EXECUTION COPY
ASSET EXCHANGE AGREEMENT
DATED AS OF NOVEMBER 18, 0000
XXXXX
XXX XX XXXX XXX XXXXXXXX XXXXXX, L.P.
AND
CENTURY-TCI CALIFORNIA, L.P.
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into
effective as of the 18th day of November, 1998, by and between TCI of East San
Xxxxxxxx Valley, L.P., a Colorado limited partnership ("TCI") and Century-TCI
California, L.P., a Delaware limited partnership (the "Partnership").
RECITALS
A. Century owns and operates cable television systems which are
franchised or hold other operating authority and operate in and around San
Pablo, Benicia, Fairfield and Rohnert Park, California and the other communities
in California listed on EXHIBIT A (the "Century Systems"). EXHIBIT A lists each
Century System, the headends for such System, the franchises served by such
System and the owner of such System. Pursuant to a Contribution Agreement dated
of even date herewith among the Partnership, Century Exchange LLC ("Century
Exchange"), certain of its Affiliates, and certain Affiliates of TCI (the
"Contribution Agreement"), Century Exchange has agreed to contribute
substantially all the assets of the Century Systems to the Partnership.
B. TCI owns and operates cable television systems which are franchised
or hold other operating authority and operate in and around East San Xxxxxxxx
Valley, California and the other communities in California listed on EXHIBIT B
(the "TCI Systems"). EXHIBIT B lists each TCI System, the headends for such
System, the franchises served by such System and the owner of such System.
C. This Agreement sets forth the terms and conditions on which the
Partnership will convey to TCI substantially all of the assets held for use or
used in connection with Century's Cable Business and TCI will convey to the
Partnership substantially all of the assets held for use or used in connection
with TCI's Cable Business, all in such a manner as to effect, to the extent
reasonably possible, a like-kind exchange of such assets under Section 1031 of
the United States Internal Revenue Code, as amended (the "Code").
D. This Agreement amends and restates in its entirety the original
Asset Exchange Agreement dated as of November 18, 1998 among the parties hereto.
AGREEMENTS
In consideration of the mutual covenants and promises set forth
herein, the parties agree as follows:
SECTION 1. DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms or terms otherwise defined in this Section 1 shall have the
meanings set forth below:
1.1 1992 Cable Act. The Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
1.2 Affiliate. With respect to any Person, any Person controlling,
controlled by or under common control with such Person; "control" means the
ownership, directly or indirectly, of voting securities representing the right
generally to elect a majority of the directors (or similar officials) of a
Person or the possession, by contract or otherwise, of the authority to direct
the management and policies of a Person.
1.3 Annualized Cash Flow. As of any date of determination, four times Cash
Flow for the most recent three full calendar months ended prior to such date.
1.4 Assets. The Century Assets or the TCI Assets, as the context requires.
1.5 Basic Services. The lowest tier of cable television service offered to
subscribers of a System that includes the retransmission of local broadcast
signals as defined by the 1992 Cable Act.
1.6 Business Day. Any day other than a Saturday, Sunday or a day on which
the banking institutions in Denver, Colorado or New York, New York are required
or authorized to be closed.
1.7 Cable Act. The Cable Communications Policy Act of 1984, as amended, and
the FCC rules and regulations promulgated thereunder.
1.8 Cable Business. Century's Cable Business or TCI's Cable Business, as
the context requires.
1.9 Cash Flow. For any period (a) for any TCI System, the "Operating
Income/Loss Before Corporate Overhead" of such System as reported on such
System's profit and loss statement for such period and (b) for any Century
System, the "Net Operating Income and Loss" of such System as reported on such
System's profit and loss statement for such period, in each case without taking
into account any interest income or nonrecurring items of income, gain or
expense and as further adjusted for the matters identified on SCHEDULE 1.9, it
being agreed that Cash Flow and the line items identified above for any System
shall continue to be calculated in a manner consistent with that used for such
System as of the date of this Agreement.
1.10 Century. The Partnership and those predecessors in interest with
respect to the Century Systems that are Affiliates of Century Communications
Corp., a Texas corporation.
1.11 Century Assets. All assets, properties, privileges, rights, interests
and claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held for use or used in connection with
Century's Cable Business that are to be contributed to the Partnership pursuant
to the Contribution Agreement, including Century Tangible Personal Property,
Century
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Owned Real Property, Century Leased Property, Century Other Real Property
Interests, Century System Franchises, Century System Licenses, Century System
Contracts, Century Books and Records and Century Other Intangibles, but
excluding any Century Excluded Assets.
1.12 Century Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and processes and all
other files of correspondence, lists, records and reports concerning Century's
Cable Business, including subscribers and prospective subscribers of the Century
Systems, signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of Century with the FCC and
statements of account filed by or on behalf of Century with the U.S. Copyright
Office.
1.13 Century Leased Property. All leasehold interests in real property that
are held for use or used in connection with Century's Cable Business and that
are to be contributed to the Partnership pursuant to the Contribution Agreement,
including those described as Century Leased Property on SCHEDULE 1.12.
1.14 Century Other Intangibles. All intangible assets other than Century
System Franchises, Century System Licenses and Century System Contracts,
including subscriber lists, accounts receivable, claims (excluding any claims
relating to Century Excluded Assets), patents, copyrights and going concern
value, if any, that are owned, held for use or used in connection with Century's
Cable Business and that are to be contributed to the Partnership pursuant to the
Contribution Agreement.
1.15 Century Other Real Property Interests. All easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property that are held for use or used in connection with
Century's Cable Business and that are to be contributed to the Partnership
pursuant to the Contribution Agreement, including those interests described as
Century Other Real Property Interests on SCHEDULE 1.14, but not including
Century Leased Property or Century Owned Property.
1.16 Century Owned Property. All fee interests in real property that are
held for use or used in connection with Century's Cable Business and that are to
be contributed to the Partnership pursuant to the Contribution Agreement,
including those described as Century Owned Property on SCHEDULE 1.15 and all
improvements thereon.
1.17 Century Required Consents. Any and all consents, authorizations and
approvals required for (a) the Partnership to transfer the Century Assets to
TCI; (b) TCI to operate the Century Systems and to own, lease, use and operate
the Century Assets and the Century Systems at the places and in the manner in
which the Century Assets are used and the Century Systems are operated as of the
date of this Agreement and as of the Closing; and (c) TCI to assume and perform
the Century System Franchises, the Century System Licenses, the leases and other
documents evidencing Century Leased Property and Century Other Real Property
Interests and the Century System Contracts, including those consents,
authorizations and approvals required under the Century System
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Franchises, the Century System Licenses, the leases and other documents
evidencing Century Leased Property and Century Other Real Property Interests and
the Century System Contracts.
1.18 Century System Contracts. All pole line agreements, underground
conduit agreements, crossing agreements, multiple dwelling, bulk billing or
commercial service agreements, leased channel access agreements and other
Contracts (other than Century System Franchises and Century System Licenses)
held for use or used in connection with Century's Cable Business and that are to
be contributed to the Partnership pursuant to the Contribution Agreement,
including those described on SCHEDULE 1.17.
1.19 Century System Franchises. All franchise agreements, operating permits
or similar governing agreements, instruments, resolutions, statutes, ordinances,
approvals, authorizations and permits obtained from any franchising authority in
connection with Century's Cable Business, including those listed on SCHEDULE
1.18, including all amendments and modifications thereto and all renewals
thereof.
1.20 Century System Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with Century's Cable Business (other than Century System Franchises, Century
System Contracts and Century Other Real Property Interests), including those
described on SCHEDULE 1.19.
1.21 Century Tangible Personal Property. All tangible personal property
that is owned, leased, held for use or used in connection with Century's Cable
Business and that are to be contributed to the Partnership pursuant to the
Contribution Agreement, including towers, tower equipment, aboveground and
underground cable, distribution systems, headend amplifiers, line amplifiers,
microwave equipment, converters, testing equipment, motor vehicles, office
equipment, computers and billing equipment, furniture, fixtures, supplies,
inventory and other physical assets, the principal items of which, including all
motor vehicles, are described on SCHEDULE 1.20.
1.22 Century's Cable Business. The cable television business and other
income-generating businesses related to the Century Systems conducted by Century
through the Century Systems.
1.23 Closing Time. 12:01 A.M., Pacific Time, on the Closing Date.
1.24 Communications Act. The Communications Act of 1934, as amended, and
the FCC rules and regulations promulgated thereunder.
1.25 Contract. Any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
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1.26 Contribution. The transactions contemplated by the Contribution
Agreement to be consummated at the closing thereunder.
1.27 Equivalent Basic Subscribers (or "EBSs"). As of any date of
determination and for each franchise area served by a System, the sum of (a) the
total number of private residential customer accounts that are billed by
individual unit for at least Basic Services (regardless of whether such accounts
are in single-family homes or in individually billed units in apartment
buildings and other multi-unit buildings) (exclusive of (i) "second connects"
and "additional outlets" as such terms are commonly understood in the cable
television industry, and (ii) accounts that are not charged or are charged less
than the standard monthly service fees and charges then in effect for such
System for Basic Services) and (b) the quotient of (i) the total monthly
xxxxxxxx for sales of Basic Services and Expanded Basic Services by such System
for such franchise area during the most recent billing period ended prior to the
date of calculation to commercial, bulk-billed and other accounts not billed by
individual unit (whether on a discounted or non-discounted basis) and to private
residential customer accounts that are billed by individual unit but pay less
than the standard monthly service fees charged for Basic Services, but excluding
xxxxxxxx in excess of a single month's charges for any account, divided by (ii)
the standard monthly combined rate (without discount of any kind) charged by
such System for such franchise area to individually billed subscribers for the
highest level of Basic Services and Expanded Basic Services offered by such
system in effect during such billing period, which monthly rate will not be less
than the applicable rates specified in SCHEDULE 5.14 (in the case of the
Partnership) or SCHEDULE 6.14 (in the case of TCI). For purposes of calculating
the number of EBSs, there will be excluded (i) all accounts billed by individual
unit that are, and all xxxxxxxx to any commercial, bulk-billed and other
accounts not billed by individual unit that are, more than 60 days past due in
the payment of any amount in excess of the lesser of $5.00 or the standard rate
charged for Basic Services at the time of determination, (ii) any accounts
billed by individual unit and all commercial, bulk-billed and other accounts not
billed by individual units that, as of the date of calculation, have not paid in
full the charges for at least one full month of the subscribed service, (iii)
that portion of the xxxxxxxx to all accounts billed by individual unit included
in clause (b) above and any commercial, bulk-billed and other accounts not
billed by individual unit representing an installation or other non-recurring
charge, a charge for equipment or for any outlet or connection other than the
first outlet or first connection in any individually billed unit or, with
respect to a bulk account, in any residential unit (e.g., an individual
apartment or rental unit), a charge for any tiered service other than Expanded
Basic Services (whether or not included within Pay TV), any charge for Pay TV or
a pass-through charge for sales taxes, line-itemized franchise fees, fees
charged by the FCC and the like, and (iv) any individually billed unit and all
xxxxxxxx to any commercial, bulk-billed or other accounts not billed by
individual unit that was solicited within the 60 day period preceding the
Closing Date to purchase such services by promotions or offers of discounts
other than those ordinarily made by the party for which the determination of
EBSs is being made or its predecessor. For purposes of this definition, payments
on account of monthly xxxxxxxx will be deemed due on the first day of the period
for which the service to which such xxxxxxxx relate is provided.
