Class A
Common Stock constituting the Stock Consideration (or, if applicable, all of the
securities of any other class or series constituting the Stock Consideration):
(1) shall have been duly authorized and validly issued, fully paid and
nonassessable, not subject to, or issued in violation of, any preemptive rights
and not issued in violation of any federal or state securities laws; and (2)
shall have the same rights and powers as all other shares of ACC Class A Common
Stock (or, if any of the securities constituting the Stock Consideration are not
shares of ACC Class A Stock, as all other securities of the same class and
series) issued and outstanding as of the date of this Agreement.
5.5 Claims and Litigation.
As of the date of this Agreement, there is no claim, legal action,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to
Buyer's knowledge threatened in writing, against or relating to Buyer or the
assets or business of Buyer or its Subsidiaries (other than FCC and other
proceedings generally affecting the cable television industry and not specific
to Buyer or its Subsidiaries and other than rate complaints or certifications
filed by customers or franchising authorities), that would have a material
adverse effect on Buyer's ability to perform its obligations under this
Agreement or that could reasonably be expected to have a material adverse effect
on the business, financial condition, assets or liabilities of Buyer and its
Subsidiaries, taken as a whole.
5.6 SEC Reports.
(a) Buyer's financial statements contained in its Annual
Report on Form 10-K for the fiscal year ended March 31, 1998 ("Buyer's 10-K")
present fairly the consolidated financial operations of Buyer for the fiscal
year then ended, in conformity with GAAP. Buyer's interim financial
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statements contained in its Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998 ("Buyer's 10-Q") reflect all adjustments which are, in
Buyer's management's opinion, necessary to a fair statement of the results for
the interim period presented and necessary to present fairly Buyer's
consolidated financial position as of September 30, 1998 and its consolidated
results of operations for the quarter ended September 30, 1998 and cash flows
from consolidated operations for the quarter ended September 30, 1998.
(b) Except as set forth in Buyer's 10-Q or in any public
document filed by Buyer with the SEC after September 30, 1998, Buyer's
capitalization (including for this purpose, all outstanding options, warrants
and other rights to acquire Capital Stock or other securities of Buyer) is as
set forth in Buyer's 10-K to the extent required to be set forth in Buyer's
10-K. The ACC Class A Common Stock is not subject to any preemptive right, claim
or other interest of any Person.
(c) Except as set forth in any public document filed by Buyer
or Hyperion Telecommunications, Inc. or Olympus Communications, L.P. with the
SEC after September 30, 1998: (1) there has not been, since September 30, 1998,
any material adverse change in the financial condition, results of operations of
Buyer, or any damage, destruction or loss which materially and adversely affects
the financial condition, results of operations or future prospects of Buyer; and
(2) as of the date of this Agreement, Buyer has not entered into any commitment
or transaction material to Buyer's business.
(d) No statement made in Buyer's 10-K or Buyer's 10-Q or any
public document filed by Buyer or Hyperion Telecommunications, Inc. or Olympus
Communications, L.P. with the SEC after September 30, 1998, nor any statement,
representation or warranty made by Buyer in this Agreement or the other
Transaction Documents (including schedules and exhibits), contains any untrue
statement of any material fact or omits a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading.
5.7 Broker.
Neither Buyer nor any Person acting on behalf of Buyer has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement except as described in Section
11.1.
5.8 Investment Purpose; Investment Company.
Buyer is acquiring the Purchased Interests for investment for its own
account and not with a view to the sale or distribution of any part thereof
within the meaning of the Securities Act. Buyer is not an "investment company"
as defined in the Investment Company Act of 1940, as amended.
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5.9 Cure.
For all purposes under this Agreement, the existence or occurrence of
any events or circumstances which constitute or cause a breach of a
representation or warranty of Buyer on the date such representation or warranty
is made shall be deemed not to constitute a breach of such representation or
warranty if such event or circumstance is cured on or prior to the Closing Date
or the earlier termination of this Agreement.
ARTICLE 6
SPECIAL COVENANTS AND AGREEMENTS
The parties covenant and agree as follows, provided that, except with
respect to express agreements and covenants of a Seller contained in this
Article 6 (including Sections 6.5, 6.12 and 6.15), no Seller shall have any
obligation or liability prior to the Closing with respect to any agreement or
covenant of FVP set forth in this Article 6 (it being understood and agreed by
each Seller that nothing in this sentence shall impair or diminish the
indemnification obligations of Sellers under Article 10 after the Closing,
including with respect to any covenant of FVP set forth in this Article 6).
6.1 Operation of Business Prior to Closing.
Except as required by applicable Legal Requirements or as contemplated
in FrontierVision's Disclosure Schedule or Section 6.1(c), without the consent
of Buyer (which consent shall not be unreasonably withheld), between the date
hereof and the Closing Date, FVP will operate and cause the FrontierVision
Companies to operate the Systems in the ordinary course of business (subject to,
and except as modified by, compliance with the following negative and
affirmative covenants) and abide by the following negative and affirmative
covenants:
(a) Negative Covenants. The FrontierVision Companies
shall not do any of the following:
(1) Franchises. Fail to use commercially
reasonable efforts to renew on substantially the same or on other commercially
reasonable terms any Franchise that has expired or will expire after the date
hereof and prior to the Closing Date in accordance with its terms; provided,
however, the FrontierVision Companies shall not agree to any material changes to
the terms of any Franchise without Buyer's prior written consent and provided
further that FVP shall not be required to take any steps necessary to obtain
renewals of any Franchise earlier than such steps are required to be taken by
applicable FCC Regulations, and obtaining renewals of any Franchise shall not be
a condition precedent to Buyer's obligations hereunder except as provided in the
immediately following sentence). The parties agree that the obligations of the
FrontierVision Companies with respect to the renewal of the Franchises referred
to in Section 3.8(F) of FrontierVision's Disclosure Schedule (Renewal Letters
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Not Timely Filed), exclusive of the Penobscot Indian Nation (ME) and Town of
Friendsville (MD) Franchises (the "Renewal Franchises") are governed solely by
Section 6.4 and 7.1(d) and not this Section 6.1(a)(1).
(2) Contracts. Modify or amend in any material
respect, except in the ordinary course of business, any Contract that shall
survive the Closing; or enter into any new Contracts that will be binding on the
FrontierVision Companies following the Closing except: (A) agreements for the
provision of cable television services to residential customers; (B) the renewal
or extension of any existing Contract on its existing terms, in all material
respects, in the ordinary course of business; (C) contracts or commitments
entered into in the ordinary course of business that are terminable on not more
than sixty days prior notice or that do not involve post-Closing obligations in
excess of Twenty-Five Thousand Dollars ($25,000) in any one case or in excess of
Five Hundred Thousand Dollars ($500,000) in the aggregate; or (D) with respect
to utility pole attachment agreements, Contracts with terms as customarily
required by the utility whose poles are utilized, and except in any event,
subject to their legal obligations and constraints, the FrontierVision Companies
will not enter into a new collective bargaining agreement without providing
Buyer a reasonable opportunity to review and approve the proposed terms of such
agreement, which approval shall not be unreasonably withheld by Buyer.
(3) Disposition of Assets. Sell, assign, lease, swap,
or otherwise transfer or dispose of any of the Assets, except as set forth in
Section 6.1 of FrontierVision's Disclosure Schedule and except for assets
consumed or disposed of in the ordinary course of business or assets (other than
any System as a whole) that are replaced by replacement property of
substantially equivalent kind and use.
(4) Encumbrances. Create, assume or permit to
exist any Encumbrance upon the Assets, except for Permitted Encumbrances or
other Encumbrances disclosed in FrontierVision's Disclosure Schedule.
(5) Indebtedness. Permit the FrontierVision
Companies to incur any additional indebtedness for borrowed money except
pursuant to the Debt Documents listed in Section 3.8 of FrontierVision's
Disclosure Schedule and that (if not repaid at or prior to the Closing) is
included in Adjustment Liabilities in the computation of Closing Net
Liabilities.
(6) Marketing Programs. Implement any new
marketing plans that are materially different from marketing plans previously
implemented by the FrontierVision Companies.
(7) Channel Lineups; Rate Changes. Make channel
additions or channel substitutions or change the channel lineup for any System
or change the customer rates charged by any System or enter into any new
carriage agreements, except as set forth in Section 6.1 of FrontierVision's
Disclosure Schedule.
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(b) Affirmative Covenants. FVP shall, and shall cause the
FrontierVision Companies to, do the following:
(1) Access to Information. Subject to Buyer's
obligations hereunder to maintain the confidentiality of Confidential
Information, allow Buyer and its authorized representatives reasonable access
during normal business hours to the Assets, physical plant, offices, properties
and records for the purpose of inspection, and furnish or cause to be furnished
to Buyer or its authorized representatives all information with respect to the
Assets or the FrontierVision Companies that Buyer may reasonably request. Any
investigation or request for information shall be conducted in such a manner as
not to interfere with the business or operations of the Systems. Buyer hereby
agrees that it shall promptly provide written notice to FVP or such Seller if
based upon information provided to Buyer or through its investigation, Buyer
determines that FVP or a Seller is in breach in any material respect of any of
its representations or warranties set forth in this Agreement.
(2) Insurance. Maintain the existing insurance
policies on the Systems and the Assets (or comparable replacement policies).
(3) Books and Records. Maintain the
FrontierVision Companies' books and records in accordance with past practices.
(4) Financial Information. Furnish to Buyer
within forty-five days after the end of each month between the date hereof and
the Closing Date, an unaudited consolidated balance sheet and statement of
operations and statement of cash flows for the FrontierVision Companies for such
month, which financial information shall be prepared from the FrontierVision
Companies' books and records maintained in the ordinary course of business in
accordance with past practices.
(5) Compliance with Laws. Comply in all material
respects with all Legal Requirements applicable to the FrontierVision Companies
and the operation of the Systems.
(6) Keep Organization Intact. Except with
respect to any voluntary departure of any of the FrontierVision Companies'
employees between the date hereof and Closing, use its commercially reasonable
efforts to preserve intact its business and organization relating to the Systems
and preserve for Buyer the goodwill of the FrontierVision Companies' suppliers,
customers and others having business relations with it.
(7) Specified Rebuild and Upgrade Projects.
Proceed with the rebuild and upgrade projects identified in Section 2.5 of
FrontierVision's Disclosure Schedule in the ordinary course of business.
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(8) Franchise Renewal Letters. File a request
for renewal under Section 626(a) of the Cable Act with the proper Franchising
Authority with respect to each Franchise in respect of which the time period for
making such filing will expire on or before the Closing Date.
(9) Year 2000 Remediation Plan. Proceed with
the Year 2000 Remediation Plan of the FrontierVision Companies in accordance in
all material respects with the provisions of such plan, a copy of which has been
provided to Buyer.
(10) Rate Changes. Implement the rate changes
set forth in Section 6.1 of FrontierVision's Disclosure Schedule in accordance
with the implementation schedule set forth therein with respect to each such
rate change.
(11) Purchase and Sale Agreement Indemnification
Claims. Pursue in the ordinary course of business consistent with the past
practice of the FrontierVision Companies any indemnification claims regarding
the condition of any of the Systems acquired from the "sellers" under the
purchase and sale agreements referred to in Section 3.11(i) that the
FrontierVision Companies may have against such "sellers" pursuant to the
indemnification provisions thereof. The FrontierVision Companies will apply any
payments actually collected after the date of this Agreement in respect of any
such claims to remedying the matter in respect of which the payments were
collected or will include the amount of any such payment that is not so applied
as an Adjustment Liability in the Computation of Closing Net Liabilities (but
shall have no obligation pursuant to this provision to expend more than the
amount collected on remedying such matter).
(c) Certain Permitted Actions. Notwithstanding anything in
this Agreement (including Sections 6.1(a) and (b) above) to the contrary, Buyer
consents and agrees as follows:
(1) Contractual Commitments. FVP, the General
Partner and the other FrontierVision Companies may comply with all of their
contractual commitments under their existing Contracts and under any Contracts
entered into after the date of this Agreement in compliance with Section
6.1(a)(2) or with Buyer's consent (in each case, as such Contracts may be in
effect from time to time in accordance with Section 6.1(a)(2) or with Buyer's
consent). FVP, the General Partner and the other FrontierVision Companies may
take such actions as are contemplated by the other Sections of this Agreement
(excluding Sections 6.1(a) and (b)) and otherwise comply with their obligations
under the other Sections of this Agreement (excluding Sections 6.1(a) and (b)).
(2) Pending Acquisitions/Swaps/Sales. The
FrontierVision Companies may consummate the transactions set forth in Section
6.1 of FrontierVision's Disclosure Schedule.
(3) Holdings Exchange Offer. FrontierVision
Holdings, L.P. and FrontierVision Holdings Capital II Corporation may consummate
the Exchange Offer and comply with its other obligations contemplated in the
Registration Rights Agreement dated as of December 9, 1998
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among FrontierVision Holdings, L.P., FrontierVision Holdings Capital II
Corporation, J.P. Morgan Securities Inc. and Chase Securities Inc.
(4) Excluded Assets. The FrontierVision
Companies may assign each of the Excluded Assets to the General Partner, its
designees or any other Person prior to the Closing; provided that such
assignments, either individually or in the aggregate, do not result in any
adverse Tax consequence to any of the FrontierVision Companies which is not
included in Adjustment Liabilities in the computation of Closing Net
Liabilities.
(5) Other Matters. The FrontierVision Companies
may take the other actions set forth in Section 6.1 of FrontierVision's
Disclosure Schedule.
6.2 Confidentiality; Press Release.
(a) FVP and the Sellers may from time to time in the course of
this transaction disclose to Buyer information and material concerning FVP and
the Sellers, the FrontierVision Companies, the Assets and the Systems, including
proprietary information, contracts, marketing information, technical
information, product or service concepts, subscriber information, rates,
financial information ideas, concepts and research and development (any of the
foregoing and any analysis, compilations, studies or other documents prepared by
or on behalf of Buyer in respect thereof are hereafter collectively referred to
as "Confidential Information"). The term "Confidential Information" does not
include any item of information that (1) is publicly known at the time of its
disclosure, (2) is lawfully received from a third party not bound in a
confidential relationship with a party hereto, (3) is published or otherwise
made known to the public by any source other than a party bound by the
provisions hereof, or (4) was generated by Buyer independently. Buyer agrees
that Confidential Information received from FVP and the Sellers shall be used
solely in connection with the transaction contemplated by this Agreement. Buyer
agrees that it shall treat confidentially and not directly or indirectly,
divulge, reveal, report, publish, transfer or disclose, for any purpose
whatsoever (other than to its investors, financing sources and agents for the
purpose of consummating the transactions contemplated by this Agreement, each of
whom shall maintain the confidentiality of such Confidential Information), all
or any portion of the Confidential Information disclosed to it by FVP or the
Sellers. In the event of a breach of the covenants contained in this Section
6.2, FVP and the Sellers shall be entitled to seek injunctive relief as well as
any and all other remedies at law or equity. If the Closing does not occur, the
Confidential Information, except for that portion which consists of analysis,
compilations, studies or other documents prepared by or on behalf of Buyer, will
be returned to FVP or the Sellers, as appropriate, immediately upon FVP's or a
Seller's request therefor; and that portion of the Confidential Information
which consists of analysis, compilations, studies or other documents prepared by
or on behalf of Buyer will be held by Buyer and kept confidential and subject to
the terms of this Section 6.2, or will be destroyed.