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1.28 Environmental Law. Any Legal Requirement concerning the protection of
public or employee health, safety, welfare or the environment, including Legal
Requirements relating to emissions, discharges, releases or threatened releases
of Hazardous Substances into the environment, air (including both ambient and
within buildings and other structures), surface water, ground water or land or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
1.29 ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.30 ERISA Affiliate. As to any Person, any trade or business, whether or
not incorporated, which together with such Person would be deemed a single
employer as determined under Section 4001(a)(14) of ERISA.
1.31 Expanded Basic Services. Any level of video programming service
greater than Basic Services provided over a cable television System, regardless
of service tier, other than Basic Services, any new product tier and Pay TV.
1.32 FCC. The Federal Communications Commission.
1.33 Financial Statements. Century's Financial Statements or TCI's
Financial Statements, as the context requires.
1.34 GAAP. Generally accepted accounting principles as in effect from time
to time.
1.35 Governmental Authority. The United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing.
1.36 Hazardous Substances. (a) Any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. 'SS''SS'6901
et seq.), as amended, and the rules and regulations promulgated thereunder; (b)
any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (15 U.S.C. 'SS''SS'9601 et
seq.) (CERCLA), as amended, and the rules and regulations promulgated
thereunder; (c) any substance regulated by the Toxic Substances Control Act
(TSCA) (15 U.S.C. 'SS''SS'2601 et seq.), or the Insecticide, Fungicide and
Rodenticide Act (IFRA) (7 U.S.C. 'SS''SS'136 et seq.), each as amended, and the
rules and regulations promulgated thereunder; (d) asbestos or asbestos-
containing material of any kind or character; (e) polychlorinated biphenyls;
(f) any substances regulated under the provisions of Subtitle I of RCRA relating
to underground storage tanks; (g) any substance the presence, use, handling,
treatment, storage or disposal of which on real property is prohibited by any
Environmental Law; and (h) any other substance which by any Environmental Law
requires special
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handling, reporting or notification of any Governmental Authority in its
collection, storage, use, treatment or disposal.
1.37 HSR Act. The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
1.38 Judgment. Any judgment, writ, order, injunction, award or decree of
any court, judge, justice or magistrate, including any bankruptcy court or judge
or the arbitrator in any binding arbitration, and any order of or by any
Governmental Authority.
1.39 Knowledge. The actual knowledge of a particular matter of one or more
of the principal corporate personnel of such party involved in the transactions
contemplated by this Agreement, or the general manager or one or more of the
managers of such party's Systems.
1.40 Leased Property. The Century Leased Property or TCI Leased Property,
as the context requires.
1.41 Legal Requirement. Applicable common law and any statute, ordinance,
code or other law, rule, regulation, order, technical or other written standard,
requirement, policy or procedure enacted, adopted, promulgated, applied or
followed by any Governmental Authority, including any Judgment and all judicial
decisions applying common law or interpreting any other Legal Requirement, in
each case, as amended.
1.42 Lien. Any security interest, security agreement, financing statement
filed with any Governmental Authority, conditional sale or other title retention
agreement, any lease, consignment or bailment given for purposes of security,
any mortgage, lien, indenture, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to, defect in or
other condition affecting title or other ownership interest (including but not
limited to reservations, rights of entry, possibilities of reverter,
encroachments, protrusions, easements, rights-of-way, rights of first refusal,
restrictive covenants, leases and licenses) of any kind, which constitutes an
interest in or claim against property, whether arising pursuant to any Legal
Requirement, System License, System Franchise, System Contract or otherwise.
1.43 Litigation. Any written claim, action, suit, proceeding, arbitration
or hearing.
1.44 Losses. Any claims, losses, liabilities, damages, penalties, costs and
expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and the cost to any Person making a claim or seeking
indemnification under this Agreement with respect to funds expended by such
Person by reason of the occurrence of any event or the existence or assertion of
any Liens (other than Permitted Liens) with respect to which indemnification is
sought, except Losses incurred by a Person or on behalf of a Person in asserting
any claim for indemnification against a party where it is ultimately determined
(including by agreement of the parties) that such Person is not entitled to
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indemnification from such party (before giving effect to the limitations on such
indemnification obligations set forth in Sections 11.5 and 11.6).
1.45 Non-TV Products and Services. (A) local or long distance wireline
telephony services, (B) data (other than data provided incidental to, or
integrated with, television programming (such as interactive services) and high
speed broadband internet access and other services now or hereafter provided by
At Home Corporation), (C) internet access services (other than high speed
broadband internet access and other services now or hereafter offered by At Home
Corporation and other than internet access services that are provided incidental
to, or integrated with, television programming), (D) video (other than cable,
broadcast or any other television programming, including any substantially
similar successor services that may replace these types of services), e.g.,
video telecommunications services, and (E) wireless telecommunications products
and services (other than cable, broadcast or any other television programming,
including any substantially similar successor services that may replace these
types of services). Notwithstanding anything to the contrary in this definition,
"Non-TV Products and Services" does not include (x) cable, broadcast or other
television programming, or (y) high speed broadband communication internet
access or services now or hereafter provided by At Home Corporation.
1.46 Other Real Property Interests. The Century Other Real Property
Interests or the TCI Other Real Property Interests, as the context requires.
1.47 Owned Property. Century Owned Property or TCI Owned Property, as the
context requires.
1.48 Pay TV. A la carte tiers or premium programming services selected by
and sold to subscribers on a per channel or per program basis.
1.49 Permitted Lien. Any (a) Lien securing Taxes, assessments and
governmental charges not yet due and payable, (b) zoning law or ordinance or any
similar Legal Requirement, (c) right reserved to any Governmental Authority to
regulate the affected property or to acquire the affected property for fair
value, whether upon condemnation or pursuant to any Franchise or ordinance, (d)
as to Owned Property and Other Real Property Interests, any Lien not securing
indebtedness or arising out of the obligation to pay money that does not
individually or in the aggregate interfere with the right or ability to own, use
or operate the Owned Property or Other Real Property Interests as they are being
used or operated or materially diminish the value of such Owned Property or
Other Real Property Interests, (e) in the case of Owned Property and Leased
Property, any lease or sublease by TCI or Century in favor of a third party that
is disclosed in the Schedules to this Agreement, and (f) in the case of Leased
Property, (i) the rights of any lessor and (ii) any Lien granted by any lessor
of Leased Property; provided that "Permitted Lien" will not include any Lien
securing a debt or claim (other than inchoate materialmen's, mechanics',
workmen's, repairmen's or other like Liens arising in the ordinary course of
business or any Lien described in clause (f) above) or any Lien which could
prevent or impair in any way the conduct of the business of the affected System
as it is currently being conducted, and provided further that the classification
of any Lien as a "Permitted
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Xxxx" will not affect any liability which TCI may have under this Agreement for
any such Lien with respect to the exchange of the TCI Systems or which the
Partnership may have under this Agreement for any such Lien with respect to the
exchange of the Century Systems, including pursuant to any indemnity obligation
under this Agreement.
1.50 Person. Any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.51 Required Consents. The Century Required Consents or the TCI Required
Consents, as the context requires.
1.52 System. Any of the Century Systems or the TCI Systems, as the context
requires.
1.53 System Contracts. The Century System Contracts or the TCI System
Contracts, as the context requires.
1.54 System Franchises. The Century System Franchises or the TCI System
Franchises, as the context requires.
1.55 System Licenses. The Century System Licenses or the TCI System
Licenses, as the context requires.
1.56 Tangible Personal Property. The Century Tangible Personal Property or
the TCI Tangible Personal Property, as the context requires.
1.57 Taxes. All levies and assessments of any kind or nature imposed by any
Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies or assessments related to
unclaimed property, together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto.
1.58 TCI Assets. All assets, properties, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held for use or used in connection with
TCI's Cable Business and in which TCI or any Affiliate of TCI has any right,
title or interest or acquires any right, title or interest on or before the
Closing, including TCI Tangible Personal Property, TCI Owned Real Property, TCI
Leased Property, TCI Other Real Property Interests, TCI System Franchises, TCI
System Licenses, TCI System Contracts, TCI Books and Records and TCI Other
Intangibles, but excluding any TCI Excluded Assets.
1.59 TCI Books and Records. All engineering records, files, data, drawings,
blueprints, schematics, reports, lists, plans and processes and all other files
of correspondence, lists, records and reports concerning TCI's Cable Business,
including subscribers and prospective subscribers of the
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TCI Systems, signal and program carriage and dealings with Governmental
Authorities, including all reports filed by or on behalf of TCI with the FCC and
statements of account filed by or on behalf of TCI with the U.S. Copyright
Office.
1.60 TCI Leased Property. All leasehold interests in real property that are
held for use or used in connection with TCI's Cable Business which TCI or any
Affiliate of TCI has, or acquires prior to Closing, including those described as
TCI Leased Property on SCHEDULE 1.58.
1.61 TCI Other Intangibles. All intangible assets other than TCI System
Franchises, TCI System Licenses and TCI System Contracts, including subscriber
lists, accounts receivable, claims (excluding any claims relating to TCI
Excluded Assets), patents, copyrights and going concern value, if any, that are
owned, held for use or used in connection with TCI's Cable Business and in which
TCI or any Affiliate of TCI has, or acquires prior to Closing, any right, title
or interest.
1.62 TCI Other Real Property Interests. All easements and rights of access
(other than those relating to multiple dwelling units) and other interests in
real property that are held for use or used in connection with TCI's Cable
Business and in which TCI or any Affiliate of TCI has, or acquires prior to
Closing, any right, title or interest, including those interests described as
TCI Other Real Property Interests on SCHEDULE 1.60, but not including TCI Leased
Property or TCI Owned Property.
1.63 TCI Owned Property. All fee interests in real property that are held
for use or used in connection with TCI's Cable Business which TCI or any
Affiliate of TCI has, or acquires prior to Closing, including those described as
TCI Owned Property on SCHEDULE 1.61 and all improvements thereon.