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(b) No party will issue any press release or make any other
public announcements concerning this Agreement or the transaction contemplated
hereby except in consultation with the other parties, except for disclosures
required by law (including any legal obligations imposed on Buyer in connection
with its status as a publicly-held corporation and any legal obligations imposed
on any of the FrontierVision Companies in connection with their status as
reporting companies under the Exchange Act or in connection with the Holdings
Exchange Offer contemplated in Section 6.1(c)(3)). With respect to press
releases or any other public announcements required by law (including the legal
obligations referred to in the parenthetical clause of the immediately preceding
sentence), the party intending to make such release or disclosure shall provide
the other parties with an advance copy and a reasonable opportunity to review.
6.3 Cooperation; Commercially Reasonable Efforts.
The parties shall cooperate with each other and their respective
counsel and accountants in all commercially reasonable respects in connection
with any actions required to be taken as part of their respective obligations
under this Agreement, and otherwise use their commercially reasonable efforts to
consummate the transactions contemplated hereby and to fulfill their obligations
hereunder as expeditiously as practicable. Buyer shall provide to FVP and
Sellers such information relating to Buyer and its Subsidiaries and their
businesses and operations as FVP and Sellers shall reasonably request. FVP shall
provide to Buyer such information relating to the FrontierVision Companies and
their businesses and operations as Buyer shall reasonably request. Following the
execution of this Agreement FVP and Buyer will negotiate in good faith to agree
to a mutually satisfactory Programming Supply Agreement consistent in all
material respects with the discussions to date between the parties with respect
to the subject matter thereof. .
6.4 Consents.
Subject to the other provisions of this Section 6.4 and this Agreement,
the parties agree as follows:
(a) Following the execution hereof, FVP shall use commercially
reasonable efforts, and shall cause the FrontierVision Companies to use
commercially reasonable efforts, to obtain as expeditiously as possible all
Consents (other than the Credit Agreement Consent and the GECC Facility Consent,
which shall be governed solely by Section 6.7(a) or Section 6.7(c) as
appropriate), required to be obtained by the FrontierVision Companies, including
Consents under the Franchises, Licenses and Contracts of the FrontierVision
Companies, and the renewal of the Renewal Franchises. Buyer agrees to cooperate
with FVP and the FrontierVision Companies in all commercially reasonable
respects in obtaining the foregoing Consents and renewals. In furtherance of the
foregoing, FVP and Buyer agree to cooperate in preparing and completing an
application on FCC Form 394 (or other appropriate form) and appropriate letters
of transmittal for each Franchise Consent listed in Section 3.4 of
FrontierVision's Disclosure Schedule and use their best efforts to file
completed applications with
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the appropriate Franchising Authorities within thirty days after the execution
of this Agreement (and in any event within forty-five days after the execution
of this Agreement). Effective upon filing of each Franchise Consent application,
FVP and Buyer shall be deemed to have agreed that such application is "facially
complete." FVP and Buyer also agree to cooperate in preparing and completing an
appropriate application and letters of transmittal for each Consent listed in
Section 3.4 of FrontierVision's Disclosure Schedule relating to Licenses and
Contracts of the FrontierVision Companies and using their best efforts to file
completed applications with the FCC or other appropriate Person within thirty
days after the execution of this Agreement (and in any event within forty-five
days after the execution of this Agreement). FVP shall also use commercially
reasonable efforts to cause all such Consents relating to Franchises and
Contracts to include a provision that permits Buyer to transfer the Purchased
Interests to any Affiliate of Buyer that agrees in writing as a condition to
such transfer to be bound by any and all obligations of Buyer in connection
therewith; provided that FVP shall have no additional obligation with respect to
obtaining such a provision if the inclusion of such a provision would cause such
Consent to be unreasonably withheld, delayed or otherwise conditioned; and
provided further that if the Franchising Authority or other Person from whom
such Consent is requested objects to the inclusion of such a provision such
request will be immediately withdrawn.
(b) In the event that after the execution of this Agreement,
FVP and Buyer mutually agree that an application on FCC Form 394 is required to
be filed in order to request a Franchise Consent that is not listed in Section
3.4 of FrontierVision's Disclosure Schedule, FVP and Buyer agree to cooperate in
preparing and completing an application on FCC Form 394 (or other appropriate
form) and appropriate letters of transmittal and using their best efforts to
file a completed application with the appropriate Franchising Authority within
ten days after FVP and Buyer agree that Consent is required. Effective upon
filing of each Franchise Consent application, FVP and Buyer shall be deemed to
have agreed that such application is "facially complete."
In the event that after the execution of this Agreement, a Franchising
Authority that did not receive a Franchise Consent request on FCC Form 394 (or
other appropriate form) pursuant to Section 6.4(a) asserts that its Consent is
required in order to consummate the transactions contemplated by this Agreement,
FVP and Buyer will notify the other party and cooperate with each other in good
faith to determine whether they agree that Consent is required. If FVP and Buyer
cannot agree within five business days after both parties are notified of such
Franchising Authority's assertion, FVP and Buyer shall mutually retain a law
firm to make the final determination (which law firm shall be experienced in
cable franchising matters and shall not then serve as legal counsel to any of
the FrontierVision Companies or Buyer). The selected law firm shall endeavor to
resolve the dispute as promptly as practicable and such firm's resolution of the
dispute shall be final and binding on the parties. All of the costs and expenses
of the selected law firm and its services rendered pursuant to this paragraph
shall be borne by whichever of FVP or Buyer is the nonprevailing party.
If it is finally determined pursuant to this Section 6.4(b) (by
agreement of FVP and Buyer or by resolution of a law firm) that a Franchise
Consent is required from such Franchising Authority, and the
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Franchise in question relates to a Franchise Area that serves a number of
subscribers equal to or greater than the number of subscribers served by the
Franchise Area that serves the fewest number of subscribers of all of the
Franchise Areas related to the Material Consent Franchises (based on the number
of subscribers specified for each such Franchise Area in Section 3.11(A) of
FrontierVision's Disclosure Schedule) (such a Franchise, a "Designated Material
Consent Franchise"), then FVP and Buyer agree to cooperate in preparing and
completing an application on FCC Form 394 (or other appropriate form) and
appropriate letters of transmittal and using their best efforts to file a
completed application with the appropriate Franchising Authority within ten days
after the date it is determined a Franchise Consent is required. Effective upon
filing of each Franchise Consent application, FVP and Buyer shall be deemed to
have agreed that such application is "facially complete."
If it is finally determined pursuant to this Section 6.4(b) (by
agreement of FVP and Buyer or by resolution of a law firm) that a Franchise
Consent is required from such Franchising Authority but the Franchise in
question is not a Designated Material Consent Franchise (all such Franchises
that are not a Designated Material Consent Franchise, a "Designated Non-Material
Consent Franchise"), and the Franchise Areas relating to all such Designated
Non-Material Consent Franchises serve in the aggregate at least 35,000
subscribers (based on the number of subscribers specified for each such
Franchise Area in Section 3.11(A) of FrontierVision's Disclosure Schedule), then
(except to the extent that Buyer agrees that no Franchise Application will be
filed for a particular Designated Non-Material Consent Franchise), FVP and Buyer
agree to cooperate in preparing and completing an application on FCC Form 394
(or other appropriate form) and appropriate letters of transmittal for each
Designated Non-Material Consent Franchise identified to such date and using
their best efforts to file a completed application with the appropriate
Franchising Authority within ten days after the date it is determined such
filings are required pursuant to this paragraph. Effective upon filing of each
Franchise Consent application, FVP and Buyer shall be deemed to have agreed that
such application is "facially complete."
(c) FVP and Buyer shall promptly furnish to any Governmental
Authority or other Person from whom a Consent or Franchise renewal is requested
such accurate and complete information regarding the FrontierVision Companies
and Buyer, including financial information and other information relating to the
cable and other media operations of the FrontierVision Companies and Buyer, as a
Governmental Authority or other Person may reasonably require in connection with
obtaining any such Consent or renewal. Notwithstanding anything in this
Agreement to the contrary, but subject to the provisos below in this Section
6.4(c), Buyer acknowledges and agrees that FVP will control and manage the
process of obtaining such Consents and Franchise renewals and that neither Buyer
nor any of its employees, agents, representatives or any other Person acting on
behalf of Buyer will contact any Governmental Authority or other Person who is
party to a Franchise, License or Contract of the FrontierVision Companies,
including those from whom a Consent or Franchise renewal is sought, for the
purpose of seeking any amendment, modification or changes to any Franchise,
License or Contract, for the purpose of waiving or extending the time period in
which such Governmental Authority or other Person is required to act on the
request for Consent or renewal, or for any other purpose that would have the
result of unduly hindering or delaying the receipt of any such Consent,
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waiver or renewal; provided that it is understood and agreed that nothing herein
shall prevent Buyer (or its employees, agents, representatives and any other
Person acting on behalf of Buyer) from communicating (by letter, press release,
or otherwise) following consultation with FVP with any such Governmental
Authority (whether or not a Consent is being sought from it) in order to provide
information relating to Buyer and transition issues regarding Buyer and the
Systems following the Closing Date or from responding to requests initiated by
Governmental Authorities or other Persons from whom a Consent is sought so long
as such response does not relate to any of the foregoing prohibited matters and
Buyer shall use commercially reasonable efforts to apprise FVP of all such
requests.
(d) If in connection with the process of obtaining any
Consent, a Governmental Authority or other Person seeks to impose any condition
or any change to a Franchise, License or Contract to which such Consent relates
that would be applicable to Buyer or any FrontierVision Company as a requirement
for granting its Consent, FVP shall promptly notify Buyer of such fact and FVP
shall not agree to such condition or change except as agreed to by Buyer in
writing; provided that if such condition or change relates to a Consent with
respect to a Material Consent Franchise or a Designated Material Consent
Franchise that is then in the Renewal Window, Buyer hereby accepts (and agrees
that FVP may accept on behalf of Buyer and the FrontierVision Companies without
the need for any further agreement by Buyer in writing) any such conditions or
changes that are commercially reasonable taken as a whole (it being agreed by
Buyer for purposes of this Agreement, without limiting whether any other terms
are commercially reasonable, that so long as the proposed renewal term of such
Franchise is at least ten years, that a requirement to complete an
upgrade/rebuild of the System serving such Franchise Area up to 750 MHz by a
date that is no earlier than three years from the Closing Date and/or a
requirement to pay franchise fees up to the amount permitted by the Cable Act is
commercially reasonable). For purposes of this Agreement, the term "Renewal
Window" means that the Franchise in question is due to expire within three years
from the date of determination.
If in connection with the process of obtaining a renewal of any Renewal
Franchise, a Franchising Authority seeks to renew such Franchise on terms that
differ in any materially adverse respect from the terms of the existing
Franchise, FVP shall promptly notify Buyer of such fact and FVP shall not agree
to such condition or change except as agreed to by Buyer in writing; provided
that Buyer hereby accepts (and agrees that FVP may accept on behalf of Buyer and
the FrontierVision Companies without the need for any further agreement by Buyer
in writing) the following: (1) a renewal of the City of Auborn (ME), City of
Lewiston (ME), and Town of Lisbon (ME) Franchises on substantially the same
terms as the respective terms of renewal specified in such existing Franchises;
(2) a renewal of the Town of Tremont (ME), Town of Bar Harbor (ME), City of Old
Town (ME), and Town of Orrington (ME) Franchises on substantially the same terms
as the terms of the existing City of Bangor (ME) Franchise; (3) a renewal of the
Town of Southwest Harbor (ME) Franchise on substantially the same terms as the
terms contained in the draft franchise proposal previously delivered to Buyer;
(4) a renewal of the Village of Holgate (OH) Franchise on substantially the same
terms as the terms contained in the draft franchise proposal previously
delivered to Buyer; (5) a renewal of the City of
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Defiance (OH) Franchise on substantially the same terms as the terms contained
in the draft franchise proposal previously delivered to Buyer; (6) a renewal of
the Village of Albany (OH) and Town of Spring Hope (NC) Franchises on terms that
are commercially reasonable taken as a whole (it being agreed by Buyer for
purposes of this Agreement, without limiting whether any other terms are
commercially reasonable, that so long as the proposed renewal term of the
Renewal Franchise is at least ten years, that a requirement to complete an
upgrade/rebuild of the System serving such Franchise Area up to 750 MHz by a
date that is no earlier than three years from the Closing Date and/or a
requirement to pay franchise fees up to the amount permitted by the Cable Act is
commercially reasonable).
Buyer agrees that all fees, costs and expenses of such conditions or
changes shall be borne by Buyer directly or indirectly as the owner of the
FrontierVision Companies. Buyer also agrees that after the Closing it will cause
the FrontierVision Companies to comply with the provisions of all of the
Franchises and will not withhold its consent to any requirement that the
FrontierVision Companies comply with the rebuild/upgrade requirements contained
in the Franchises as set forth in Section 6.4 of FrontierVision's Disclosure
Schedule (as such requirements may be modified with Buyer's consent) that is
imposed by a Franchising Authority as a condition to its approval of a request
for Consent or request for a Franchise renewal.
(e) If prior to the Closing hereunder any Franchising
Authority purchases the assets of any System (or portion thereof) that serves
the Franchise Area covered by the Franchise granted by such Franchising
Authority pursuant to any right of first refusal in such Franchise that is
triggered by the consummation of the purchase and sale of the Purchased
Interests, an amount equal to the product of (1) the number of Closing
Equivalent Subscribers represented by the subscribers served in such Franchise
Area (determined as if the effective time of the consummation of the respective
sale of such to the Franchising Authority were the Adjustment Time hereunder)
multiplied by (2) $2,928 shall be included as an Adjustment Liability in the
computation of Closing Net Liabilities, and the target number of 700,000 Closing
Equivalent Subscribers referred to in Section 2.5(a) shall be reduced by such
number of Closing Equivalent Subscribers. FVP will not agree and will not permit
the FrontierVision Companies to agree to sell the assets of any System (or
portion thereof) pursuant to a right of first refusal in a Franchise as
described above if the closing thereof would occur after the Closing hereunder
and the purchase consideration would be less than the amount equal to the
product of (1) the number of Closing Equivalent Subscribers represented by the
subscribers served in such Franchise Area (determined as if the effective time
of the consummation of the respective sale of such to the Franchising Authority
were the Adjustment Time hereunder) multiplied by (2) $2,928.