1.64 TCI Required Consents. Any and all consents, authorizations and
approvals required for (a) TCI to transfer the TCI Assets to the Partnership;
(b) the Partnership to operate the TCI Systems and to own, lease, use and
operate the TCI Assets and the TCI Systems at the places and in the manner in
which the TCI Assets are used and the TCI Systems are operated as of the date of
this Agreement and as of the Closing; and (c) the Partnership to assume and
perform the TCI System Franchises, the TCI System Licenses, the leases and other
documents evidencing TCI Leased Property or TCI Other Real Property Interests
and the TCI System Contracts, including those consents, authorizations and
approvals required under the TCI System Franchises, the TCI System Licenses, the
leases and other documents evidencing TCI Leased Property and TCI Other Real
Property Interests and the TCI System Contracts.
1.65 TCI System Contracts. All pole line agreements, underground conduit
agreements, crossing agreements, multiple dwelling, bulk billing or commercial
service agreements, leased channel access agreements and other Contracts (other
than TCI System Franchises and TCI System Licenses) held for use or used in
connection with TCI's Cable Business and to which TCI or any Affiliate of TCI
is, or becomes prior to Closing, a party or bound, including those described on
SCHEDULE 1.63.
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1.66 TCI System Franchises. All franchise agreements, operating permits or
similar governing agreements, instruments, resolutions, statutes, ordinances,
approvals, authorizations and permits obtained from any franchising authority in
connection with TCI's Cable Business, including those listed on SCHEDULE 1.64,
including all amendments and modifications thereto and all renewals thereof.
1.67 TCI System Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with TCI's Cable Business (other than TCI System Franchises, TCI System
Contracts and TCI Other Real Property Interests), including those described on
SCHEDULE 1.65.
1.68 TCI Tangible Personal Property. All tangible personal property that is
owned, leased, held for use or used in connection with TCI's Cable Business and
in which TCI or any Affiliate of TCI has, or acquires prior to Closing, any
right, title or interest, including towers, tower equipment, aboveground and
underground cable, distribution systems, headend amplifiers, line amplifiers,
microwave equipment, converters, testing equipment, motor vehicles, office
equipment, computers and billing equipment, furniture, fixtures, supplies,
inventory and other physical assets, the principal items of which, including all
motor vehicles, are described on SCHEDULE 1.66.
1.69 TCI's Cable Business. The cable television business and other
income-generating businesses related to the TCI Systems conducted by TCI through
the TCI Systems.
1.70 Third Party. With respect to TCI, any Person other than TCI and its
Affiliates and, with respect to the Partnership, any Person other than the
Partnership and its Affiliates (including Century).
1.71 Transaction Documents. The instruments and documents described in
Sections 9.2 and 9.3 which are to be executed and delivered by or on behalf of
Century or TCI in connection with this Agreement or the transactions
contemplated hereby.
1.72 Other Definitions. The following terms are defined in the Sections or
Recitals indicated:
Term Section or Recital
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Action 11.4
Adjustment Amount 3.2(j)
Agreement First Paragraph
Antitrust Division 7.7
Cash Consideration 3.1
Cash Flow Multiple 3.1
Century Assumed Obligations and Liabilities 4.3
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Century Balance Sheet 5.10
Century Damages 11.5
Century Exchange Recital A
Century Excluded Assets 4.4
Century Plans 5.13(b)
Century Systems Recital A
Century Title Policies 9.3(d)
Century's Financial Statements 5.10
Closing 9.1
Closing Date 9.1
Code Recital C
"commercially reasonable efforts" 12.18
Contribution Agreement Recital A
Copyright Act 5.8(a)
Cost of Service Election 5.8(d)
Estoppel Certificate 7.5(b)
FAA 5.8(c)
Final Adjustment Certificate 3.3(b)
FTC 7.7
Hired Employee 7.3(g)
Hiring Party 7.3(g)
Indemnified Party 11.4
Indemnifying Party 11.4
Initial Adjustment Certificate 3.3(a)
Outside Closing Date 10.1(b)
Partnership First Paragraph
Prime Rate 12.10
Pro Rata Adjustments 3.2(a)
Qualified Intermediary 3.1
Rate Determination 3.4(a)
Retained Employees 7.3(a)
Surveys 7.6
Survival Period 11.1
Taking 12.16
TCI First Paragraph
TCI Assumed Obligations and Liabilities 4.1
TCI/AT&T Transaction 7.5(a)
TCI Balance Sheet 6.10
TCI Damages 11.6
TCI Excluded Assets 4.2
TCI Plans 6.13(b)
TCI Systems Recital C
TCI Title Policies 9.2(d)
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TCI's Financial Statements 6.10
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Transferee Party 7.19(d)
Transferor Party 7.19(d)
Transitional Billing Services 7.12
Upgrade Deductions 3.2(f)
WARN 5.13(a)
1.73 Accounting Terms. All accounting terms not otherwise defined in this
Agreement will have the meanings ascribed to them under GAAP.
SECTION 2. EXCHANGE
2.1 Exchange.
(a) Subject to the terms and conditions set forth in this Agreement,
at the Closing, TCI and the Partnership will exchange simultaneously the TCI
Assets for the Century Assets, free and clear of all Liens (except Permitted
Liens). TCI and the Partnership agree to use all reasonable efforts to structure
the transaction in such a way that it will be a tax-free exchange of like-kind
assets under Section 1031 of the Code, the regulations promulgated thereunder
and judicial and administrative interpretations thereof.
(b) To the maximum extent permitted by Section 1031 of the Code, the
regulations promulgated thereunder and judicial and administrative
interpretations thereof, in such exchange: (i) the TCI Tangible Personal
Property and the Century Tangible Personal Property will be exchanged each for
the other; (ii) the TCI Owned Property, TCI Leased Property and TCI Other
Property Interests and Century Owned Property, Century Leased Property and
Century Other Real Property Interests will be exchanged each for the other; and
(iii) the TCI System Contracts, TCI System Franchises, TCI System Licenses and
TCI Other Intangibles and the Century System Contracts, Century System
Franchises, Century System Licenses and Century Other Intangibles will be
exchanged each for the other.
SECTION 3. CONSIDERATION
3.1 Value of Assets; Cash Consideration. Annualized Cash Flow for the TCI
Systems and for the Century Systems will be determined as of the Closing Date
and the party with the lower Annualized Cash Flow as of the Closing Date will
pay to the other party or its designee at the Closing in accordance with Section
3.3 by wire transfer, in immediately available funds, an amount equal to the
difference between the Annualized Cash Flows of the parties multiplied by the
cash flow multiple set forth on SCHEDULE 1.9 (the "Cash Flow Multiple"), subject
to adjustment as provided in Section 3.2 (the "Cash Consideration"). If the
party to whom payment is to be made has
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transferred its rights under this agreement to a Qualified Intermediary (as
defined in Treas, Reg. 'SS'1.1031(k)-1(g)), the party making such payment will
make it in accordance with the terms of the Qualified Intermediary agreement
governing such assignment.
3.2 Adjustments to Cash Consideration. The following amounts shall be
calculated as of the Closing Time with respect to each of TCI and the
Partnership (the "Pro Rata Adjustments"):
(a) Appropriate adjustments on a pro rata basis as of the Closing Time
will be made with respect to each of TCI and the Partnership for all prepaid
expenses other than inventory (but only to the extent the full benefit of such
prepaid expenses will be realizable by the other party within 12 months after
the Closing Date), and for all accrued expenses (including real and personal
property taxes), copyright fees and franchise or license fees or charges,
prepaid income, subscriber prepayments and, subject to paragraph (e) below,
accounts receivable related to such party's Cable Business, all as determined in
accordance with GAAP consistently applied and to reflect the principle that all
expenses and income attributable to such party's Cable Business for the period
through and including the Closing Time are for the account of such party, and
all expenses and income attributable to such party's Cable Business for the
period after the Closing Time are for the account of the other party.
(b) All advance payments to, or funds of third parties on deposit
with, TCI or the Partnership as of the Closing Time and relating to such party's
Cable Business, including advance payments and deposits (including any accrued
interest on such deposits) by subscribers served by such party's Cable Business
for converters, encoders, decoders, cable television service and related sales,
shall be assumed by, and credited to the account of, the other party.
(c) There shall be credited to each party the economic value of all
accrued vacation time that such party credits after the Closing Time to the
employees of the other party that are hired by such party pursuant to Section
7.3(g), where economic value is the amount equal to the cash compensation that
would be payable to each such employee at his or her level of compensation on
the Closing Date for a period equal to such employee's credited accrued
vacation.
(d) All deposits relating to the business and operations of each
party's Systems that are held by third parties as of the Closing Time for the
account of such party or as security for such party's performance of its
obligations, including deposits on leases and deposits for utilities, will be
credited to the account of such party in their full amounts and will become the
property of the other party; provided that no adjustment will be made for any
deposits the full benefit of which for contractual or other reasons cannot be
made available to the other party within 12 months following the Closing Time.
(e) Neither TCI nor the Partnership will receive credit for any of its
(i) accounts receivable resulting from cable television service sales any
portion of which is 60 days or more past due as of the Closing Time, (ii)
accounts receivable resulting from advertising sales any portion of which is 120
days or more past due as of the Closing Time; provided, that each party shall
receive
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credit for advertising accounts receivable from national and regional
representation accounts that are assigned to the other party at Closing in an
amount equal to 100% of the face amount of such accounts receivable regardless
of the age thereof, or (iii) accounts receivable from customers whose accounts
are inactive or whose service is pending disconnection for any reason as of the
Closing Time. For purposes of making "past due" calculations under this
paragraph, the billing statements of a System will be deemed to be due and
payable on the first day of the period during which the service to which such
billing statements relate is provided.
(f) There shall be debited to the accounts of TCI and the Partnership,
an amount equal to the upgrade deduction for each party specified on SCHEDULE
1.9 (the "Upgrade Deductions"); provided that the Upgrade Deduction for each
party shall be reduced by the aggregate amount of all capital expenditures made
by such party (and, in the case of the Partnership, all capital expenditures
made by Century) during the period from November 1, 1997 through the Closing
Date relating to upgrades and rebuilds of System plant capacity and associated
items (including headend sites and headend equipment to expand channel
capacity).
(g) There shall be credited to the accounts of TCI and Century all
capital expenditures made by such party relating to the launch of digital or
internet services, including the purchase of digital converters but not
including digital converters purchased in the ordinary course of business to
replace lost, stolen or defective digital converters.
(h) There shall be credited to the account of the other party an
amount equal to the aggregate amount of all capital expenditures reasonably
estimated by the other party to be incurred by it after Closing to assure that
the Computer and Other Systems received by it are Year 2000 Ready; provided that
the amount so estimated shall be subject to the dispute resolution procedures
set forth in Section 3.3.
(i) The adjustments provided for in this Section 3.2 will be made
without duplication. In addition, none of the adjustments provided for in this
Section 3.2 will be made with respect to any Excluded Asset or with respect to
any item of income or expense related to an Excluded Asset.
(j) The Cash Consideration to be paid pursuant to Section 3.1 shall be
increased or decreased, as applicable, by the net amount of the Pro Rata
Adjustments calculated under this Section 3.2 (the "Adjustment Amount").