(f) If, notwithstanding their commercially reasonable efforts,
FVP and the other FrontierVision Companies are unable to obtain any required
Consents or Franchise renewal, none of FVP or any of the Sellers shall be liable
to Buyer for any breach of covenant and after the Closing none of FVP or any of
the Sellers shall have any further obligation with respect to obtaining any such
Consents or renewals or any liability for the failure of such Consents or
renewals to be obtained. Except as provided in this Agreement or with respect to
the Credit Agreement Consent, nothing herein
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shall require the expenditure or payment of any funds (other than in respect of
normal and usual attorneys fees, filing fees or other normal costs of doing
business) or the giving of any other consideration by FVP, any Seller or any of
the FrontierVision Companies in order to obtain any Consent or renewal.
6.5 HSR Act Filing.
(a) As soon as practicable after the execution of this
Agreement, but in any event no later than forty-five days after such execution,
FVP, as the "acquired person," and Buyer, as the "acquiring person," will each
complete and file, or cause to be completed and filed, a premerger notification
and report under the HSR Act that is consistent with the rules and regulations
of the Federal Trade Commission (the "FTC") and that requests early termination
of the waiting period imposed by the HSR Act. FVP and Buyer shall use
commercially reasonable efforts to respond as promptly as reasonably practicable
to any inquiries received from 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. FVP and Buyer shall use 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. The fees relating to the filings required by the HSR Act
shall be shared equally by Buyer, on the one hand, and Sellers, on the other
hand.
(b) Each of the other parties to this Agreement and their
Affiliates will cooperate with FVP and Buyer in causing such filings to be made
as expeditiously as practicable, will promptly file, after any request by the
FTC or Antitrust Division and after appropriate negotiation with the FTC or the
Antitrust Division of the scope of such request, any information or documents so
requested, and will furnish FVP and Buyer with copies of any correspondence from
or to, and notify FVP and Buyer of any other communications with, the FTC and
Antitrust Division that relates to the transactions contemplated by this
Agreement.
(c) If the parties subsequently determine that any filing by
any of the Sellers or their Affiliates is required in connection with the
consummation of the transactions contemplated by this Agreement, including the
acquisition by any of the Sellers of ACC Class A Common Stock, such Seller and,
as necessary, Buyer, will each complete and file, or cause to be completed and
filed, a premerger notification and report under the HSR Act that is consistent
with FTC rules and regulations and that requests early termination of the
waiting period imposed by the HSR Act. Each of the parties making such filings
shall use commercially reasonable efforts to: (1) respond as promptly as
reasonably practicable to any inquiries received from the FTC and the Antitrust
Division for additional information or documentation; (2) respond as promptly as
reasonably practicable to all inquiries and requests received from any other
Governmental Authority in connection with antitrust matters; and (3) overcome
any objections which may be raised by the FTC, the Antitrust Division or any
other Governmental
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Authority having jurisdiction over antitrust matters. The filing fees related to
any filing required to be made under this subsection (c) shall be shared equally
between the "acquiring person" and the "acquired person" for each such filing,
except that if any filing is required solely as a result of the purchase and
sale of the SPC Stock contemplated hereby (as opposed to direct partnership
interests in FVP), any filing fees related to such filings shall be paid solely
by the SPC Seller(s) who own(s) the SPC Stock in question.
6.6 Buyer's Qualifications and Financing.
(a) Buyer will not take any action that does, or could
reasonably be expected to, disqualify Buyer to be the transferee of control of
the FrontierVision Companies as the holder of the Franchises and the owner and
operator of the Assets and Systems. Should Buyer become aware of any fact or
circumstance that would disqualify Buyer as the transferee of control of the
FrontierVision Companies, Buyer will promptly notify FVP and Sellers in writing
thereof and will remove any such disqualifying fact or circumstance.
(b) Buyer will not take any action that is inconsistent with
its obligations under this Agreement or which does, or would reasonably be
expected to, materially hinder or delay the consummation of the transaction
contemplated by this Agreement. Without limiting the generality of the
foregoing, at all times between the date hereof and the Closing Date, Buyer will
take all necessary or advisable actions to ensure, and Buyer will ensure, that
Buyer is able to deliver the Cash Consideration and the Stock Consideration at
Closing. From the date hereof until Closing, Buyer will promptly notify FVP and
Sellers of any event that occurs or circumstance that arises that could prevent
Buyer from being able to deliver the Cash Consideration or Stock Consideration
at Closing.
6.7 Discharge of Debt Documents.
(a) Promptly following the execution of this Agreement, FVP
will approach the agent banks under the Credit Agreement to seek requisite
lender consent (the "Credit Agreement Consent") to permit the outstanding loans
and commitments under the Credit Agreement to remain outstanding after the
Closing, and FVP will use its best efforts to obtain such Consent. FVP will keep
Buyer reasonably informed as to FVP's inquiries and the agent banks' responses
with respect thereto. Buyer acknowledges and agrees that FVP has no obligation
(other than to use best efforts as provided above) to obtain the Credit
Agreement Consent and that obtaining the Credit Agreement Consent is not a
condition precedent to Buyer's obligations hereunder and that this Section
6.7(a) in no way limits Buyer's obligation under Section 6.7(b) if the
indebtedness under the Credit Agreement becomes due and payable at the Closing.
FVP shall afford Buyer the opportunity to discuss and negotiate the Credit
Agreement Consent with the agent banks and other lenders under the Credit
Agreement. It is understood and agreed that both FVP and Buyer shall have a
reasonable opportunity to review and the right to approve the Credit Agreement
Consent documentation and terms thereof prior to execution thereof.
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(b) If the Credit Agreement Consent is not obtained, Buyer
shall cause all obligations of the FrontierVision Companies under the Credit
Agreement (including all principal, accrued and unpaid interest and all other
amounts) that becomes due and payable concurrently with the consummation of the
Closing to be discharged in full at the Closing.
(c) Promptly following the execution of this Agreement, FVP
will approach General Electric Capital Corporation ("GECC") to seek consent (the
"GECC Facility Consent") to permit the Equipment Leasing Facility to remain
outstanding after the Closing, and FVP will use its commercially reasonable
efforts (which shall in no event require the expenditure or payment of funds or
the giving of any other consideration by FVP, any Seller or any of the
FrontierVision Companies in order to obtain the GECC Facility Consent) to obtain
such Consent. FVP will keep Buyer reasonably informed as to FVP's inquiries and
GECC's responses with respect thereto. Buyer acknowledges and agrees that FVP
has no obligation (other than to use commercially reasonable efforts as provided
above) to obtain the GECC Facility Consent and that obtaining the GECC Facility
Consent is not a condition precedent to Buyer's obligations hereunder. If GECC
withholds its consent, FVP will cause all indebtedness outstanding under such
Equipment Leasing Facility to be repaid at or before the Closing.
(d) Buyer acknowledges and agrees that the Issuers under the
Indentures will be required to make an Offer of Redemption under each of the
Indentures within thirty days of the Closing Date, in the case of the 1996
Indenture, and within thirty-five days of the Closing Date, in the case of the
1997 Indenture and the 1998 Indenture. Buyer will cause the Issuers to discharge
all of their obligations under the Indentures in accordance with their terms.
(e) FVP will cause the FrontierVision Companies to terminate
all of its interest rate protection and similar agreements and discharge all of
their obligations thereunder at or prior to the Closing unless Buyer has
delivered reasonable prior notice to FVP specifying that Buyer desires the
FrontierVision Companies to maintain the effectiveness of one or more of such
agreements as specified in Buyer's notice. If the FrontierVision Companies
maintain the effectiveness of one or more of such agreements at Buyer's request,
the amount of the net asset shall be included as an Adjustment Asset in the
computation of Closing Net Liabilities, if applicable, or the amount of the net
liability shall be included as an Adjustment Liability in the computation of
Closing Net Liabilities, if applicable.
6.8 Retention and Access to the FrontierVision Companies' Records.
Except as provided in Section 6.10(c)(1), the General Partner and
Sellers shall, for a period of five years from the Closing Date, have access to,
and the right to copy, at their expense, during usual business hours upon
reasonable prior notice to Buyer, all of the books and records relating to the
FrontierVision Companies, Assets and Systems that were transferred to Buyer
pursuant to this Agreement. Buyer shall retain and preserve all such books and
records for such five year period. Subsequent to such five year period, Buyer
shall only destroy such books and records if there is no
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ongoing litigation, governmental audit or other proceeding, and subsequent to
thirty days' notice to the General Partner and Sellers of their right to remove
and retain such books and records, or to copy such books and records prior to
their destruction.
6.9 Employee Matters.
(a) Except as otherwise provided in this Section 6.9, nothing
herein shall require Buyer or the FrontierVision Companies to continue the
employment of any employees of the FrontierVision Companies for any period of
time following the Closing. Within thirty days after representatives of Buyer
meet with the FrontierVision Companies' corporate-level employees to discuss
employment opportunities with Buyer following the Closing, FVP shall provide to
Buyer a list of all employees of the FrontierVision Companies and shall
designate those corporate-level employees that are not available for continued
employment with the FrontierVision Companies following the Closing. Within a
reasonable period of time following the receipt of such list and no less than
sixty days prior to the Closing Date, Buyer shall provide FVP with written
notice of which of the available employees of the FrontierVision Companies Buyer
intends to retain following the Closing (the "Assumed Employees"). FVP shall
cause the FrontierVision Companies to terminate the employment of all employees
that are not Assumed Employees on or prior to the Closing. Notwithstanding the
foregoing, Buyer agrees to provide FVP with written notice of which of the
available employees of the FrontierVision Companies Buyer intends to retain
following the Closing at least 100 days prior to the Closing in the event that
Buyer intends to terminate or to cause any FrontierVision Company to terminate
50 or more employees (when considered together with those employees to be
terminated as designated by any FrontierVision Company) during the 90-day period
prior to and including the Closing to permit FVP to make any required notices
under the Worker Adjustment and Retraining Notification Act, as amended ("WARN
Act"). In the event that Buyer fails to provide such notice to FVP, Buyer agrees
that it will retain a sufficient number of employees employed by the
FrontierVision Companies as of the Closing to ensure that 50 or more employees
do not experience "employment loss" as that term is defined in the WARN Act
during the 90-day period prior to and including the Closing. Buyer shall
continue to employ such employees for a period of at least 90 days after the
Closing, except for such employees who voluntarily terminate employment, retire
or are discharged for cause. Buyer shall be solely responsible for and shall
indemnify and hold Sellers harmless from any liability arising under the WARN
Act after the Closing arising out of Buyer's failure to provide adequate
advanced written notice to FVP or arising out of Buyer's failure to continue the
employment of any FrontierVision Company employee as required in this Section
6.9(a). Buyer shall have no obligation to provide severance benefits to any
employee of the FrontierVision Companies who terminate employment on or prior to
Closing.
(b) As of and immediately after the Closing each Assumed
Employee shall be employed in the same position and on the same terms and
conditions prevailing as of the Closing, and each Assumed Employee who continues
his employment after the Closing shall receive credit for past service with any
of the FrontierVision Companies for all purposes of eligibility and vesting
under
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Buyer's Employee Plans and for all other purposes under Buyer's vacation, sick
leave or other benefit programs or arrangements. Buyer shall not otherwise be
required to maintain any particular level of benefits for any of the Assumed
Employees except that Buyer will not discuss any potential changes in employment
terms or benefits with the Assumed Employees prior to the Closing.
Notwithstanding the foregoing, upon Buyer's request, FVP will coordinate with
Buyer to permit Buyer to meet with any of the corporate-level Assumed Employees
to discuss employment opportunities following the Closing, including position,
salary and other employment benefits (and the requirement that such employee
must continue employment in the same position and on the same terms and
conditions shall not apply to any corporate-level Assumed Employees).
(c) Buyer shall assume full responsibility and liability for
offering and providing "continuation coverage" to any "qualified beneficiary"
who is covered by a "group health plan" sponsored or contributed to by any
FrontierVision Company or any of their ERISA Affiliates and who has experienced
a "qualifying event" or is receiving "continuation coverage" on or prior to the
Closing. "Continuation coverage," "Qualified beneficiary," "Qualifying event"
and "group health plan" all shall have the meanings given such terms under
Section 4980B of the Code and Section 601 et seq. of ERISA. Buyer shall hold the
FrontierVision Companies and any entity required to be combined with the
FrontierVision Companies (within the meaning of Sections 414(b), (c), (m) or (o)
of the Code) harmless from and fully indemnify them against any costs, expenses,
losses, damages and liabilities incurred or suffered by them directly or
indirectly, including, but not limited to, reasonable attorneys' fees and
expenses, which relate to continuation coverage and arise as a result of any
action or omission by any FrontierVision Company or any of their ERISA
Affiliates or because Buyer is deemed to be a successor employer to any
FrontierVision Company or any of their ERISA Affiliates.
(d) If the employment of any Assumed Employee who continues
his employment with the FrontierVision Companies after the Closing is terminated
within the one-year period immediately following the Closing, such employee
shall be entitled to receive severance benefits in accordance with the
provisions of the FrontierVision Severance Pay Plan disclosed in Section 3.13 of
FrontierVision's Disclosure Schedule. Notwithstanding the foregoing or anything
in the FrontierVision Severance Pay Plan to the contrary, Buyer shall have no
obligation to provide any severance benefits to any such employee discharged for
cause.
(e) At or prior to the Closing, FVP and the other
FrontierVision Companies shall enter into appropriate release agreements with
James C. Vaughn and John S. Koo, pursuant to which each party irrevocably
waives, releases and forever discharges the other party (including the agents,
servants, employees, directors, officers, affiliates, divisions, partners and
representatives of FVP and the other FrontierVision Companies) of and from any
and all actions, causes of actions, charges, complaints, claims, liabilities,
and expenses (including, without limitation, attorneys' fees and costs) of any
nature whatsoever, known or unknown, in law and equity, arising from the
employment agreements by and between FVP and each of James C. Vaughn and John S.
Koo.
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(f) At the Closing, Buyer shall cause all amounts due under
the FrontierVision Partners, L.P. Executive Deferred Compensation Plan to be
paid as directed by FVP. An amount equal to the aggregate amount of such
payments shall be included as an Adjustment Liability in the computation of
Closing Net Liabilities. The participants under the Plan shall deliver
appropriate releases to Buyer with respect to its rights under the Plan
contingent upon receipt of the Closing payment due to such participant.
6.10 Tax Matters.
The following provisions shall govern the allocation of responsibility
between Buyer and Sellers for certain tax matters following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. The
General Partner shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the FrontierVision Companies for all periods ending on
or prior to the Closing Date which are required to be filed after the Closing
Date. Such Tax Returns shall be prepared in accordance with each FrontierVision
Company's past custom and practice (subject to applicable Legal Requirements and
determined on the basis of the appropriate permanent records of such
FrontierVision Company), and allocations of items of income and gain and loss
and deduction shall be made using the closing of the books method. In the case
of any FrontierVision Company that is a partnership or limited liability
company, such Tax Returns shall be prepared in accordance with the Charter
Documents of such FrontierVision Company as in effect on the Closing Date. In
preparing each FrontierVision Company's Tax Returns, the General Partner shall
consult with Buyer in good faith and shall provide Buyer with drafts of such Tax
Returns (together with the relevant back-up information) for review at least
twenty days prior to filing. After the Closing, Buyer shall not prepare or cause
to be prepared or file or cause to be filed any Tax Return for the
FrontierVision Companies for any period ending on or prior to the Closing Date,
except as any Seller adversely affected thereby may agree in writing.
(b) Tax Periods Beginning Before and Ending After the Closing
Date. Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of the FrontierVision Companies for Tax periods which begin
before the Closing Date and end after the Closing Date. Such Tax Returns shall
be prepared in accordance with each FrontierVision Company's past custom and
practice (subject to applicable Legal Requirements and determined on the basis
of the appropriate permanent records of such FrontierVision Company). In
preparing such Tax Returns, Buyer shall consult with the General Partner in good
faith and shall provide the General Partner with drafts of such Tax Returns
(together with the relevant back-up information) for review at least twenty days
prior to filing.
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(c) Cooperation on Tax Matters.
(1) Buyer and the General Partner shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section 6.10 and
any audit, litigation, or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation, or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Buyer and the General Partner agree (A) to
retain all books and records with respect to Tax matters pertinent to the
FrontierVision Companies relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to the
extent notified by Buyer or the General Partner, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Buyer or the General
Partner, as the case may be, shall allow the other party to take possession of
such books and records to the extent they would otherwise be destroyed or
discarded.
(2) Buyer and the General Partner further agree,
upon request, to use commercially reasonable efforts to obtain any certificate
or other document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including Taxes with respect to the transactions contemplated hereby).
(d) Tax Sharing Agreements. All tax sharing agreements or
similar agreements with respect to or involving the FrontierVision Companies
shall be terminated as of the Closing Date and, after the Closing Date, the
FrontierVision Companies shall not be bound thereby or have any liability
thereunder.
(e) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be borne one-half by
Buyer and one-half by Sellers. Buyer and the General Partner will cooperate in
all reasonable respects to prepare and file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees.
6.11 FrontierVision Name.
Buyer agrees that the General Partner shall retain the right to the
name "FrontierVision" after the Closing and agrees to change the name of each of
the FrontierVision Companies within one year after the Closing to a name that
does not include any variant of "FrontierVision" and agrees not to
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otherwise use the "FrontierVision" name or any variant thereof thereafter,
subject to Buyer's indemnification obligations under Section 10.4(c).
6.12 Releases.
After the Closing neither Buyer nor its Affiliates will have any claim
against (except as expressly provided in Article 10), or be entitled to enforce
any provision of the existing partnership agreement of FVP (or either of the
Limited Partnership Interests and Note Purchase Agreements pursuant to which the
Sellers made their investments in FVP) against, any Seller or any Affiliate of
any Seller or any officer or director of any Seller or any Affiliate of any
Seller, and any and all such claims (except claims made pursuant to Article 10)
are hereby waived and released. At the Closing, subject to Section 6.13, each
Seller shall execute and deliver to Buyer a Seller Release. At the Closing,
subject to Section 6.13, each Person designated on Exhibit H shall execute and
deliver to Buyer a Management Release.
6.13 Directors and Officers Insurance.
Prior to the Closing FVP will purchase on behalf of the FrontierVision
Companies a General Partners Liability/Limited Partnership Reimbursement
insurance policy in scope and coverage substantially similar to the policy
quotation received by Buyer from American Dynasty Surplus Line Insurance Company
on February 16, 1999, covering the officers and directors of the FrontierVision
Companies and the members of FVP's Advisory Committee. The amount of any
premiums paid by the FrontierVision Companies prior to the Adjustment Time in
respect of such policy shall be included as an Adjustment Asset in the
computation of Closing Net Liabilities. Buyer agrees to cause the FrontierVision
Companies to keep such policy in effect for at least the three year period
following the Closing Date.
6.14 Rate Regulatory Matters.
The parties acknowledge and agree that notwithstanding anything in this
Agreement or any other Transaction Document to the contrary (including any
representation or warranty made by FVP in Sections 3.11(e), 3.15 or 3.16), any
matter relating to, in connection with or resulting or arising from any Rate
Regulatory Matter, or any actions taken prior to or after the date hereof by any
FrontierVision Company to comply with or in a good faith attempt to comply with
any Rate Regulatory Matter (including any rate reduction, refund, penalty or
similar action having the effect of reducing the rates previously or
subsequently paid by subscribers, whether instituted or implemented by or
imposed on any FrontierVision Company and changes to rate practices instituted
or implemented by or imposed on any FrontierVision Company), shall not: (a)
cause or constitute, directly or indirectly, a breach by any FrontierVision
Company or any Seller of any of its representations, warranties, covenants or
agreements contained in this Agreement or any other Transaction Document (and
such representations, warranties, covenants, and agreements shall hereby be
deemed to be modified appropriately to reflect and permit
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the impact and existence of such Rate Regulatory Matters and to permit any
action by any FrontierVision Company to comply with or attempt in good faith to
comply with such Rate Regulatory Matters; (b) otherwise cause or constitute,
directly or indirectly, a default or breach by any FrontierVision Company or any
Seller under this Agreement or any other Transaction Document; (c) result in the
failure of any condition precedent to the obligations of Buyer under this
Agreement or any other Transaction Document; (d) otherwise excuse Buyer's
performance of its obligations under this Agreement or any other Transaction
Document; or (e) except as expressly provided in Section 10.2(c), give rise to
any claim for indemnification or other compensation by Buyer or any adjustment
to the Stock Consideration or Cash Consideration.
6.15 Distribution by SPCs of Interest in General Partner; Cancellation
of SPC Notes.
(a) Immediately prior to the Closing, each of Brown Brothers
Harriman & Co. and Olympus Growth Fund II, L.P., both of which are SPC Sellers,
will cause the respective SPC owned by it to distribute, directly or indirectly,
to such SPC Seller the limited partnership interest in the General Partner held
by such SPC (together with all of its rights and obligations under the
partnership agreement of the General Partner). Such partnership interests in the
General Partner are not included in the Purchased Interests and shall not be
sold and transferred to Buyer hereunder.
(b) Each SPC Seller that holds any SPC Note shall cause all
such SPC Notes to be canceled concurrently with the Closing. Buyer shall not
assume any liability with respect to any SPC Notes, and no SPC shall have any
continuing liability after the Closing with respect to any SPC Notes.
6.16 Cooperation on Buyer SEC Matters.
(a) FVP shall cooperate with Buyer and its counsel and
accountants in connection with any filing required to be made by Buyer with the
SEC. FVP shall provide to Buyer such information relating to the FrontierVision
Companies and their respective business and operations as Buyer may reasonably
request. All costs, expenses and fees incurred in connection with the inclusion
by Buyer of such information in any such filing shall be borne by Buyer, and
Buyer shall indemnify and hold harmless FVP and the Sellers from any Losses
resulting from the inclusion by Buyer of any such information in any such
filing, except Buyer shall not have any indemnification liability to the
FrontierVision Companies to the extent any Losses arise out of any information
included by Buyer in reliance upon and in conformity with written information
furnished by the FrontierVision Companies expressly for use in connection with
such filings.
(b) FVP hereby consents to the inclusion by Buyer of financial
statements of the FrontierVision Companies, if requested to be so included by
Buyer, in any report required to be filed by Buyer with the SEC, the National
Association of Securities Dealers' Automated Quotations ("NASDAQ") System or any
stock exchange pursuant to applicable Legal Requirements, including the
Securities Act and the Exchange Act. All costs, expenses and fees incurred in
connection with the
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inclusion by Buyer of financial statements of the FrontierVision Companies in
any such report shall be borne by Buyer, and Buyer shall indemnify and hold
harmless FVP and the Sellers from any Losses resulting from the inclusion by
Buyer of financial statements of the FrontierVision Companies in any such
report. FVP agrees to obtain the consent of the independent public accountants
of the FrontierVision Companies to the inclusion of such financial statements in
any report so required to be filed by Buyer with the SEC, NASDAQ System or any
stock exchange.
6.17 Stock Consideration Registration Rights Agreement.
(a) Simultaneously with the execution of this Agreement, and
as a material inducement to Sellers to enter into this Agreement, Buyer shall
execute and deliver the Stock Consideration Registration Rights Agreement,
pursuant to which Buyer will grant Sellers certain rights as provided therein in
respect of the shares of ACC Class A Common Stock and other securities
constituting the Stock Consideration (such shares and other securities, the
"Stock Consideration Registrable Securities"). Buyer shall perform all of its
obligations under the Stock Consideration Registration Rights Agreement in
accordance with their terms.
(b) Prior to the Closing FVP will make a written request to
the "Minor Holders" under the Stock Consideration Registration Rights Agreement
with respect to compliance with certain "Sales Notice" procedures, and establish
a "preferred broker" to facilitate such Sales Notices, all as more fully
described in Paragraph 2(b) of the Stock Consideration Registration Rights
Agreement. No "Minor Holder" will be liable to Buyer or any other party for any
damages sustained by Buyer or any other party as a result of the failure of such
Minor Holder to make a Sales Notice as requested by FVP.
6.18 State Cable Systems.
The FrontierVision Companies acquired certain of the Systems from State
Cable TV Corporation and Better Cable TV Company on October 23, 1998 pursuant to
a purchase and sale agreement referred to in Section 3.11 of FrontierVision's
Disclosure Schedule (the "State Cable Acquisition Agreement"). The
FrontierVision Companies have filed, or intend to file after the execution of
this Agreement, an indemnification claim against the sellers thereunder based on
their breach of certain representations and warranties relating to the bandwidth
capacity of such Systems. In consideration of the inclusion as an Adjustment
Liability of item (G) in Section 2.5(b)(2), FVP and Buyer hereby agree as
follows: (1) Sellers shall be entitled to the first $5,500,000 which is
collected by or on behalf of the FrontierVision Companies, either before or
after the Closing hereunder, in respect of such claim (to the extent it relates
to the plant miles in respect of which item (G) in Section 2.5(b)(2) relates)
and Buyer shall be entitled to any amounts collected in excess of $5,500,000;
and (2) if such claim is not finally resolved prior to the Closing hereunder,
Buyer shall offer to engage the General Partner to proceed with the claim on
behalf of and as the agent of the FrontierVision Companies, will cooperate and
cause the FrontierVision Companies to cooperate with the General Partner in all
reasonable respects in connection therewith, and if any such amounts are
collected by or on behalf of
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the FrontierVision Companies after the Closing hereunder, Buyer shall cause the
first $5,500,000 in the aggregate of such monies (less any such amounts
collected by the FrontierVision Companies prior to the Closing) to be remitted
promptly to the General Partner for the benefit of Sellers; provided, however,
that (A) the General Partner shall not be required to accept such engagement or
proceed with such claim and Buyer may terminate the engagement of the General
Partner at any time provided that Buyer shall still cause the first $5,500,000
in the aggregate of such monies (less any such amounts collected by the
FrontierVision Companies prior to the Closing) to be remitted promptly to the
General Partner for the benefit of Sellers except that out of any monies to be
remitted to the General Partner pursuant to this clause (B) there shall be
deducted Buyer's reasonable out-of-pocket costs and expenses actually incurred,
if any, in connection with prosecuting such claim after the Closing and provided
further that if the amount of the monies collected after the Closing exceeds
$5,500,000, Sellers shall only bear a pro rata portion of Buyer's out-of-pocket
costs and expenses based on a fraction, the numerator of which is equal to
$5,500,000 and the denominator of which is equal to the total amount of the
monies collected; and (B) the General Partner shall not waive or settle such
claim without the prior written consent of Buyer (which consent shall not be
unreasonably withheld) if the settlement relates to any indemnification claim
other than the claim described above in subsection (1) or otherwise impairs the
rights of the FrontierVision Companies with respect to any other indemnification
claims under the State Cable Acquisition Agreement.
6.19 Lien Searches.
FVP shall deliver to Buyer, at least two weeks prior to the Closing
Date, an accurate list of the current address of each Seller's respective
principal place of business, or if such Seller has no principal place of
business, such Seller's respective residence, and upon delivery of such list FVP
shall be deemed to have represented and warranted to Buyer that each such
address is the true and correct address that it purports to be with respect to
each Seller as of such date.
6.20 Distant Signals; Copyright Matters.
Unless otherwise restricted or prohibited by any Governmental
Authority, Legal Requirement or Contract, if requested by Buyer, FVP will cause
the FrontierVision Companies to delete prior to the Closing any distant
broadcast signal the continued carriage of which will in Buyer's reasonable
judgment result in a substantial increase to Buyer's copyright liability;
provided, however, that Buyer shall give FVP reasonable advance notice to permit
the FrontierVision Companies to comply with its notice obligations in connection
with a signal deletion and FVP shall have no obligation to cause the deletion of
such signal unless Buyer agrees to reimburse the Sellers for any out-of-pocket
costs and expenses that may be incurred by the FrontierVision Companies in
connection with deleting any such signals (other than nominal costs and
expenses).
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ARTICLE 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
7.1 Conditions to Obligations of Buyer.
All obligations of Buyer at the Closing hereunder are subject to the
fulfillment prior to or at the Closing of each of the following conditions:
(a) Representations and Warranties of FVP. As to the
representations and warranties of FVP set forth in Article 3, (1) those
representations and warranties set forth in Article 3 which are expressly stated
to be made solely as of the date of this Agreement or another specified date
shall be true and correct in all respects as of such date, and (2) all other
representations and warranties of FVP set forth in Article 3 shall be true and
correct in all respects at and as of the time of the Closing as though made at
and as of that time, except in each case of clauses (1) and (2) to the extent
that the aggregate effect of the inaccuracies in such representations and
warranties as of the applicable times does not constitute a material adverse
change in the business, financial condition, assets or liabilities of the
FrontierVision Companies, taken as a whole, when compared with the state of
facts that would exist if all such representations and warranties were true in
all respects as of the applicable times, not giving effect to any inaccuracies
resulting from any actions taken in accordance with the provisions of this
Agreement, any event that arose in the ordinary course of business, any changes
in economic conditions that are applicable to the cable industry generally on a
national, state, regional or local basis, any changes in conditions (including
Rate Regulatory Matters, and other federal, state or local governmental actions,
legislation or regulations) that are applicable to the cable industry generally
on a national, state, regional or local basis, or any changes in competitive
activities.