3.3 Calculation of Adjustments.
(a) Each party will estimate in good faith with respect to its
Systems, and set forth, together with a detailed statement of the calculation
thereof, the Annualized Cash Flow and Pro Rata Adjustments with respect to its
Cable Business in a certificate (the "Initial Adjustment Certificate") executed
by an authorized representative of such party and delivered to the other party
at least 10 Business Days prior to the Closing. Each Initial Adjustment
Certificate will be
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accompanied by appropriate documentation, including an accounts receivable
detail with relevant aging information as of the Closing Time, in summary form,
supporting the determination of the Annualized Cash Flow and Pro Rata
Adjustments proposed in such certificate. Following receipt of such Initial
Adjustment Certificate, the recipient shall have five Business Days to review
such schedule and supporting information and to notify the preparer of such
Initial Adjustment Certificate of any disagreements with the preparer's
estimates of its Annualized Cash Flow or Pro Rata Adjustments. If the recipient
provides a notice of disagreement with the preparer's estimates of such amounts
within such five Business Day period, TCI and the Partnership shall negotiate in
good faith to resolve any such dispute and to reach an agreement prior to the
Closing on such estimated amounts as of the Closing Time. The estimates so
agreed upon by TCI and the Partnership or (if the parties do not reach such an
agreement on such estimated amounts set forth in the Initial Adjustment
Certificate prior to the Closing Date or if the recipient fails to provide a
notice of disagreement with the preparer's estimates of such amounts within the
time provided) the estimates of such Annualized Cash Flow and Pro Rata
Adjustments set forth in the Initial Adjustment Certificate shall be the basis
for preliminarily determining the Cash Consideration to be paid pursuant to
Section 3.1 and the preliminary adjustment to be made to Cash Consideration on
the Closing Date in respect of the Adjustment Amount. All disagreements that may
exist with respect to the Initial Adjustment Certificate shall be resolved in
connection with the preparation of the Final Adjustment Certificate pursuant to
paragraph (b) below.
(b) Within 90 days after the Closing, each party will deliver to the
other a certificate (the "Final Adjustment Certificate") showing in full detail
its final determination of Annualized Cash Flow and the Pro Rata Adjustments
with respect to its Systems, which certificate will be accompanied by
appropriate documentation supporting the amounts proposed in such certificate,
including an accounts receivable detail with relevant aging information as of
the Closing Time, and which will be executed by an officer of such party. Each
party will review the other's Final Adjustment Certificate and will give written
notice to the other party of any objections it has to the calculations shown in
such certificate within 30 days after its receipt thereof. TCI and the
Partnership will endeavor in good faith to resolve any such objections within 30
days after the receipt by the parties of each other's objections. If any
objections or disputes have not been resolved at the end of such 30-day period,
the disputed portions of Annualized Cash Flow or the Pro Rata Adjustments will
be determined within the following 30 days by a partner in a major accounting
firm with substantial cable television audit experience which is not the auditor
of either the Partnership or TCI (or any Affiliate of either of them) and the
determination of such auditor will be final and will be binding upon all
parties. If the Partnership and TCI cannot agree with respect to the selection
of an auditor, the Partnership and TCI will each select an auditor and those two
auditors will select a third auditor whose determination will be final and will
be binding upon all parties. The Partnership and TCI will bear equally the
expenses arising in connection with an auditor's determination of disputed
amounts, and payment of the final amount owed pursuant to this Section 3 (after
taking into account any adjustments or payments made or paid at Closing) will be
made by the party responsible therefor to the other party in immediately
available funds within 15 Business Days after the final determination is made.
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(c) Each party will provide to the other reasonable access to all
records in its possession which were used in the preparation of its Initial
Adjustment Certificate and Final Adjustment Certificate.
3.4 Post-Closing Rate Adjustments.
(a) If at any time after the final determination of Cash Consideration
pursuant to this Section 3, it is determined pursuant to a final non-appealable
order of, or pursuant to a final settlement with, the FCC or other Governmental
Authority (a "Rate Determination"), that (i) any rates charged to subscribers of
any Systems for services or equipment at any time during the three month period
used to calculate Annualized Cash Flow were not allowable under rules and
regulations promulgated by the FCC under the Communications Act, or any
authoritative interpretation thereof, and (ii) that the rates to be charged by
such Systems following the Closing Date must be reduced, then the Cash
Consideration to be paid pursuant to this Section 3 will be recalculated using
an adjusted Annualized Cash Flow that reflects the allowable rate for such time
period (after taking into account as an offset any other rate increases that are
available to the affected Systems at the time); provided that this Section
3.4(a) will not require any duplicative adjustments with respect to adjustments
made under the terms set forth in SCHEDULE 1.9. Upon the happening of an event
specified in this Section 3.4(a), the parties will negotiate in good faith for a
period of 60 days to reach agreement on the amount of the required adjustment;
provided that if TCI and the Partnership are not able to agree on the amount of
the adjustment to Cash Consideration to be made pursuant to this Section 3.4(a)
within such time frame, any disputed amounts will be determined in the manner
set forth in Section 3.3(b) with respect to disputes involving the Annualized
Cash Flow and Pro Rata Adjustments. Upon agreement or final determination of the
required adjustment, the party responsible for payment pursuant to this Section
3.4(a) shall promptly make such payment to the other.
(b) If pursuant to a Rate Determination that occurred prior to Closing
any rates charged to subscribers of any Systems for services or equipment at any
time during the three month period used to calculate Annualized Cash Flow were
required to be reduced and following Closing there is another Rate Determination
pursuant to which such rates are permitted to be raised following Closing, then
the Cash Consideration to be paid pursuant to this Section 3 will be
recalculated using an adjusted Annualized Cash Flow that reflects the increased
rate that would have been permissible for such time period (after taking into
account as an offset any other rate decreases that are applicable to the
affected Systems at the time); provided that this Section 3.4(b) will not
require any duplicative adjustments with respect to adjustments made under the
terms set forth in SCHEDULE 1.9. Upon the happening of an event specified in
this Section 3.4(b), the parties will negotiate in good faith for a period of 60
days to reach agreement on the amount of the required adjustment; provided that
if TCI and the Partnership are not able to agree on the amount of the adjustment
to Cash Consideration to be made pursuant to this Section 3.4(b) within such
time frame, any disputed amounts will be determined in the manner set forth in
Section 3.3(b) with respect to disputes involving the Annualized Cash Flow and
Pro Rata Adjustments. Upon agreement or final determination of the
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required adjustment, the party responsible for payment pursuant to this Section
3.4(b) shall promptly make such payment to the other.
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS
4.1 TCI Assumed Obligations and Liabilities. As of the Closing Time, TCI
will assume and after the Closing Time, TCI will pay, discharge and perform the
following (the "TCI Assumed Obligations and Liabilities"): (a) those obligations
and liabilities accruing and relating to periods after the Closing Time under or
with respect to the Century Assets assigned and transferred to TCI at the
Closing; (b) those obligations and liabilities of Century and the Partnership to
customers of Century's Cable Business for (i) subscriber deposits related to the
Century Systems held by the Partnership as of the Closing Time in the amount for
which TCI received credit under Section 3.2 and (ii) customer, advertising and
other advance payments held by the Partnership as of the Closing Time in the
amount for which TCI received credit under Section 3.2; (c) all other
obligations and liabilities accruing and relating to Century's Cable Business
prior to the Closing Time in respect of which TCI received a credit pursuant to
Section 3.2; and (d) all other obligations and liabilities accruing and relating
to periods after the Closing Time and arising out of TCI's ownership of the
Century Assets or operation of the Century Systems after the Closing Time,
except to the extent that such obligations or liabilities relate to any Century
Excluded Asset. All obligations and liabilities, contingent, fixed or otherwise,
arising out of or relating to the Century Assets or the Century Systems other
than the TCI Assumed Obligations and Liabilities will remain and be the
obligations and liabilities solely of the Partnership or, if not assumed by the
Partnership, Century, including any obligation, liability or claim relating to
or arising pursuant to (x) rate refunds to subscribers of the Century Systems
with respect to rates charged to such subscribers during periods through and
including the Closing Time, (y) litigation commenced prior to, or related to an
event occurring at any time prior to the Closing Time, or (z) any Century
Excluded Asset.
4.2 TCI Excluded Assets. "TCI Excluded Assets" means all: (a) programming
(including cable guide Contracts) and retransmission consent Contracts of TCI
(other than those listed on SCHEDULE 1.63 (TCI System Contracts) and not
designated as a TCI Excluded Asset); (b) TCI Plans; (c) insurance policies of
TCI and rights and claims thereunder (except as otherwise provided in Section
12.16); (d) bonds, letters of credit, surety instruments and other similar items
and any stocks, bonds, certificates of deposit and similar investments of TCI;
(e) cash and cash equivalents and notes receivable of TCI; (f) TCI's trademarks,
trade names, service marks, service names, logos and similar proprietary rights,
subject to Section 7.11; (g) subscriber billing Contracts and related leased
equipment and software of TCI, even if listed on any Schedule to this Agreement
but subject to Section 7.12; (h) all contracts and related accounts receivable
for providing DMX service to commercial accounts via direct broadcast satellite
even if listed on a Schedule to this Agreement; (i) all TCI Contracts relating
to national advertising sales representation, including Contracts with National
Cable Communications or Cable Networks, Inc.; (j) all agreements pursuant to
which TCI has created, incurred, assumed or guaranteed indebtedness for borrowed
money or under which any Lien securing such indebtedness has been or may be
imposed on any TCI Asset; (k) any claims, rights or choses in action of TCI
related to the period prior to the Closing Time (other than customer
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and advertising accounts receivable), including, without limitation, any
Litigation and the proceeds thereof and any claims, rights and interest in and
to any refunds of federal, state or local franchise, income or other taxes or
payments of any nature for the periods prior to the Closing Time, including
copyright fees; (l) any books and records that TCI is required by any Legal
Requirement to retain and any books of account, tax reports and returns and the
like related to the TCI Systems; provided that copies of such books and records
will be made available to the Partnership for a period of three years (and six
years in the case of tax reports and returns and underlying books and records,
although in the case of underlying books and records, the parties acknowledge
that they are not retained for periods for which an IRS field examination has
been completed) from the Closing Date upon reasonable request; (m) TCI's
partnership records and other books and records related to internal partnership
matters and financial relationships with TCI's lenders and affiliates; (n) any
employment, union, collective bargaining, compensation, bonus, deferred
compensation, noncompetition, confidentiality, consulting, agency or management
agreements of TCI other than those listed on SCHEDULE 1.63; (o) all documents,
reports and records relating to the employees of the TCI Systems; provided that
copies of such books and records will be made available to the Partnership for a
period of three years from the Closing Date upon reasonable request by the
Partnership accompanied by a waiver and release from the employee whose records
are sought in form and substance reasonably satisfactory to TCI; (p) any
agreement, right, asset or property owned, leased or held by TCI or its
affiliates that is not used or held for use primarily in connection with the
operation of the TCI Systems; (q) TCI's rights under the @Home Distribution
Agreement (as defined in the limited partnership agreement of the Partnership),
it being agreed that the parties' rights and obligations with respect thereto
shall be as specified in such partnership agreement and (r) rights, assets and
properties described on SCHEDULE 4.2.