(b) Representations and Warranties of Sellers. As to the
representations and warranties of Sellers set forth in Article 4, (1) those
representations and warranties set forth in Article 4 which are expressly stated
to be made solely as of the date of this Agreement or another specified date
shall be true and correct in all respects as of such date, and (2) all other
representations and warranties of Sellers set forth in Article 4 shall be true
and correct in all respects at and as of the time of the Closing as though made
at and as of that time, except in each case of clauses (1) and (2) to the extent
that the aggregate effect of the inaccuracies in such representations and
warranties as of the applicable times does not materially impair Sellers'
ability to perform their obligations under this Agreement and the other
Transaction Documents to which they are party.
(c) Covenants. FVP and the Sellers shall have performed and
complied with all covenants and agreements required by this Agreement (other
than by Sections 6.4 and 6.7, which are governed by the immediately following
sentence) to be performed or complied with by them prior to or at the Closing,
except to the extent that the aggregate effect of the failure to so perform or
comply
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has not had a material adverse effect on the business, financial condition,
assets or liabilities of the FrontierVision Companies, taken as a whole. FVP
shall have performed and complied with in all material respects all covenants
and agreements required by Sections 6.4, 6.7 and 6.16 to be performed or
complied with by it prior to or at the Closing.
(d) Franchise Consents and Franchise Renewals.
(1) A Consent of the Franchising Authority shall
have been obtained for each Franchise designated in Section 3.4 of
FrontierVision's Disclosure Schedule as a "Material Consent Franchise" and for
each Designated Material Consent Franchise, if any. Notwithstanding the
preceding sentence, and for purposes of satisfaction of the condition in this
subsection (1):
(A) Consent with respect to any Material
Consent Franchise or any Designated Material Consent Franchise shall be deemed
obtained on the date the 120-Day Period expires if such Franchising Authority
fails to approve or deny the request for Consent by such date and the failure to
approve the request for Consent was not principally caused by any of the
following: a non-frivolous dispute by the Franchising Authority as to the
FrontierVision Companies' (or any predecessor's) noncompliance with the
Franchise (provided that FVP has provided Buyer with evidence reasonably
satisfactory to Buyer supporting FVP's contention that such dispute is
frivolous); a non-frivolous dispute by the Franchising Authority as to Buyer's
qualifications to be the transferee of control of the FrontierVision Companies
as the holder of the Franchise in question (provided that FVP has provided Buyer
with evidence reasonably satisfactory to Buyer supporting FVP's contention that
such dispute is frivolous); or the withholding of consent by FVP or Buyer to any
requirements that would be imposed by the Franchising Authority as a condition
to granting such Consent (although nothing herein shall be deemed to limit the
provisions of Section 6.4(d) relating to changes and conditions that Buyer is
required to accept and that FVP may accept on behalf of Buyer and the
FrontierVision Companies). The term "120-Day Period" means, with respect to any
Franchise, the 120 day period commencing on the date on which the Consent
application on FCC Form 394 (or other appropriate form) required to be filed
with respect to such Franchise was filed with the appropriate Franchising
Authority, plus the number of days, if any, that FVP has agreed with a
Franchising Authority to extend the 120-day period provided by Section 617 of
the Cable Act.
(B) Consent with respect to any Material
Consent Franchise or Designated Material Consent Franchise that is not in the
Renewal Window shall be deemed obtained on the sixtieth day (subject to the
proviso below) after the date the 120-Day Period expires, or if the Franchising
Authority has affirmatively denied the request for Franchise Consent, the
sixtieth day after the date of such denial, if such Franchising Authority fails
to approve or fails to reverse its denial of the request for Consent by such
date and the failure to approve or reverse its denial of the request for Consent
was not principally caused by a non-frivolous dispute by the Franchising
Authority as to the FrontierVision Companies' (or a predecessor's) noncompliance
with the Franchise (provided that FVP has provided Buyer with evidence
reasonably satisfactory to Buyer supporting FVP's contention that
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such dispute is frivolous); provided, however, that the sixty day extension
period referred to above shall be reduced by each day that the Franchise Consent
application was filed after the forty-fifth day after the execution of this
Agreement (with respect to applications filed pursuant to Section 6.4(a)) or
filed after the tenth day after the date it was determined that such application
was required to be filed (with respect to applications filed pursuant to Section
6.4(b)) if such delay in filing was principally caused by Buyer.
(2) The Renewal Franchises shall have been renewed in
accordance with the
provisions of Section 6.4. The condition in this subsection (2) shall be deemed
satisfied as to any Renewal Franchise (other than the City of Lewiston (ME),
City of Auborn (ME), and City of Defiance (OH) Franchises) if such Franchise is
extended on its existing terms to a date that permits either the FrontierVision
Companies (prior to the Closing) or Buyer (after the Closing) to file a request
for renewal under Section 626(a) of the Cable Act prior to the expiration of the
statutory time period for making such filing (determined on the basis of the new
expiration date).
(3) A Consent of the Franchising Authority under
the Town of Manchester (ME), the Town of Winthrop (ME), the Town of Peru (ME),
the Town of Fairfield (ME), the Town of Milo (ME), and the City of Brewer (ME)
Franchises shall have been obtained (with an acknowledgment by such Franchising
Authority that the FrontierVision Companies are not in default under the
Franchise) or the date by which the FrontierVision Companies are required to
complete any upgrade/rebuild requirements set forth in such Franchises shall
have been extended at least three years such that the FrontierVision Companies
are not in default under the Franchise.
(e) FCC Consents. Consent of the FCC shall have been obtained
with respect to each CARS License listed in Section 3.8 of FrontierVision's
Disclosure Schedule.
(f) Lease Consents. Consent of the lessor under the office
leases designated as "Material Consent Leases" in Section 3.4 of
FrontierVision's Disclosure Schedule shall have been obtained.
(g) Hart-Scott-Rodino. The requisite waiting period, if any,
under the HSR Act shall have expired or been terminated.
(h) Judgment. There shall not be in effect on the date on
which the Closing is to occur any judgment, decree, or order of a court of
competent jurisdiction or other prohibition having the force of law that would
prevent or make unlawful the Closing, provided that Buyer shall have used
commercially reasonable efforts to prevent the entry of any such judgment,
decree, order or other legal prohibition and to appeal as expeditiously as
possible any such judgment, decree, order or other legal prohibition that may be
entered and shall have otherwise taken commercially reasonable actions to cause
any such judgment, decree, order or other legal prohibition to cease to be in
effect as expeditiously as possible.
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(i) No Material Adverse Change. No event shall have occurred
between December 31, 1998 and the date on which the Closing is to occur that has
had a material adverse effect on the business, financial condition, assets or
liabilities of the FrontierVision Companies, taken as a whole, other than events
or changes disclosed in this Agreement or FrontierVision's Disclosure Schedule,
or an event that arose in the ordinary course of business, any changes in
economic conditions that are applicable to the cable industry generally on a
national, state, regional or local basis, any changes in conditions (including
Rate Regulatory Matters, and other federal, state or local governmental actions,
legislation or regulations) that are applicable to the cable industry generally
on a national, state, regional or local basis, or any changes in competitive
activities.
(j) Lien Searches. FVP shall have delivered to Buyer, at least
two weeks prior to the Closing Date, UCC financing statement, tax lien and
judgment searches dated not more than thirty days prior to the Closing Date
(including copies of documents listed on each search, if any) with respect to
each of the Sellers performed by a search firm reasonably satisfactory to Buyer
in the jurisdiction of each Seller's respective principal place of business, or
if such Seller has no place of business, in the jurisdiction of his or her
respective residence as set forth in the list delivered by FVP pursuant to
Section 6.19 (except that this condition shall not be deemed unsatisfied by the
failure to deliver a search at least two weeks prior to the Closing Date if such
search does not evidence any Encumbrance on the Purchased Interests or the
Assets that is not a Permitted Encumbrance or if any such Encumbrance that is
not a Permitted Encumbrance is removed at or prior to the Closing).
(k) Deliveries. Sellers shall have made or stand willing to
make all the deliveries to Buyer described in Section 8.2.
7.2 Conditions to Obligations of Sellers.
All obligations of each Seller at the Closing hereunder are subject to
the fulfillment prior to or at the Closing of each of the following conditions:
(a) Representations and Warranties. As to the representations
and warranties of Buyer set forth in Article 5, (1) those representations and
warranties set forth in Article 5 which are expressly stated to be made solely
as of the date of this Agreement or another specified date shall be true and
correct in all respects as of such date, and (2) all other representations and
warranties of Buyer set forth in Article 5 shall be true and correct in all
respects at and as of the time of the Closing as though made at and as of that
time, except in each case of clauses (1) and (2) to the extent that the
aggregate effect of the inaccuracies in such representations and warranties as
of the applicable times does not constitute a material adverse change in the
business, financial condition, assets or liabilities of Buyer and its
Subsidiaries, taken as a whole, when compared with the state of facts that would
exist if all such representations and warranties were true in all respects as of
the applicable times, not giving effect to any inaccuracies resulting from any
actions taken in accordance with the provisions of this
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Agreement, any event that arose in the ordinary course of business, any changes
in economic conditions that are applicable to the cable industry generally on a
national, state, regional or local basis, any changes in conditions (including
Rate Regulatory Matters, and other federal, state or local governmental actions,
legislation or regulations) that are applicable to the cable industry generally
on a national, state, regional or local basis, or any changes in competitive
activities.
(b) Covenants. Buyer shall have performed and complied with in
all material respects all covenants and agreements required by this Agreement to
be performed or complied with by it prior to or at the Closing.
(c) Hart-Scott-Rodino. The requisite waiting period, if any,
under the HSR Act shall have expired or been terminated.
(d) Judgment. There shall not be in effect on the date on
which the Closing is to occur any judgment, decree, or order of a court of
competent jurisdiction or other prohibition having the force of law that would
prevent or make unlawful the Closing, provided that FVP shall have used
commercially reasonable efforts to prevent the entry of any such judgment,
decree, order or other legal prohibition and to appeal as expeditiously as
possible any such judgment, decree, order or other legal prohibition that may be
entered and shall have otherwise taken commercially reasonable actions to cause
any such judgment, decree, order or other legal prohibition to cease to be in
effect as expeditiously as possible.
(e) No Material Adverse Change. No event shall have occurred
between the date of this Agreement and the date on which the Closing is to occur
that has had a material adverse effect on the business, financial condition,
assets or liabilities of Buyer and its Subsidiaries, taken as a whole, other
than an event that arose in the ordinary course of business, any changes in
economic conditions that are applicable to the cable industry generally on a
national, state, regional or local basis, any changes in conditions (including
Rate Regulatory Matters, and other federal, state or local governmental actions,
legislation or regulations) that are applicable to the cable industry generally
on a national, state, regional or local basis, or any changes in competitive
activities.
(f) Stock Consideration. The shares of ACC Class A Common
Stock to be paid and issued to Sellers as the Stock Consideration (or, if
applicable, all of the securities of any other class or series constituting the
Stock Consideration): (1) shall have been duly authorized and validly issued,
fully paid and nonassessable, not subject to, or issued in violation of, any
preemptive rights and not issued in violation of any federal or state securities
laws; (2) shall comply with the provisions of the Stock Consideration
Registration Rights Agreement; and (3) shall have the same rights and powers as
all other shares of ACC Class A Common Stock (or, if any of the securities
constituting the Stock Consideration are not shares of ACC Class A Stock, as all
other securities of the same class or series) issued and outstanding as of the
date of this Agreement.
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(g) Stock Consideration Registration Rights Agreement. The
Stock Consideration Registration Rights Agreement shall be in full force and
effect in accordance with its terms and Buyer shall have performed all of its
obligations therein in accordance with their terms. An appropriate registration
statement covering the registration of all of the Stock Consideration
Registrable Securities shall have been declared effective under the Securities
Act in accordance with the provisions of the Stock Consideration Registration
Rights Agreement (and such registration statement shall not be subject to any
stop order or proceeding seeking a stop order). All of the Stock Consideration
Registrable Securities shall be listed on the NASDAQ National Market System, New
York Stock Exchange or American Stock Exchange or other major market system or
exchange reasonably acceptable to Sellers.
(h) Deliveries. Buyer shall have made or stand willing to make
all the deliveries described in Section 8.3.
ARTICLE 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date.
(1) Subject to satisfaction or, to the extent
permitted by law, waiver, of the closing conditions described in Article 7, and
subject to Sections 8.1(a)(2), 8.1(a)(3) and 8.1(a)(4), the Closing shall take
place on the tenth business day after FVP or Buyer provides written notice to
the other party after satisfaction or waiver of the conditions set forth in
Sections 7.1(d), (e), (f) and (g) and Section 7.2(c) (provided that without
Buyer's consent, the Closing Date shall not be earlier than the earlier of the
date on which all Franchise Consents are obtained and the date that is sixty
days after the date on which the 120-Day Period has expired for each Franchise
in respect of which a Franchise Consent application was filed; provided,
however, that the sixty day extension period referred to above shall be reduced
by each day that the Franchise Consent application was filed after the
forty-fifth day after the execution of this Agreement (with respect to
applications filed pursuant to Section 6.4(a)) or filed after the tenth day
after the date it was determined that such application was required to be filed
(with respect to applications filed pursuant to Section 6.4(b)) if such delay in
filing was principally caused by Buyer)); and provided further that without the
consent of both FVP and Buyer the Closing Date shall not be earlier than the
tenth business day after FVP or Buyer provides written notice to the other party
that the Closing is permitted to take place in accordance with the preceding
provisions of this Section 8.1(a)(1)), or on such earlier or later date as FVP
and Buyer shall mutually agree. If such tenth business day (or any other date
for the Closing agreed to by FVP and Buyer) would extend the date for the
Closing beyond the Upset Date, the Upset Date shall be extended to the day after
such tenth business day or other date agreed to for the Closing, as applicable.