4.3 Century Assumed Obligations and Liabilities. As of the Closing Time,
the Partnership will assume and after the Closing Time, the Partnership will
pay, discharge and perform the following (the "Century Assumed Obligations and
Liabilities"): (a) those obligations and liabilities accruing and relating to
periods after the Closing Time under or with respect to the TCI Assets assigned
and transferred to the Partnership at the Closing; (b) those obligations and
liabilities of TCI to customers of TCI's Cable Business for (i) subscriber
deposits related to the TCI Systems held by TCI as of the Closing Time in the
amount for which the Partnership received credit under Section 3.2 and (ii)
customer, advertising and other advance payments held by TCI as of the Closing
Time in the amount for which the Partnership received credit under Section 3.2;
(c) all other obligations and liabilities accruing and relating to TCI's Cable
Business prior to the Closing Time in respect of which the Partnership received
a credit pursuant to Section 3.2; and (d) all other obligations and liabilities
accruing and relating to periods after the Closing Time and arising out of the
Partnership's ownership of the TCI Assets or operation of the TCI Systems after
the Closing Time, except to the extent that such obligations or liabilities
relate to any TCI Excluded Asset. All obligations and liabilities, contingent,
fixed or otherwise, arising out of or relating to the TCI Assets or the TCI
Systems other than the Century Assumed Obligations and Liabilities will remain
and be the obligations and liabilities solely of TCI including any obligation,
liability or claim relating to or arising pursuant to (x) rate refunds to
subscribers of the TCI Systems with respect to rates charged to such subscribers
during periods through and including the Closing Time, (y) litigation
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commenced prior to, or related to an event occurring at any time prior to the
Closing Time, or (z) any TCI Excluded Asset.
4.4 Century Excluded Assets. "Century Excluded Assets" means all: (a)
programming (including cable guide Contracts) and retransmission consent
Contracts of the Partnership (other than those listed on SCHEDULE 1.17 (Century
System Contracts) and not designated as a Century Excluded Asset); (b) Century
Plans; (c) insurance policies of Century and rights and claims thereunder
(except as otherwise provided in Section 12.16); (d) bonds, letters of credit,
surety instruments and other similar items and any stocks, bonds, certificates
of deposit and similar investments of the Partnership; (e) cash and cash
equivalents and notes receivable of the Partnership; (f) Century's trademarks,
trade names, service marks, service names, logos and similar proprietary rights,
subject to Section 7.11; (g) subscriber billing Contracts and related leased
equipment and software of the Partnership, even if listed on any Schedule to
this Agreement but subject to Section 7.12; (h) all Century Contracts relating
to national advertising sales representation; (i) all agreements pursuant to
which the Partnership has created, incurred, assumed or guaranteed indebtedness
for borrowed money or under which any Lien securing such indebtedness has been
or may be imposed on any Century Asset; (j) any claims, rights or choses in
action of Century related to the period prior to the Closing Time (other than
customer and advertising accounts receivable), including, without limitation,
any Litigation and the proceeds thereof and any claims, rights and interest in
and to any refunds of federal, state or local franchise, income or other taxes
or payments of any nature for the periods prior to the Closing Time, including
copyright fees; (k) any books and records that Century is required by any Legal
Requirement to retain and any books of account, tax reports and returns and the
like related to the Century Systems; provided that copies of such books and
records will be made available to TCI for a period of three years (and six years
in the case of tax reports and returns and underlying books and records,
although in the case of underlying books and records, the parties acknowledge
that they are not retained for periods for which an IRS field examination has
been completed) from the Closing Date upon reasonable request; (l) Century's
corporate minute books and other books and records related to internal corporate
matters and financial relationships with Century's lenders and affiliates; (m)
any employment, union, collective bargaining, compensation, bonus, deferred
compensation, noncompetition, confidentiality, consulting, agency or management
agreements of the Partnership other than those listed on SCHEDULE 1.17; (n) any
agreement, right, asset or property owned, leased or held by Century that is not
used or held for use primarily in connection with the operation of the Century
Systems; (o) all documents, reports and records relating to the employees of the
Century Systems; provided that copies of such books and records will be made
available to TCI for a period of three years from the Closing Date upon
reasonable request by TCI accompanied by a waiver and release from the employee
whose records are sought in form and substance reasonably satisfactory to the
Partnership; (p) the @ Home Distribution Agreement dated as of May 1, 1998 by
and between At Home Corporation and Century Communications Corp.; (q) all assets
related to Century's Cable Business that are not required to be contributed by
Century Exchange to the Partnership under the Contribution Agreement; and (r)
rights, assets and properties described on SCHEDULE 4.4.
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SECTION 5. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES
The Partnership represents and warrants to TCI as of the date of this
Agreement (or, if a different date is specified in this Section 5 or in the
Century Schedules, as of such specified date) as follows:
5.1 Organization and Qualification of the Partnership. The Partnership is a
limited partnership duly organized and validly existing under the laws of the
State of Delaware. The Partnership (a) has all requisite partnership power and
authority to own, lease and use the Century Assets and to conduct Century's
Cable Business as it is currently conducted and (b) at Closing will be duly
qualified to do business and be in good standing under the laws of each
jurisdiction in which the ownership, leasing or use of the Century Assets or the
nature of its activities in connection with the Century Systems makes such
qualification necessary, except in any such jurisdiction where the failure to be
so qualified and in good standing would not have a material adverse effect on
the ownership or operation of Century's Cable Business, the Century Assets or
Century Systems or on the ability of the Partnership to perform its obligations
under this Agreement. The Partnership's taxpayer identification number will be
delivered at Closing.
5.2 Authority and Validity. The Partnership has all requisite partnership
power and authority to execute and deliver, to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Transaction Documents to which it is a party. The execution and delivery by the
Partnership, the performance by the Partnership under, and the consummation by
the Partnership of the transactions contemplated by, this Agreement and the
Transaction Documents to which it is a party have been duly and validly
authorized by all required partnership action by or on behalf of the
Partnership. This Agreement has been, and when executed and delivered by the
Partnership, the Transaction Documents will be, duly and validly executed and
delivered by the Partnership and the valid and binding obligations of the
Partnership, enforceable against the Partnership in accordance with their terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to the enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
5.3 No Conflict; Required Consents. Except for, and subject to receipt of,
the Century Required Consents, all of which are listed on SCHEDULE 5.3, the TCI
Required Consents, any Consents necessary to consummate the Contribution, and
the notification and expiration or earlier termination of the waiting period
under the HSR Act, the execution and delivery by the Partnership, the
performance of the Partnership under, and the consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which the
Partnership is a party do not and will not: (a) conflict with or violate any
provision of its partnership agreement; (b) violate any provision of any Legal
Requirement; (c) require any consent, approval or authorization of, or filing of
any certificate, notice, application, report or other document with, any
Governmental Authority or other Person; or (d) (i) conflict with, violate,
result in a breach of or constitute a default under (without regard to
requirements of notice, lapse of time or elections of other Persons or any
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combination thereof), (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) its performance under, (iv) result in the creation or
imposition of any Lien under any Century System Franchise, Century System
License or any Century System Contract or other instrument evidencing any of the
Century Assets to which Century is party or by which Century or any of its
assets is bound or affected and which will be assigned to the Partnership,
except for purposes of clauses (c) and (d) such consents, approvals,
authorizations and filings that, if not obtained or made, would not, and such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have a material adverse effect on any Century System, Century's Cable Business
or on its ability to perform its obligations under this Agreement or the
Transaction Documents to which it is a party.
5.4 Assets.
(a) Century has, and at the Closing the Partnership will have, good
and valid title to (or, in the case of Assets that are leased, valid leasehold
interests in) the Century Assets (other than Century Owned Real Property,
Century Leased Property and Century Other Real Property Interests, as to which
representations and warranties in Section 5.6 apply). The Century Assets are
free and clear of all Liens, except (i) Permitted Liens and (ii) Liens described
on SCHEDULE 5.4, all of which Liens on SCHEDULE 5.4 will be terminated, released
or, in the case of the rights of first refusal listed on SCHEDULE 5.4, waived,
as appropriate, at or prior to the Closing. SCHEDULE 1.20 lists the principal
items of Century Tangible Personal Property as of the date specified on such
Schedule, or if no date is specified, as of the date of this Agreement. Except
as described on SCHEDULE 1.20 (Century Tangible Personal Property), the Century
Tangible Personal Property is in good operating condition and repair (ordinary
wear and tear excepted).
(b) Except for items included in the Century Excluded Assets, the
Century Assets constitute all the assets necessary to permit TCI to conduct
Century's Cable Business and to operate the Century Systems substantially as
they are being conducted and operated on the date of this Agreement and in
compliance in all material respects with all applicable Legal Requirements,
Century System Contracts, Century System Licenses and Century System Franchises
and to perform all of the TCI Assumed Obligations and Liabilities.
(c) Except as disclosed on SCHEDULE 5.4, to the Knowledge of Century,
no third party has been granted or applied for a cable television franchise or
is providing or intending to provide multichannel video programming, other than
programming by direct-broadcast satellite in any of the communities or
unincorporated areas currently served by Century's Cable Business.
5.5 Century System Franchises, Century System Licenses, Century System
Contracts and Century Other Real Property Interests.
(a) Except for the agreements listed on SCHEDULES 1.12 (Century Leased
Property), 1.14 (Century Other Real Property Interests), 1.17 (Century System
Contracts), 1.18
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(Century System Franchises) and 1.19 (Century System Licenses), or as described
on SCHEDULE 4.4 (Century Excluded Assets) or otherwise included in the
definition of Century Excluded Assets, Century is not bound or affected by any
of the following that relate primarily or in whole to Century's Cable Business:
(i) leases of real or personal property; (ii) franchises for the construction or
operation of cable television systems or Contracts of substantially equivalent
effect; (iii) other licenses, authorizations, consents or permits of the FCC or
any other Governmental Authority; (iv) material easements, rights of access,
underground conduit agreements, crossing agreements or other interests in real
property; (v) pole line or attachment agreements; (vi) multiple dwelling unit
agreements, including bulk agreements, and commercial service agreements;
provided that only a listing of the addresses of such units is attached, it
being acknowledged by TCI that written agreements do not exist with respect to
all such units; (vii) agreements pursuant to which the Century Systems receive
or provide advertising sales representation services; (viii) agreements pursuant
to which a Century System has constructed or agreed to construct for third
parties an institutional network or otherwise provides to third parties
telecommunications services other than one-way video; (ix) agreements pursuant
to which the Systems receive or have contracted to receive any Non-TV Products
and Services; (x) construction and development agreements (other than
installation agreements where services are provided in the ordinary course of
business on an as-needed basis); or (xi) Contracts relating to the operation of
Century's Cable Business other than those described in any other clause of this
Section which contemplate payments by or to Century in any 12-month period
exceeding $25,000 individually or $150,000 in the aggregate or that have a
remaining term of two years or more as of the Closing Date. Except as described
on the Schedules to this Agreement, no Affiliate of the Partnership (other than
Century) is a party to any documents listed on such Schedules.