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(2) If on the date on which the Closing would
otherwise be required to take place pursuant to Section 8.1(a)(1), (A) there
shall be in effect any judgment, decree, or order of a court of competent
jurisdiction that would prevent or make unlawful the Closing, or (B) any other
circumstance beyond the reasonable control of FVP or Sellers or Buyer (but which
shall not in any event include any matters relating to financing of the
transactions contemplated hereby) shall exist that would prevent the Closing or
the satisfaction of any of the conditions precedent to any party set forth in
Article 7, then either FVP or Buyer may, at its option, postpone the date on
which the Closing is required to take place until the tenth business day after
either party provides written notice to the other party, as soon as practicable
after such conditions are satisfied, such judgment, decree, or order ceases to
be in effect, or such other circumstance ceases to exist; provided, however,
that a party's postponement of the date on which the Closing is required to take
place shall not restrict the exercise by FVP or Buyer of its rights under
Section 9.2 or 9.3, as applicable.
(3) If on the date on which the Closing would
otherwise be required to take place pursuant to Section 8.1(a)(1), the Credit
Agreement Consent has not been obtained, then Buyer may, at its option, postpone
the date on which the Closing is required to take place until such date, but in
no event later than June 30, 1999, to be set by Buyer on at least ten business
days' written notice to FVP.
(4) If on the date on which the Closing would
otherwise be required to take place pursuant to the foregoing subsections of
this Section 8.1(a), the conditions set forth in Sections 7.2(f) or (g) have not
been satisfied, then either FVP or Buyer may, at its option (but it shall not be
compelled to do so), postpone the date on which the Closing is required to take
place until such date, but in no event later than the Upset Date, to be set by
either party on at least ten business days' written notice to the other party,
as soon as practicable after such conditions are satisfied; provided, however,
that a party's postponement of the date on which the Closing is required to take
place shall not restrict the exercise by FVP or Buyer of its rights under
Section 9.2 or 9.3, as applicable; and provided, further, that if such
conditions set forth in Sections 7.2(f) and (g) have not been satisfied in any
event by the Upset Date, Buyer shall be deemed to have willfully breached this
Agreement with the attendant consequences set forth in Sections 2.4 and 9.4;
provided, further, however, that Buyer may on the Upset Date, but only on the
Upset Date, satisfy the conditions set forth in Sections 7.2(g) and (h) by being
ready, able, and willing to deliver on the Upset Date, in lieu of the Stock
Consideration Registrable Securities, additional cash consideration in an amount
equal to the aggregate fair market value of the Stock Consideration Registrable
Securities (computed on the basis of the Weighted Average Trading Price of the
ACC Class A Common Stock or other security constituting the Stock Consideration
for the ten trading day period beginning on the thirteenth trading day prior to
the Upset Date.
(b) Closing Place. The Closing shall be held at the offices of
Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place or time as FVP and Buyer shall
mutually agree.
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8.2 Deliveries by Sellers.
Prior to or at the Closing, Sellers shall deliver or cause to be
delivered to Buyer the following:
(a) Purchased Interests. An assignment agreement providing for
the assignment of the Purchased Interests to Buyer, in a form reasonably
satisfactory to Buyer, together with any notes or certificates representing the
Purchased Interests, duly endorsed for transfer.
(b) Officer's Certificate of FVP. A certificate executed by
FVP, dated as of the Closing Date, certifying that the closing conditions
specified in Sections 7.1(a) and (c) have been satisfied as to FVP, except as
disclosed in said certificate.
(c) Secretary's Certificate. A certificate executed by FVP,
dated as of the Closing Date, (1) certifying that the resolutions, as attached
to said certificate, were duly adopted by the Advisory Committee of FVP,
authorizing and approving the execution by FVP of this Agreement and the other
Transaction Documents to which FVP is a party and the consummation of the
transactions contemplated hereby and thereby and that such resolutions remain in
full force and effect; (2) certifying that the resolutions, as attached to said
certificate, were duly adopted by the Board of Directors of FrontierVision Inc.,
authorizing and approving the execution by FVP and the General Partner of this
Agreement and the other Transaction Documents to which they are a party and the
consummation of the transactions contemplated hereby and thereby and that such
resolutions remain in full force and effect; and (3) providing, as attachments
thereto, Certificates of Good Standing for FVP and each of the other
FrontierVision Companies certified by an appropriate state official of the State
of their organization, all certified by such state officials as of a date not
more than fifteen days before the Closing Date.
(d) Consents. Copies of Consents which have been obtained by
FVP or Sellers prior to the Closing.
(e) Corporate, Financial, and Tax Records. All corporate
records (including minute books and stock books and registers) and financial and
tax records of each of the FrontierVision Companies that are not located at one
of the offices or sites included in the Real Property.
(f) Post-Closing Escrow Agreement. The Post-Closing
Escrow Agreement, duly executed by each Seller and the Escrow Agent.
(g) Noncompetition Agreement. The Noncompetition Agreements,
duly executed by each Person designated on Exhibit A.
(h) Opinion of Counsel. An opinion of Dow, Lohnes & Albertson,
PLLC, counsel to FVP, dated as of the Closing Date, substantially in the form of
Exhibit C hereto.
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(i) Seller Releases. A Seller Release, duly executed by each
Seller.
(j) Management Releases. A Management Release, duly executed
by each Person designated on Exhibit H.
8.3 Deliveries by Buyer.
Prior to or at the Closing, Buyer shall deliver to Sellers the
following:
(a) Purchase Consideration.
(1) An assumption agreement providing for the
assumption by Buyer of the Assumed Liabilities, in a form reasonably
satisfactory to Sellers.
(2) The Closing Cash Payment as follows: (A)
$5,000,000 will be paid to the Escrow Agent for deposit in the Post-Closing
Adjustments Escrow pursuant to Section 2.7; (B) any amount required to be
deposited in the Post-Closing Adjustments Escrow pursuant to Section 2.6 will be
paid to the Escrow Agent; (C) any amount required to be deposited in a
Post-Closing Section 2.8 Escrow pursuant to Section 2.8 will be paid to the
Escrow Agent; (D) any amount required to be deposited in the Post-Closing
Section 2.9 Escrow pursuant to Section 2.9 will be paid to the Escrow Agent; and
(E) the balance of the Closing Cash Payment will be paid by wire or accounts
transfer of immediately available funds to one or more accounts designated by
Sellers by written notice to Buyer not less than two days prior to the Closing.
(3) The Stock Consideration as follows: (A) stock
certificates representing 1,000,000 shares of ACC Class A Common Stock in the
aggregate will be issued and registered in the name of Seller or Sellers'
designees as directed by the Sellers by written notice to Buyer not less than
two days prior to the Closing and transferred to the Escrow Agent for deposit in
the Post-Closing Indemnity Escrow pursuant to Section 10.3, and (B) stock
certificates representing the portion of the Stock Consideration which is not
transferred to the Escrow Agent will be issued and registered in the name of
Seller or Sellers' designees as directed by the Sellers by written notice to
Buyer not less than two days prior to the Closing and delivered to Sellers or
Sellers' designees; or, if Buyer delivers cash pursuant to Section 8.1(a)(4) in
lieu of the Stock Consideration Registrable Securities, (A) an amount equal to
the aggregate fair market value of 1,000,000 shares of ACC Class A Common Stock
(computed on the basis of the Weighted Average Trading Price of the ACC Class A
Common Stock for the ten trading day period beginning on the thirteenth trading
day prior to the Closing Date) will be transferred to the Escrow Agent for
deposit in the Post-Closing Indemnity Escrow pursuant to Section 10.3, and (B)
the portion of the Stock Consideration which is not transferred to the Escrow
Agent will be paid by wire or accounts transfer of immediately available funds
to one or more accounts designated by Sellers by written notice to Buyer not
less than two days prior to the Closing.
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(b) Officer's Certificate. A certificate executed by Buyer,
dated as of the Closing Date, certifying that the closing conditions specified
in Sections 7.2(a) and (b) have been satisfied, except as disclosed in said
certificate.
(c) Secretary's Certificate. A certificate executed by Buyer,
dated as of the Closing Date, (1) certifying that the resolutions, as attached
to said certificate, were duly adopted by the Board of Directors of Buyer,
authorizing and approving the execution by Buyer of this Agreement and the other
Transaction Documents to which Buyer is a party and the consummation of the
transactions contemplated hereby and thereby and that such resolutions remain in
full force and effect; and (2) providing, as attachments thereto, a Certificate
of Good Standing for Buyer certified by an appropriate state official of the
State of Delaware, certified by such state official as of a date not more than
fifteen days before the Closing Date.
(d) Post-Closing Escrow Agreement. The Post-Closing
Escrow Agreement, duly executed by Buyer and the Escrow Agent.
(e) Opinion of Counsel. Opinions of Buchanan Ingersoll
Professional Corporation, counsel to Buyer, dated as of the Closing Date,
substantially in the form of Exhibit D hereto.
ARTICLE 9
TERMINATION
9.1 Termination by Agreement.
This Agreement may be terminated at any time prior to the Closing by
agreement between FVP and Buyer.
9.2 Termination by FVP.
This Agreement may be terminated at any time prior to the Closing by
FVP and the purchase and sale of the Purchased Interests abandoned, upon written
notice to Buyer, upon the occurrence of any of the following:
(a) Conditions. If on any date determined for the Closing in
accordance with Section 8.1 if each condition set forth in Section 7.1 has been
satisfied (or will be satisfied by the delivery of documents at the Closing) or
waived in writing on such date and either a condition set forth in Section 7.2
has not been satisfied (or will not be satisfied by the delivery of documents at
the Closing) or waived in writing on such date or Buyer has nonetheless refused
to consummate the Closing. Notwithstanding the foregoing, FVP may not rely on
the failure of any condition set forth in Section
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7.2 to be satisfied if such failure was principally caused by FVP's or any
Seller's failure to act in good faith or a breach of or failure to perform any
of its representations, warranties, covenants or other obligations in accordance
with the terms of this Agreement.
(b) Upset Date. If the Closing shall not have occurred on or
prior to the Upset Date, unless the failure of the Closing to occur was
principally caused by FVP's or any Seller's failure to act in good faith or a
breach of or failure to perform any of its representations, warranties,
covenants or other obligations in accordance with the terms of this Agreement;
provided that (1) if on the Upset Date the Closing has not occurred solely
because any notice period required by Section 8.1(a) has not lapsed, the Upset
Date shall be extended to a date that is one business day after the lapse of
such period; and (2) if FVP is required to file a Franchise Consent application
pursuant to Section 6.4(b), then FVP may extend the Upset Date from time to time
at its sole option by notice to Buyer to a date that is one business day after
the later of (A) the date that is 210 days after the last Franchise Consent
application was filed pursuant to Section 6.4(b) and (B) 90 days after the last
affirmative denial by a Franchising Authority of a request for such Franchise
Consent.
9.3 Termination by Buyer.
This Agreement may be terminated at any time prior to the Closing by
Buyer and the purchase and sale of the Purchased Interests abandoned, upon
written notice to FVP, upon the occurrence of any of the following:
(a) Conditions. If on any date determined for the Closing in
accordance with Section 8.1 if each condition set forth in Section 7.2 has been
satisfied (or will be satisfied by the delivery of documents at the Closing) or
waived in writing on such date and either a condition set forth in Section 7.1
has not been satisfied (or will not be satisfied by the delivery of documents at
the Closing) or waived in writing on such date or Sellers have nonetheless
refused to consummate the Closing. Notwithstanding the foregoing, Buyer may not
rely on the failure of any condition set forth in Section 7.1 to be satisfied if
such failure was principally caused by Buyer's failure to act in good faith or a
breach of or failure to perform any of its representations, warranties,
covenants or other obligations in accordance with the terms of this Agreement.
(b) Upset Date. If the Closing shall not have occurred on or
prior to the Upset Date, unless the failure of the Closing to occur was
principally caused by Buyer's failure to act in good faith or a breach of or
failure to perform any of its representations, warranties, covenants or other
obligations in accordance with the terms of this Agreement or failure to satisfy
the conditions set forth in Sections 7.2(f) or (g); provided that (1) if on the
Upset Date the Closing has not occurred solely because any notice period
required by Section 8.1(a) has not lapsed, the Upset Date shall be extended to a
date that is one business day after the lapse of such period; and (2) if FVP is
required to file a Franchise Consent application pursuant to Section 6.4(b),
then FVP may extend the Upset Date from time to time at its sole option by
notice to Buyer to a date that is one business day after the later of (A) the
date that is 210 days
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after the last Franchise Consent application was filed pursuant to Section
6.4(b) and (B) 90 days after the last affirmative denial by a Franchising
Authority of a request for such Franchise Consent.
9.4 Effect of Termination.
If this Agreement is terminated as provided in this Article 9, then
this Agreement will forthwith become null and void and there will be no
liability on the part of any party to any other party or any other Person in
respect thereof, provided that:
(a) Surviving Obligations. The obligations of the parties
described in Sections 6.2, 9.4 and 11.1 (and all other provisions of this
Agreement relating to expenses) will survive any such termination. In addition,
if FVP is entitled to receive the Deposit Escrow Property in accordance with
Section 2.4, all of Buyer's obligations with respect to the Deposit Escrow
Property, including its obligations under the Deposit Escrow Agreement and under
the Deposit Registration Rights Agreement will survive any such termination.
(b) Withdrawal of Applications. All filings, applications and
other submissions relating to the transfer of the Purchased Interests shall, to
the extent practicable, be withdrawn from the Governmental Authority or other
Person to whom made.
(c) Willful Breach by Buyer. No such termination will relieve
Buyer from liability for a willful breach of this Agreement (which shall be
deemed to include without limitation any failure by Buyer to satisfy the
conditions set forth in Sections 7.2(f) or (g) by the date on which the Closing
would otherwise be required to take place pursuant to Section 8.1, subject to
the provisions of Section 8.1(a)(4), or in any event by the Upset Date), and in
such event the Deposit Escrow Property shall be released from escrow and
delivered to FVP. Subject to Buyer's continuing obligations described in Section
9.4(a), the delivery of the Deposit Escrow Property to Sellers in compliance
with the provisions of Section 2.4 shall be liquidated damages and constitute
full payment and the exclusive remedy for any damages suffered by FVP and
Sellers by reason of Buyer's breach of this Agreement prior to the Closing. If
the Deposit Escrow Property is not delivered to Sellers in compliance with the
provisions of Section 2.4, FVP and Sellers shall have all rights and remedies
available at law or equity to enforce the provisions of Section 2.4.
(d) Willful Breach by FVP or Sellers. No such termination will
relieve FVP from liability for its willful breach of this Agreement, and in such
event Buyer shall have all rights and remedies available at law or equity,
including the remedy of specific performance against FVP. No such termination
will relieve any Seller from liability for its willful breach of this Agreement,
and in such event Buyer shall have all rights and remedies available at law or
equity, including the remedy of specific performance against such breaching
Seller.