(b) Complete and correct copies of the Century System Franchises and
Century System Licenses have been delivered by the Partnership to TCI. Except as
set forth on SCHEDULE 1.18 (Century System Franchises), the Century System
Franchises contain all of the commitments and obligations of Century to the
applicable Governmental Authority granting such Franchises with respect to the
construction, ownership and operation of the Century Systems. The Century System
Franchises and Century System Licenses are currently in full force and effect
and are valid and enforceable under all applicable Legal Requirements according
to their terms. There is no legal action, governmental proceeding or, to
Century's Knowledge, investigation, pending or to Century's Knowledge
threatened, to terminate, suspend or modify any Century System Franchise or any
Century System License and Century is in material compliance with the terms and
conditions of all the Century System Franchises and Century System Licenses and
with other applicable requirements of all Governmental Authorities (including
the FCC and the Register of Copyrights) relating to the Century System
Franchises and Century System Licenses, including all requirements for
notification, filing, reporting, posting and maintenance of logs and records.
All areas served by the Century Systems are served pursuant to one of the
Century Franchises except as set forth on SCHEDULE 1.18.
(c) Except as set forth on SCHEDULE 1.14, complete and correct copies
of all Century System Contracts required to be listed on Century's Schedules
(including all Contracts
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relating to Leased Property and Other Real Property Interests described on
SCHEDULE 1.14) have been provided to TCI. Such documents constitute the entire
agreement with the other party. Each such Century System Contract is in full
force and effect and constitutes the valid, legal, binding and enforceable
obligation of Century, and Century is not and to Century's Knowledge, each other
party thereto is not in breach or default of any material terms or conditions
thereunder.
5.6 Real Property. All Century Assets consisting of Century Owned Property,
Century Leased Property and material Century Other Real Property Interests are
described on SCHEDULES 1.12 (Century Leased Property), 1.14 (Century Other Real
Property Interests) and 1.15 (Century Owned Property), including address and use
for each such real property interest. Except as otherwise disclosed on SCHEDULE
1.15 (Century Owned Property), Century holds (and at the Closing, the
Partnership will hold) title to the Century Owned Property free and clear of all
Liens (except (i) Permitted Liens and (ii) Liens described on SCHEDULE 5.4, all
of which Liens on SCHEDULE 5.4 will be terminated, released or, in the case of
the rights of first refusal listed on SCHEDULE 5.4, waived, as appropriate, at
or prior to the Closing) and Century has (and at the Closing, the Partnership
will have) the valid and enforceable right to use and possess such Century Owned
Property, subject only to the above-referenced Liens. Except as otherwise
disclosed on SCHEDULES 1.12 (Century Leased Property) and 1.14 (Century Other
Real Property Interests), Century has (and at the Closing, the Partnership will
have) valid and enforceable leasehold interests in all Century Leased Property
and, with respect to Century Other Real Property Interests, has valid and
enforceable rights to use such Century Other Real Property Interests, in each
case subject only to the above-referenced Liens. Except for ordinary wear and
tear and routine repairs, all of the material improvements, leasehold
improvements and the premises of the Century Owned Property and the premises
demised under the leases and other documents evidencing the Century Leased
Property are in good condition and repair and are suitable for the purposes
used. Each parcel of Century Owned Property and each parcel of Century Leased
Property and any improvements thereon and their current use (x) has access to
and over public streets or private streets for which Century has (and at the
Closing, the Partnership will have) a valid right of ingress and egress, (y)
conforms in its current use and occupancy to all material zoning requirements
without reliance upon a variance issued by a Governmental Authority or a
classification of the parcel in question as a nonconforming use and (z) conforms
in its current use to all restrictive covenants, if any, or other Liens
affecting all or part of such parcel. Except where the failure of the
representations made in this sentence to be true and correct would not have a
material adverse effect on the Century Assets or Century's Cable Business, all
buildings, towers, guy wires and anchors, headend equipment, earth-receiving
dishes and related facilities used in the operations of the Century Systems and
included in the Century Assets are located entirely on Century Owned Property or
Century Leased Property or other real property in which Century has a Century
Other Real Property Interest and are maintained, placed and located in
accordance with the provisions of all applicable Legal Requirements, deeds,
leases, licenses, permits or other legally enforceable arrangements.
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5.7 Environmental.
(a) To Century's Knowledge, the Century Owned Property and Century
Leased Property comply in all material respects with and have previously been
operated in compliance in all material respects with all Environmental Laws.
Except as disclosed on SCHEDULE 5.7, Century has not, either directly or
indirectly (i) generated, stored, used, treated, handled, discharged, released
or disposed of any Hazardous Substances at, on, under, in or about, to or from
or in any other manner affecting, any Century Owned Property or Century Leased
Property, (ii) transported any Hazardous Substances to or from any Century Owned
Property or Century Leased Property or (iii) undertaken or caused to be
undertaken any other activities relating to the Century Owned Property or
Century Leased Property, which could reasonably give rise to any liability under
any Environmental Law and, to Century's Knowledge, no other present or previous
owner, tenant, occupant or user of any Century Owned Property or Century Leased
Property or any other Person has committed or suffered any of the foregoing. To
Century's Knowledge, no release of Hazardous Substances outside the Century
Owned Property or Century Leased Property has entered or threatens to enter any
Century Owned Property or Century Leased Property, nor is there any pending or
threatened Litigation based on Environmental Laws which arises from any
condition of the land adjacent to or immediately surrounding any Century Owned
Property or Century Leased Property. No Litigation based on Environmental Laws
which relates to any Century Owned Property or Century Leased Property or any
operations or conditions on it (y) has been asserted or conducted in the past or
is currently pending against or with respect to Century or, to Century's
Knowledge, any other Person or (z) to Century's Knowledge, is threatened or
contemplated.
(b) Except as disclosed on SCHEDULE 5.7, to Century's Knowledge, (i)
no aboveground or underground storage tanks are currently or have been located
on any Century Owned Property or Century Leased Property, (ii) no Century Owned
Property or Century Leased Property has been used at any time as a gasoline
service station or any other facility for storing, pumping, dispensing or
producing gasoline or any other petroleum products or wastes and (iii) no
building or other structure on any Century Owned Property or Century Leased
Property contains asbestos, asbestos-containing material or material presumed to
be asbestos-containing material under any Environmental Law.
(c) The Partnership has provided TCI with complete and correct copies
of (i) all studies, reports, surveys or other written materials in Century's
possession relating to the presence or alleged presence of Hazardous Substances
at, on, under or affecting the Century Owned Property or Century Leased
Property, (ii) all notices (other than general notices made by general
publication) or other materials in Century's possession that were received from
any Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
the Century Owned Property or Century Leased Property or activities at the
Century Owned Property or Century Leased Property and (iii) all materials in
Century's possession relating to any Litigation or allegation by any private
third party concerning any Environmental Law.
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5.8 Compliance with Legal Requirements.
(a) The ownership, leasing and use of the Century Assets as they are
currently owned, leased and used and the conduct of Century's Cable Business and
the operation of the Century Systems as they are currently conducted and
operated do not violate or infringe in any material respect any Legal
Requirements currently in effect (other than Legal Requirements described in
Sections 5.7, 5.8(d) and 5.13, as to which the representations and warranties
set forth in those subsections shall apply), including (i) the Communications
Act, (ii) Section 111 of the U.S. Copyright Act of 1976 and the applicable U.S.
Copyright Office rules and regulations promulgated thereunder (the "Copyright
Act") and (iii) all other applicable Legal Requirements relating to the
construction, maintenance, ownership and operation of the Century Assets, the
Century Systems and Century's Cable Business. Except as disclosed on SCHEDULE
5.8, Century has received no written notice of any violation by Century or
Century's Cable Business of any Legal Requirement applicable to the operation of
Century's Cable Business as currently conducted, or the Century Systems as
currently operated and to Century's Knowledge, there is no existing fact,
circumstance or condition that could reasonably form the basis for a finding by
any Governmental Authority of any such violation.
(b) A valid request for renewal has been duly and timely filed under
Section 626 of the Communications Act with the proper Governmental Authority
with respect to all Century System Franchises that have expired prior to or will
expire within 36 months after the date of this Agreement.
(c) Except as set forth in SCHEDULE 5.8, (i) no written notices or
demands have been received from the FCC, from any television station, or from
any other Person or Governmental Authority (A) challenging the right of the
Century Systems to carry any television broadcast station or deliver the same or
(B) claiming that any Century System has failed to carry a television broadcast
station required to be carried pursuant to the Communications Act or has failed
to carry a television broadcast station on a channel designated by such station
consistent with the requirements of the Communications Act; (ii) all necessary
Federal Aviation Administration ("FAA") approvals have been obtained with
respect to the height and location of towers used in connection with the
operation of the Century Systems and are listed in SCHEDULE 5.8, and such towers
are being operated in compliance in all material respects with applicable FCC
and FAA rules; and (iii) Century has received no written notice from any
Governmental Authority with respect to an intention to enforce customer service
standards pursuant to the 1992 Cable Act and except as set forth in its System
Franchises, Century has not agreed with any Governmental Authority to establish
customer service standards that exceed the FCC standards promulgated pursuant to
the 1992 Cable Act.
(d) Notwithstanding the foregoing, to Century's Knowledge, each
Century System is in compliance in all material respects with the provisions of
the 1992 Cable Act as such Legal Requirements relate to the rates and other fees
charged to subscribers of Century's Cable Business. Century has used reasonable
good faith efforts to establish rates charged to subscribers, effective since
September 1, 1993, that are or were allowable under the 1992 Cable Act and any
authoritative
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interpretation thereof now or then in effect, to the extent such rates are or
were subject to regulation at such time by any Governmental Authority, including
any local franchising authority and/or the FCC. Notwithstanding the foregoing,
the Partnership makes no representation or warranty that any of its rates that
are not subject to rate regulation would be allowable if such rates were subject
to regulation and make no representation or warranty that the rates charged to
subscribers would be allowable under any rules and regulations of the FCC or any
authoritative interpretation thereof, promulgated after the Closing Date. The
Partnership has delivered to TCI complete and correct copies of all FCC Forms
and other information reasonably requested by TCI relating to rate regulation
generally or specific rates charged to subscribers with respect to the Century
Systems. Except as set forth on SCHEDULE 5.8, Century has not made any election
with respect to any cost of service proceeding conducted in accordance with Part
76.922 of Title 47 of the Code of Federal Regulations or any similar proceeding
with respect to any of the Century Systems (a "Cost of Service Election").