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(e) No Recourse. Anything in this Agreement or applicable law
to the contrary notwithstanding, in the event this Agreement is terminated as
provided in this Article 9, Buyer will have no claim or recourse against any of
FVP's, the General Partner's, or any Seller's respective officers, directors,
shareholders, partners, employees, agents or Affiliates (excluding from
"Affiliates" for this purpose FVP, the General Partner and the other Sellers
themselves) as a result of the breach of any representation, warranty, covenant
or agreement of FVP or any Seller contained herein or otherwise arising out of
or in connection with the transactions contemplated by this Agreement or the
business or operations of the FrontierVision Companies prior to the Closing, it
being understood that FVP shall have no liability for any breach by a Seller and
no Seller will have any liability for any breach by FVP or another Seller.
9.5 Attorneys' Fees.
Notwithstanding any provision in this Agreement that may limit or
qualify a party's remedies, in the event of a default by any party that results
in a lawsuit or other proceeding for any remedy available under this Agreement,
the prevailing party shall be entitled to reimbursement from the defaulting
party of its reasonable legal fees and expenses (whether incurred in
arbitration, at trial, or on appeal).
ARTICLE 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Survival.
All representations, warranties and covenants set forth herein will
survive the Closing, provided that all claims made in respect of such
representations, warranties and covenants will be subject to any applicable
limitations set forth in this Article 10.
10.2 Indemnification by Sellers.
After the Closing, but subject to Section 10.5, each Seller hereby
agrees to indemnify and hold Buyer harmless against and with respect to, and
shall reimburse Buyer for:
(a) any and all Losses resulting from any untrue
representation or breach of warranty by FVP or the nonfulfillment of any
covenant to be performed by FVP prior to the Closing contained in this Agreement
or any other Transaction Document to which FVP is a party;
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(b) any and all Losses resulting from any untrue
representation or breach of warranty by such Seller or the nonfulfillment of any
covenant by such Seller contained in this Agreement or any other Transaction
Document to which such Seller is a party; and
(c) any rate refund liability imposed on any of the
FrontierVision Companies for any period ending prior to the Adjustment Time by a
final order or decision issued by a Governmental Authority (but only to the
extent of the out-of-pocket costs payable in respect thereof and it being
understood and agreed that any claim for indemnification in respect of any rate
refund liability may be made only pursuant to this Section 10.2(c) and not under
any other provision of this Section 10.2); provided, however, that Buyer may
make a claim pursuant to this Section 10.2(c) upon the issuance of an initial
adverse order or decision by a Governmental Authority with respect to one of the
FrontierVision Companies for any period ending prior to the Adjustment Time that
could result in an obligation of the Sellers to indemnify Buyer under this
Section 10.2(c) in order to preserve its rights under this Article 10 pending
appeal or other final resolution of such order or decision.
(d) any and all Losses resulting from the matters disclosed in
Sections 3.14 and 3.15 of FrontierVision's Disclosure Schedule (other than
matters relating to Rate Regulatory Matters, including, without limitation, the
matters disclosed in items 1 and 2 of said Section 3.15) and the tax audits
disclosed in Section 3.12 of FrontierVision's Disclosure Schedule.
(e) any and all Losses resulting from any pole attachment fees
payable with respect to the operation by the FrontierVision Companies of the
Systems for any period ending prior to the Adjustment Time.
(f) any and all Losses resulting from the matter disclosed in
Item A.4 of Section 3.6 of FrontierVision's Disclosure Schedule relating to a
dispute between the FrontierVision Companies and CSG.
(g) any and all Losses resulting from amounts that are payable
by the FrontierVision Companies to the other parties under the purchase and sale
agreements referred to in Section 3.11(i).
10.3 Post-Closing Escrow Agreement.
FVP and Buyer have agreed on and delivered to the Escrow Agent a form
of Post-Closing Escrow Agreement in the form of Exhibit B hereto. Following the
execution of this Agreement FVP and Buyer will cooperate in good faith with the
Escrow Agent (or another Person who FVP and Buyer mutually select to serve as
the escrow agent thereunder) to agree with the Escrow Agent (or such other
Person) on the final form of the Post-Closing Escrow Agreement including such
changes to the form attached as Exhibit B as are requested or recommended by the
Escrow Agent and are mutually acceptable to FVP and Buyer (such acceptance not
to be unreasonably withheld by FVP and Buyer). FVP and Buyer agree to take such
additional actions and enter into appropriate amendments to the
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Transaction Documents as may reasonably be necessary to reflect the final form
of Post-Closing Escrow Agreement. Subject to the foregoing, at the Closing,
Buyer, Sellers and the Escrow Agent shall execute the Post-Closing Escrow
Agreement, in accordance with which, on the Closing Date, in addition to the
deposit contemplated by Section 2.7 and in addition to any deposit required by
Sections 2.6, 2.8 or 2.9, Buyer will deposit 1,000,000 shares of ACC Class A
Common Stock with the Escrow Agent on behalf of Sellers in order to provide a
fund for, and the exclusive source for, the payment of any indemnification to
which Buyer is entitled under this Article 10 (such escrow, the "Post-Closing
Indemnity Escrow"). The Post-Closing Indemnity Escrow will be administered, and
the Post-Closing Indemnity Property (as defined below) will be held and
disbursed, in accordance with the provisions of this Article 10 and the
Post-Closing Escrow Agreement. The "Post-Closing Indemnity Property" means,
collectively, the 1,000,000 shares of ACC Class A Common Stock deposited with
the Escrow Agent pursuant to this Section 10.3, together with the kind and
amounts of securities, cash and other property that Sellers would have held or
been entitled to receive as of the date the Post-Closing Indemnity Property is
released in accordance with this Agreement (whether resulting from a stock
split, subdivision, combination or reclassification of the outstanding capital
stock of Buyer, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Buyer may be a
party or otherwise) had Sellers held such shares of ACC Class A Common Stock as
of the Closing Date and retained such shares, and all securities, cash and other
property distributed or issued with respect to or in substitution or exchange
therefor, during the period from the Closing Date through (and including) the
date the Post-Closing Indemnity Property is released. Subject to the terms and
conditions contained in the Post-Closing Escrow Agreement and the Stock
Consideration Registration Rights Agreement, the Sellers will have the right to
cause the shares of ACC Class A Common Stock or other securities constituting
the Post-Closing Indemnity Property to be sold and converted to cash from time
to time. If Buyer delivers cash pursuant to Section 8.1(a)(4) in lieu of the
Stock Consideration Registrable Securities, Buyer will deposit cash in the
amount determined pursuant to the second part of Section 8.3(a)(3) in the
Post-Closing Indemnity Escrow and the term "Post-Closing Indemnity Property"
shall mean such deposit plus any earnings thereon.
10.4 Indemnification by Buyer.
After the Closing, but subject to Section 10.5, Buyer hereby agrees to
indemnify and hold Sellers harmless against and with respect to, and shall
reimburse Sellers for:
(a) any and all Losses resulting from any untrue
representation, breach of warranty, or nonfulfillment of any covenant by Buyer
contained in this Agreement or any other Transaction Document to which Buyer is
a party;
(b) any and all Losses resulting from any liability or
obligation of the FrontierVision Companies arising from or related to any event
occurring after the Closing Date, and any Assumed Liabilities and any liability
or obligation that was reflected as an Adjustment Liability in computing Closing
Net Liabilities under Article 2;
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(c) any and all Losses arising as a result of the occurrence
of the Closing without the receipt of any Consent (including any Consent under a
Franchise, but excluding any Consent that was not either disclosed in
FrontierVision's Disclosure Schedule or determined to require Consent pursuant
to Section 6.4(b) or requested prior to the Closing), waiver of a Franchising
Authority's right of first refusal under a Franchise, or renewal of any
Franchise; and
(d) any and all Losses resulting from the use of the
"FrontierVision" name or any variant thereof by Buyer and/or its Affiliates
and/or the FrontierVision Companies from and after the Closing.
10.5 Certain Limitations on Indemnification Obligations.
Notwithstanding anything in this Agreement to the contrary:
(a) No Seller will be required to indemnify or otherwise be
liable to Buyer for any matter described in Section 10.2 unless and until the
aggregate amount of all Losses of Buyer arising therefrom for which Sellers
would have indemnification liability to Buyer but for this Section 10.5(a),
exceeds $1,000,000, in which event Sellers will be liable for all such Losses;
provided, however, that this Section 10.5(a) shall not apply to any amount
payable to Buyer pursuant to Section 2.7 or Section 2.9 or Section 10.2(c) (but
only in respect of a claim that Buyer could have made under Section 10.2(c)
immediately after the Closing) or Section 10.2(d) or Section 10.2(e) (but only
in respect of a claim that Buyer could have made under Section 10.2(e)
immediately after the Closing) or Section 10.2(f) or Section 10.2(g), but no
amounts paid to Buyer pursuant to the sections referred to in this proviso (as
limited in this proviso) shall be treated as Losses for purposes of determining
when Buyer's Losses exceed $1,000,000.
(b) No Seller will be required to indemnify or otherwise be
liable to Buyer with respect to any Losses arising under Section 10.2 unless
Buyer gives Sellers written notice of a claim pursuant to Section 10.2 on or
prior to the date that is eighteen months after the Closing Date; provided that,
the Post-Closing Indemnity Property shall be released to Sellers as follows:
(1) On the first business day following the date
that is six months after the Closing Date (the "Initial Release Date"):
(A) if on the Initial Release Date the
Post-Closing Indemnity Property consists solely of shares of ACC Class A Common
Stock or other Stock Consideration Registrable Securities, then the number of
shares of ACC Class A Common Stock or other Stock Consideration Registrable
Securities equal to one-half of the total number of such shares deposited into
the Post-Closing Indemnity Escrow on the Closing Date, less the total number of
shares that were previously paid out to Buyer in respect of claim(s) made by
Buyer pursuant to this Article 10 or Article 2, and less
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the number of shares the fair market value of which equals the aggregate dollar
value of all bona fide claims made by Buyer pursuant to this Article 10 or
Article 2 that remain outstanding on the Initial Release Date, shall be released
from escrow and paid over to Sellers (the number of shares to be appropriately
adjusted to give effect to any stock split, combination or similar event);
(B) if on the Initial Release Date the
Post-Closing Indemnity Property consists solely of cash funds, then an amount in
cash equal to one-half of the total amount of cash funds that would have been in
the Post-Closing Indemnity Escrow on the Initial Release Date if no payments had
been made to Buyer out of the Post-Closing Indemnity Escrow during such period,
less the dollar value of all payments (whether in the form of shares or cash)
that were previously paid out to Buyer in respect of claim(s) made by Buyer
pursuant to this Article 10 or Article 2, and less the aggregate dollar value of
all bona fide claims made by Buyer pursuant to this Article 10 or Article 2 that
remain outstanding on the Initial Release Date, shall be released from escrow
and paid over to Sellers;
(C) if on the Initial Release Date the
Post-Closing Indemnity Property consists partly of shares of ACC Class A Common
Stock or other Stock Consideration Registrable Securities and partly of cash
funds, then the number of shares of ACC Class A Common Stock or other Stock
Consideration Registrable Securities equal to one-half the total number of such
shares that would have been in the Post-Closing Indemnity Escrow on the Initial
Release Date if no payments in the form of such shares had been made to Buyer
out of the Post-Closing Indemnity Escrow during such period, less the total
number of shares that were paid out to Buyer in respect of claim(s) made by
Buyer pursuant to this Article 10 or Article 2, and less the number of shares
the fair market value of which equals the aggregate dollar value of all bona
fide claims made by Buyer pursuant to this Article 10 or Article 2 that remain
outstanding on the Initial Release Date (except to the extent an amount in cash
has been reserved for any portion of such outstanding claims), shall be released
from escrow and paid over to Sellers (the number of shares to be appropriately
adjusted to give effect to any stock split, combination or similar event), and
an amount in cash equal to one-half of the total amount of cash funds that would
have been in the Post-Closing Indemnity Escrow on the Initial Release Date if no
payments in the form of cash had been made to Buyer out of the Post-Closing
Indemnity Escrow during such period, less the dollar value of all payments that
were previously paid out in the form of cash to Buyer in respect of claim(s)
made by Buyer pursuant to this Article 10 or Article 2, and less the aggregate
dollar value of all bona fide claims made by Buyer pursuant to this Article 10
or Article 2 that remain outstanding on the Initial Release Date (except to the
extent a number of shares has been reserved for any portion of such outstanding
claims), shall be released from escrow and paid over to Sellers; and
(2) on the first business day following the date that
is eighteen months after the Closing Date (the "Second Release Date") all
remaining Post-Closing Indemnity Property, less a number of shares of ACC Class
A Common Stock or other Stock Consideration Registrable Securities or an amount
in cash or a combination thereof as directed by the General Partner the
aggregate dollar value of which is equal to the aggregate dollar amount of any
bona fide claims made by Buyer that remain outstanding on the Second Release
Date, shall be released from escrow and paid over to Sellers.
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Attached hereto as Exhibit I for illustrative purposes only is an example of how
the preceding provisions are intended to work. Thereafter, any remaining
Post-Closing Indemnity Property shall be released from escrow and paid over to
Sellers or Buyer in accordance with this Agreement and the Post-Closing Escrow
Agreement. To the extent any payment is made to Buyer out of the Post-Closing
Indemnity Property pursuant to Sections 2.7, 2.8 or 2.9 or this Article 10, and
the Post-Closing Indemnity Property consists of both Stock Consideration
Registrable Securities and cash, the General Partner shall designate which
portion of the payment shall be made in the form of shares (based on its fair
market value on the date of payment as computed as provided in Section 10.5(c))
or cash or combination of both. On the business day that it is determined in
accordance with this Section 10.5(b) and this Article 10 that Buyer and/or
Sellers are entitled to all or any portion of the Post-Closing Indemnity
Property, the General Partner and Buyer will execute and deliver to the Escrow
Agent joint written instructions containing appropriate disbursement
instructions consistent with this Section 10.5(b) and this Article 10 and the
Post-Closing Escrow Agreement.
(c) All payments required to be made by Sellers or any Seller
in respect of their indemnification obligations under this Article 10 shall be
made solely from the Post-Closing Indemnity Property. For purposes of this
Article 10 and the Post-Closing Escrow Agreement, the fair market value of a
share of ACC Class A Common Stock or other Stock Consideration Registrable
Security on any day shall be computed by reference to the Weighted Average
Trading Price of such stock or other security for the ten trading day period
beginning on the thirteenth trading day prior to the date of determination.
(d) Anything in this Agreement or applicable law to the
contrary notwithstanding, other than with respect to the Post-Closing Indemnity
Property as provided for and limited in this Article 10 (and other than with
respect to the Post-Closing Adjustment Funds as provided for and limited in
Section 2.7, the Post-Closing Section 2.8 Funds as provided for and limited in
Section 2.8, and the Post-Closing Section 2.9 Funds as provided for and limited
in Section 2.9) after the Closing no Seller (or any officer, director,
shareholder, partner, employee, agent or Affiliate of such Seller) shall have
any obligation or liability to Buyer under Article 10, and Buyer will have no
claim or recourse against any Seller (or any officer, director, shareholder,
partner, employee, agent or Affiliate of such Seller) as a result of the breach
of any representation, warranty, covenant or agreement of FVP or any Seller
contained herein or otherwise arising out of or in connection with the
transactions contemplated by this Agreement or the business or operations of the
FrontierVision Companies, other than claims relating to the Noncompetition
Agreements or the Deposit Registration Rights Agreement or the Stock
Consideration Registration Rights Agreement (which shall each be governed by its
respective terms); and the Post-Closing Indemnity Property, the Post-Closing
Adjustment Funds, the Post-Closing Section 2.8 Funds and the Post-Closing
Section 2.9 Funds (in each case as provided for and limited by the provisions of
this Agreement) shall be the sole and exclusive remedy for any such claim by
Buyer for any such matters, whether such claims are framed in contract, tort or
otherwise.
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(e) The amount payable to the Claimant by the Indemnifying
Party in respect of a Loss shall be computed net of any insurance coverage with
respect thereto that reduces the amount of such Loss that would otherwise be
sustained, and Buyer and each Seller agree to use commercially reasonable
efforts to collect any and all insurance proceeds to which it may be entitled in
respect of any Loss.
(f) Sellers will not be liable with respect to any Loss to the
extent that the amount of such Loss was included as an Adjustment Liability in
the computation of Closing Net Liabilities in accordance with Article 2.
(g) Notwithstanding anything in this Agreement to the
contrary, no Seller shall have any liability or obligation (for indemnification
or otherwise) arising as a result of the occurrence of the Closing without
certain Consents or Buyer's waiver of any closing condition, nor shall any
adjustment be made to the Cash Consideration in respect of the foregoing.
(h) Buyer will not be required to indemnify or otherwise be
liable to any Seller with respect to any Losses arising under Section 10.4(a)
with respect to an untrue representation or breach of warranty set forth in
Section 5.6 unless Sellers give Buyer written notice of such a claim on or prior
to the date that is thirty days after the expiration of the statute of
limitations with respect to such claim.
(i) Buyer will not be required to indemnify or otherwise by
liable to any Seller with respect to Losses arising under Section 10.4(d) to the
extent such Losses result from the matter disclosed in Section 3.10(B) of
FrontierVision's Disclosure Schedule.
10.6 Procedure for Indemnification.
The procedure for indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim and
the amount thereof (if known and quantifiable).
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim. If the
Claimant and the Indemnifying
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Party do not agree within the thirty-day period (or any mutually agreed upon
extension thereof), the Claimant may seek appropriate remedy at law or equity.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to participate in or assume control of the defense of any third-party
claim, the Claimant will not enter into any settlement of such claim which could
result in indemnification liability unless the Claimant gives the Indemnifying
Party prior written notice of such settlement. If the Indemnifying Party does
not thereupon elect to assume the defense of such claim within five business
days after such notice is given, then the Claimant may enter into such
settlement and such settlement will be binding upon Buyer and Sellers for
purposes of determining whether any indemnification payment is required pursuant
to this Article 10.
10.7 Treatment of Indemnification Payments.
Buyer and Sellers will treat all payments made pursuant to this Article
10 (including all payments made to Buyer out of the Post-Closing Indemnity
Property but excluding the release of any Post-Closing Indemnity Property to
Sellers) as an adjustment to the Purchase Consideration for all purposes.
ARTICLE 11
MISCELLANEOUS
11.1 Fees and Expenses.
Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents, and representatives. Buyer and Sellers agree that
the brokerage fee payable to Daniels & Associates shall be paid by Buyer in the
event the Closing occurs hereunder. Buyer and Sellers agree that the fees and
expenses incurred in connection with the lien searches described in Section
7.1(j) shall be borne one-half by Buyer and one-half by Sellers.
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11.2 Notices.
All notices, demands, and requests required or permitted to be given
under the provisions of this Agreement shall be in writing, may be sent by
telecopy (with automatic machine confirmation), delivered by personal delivery,
or sent by commercial delivery service or certified mail, return receipt
requested, shall be deemed to have been given on the date of actual receipt,
which may be conclusively evidenced by the date set forth in the records of any
commercial delivery service or on the return receipt, and shall be addressed to
the recipient at the address specified below, or with respect to any party, to
any other address that such party may from time to time designate in a writing
delivered in accordance with this Section 11.2:
If to Buyer:
Adelphia Communications Corporation
Main at Water Street
Coudersport, Pennsylvania 16915
Attention: James M. Kane,
Vice President Corporate Development
Telecopier: (814) 274-7098
with copies (which shall not
constitute notice) to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre, 21st Floor
Pittsburgh, Pennsylvania 15219
Attention: Bruce I. Booken, Esq.
Telecopier: (412) 562-1041
If to FVP (prior to the Closing)
or the General Partner
(after the Closing):
FrontierVision Partners, L.P.
1777 South Harrison Street
Suite P-200
Denver, Colorado 80210-3925
Attention: James C. Vaughn, President
Telecopier: (303) 757-6105
with a copy (which shall not
constitute notice) to:
If to a Seller:
Dow, Lohnes & Albertson, PLLC 1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
Attention: John T. Byrnes, Esq. and
J. Christopher Redding, Esq.
Telecopier: (202) 776-2222
At the address specified for such Seller
on the attached Exhibit E
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11.3 Benefit and Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns; provided
that (a) neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by FVP or a Seller without the prior written consent
of Buyer (which consent shall not be unreasonably withheld or delayed), and (b)
neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned by Buyer without the prior written consent of FVP (prior to the
Closing) or the General Partner (after the Closing) (which consent shall not be
unreasonably withheld or delayed). Notwithstanding the provisions of the
immediately preceding sentence, Buyer may assign all or any portion of its
rights (but not its obligations) under this Agreement to one or more
Subsidiaries or Affiliates of Buyer, without the prior written consent of FVP or
the General Partner; provided that (1) such assignee executes documentation
reasonably satisfactory to Sellers evidencing such assignment, and (2) Buyer
remains liable to perform the obligations in full to be performed by Buyer
hereunder, and (3) no such assignment would be reasonably likely to hinder or
delay the Closing as reasonably determined by Sellers. Consent shall be deemed
to be reasonably withheld if the consenting party reasonably determines that the
assignment would be reasonably likely to hinder or delay the Closing. In the
event of a permitted assignment by Buyer, Buyer, as well as such assignee, shall
remain liable hereunder for all purposes and the representations, warranties and
covenants made by Buyer shall apply equally to the assignee (modified as
appropriate for the organization of the assignee). In no event may Buyer assign
its obligations with respect to the Stock Consideration or Deposit Escrow
Property without FVP's consent (prior to Closing) or the General Partner's
consent (after the Closing), which may be withheld in its sole and absolute
discretion. This Agreement is not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder, except the provisions of
Section 6.9 are intended for the benefit of, and may be relied upon by, the
Assumed Employees, and the provisions of Section 6.13 are intended for the
benefit of, and may be relied upon by, the officers and directors of the
FrontierVision Companies and the members of FVP's Advisory Committee.
11.4 Further Assurances .
After the Closing the parties shall take any actions and execute any
other documents that may be necessary or desirable to the implementation and
consummation of this Agreement upon the reasonable request of the other party,
at the expense of the requesting party.
11.5 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
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11.6 Entire Agreement.
This Agreement, the Disclosure Schedules and the Exhibits hereto, and
the other Transaction Documents to be delivered by the parties pursuant to this
Agreement, collectively represent the entire understanding and agreement between
Buyer, FVP, and Sellers with respect to the subject matter of this Agreement and
supersedes all prior agreements, understandings and negotiations between the
parties. Buyer acknowledges that none of FVP or any other FrontierVision Company
or any Seller has made any, or makes any, promises, representations, warranties,
covenants or undertakings, express or implied, other than those expressly set
forth in this Agreement. Notwithstanding the first sentence of this Section
11.6, this Agreement does not impair or otherwise affect the validity of (1) any
consent whenever granted by any Seller with respect to the execution, delivery,
and performance of this Agreement or any other document or instrument relating
to the subject matter of this Agreement or (2) any power of attorney whenever
granted by any Seller authorizing any Person to execute and deliver on behalf of
such Seller this Agreement or any other document or instrument relating to the
subject matter of this Agreement.
11.7 Amendments; Waiver of Compliance; Consents.
This Agreement may be amended and any provision of this Agreement may
be waived; provided that any such amendment or waiver (a) will be binding upon
FVP prior to the Closing only if such amendment or waiver is set forth in a
writing executed by FVP, (b) will be binding upon a Seller prior to the Closing
only if such amendment or waiver is set forth in a writing executed by FVP and
has been approved by 75% of the voting members of FVP's Advisory Committee (with
a certificate delivered by FVP stating that such required approval has been
obtained being conclusive evidence thereof), and (c) will be binding upon a
Seller after the Closing only if such amendment or waiver is set forth in a
writing executed by the General Partner and has been approved by 75% of the
voting members of FVP's Advisory Committee (as constituted immediately prior to
the Closing) (with a certificate delivered by the General Partner stating that
such required approval has been obtained being conclusive evidence thereof), and
(d) will be binding upon Buyer only if such amendment or waiver is set forth in
a writing executed by Buyer. No waiver shall operate as a waiver of, or estoppel
with respect to, any subsequent or other matter not expressly waived.
11.8 Consent and Agreements of Sellers.
(a) Pursuant to a separate agreement each Seller has appointed
FVP and the General Partner, each with power to act separately (for all periods
prior to the Closing) and the General Partner (for all periods from and after
the Closing) as the true and lawful attorney-in-fact and agent of each Seller
(in such capacity, FVP and the General Partner are referred to as the "Agent"),
to act for each Seller in Seller's name, place and stead with respect to this
Agreement and the other Transaction Documents and all of the transactions
contemplated hereby and thereby. Buyer shall be entitled to rely exclusively
upon any communication given by Agent and shall not be liable in any manner
whatsoever
- 91 -
for any action taken or not taken in reliance upon Agent. Any payments made, at
Agent's request and instruction, by Buyer to Agent pursuant to the terms of this
Agreement and the other Transaction Documents shall fully discharge Buyer for
any liability to any Seller in connection with such payment, as fully and
completely as if such payment had been made directly to such Seller. Buyer
hereby agrees to accept and rely on the actions of Agent as if it were the
action of a Seller or Sellers.
(b) Each Seller consents to the execution, delivery and
performance of this Agreement by FVP, the General Partner and each other Seller
and to the taking by FVP, each FrontierVision Company, the General Partner and
each other Seller of all actions contemplated by this Agreement to be taken by
such Person. Subject to the terms and conditions of this Agreement, each Seller
agrees to consummate the transactions contemplated by this Agreement in
accordance with its terms, as it may be amended pursuant to Section 11.7.
11.9 Counterparts.
This Agreement may be signed in counterparts with the same effect as if
the signature on each counterpart were upon the same instrument.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, this Agreement has been executed by Buyer, FVP, the
General Partner and the other Sellers as of the date first written above.
BUYER:
ADELPHIA COMMUNICATIONS CORPORATION
By: ____________________________
Name:
Title:
FVP:
FRONTIERVISION PARTNERS, L.P., by FVP GP, L.P., its general partner, by
FrontierVision Inc., its general partner
By: ____________________________
James C. Vaughn, President
GENERAL PARTNER:
FVP GP, L.P., by FrontierVision Inc., its general
partner
By: ____________________________
James C. Vaughn, President
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-1
LIMITED PARTNER SELLERS:
JP Morgan Investment Corporation
60 Wall Street SBIC Fund, L.P.
First Union Capital Partners, Inc.
Tahosa Investors
Kensington Investment Associates
Pegasus Partners
Prosperity Associates
SBF Investments Ltd.
L. Phillips Runyon III
Roth Trading Company
Washington Partners
Duff Ackerman Goodrich - FrontierVision, L.P.
EOS Partners SBIC, L.P.
Richard King Mellon Foundation
Arthur Miltenberger (Mellon Family Investment Co.,
IV)
J. Cashew Corporation
Bertelson Family Trust
John C. Unkovic
Roger S. Ahlbrandt
Dr. Anne McBride Curtis
Bruce D. Evans
Frances C. Hardie
Hardie Brothers
James H. Hardie
John D. Margolis Trust
Grover Sams
Augustus O. Schroeder
Justin J. Stevenson III
John W. Weiser
Mallard Investments Limited Partnership
Olympus Executive Fund, L.P.
Leslie Abbey
Jonathan Abbey
Michael Rothbard
James C. Vaughn
John S. Koo
William P. Brovsky
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-2
William J. Mahon
James W. McHose
Albert D. Fosbenner
Richard G. Halle'
Joyce L. Vermace
Robert J. Valentine
Ian R. Dennett
David M. Heyrend
Todd E. Padgett
Galan F. Fernandes
Daniel P. Callahan
R. Bruce Ellis
David C. Apel
Kristine M. Rogers
Debra L. Graham
Brian L. Seifarth
Keith A. Tyrrell
Jerry R. Wert
Brian P. Hart
Robert D. Gordon
Judith B. Pierce
Stephen R. Trippe
Keith R. Froleiks
Gary Crosby
Kathleen B. Hounsell
James B. Underwood
Jill Farschman
Craig A. Waskou
Lisa L. Powers
Debbie J. Dougherty
Robert A. Dallmer
Bonnie J. Bosekrus
By FrontierVision Partners, L.P., Agent and Attorney-in-Fact for each Limited
Partner Seller, by FVP GP, L.P., its general partner, by FrontierVision Inc.,
its general partner
By: ____________________________
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-3
James C. Vaughn, President
SPC SELLERS:
1818 Fund II, L.P.
Olympus Growth Fund II, L.P.
Carson Group Inc.
Sendal Investment Limited
Monte Coral, S.L.
AZATE S.L.
Salzburg Corporation
Clover Enterprises
Kinnari Limited
Leeward Holdings
Staniard Limited
Solar Group S.A.
Englewood Enterprises
Grove Enterprises
Walvis Bay Limited
Datronics Limited
Brinkley Holdings Limited
Salt Lake Enterprises, Inc.
Cromwell International Corp.
By FrontierVision Partners, L.P., Agent and Attorney-in-Fact for each SPC
Seller, by FVP GP, L.P., its general partner, by FrontierVision Inc., its
general partner
By: ____________________________
James C. Vaughn, President
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-4