Except as set forth in SCHEDULE 5.8, Century has not entered into and is not
subject to any so-called social contract or proposed resolution with the FCC or
any local franchise authority with respect to rates charged for cable television
services in the Century Systems and is not currently negotiating or anticipating
entering into or being subject to the same. Except as otherwise described on
SCHEDULE 5.8, as of the date of this Agreement, (i) to the Knowledge of Century,
there are no outstanding or unresolved proceedings or investigations (other than
those affecting the cable industry generally) dealing with or otherwise
affecting the rates that any cable television system included in the Century
Systems can charge (whether for programming, equipment, installation, service or
otherwise) including appeals, (ii) no cable television system included in the
Century Systems is subject to any currently effective order issued by a
Governmental Authority that reduced the rates that it may charge (whether for
programming, equipment, installation, service, or otherwise), (iii) no local
franchising authority has been certified by the FCC as a rate regulating
authority with respect to any of the Century Systems, and (iv) there is no
unresolved complaint pending with respect to the CPST tier of any Century System
and no rate order with respect to the Century Systems that is being appealed.
(e) The Century Systems that serve more than 10,000 subscribers will
have emergency alert capability as required by the FCC prior to January 1, 1999
or such later date as may hereafter be specified by the FCC.
5.9 Patents, Trademarks and Copyrights. Century has deposited with the U.S.
Copyright Office all statements of account and other documents and instruments,
and has paid all royalties, supplemental royalties, fees and other sums to the
U.S. Copyright Office under the Copyright Act with respect to the business and
operations of the Century Systems as are required to obtain, hold and maintain
the compulsory license for cable television systems prescribed in Section 111 of
the Copyright Act. To Century's Knowledge, there is no inquiry, claim, action or
demand pending before the U.S. Copyright Office or from any other Person which
questions the copyright filings or payments made by Century with respect to the
Century Systems. The Partnership has delivered to TCI complete and correct
copies of all current reports and filings for the past three years, made or
filed pursuant to copyright rules and regulations with respect to Century's
Cable Business. Century does not possess any patent, patent right, trademark or
copyright related to or material to the
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operation of the Century Systems and Century is not a party to any license or
royalty agreement with respect to any such patent, patent right, trademark or
copyright, except for licenses respecting program material and obligations under
the Copyright Act applicable to cable television systems generally. The Century
Systems and Century's Cable Business have been operated in such a manner so as
not to violate or infringe upon the rights, or give rise to any rightful claim
of any Person for copyright, trademark, service xxxx, patent or license
infringement or the like.
5.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events. The Partnership has delivered to TCI complete and correct
copies of (a) unaudited balance sheets of the Century Systems and related
statements of income, stockholders' equity and cash flows for the Century
Systems and as of the fiscal year ended May 31, 1997, including all notes and
schedules thereto and (b) unaudited balance sheets of the Century Systems and
the related unaudited statements of income of the Century Systems for each
quarter ending after May 31, 1997 (all of such financial statements and notes
being hereinafter referred to as "Century's Financial Statements"). Century's
Financial Statements are in accordance with the books and records of Century,
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, and, except as may be described therein, present
fairly the financial condition of Century at the dates and for the periods
indicated, subject, in the case of unaudited Century Financial Statements, only
to standard year-end adjustments and the omission of footnotes. The unaudited
Balance Sheet as of February 28, 1998 of Century is herein called "Century
Balance Sheet." At the date of the Century Balance Sheet, Century had no
material liabilities with respect to the Systems required by GAAP to be
reflected or reserved against therein that were not fully reflected or reserved
against on the Century Balance Sheet, other than liabilities as set forth on
SCHEDULE 5.10. Except as set forth on SCHEDULE 5.10, since November 30, 1997:
(x) neither Century nor the Partnership has incurred any obligation or liability
(contingent or otherwise) with respect to the Systems, except normal trade or
business obligations incurred in the ordinary course of business, the
performance of which will not, to Century's Knowledge, individually or in the
aggregate, have a material adverse effect on the financial condition of Century
or the results of operations of Century's Cable Business; (y) there has been no
material adverse change in the Century Assets comprising any Century System or
in the business, condition, financial or otherwise, or liabilities of Century's
Cable Business or any Century System and, to Century's Knowledge, no fact or
condition exists or is contemplated or threatened which would result in such a
change in the future; and (z) Century's Cable Business has been conducted only
in the ordinary course of business consistent with past practice. For the
purpose of this Agreement, the impact of general economic conditions (including
changes in capital and financial markets), governmental legislation and
regulations and other events which affect the cable industry as a whole in the
State of California or the United States, shall not be considered in determining
whether there has been a material adverse change in the business, condition,
financial or otherwise or liabilities of Century's Cable Business or any Century
System or the Century Assets.
5.11 Litigation. Except as set forth in SCHEDULE 5.11: (a) there is no
Litigation pending or, to Century's Knowledge, threatened, and to Century's
Knowledge, there is no investigation pending or threatened, by or before any
Governmental Authority or private arbitration tribunal against Century which, if
adversely determined, would materially adversely affect the financial
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condition or operations of Century's Cable Business, Century Systems, the
Century Assets or the ability of the Partnership to perform its obligations
under this Agreement, or which, if adversely determined, would result in the
modification, revocation, termination, suspension or other limitation of any of
the Century System Franchises, Century System Licenses, Century System Contracts
or leases or other documents evidencing the Century Leased Property or the
Century Other Real Property Interests; and (b) there is not in existence any
Judgment requiring Century to take any action of any kind with respect to the
Century Assets or the operation of the Century Systems, or to which Century
(with respect to the Century Systems), the Century Systems or the Century Assets
are subject or by which they are bound or affected.
5.12 Tax Returns; Other Reports. Century has duly and timely filed in
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by Century, and has timely paid all Taxes which
have become due and payable, whether or not so shown on any such return or
report, the failure of which to be filed or paid could adversely affect or
result in the imposition of a Lien upon the Century Assets or that could impose
on TCI any transferee liability for any taxes, penalties or interest due or to
become due from Century, except such amounts as are being contested diligently
and in good faith and are not in the aggregate material. Century has received no
notice of, nor does Century have any Knowledge of, any deficiency, assessment or
audit, or proposed deficiency, assessment or audit from any taxing Governmental
Authority which could affect or result in the imposition of a Lien upon the
Century Assets.
5.13 Employment Matters.
(a) SCHEDULE 5.13(a) contains a complete and correct list of the names
and positions of all employees engaged principally in Century's Cable Business
as of the date set forth on SCHEDULE 5.13(a). Century has complied in all
material respects with all applicable Legal Requirements relating to the
employment of labor, including, the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. 'SS'2101, et seq. ("WARN"), ERISA, continuation
coverage requirements with respect to group health plans and those relating to
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, equal employment opportunity, age and disability discrimination,
immigration control and the payment and withholding of Taxes.
(b) Each employee benefit plan (as defined in Section 3(3) of ERISA)
or any multi-employer plan (as defined in Section 3(37) of ERISA) with respect
to which Century or any of its ERISA Affiliates has any liability or in which
any employees or agents, or any former employees or agents, of Century or any of
its ERISA Affiliates participate is set forth in SCHEDULE 5.13 (the "Century
Plans"). Except as disclosed on SCHEDULE 5.13(a), neither Century, any of its
ERISA Affiliates nor any Century Plan is in material violation of any provision
of the Code or ERISA. No "reportable event" (as defined in Section 4043 of
ERISA) has occurred and is continuing with respect to any Century Plan and no
"prohibited transaction" (as defined in Section 406 of ERISA) has occurred with
respect to any Century Plan which reasonably could result in material liability
to Century or any of its ERISA Affiliates. No material "accumulated funding
deficiency" or "withdrawal liability" (as defined in Section 302 of ERISA)
exists with respect to any
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of the Century Plans. After the Closing, TCI will not be required, under ERISA,
the Code or any collective bargaining agreement, to establish, maintain or
continue any Plan currently maintained by Century or any of its ERISA
Affiliates.
(c) Except as set forth on SCHEDULE 5.13, there are no union or
collective bargaining agreements applicable to any Person employed by Century
that renders services in connection with the Century Systems and Century has no
duty to bargain with any labor organization with respect to any such Person.
There are not pending any unfair labor practice charges against Century, any
demand for recognition or any other effort of or request or demand from, a labor
organization for representative status with respect to any Person employed by
Century that renders services in connection with the Century Systems. Except as
described on SCHEDULE 5.13, Century has no employment Contracts, either written
or oral, with any employee of the Century Systems and none of the employment
Contracts or other agreements listed on SCHEDULE 5.13 requires Century or will
require TCI to employ any Person after the Closing Time.
5.14 Century Systems Information. SCHEDULE 5.14 sets forth a materially
true and accurate description of the following information relating to Century's
Cable Business, as of the date specified in SCHEDULE 5.14, or, if no date is
specified, as of August 20, 1998:
(a) the approximate number of miles (both underground and aerial) of
plant included in the Century Assets;
(b) the number of Equivalent Basic Subscribers (including the number
that are individually billed and the number that are bulk-billed) served by the
Century Systems for each Century System service area (by franchise area or
community);
(c) the approximate number of single family homes and residential
dwelling units passed by the Century Systems;
(d) a description of basic and optional or tier services available
from the Century Systems, the rates charged by Century for each and the number
of customers receiving each optional or tier service;
(e) the stations and signals carried by the Century Systems and the
channel position of each such signal and station and the basis for carriage of
all television broadcast signals; and
(f) the cities, towns, villages, townships, boroughs, counties or
other communities served by the Century Systems (with or without the requirement
of a franchise).
5.15 Accounts Receivable. Century's accounts receivable for its Cable
Business are actual and bona fide receivables representing obligations for the
total dollar amount of such receivables, as shown on the books of Century, that
resulted from the regular course of Century's Cable Business.
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Such receivables are subject to no offset or reduction of any nature, except for
a reserve for uncollectible amounts consistent with the reserve established by
Century in Century's Financial Statements and those credits or reductions to
such accounts made in the ordinary course of business.
5.16 Bonds; Letters of Credit. Except as set forth on SCHEDULE 5.16, there
are no franchise, construction, fidelity, performance, or other bonds,
guaranties in lieu of bonds or letters of credit posted by Century in connection
with its operation or ownership of any of the Century Systems or Century Assets.
5.17 Finders and Brokers. Century has not employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which TCI could be liable.
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES
TCI represents and warrants to the Partnership as of the date of this
Agreement (or, if a different date is specified in this Section 5 or in the TCI
Schedules, as of such specified date) as follows.
6.1 Organization and Qualification of TCI. TCI is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Colorado and has all requisite partnership power and authority to own,
lease and use the TCI Assets owned, leased or used by it and to conduct TCI's
Cable Business as it is currently conducted. TCI is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the ownership, leasing or use of the TCI Assets or the nature of its activities
in connection with the TCI Systems makes such qualification necessary, except in
any such jurisdiction where the failure to be so qualified and in good standing
would not have a material adverse effect on the ownership or operation of TCI's
Cable Business, the TCI Assets or TCI Systems or on the ability of TCI to
perform its obligations under this Agreement. TCI's U.S. taxpayer identification
number is 00-0000000.
6.2 Authority and Validity. TCI has all requisite partnership power and
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Transaction
Documents to which TCI is a party. The execution and delivery by TCI, the
performance by TCI under, and the consummation by TCI of the transactions
contemplated by, this Agreement and the Transaction Documents to which TCI is a
party have been duly and validly authorized by all required partnership action
by or on behalf of TCI. This Agreement has been, and when executed and delivered
by TCI the Transaction Documents will be, duly and validly executed and
delivered by TCI and the valid and binding obligations of TCI, enforceable
against TCI in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to the enforcement of creditors' rights
generally or by principles governing the availability of equitable remedies.
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6.3 No Conflict; Required Consents. Except for, and subject to receipt of,
the TCI Required Consents, all of which are listed on SCHEDULE 6.3, and the
Century Required Consents and the notification an9d expiration or earlier
termination of the waiting period under the HSR Act, the execution and delivery
by TCI, the performance of TCI under, and the consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which TCI is a
party do not and will not: (a) conflict with or violate any provision of its
charter or bylaws; (b) violate any provision of any Legal Requirement; (c)
require any consent, approval or authorization of, or filing of any certificate,
notice, application, report or other document with, any Governmental Authority
or other Person; or (d) (i) conflict with, violate, result in a breach of or
constitute a default under (without regard to requirements of notice, lapse of
time or elections of other Persons or any combination thereof), (ii) permit or
result in the termination, suspension or modification of, (iii) result in the
acceleration of (or give any Person the right to accelerate) the performance of
TCI under, (iv) result in the creation or imposition of any Lien under any TCI
System Franchise, TCI System License or any TCI System Contract or other
instrument evidencing any of the TCI Assets or by which TCI or any of its assets
is bound or affected, except for purposes of clauses (c) and (d) such consents,
approvals, authorizations and filings, that, if not obtained or made, would not,
and such violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have a material adverse effect on any TCI System, TCI's Cable Business or on the
ability of TCI to perform its obligations under this Agreement or the
Transaction Documents to which TCI is a party.
6.4 Assets.
(a) TCI has good and valid title to (or, in the case of Assets that
are leased, valid leasehold interests in) the TCI Assets (other than TCI Owned
Real Property, TCI Leased Property and TCI Other Real Property Interests, as to
which representations and warranties in Section 6.6 apply). The TCI Assets are
free and clear of all Liens, except (i) Permitted Liens and (ii) Liens described
on SCHEDULE 6.4, all of which Liens on SCHEDULE 6.4 will be terminated, released
or, in the case of the rights of first refusal listed on SCHEDULE 6.4, waived,
as appropriate, at or prior to the Closing. SCHEDULE 1.66 lists the principal
items of TCI Tangible Personal Property as of the date specified on such
Schedule, or if no date is specified, as of the date of this Agreement. Except
as described on SCHEDULE 1.66 (TCI Tangible Personal Property), the TCI Tangible
Personal Property is in good operating condition and repair (ordinary wear and
tear excepted).
(b) Except for items included in the TCI Excluded Assets, the TCI
Assets constitute all the assets necessary to permit the Partnership to conduct
TCI's Cable Business and to operate the TCI Systems substantially as they are
being conducted and operated on the date of this Agreement and in compliance in
all material respects with all applicable Legal Requirements, TCI System
Contracts, TCI System Licenses and TCI System Franchises and to perform all of
the Century Assumed Obligations and Liabilities.
(c) Except as disclosed on SCHEDULE 6.4, to the Knowledge of TCI, no
third party has been granted or applied for a cable television franchise or is
providing or intending to provide
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multichannel video programming, other than programming by direct broadcast
satellite, in any of the communities or unincorporated areas currently served by
TCI's Cable Business.
6.5 TCI System Franchises, TCI System Licenses, TCI System Contracts and
TCI Other Real Property Interests.
(a) Except for the agreements listed on SCHEDULES 1.58 (TCI Leased
Property), 1.60 (TCI Other Real Property Interests), 1.63 (TCI System
Contracts), 1.64 (TCI System Franchises) and 1.65 (TCI System Licenses) or as
described on SCHEDULE 4.2 (TCI Excluded Assets) or otherwise included in the
definition of TCI Excluded Assets, TCI is not bound or affected by any of the
following that relate primarily or in whole to TCI's Cable Business: (i) leases
of real or personal property; (ii) franchises for the construction or operation
of cable television systems or Contracts of substantially equivalent effect;
(iii) other licenses, authorizations, consents or permits of the FCC or any
other Governmental Authority; (iv) material easements, rights of access,
underground conduit agreements, crossing agreements or other interests in real
property; (v) pole line or attachment agreements; (vi) multiple dwelling unit
agreements, including bulk agreements, and commercial service agreements;
provided that only a listing of the addresses of such units is attached, it
being acknowledged by the Partnership that written agreements do not exist with
respect to all such units; (vii) agreements pursuant to which the TCI Systems
receive or provide advertising sales representation services; (viii) agreements
pursuant to which a TCI System has constructed or agreed to construct for third
parties an institutional network or otherwise provide to third parties
telecommunications services other than one-way video; (ix) agreements pursuant
to which the Systems receive or have contracted to receive Non-TV Products and
Services; (x) construction and development agreements (other than installation
agreements where services are provided in the ordinary course of business on an
as-needed basis); or (xi) Contracts relating to the operation of TCI's Cable
Business other than those described in any other clause of this Section which
contemplate payments by or to TCI in any 12-month period exceeding $25,000
individually or $150,000 in the aggregate or that have a remaining term of two
years or more as of the Closing Date. Except as described on the Schedules to
this Agreement, no Affiliate of TCI is a party to any documents listed on such
Schedules.
(b) Except as set forth on SCHEDULE 1.63, complete and correct copies
of the TCI System Franchises and TCI System Licenses have been delivered by TCI
to the Partnership. Except as set forth on SCHEDULE 1.64 (TCI System
Franchises), the TCI System Franchises contain all of the commitments and
obligations of TCI to the applicable Governmental Authority granting such
Franchises with respect to the construction, ownership and operation of the TCI
Systems. The TCI System Franchises and TCI System Licenses are currently in full
force and effect and are valid and enforceable under all applicable Legal
Requirements according to their terms. There is no legal action, governmental
proceeding or, to TCI's Knowledge, investigation, pending or to TCI's Knowledge
threatened, to terminate, suspend or modify any TCI System Franchise or TCI
System License and TCI is in material compliance with the terms and conditions
of all the TCI System
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Franchises and TCI System Licenses and with other applicable requirements of all
Governmental Authorities (including the FCC and the Register of Copyrights)
relating to the TCI System Franchises and TCI System Licenses, including all
requirements for notification, filing, reporting, posting and maintenance of
logs and records. All areas served by the TCI Systems are served pursuant to one
of the TCI Franchises except as set forth on SCHEDULE 1.64.
(c) Except as disclosed on SCHEDULE 1.63, complete and correct copies
of all TCI System Contracts required to be listed on TCI's Schedules (including
all Contracts relating to Leased Property and Other Real Property Interests
described on SCHEDULE 1.60) have been provided to the Partnership. Such
documents constitute the entire agreement with the other party. Except as
disclosed on SCHEDULE 1.63, each such TCI System Contract is in full force and
effect and constitutes the valid, legal, binding and enforceable obligation of
TCI and TCI is not and to TCI's Knowledge, each other party thereto is not in
breach or default of any material terms or conditions thereunder.
6.6 Real Property. All TCI Assets consisting of TCI Owned Property, TCI
Leased Property and material TCI Other Real Property Interests are described on
SCHEDULES 1.58 (TCI Leased Property), 1.60 (TCI Other Real Property Interests)
and 1.61 (TCI Owned Property), including address and use for each such real
property interest. Except as otherwise disclosed on SCHEDULE 1.61 (TCI Owned
Property), TCI holds title to the TCI Owned Property free and clear of all Liens
(except (i) Permitted Liens and (ii) Liens described on SCHEDULE 6.4, all of
which Liens on SCHEDULE 6.4 will be terminated, released or, in the case of the
rights of first refusal listed on SCHEDULE 6.4, waived, as appropriate, at or
prior to the Closing) and has the valid and enforceable right to use and possess
such TCI Owned Property, subject only to above-referenced Liens. Except as
otherwise disclosed on SCHEDULES 1.58 (TCI Leased Property) and 1.60 (TCI Other
Real Property Interests); TCI has valid and enforceable leasehold interests in
all TCI Leased Property and, with respect to TCI Other Real Property Interests,
has valid and enforceable rights to use all TCI Other Real Property Interests
subject, in each case subject only to the above-referenced Liens. Except for
ordinary wear and tear and routine repairs, all of the material improvements,
leasehold improvements and the premises of the TCI Owned Property and the
premises demised under the leases and other documents evidencing the TCI Leased
Property are in good condition and repair and are suitable for the purposes
used. Each parcel of TCI Owned Property and each parcel of TCI Leased Property
and any improvements thereon and their current use (x) has access to and over
public streets or private streets for which TCI has a valid right of ingress and
egress, (y) conforms in its current use and occupancy to all material zoning
requirements without reliance upon a variance issued by a Governmental Authority
or a classification of the parcel in question as a nonconforming use and (z)
conforms in its current use to all restrictive covenants, if any, or other Liens
affecting all or part of such parcel. Except where the failure of the
representations made in this sentence to be true and correct would not have a
material adverse effect on the TCI Assets or TCI's Cable Business, all
buildings, towers, guy wires and anchors, headend equipment, earth-receiving
dishes and related facilities used in the operations of the TCI Systems and
included in the TCI Assets are located entirely on TCI Owned Property or TCI
Leased Property or other real property in which TCI has a TCI Other Real
Property Interest and are maintained, placed and located in accordance with the
provisions of all applicable Legal Requirements, deeds, leases, licenses,
permits or other legally enforceable arrangements.
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6.7 Environmental.
(a) To TCI's Knowledge, the TCI Owned Property and TCI Leased Property
comply in all material respects with and has previously been operated in
compliance in all material respects with all Environmental Laws. Except as
disclosed on SCHEDULE 6.7, TCI has not either directly or indirectly (i)
generated, stored, used, treated, handled, discharged, released or disposed of
any Hazardous Substances at, on, under, in or about, to or from or in any other
manner affecting, any TCI Owned Property or TCI Leased Property, (ii)
transported any Hazardous Substances to or from any TCI Owned Property or TCI
Leased Property or (iii) undertaken or caused to be undertaken any other
activities relating to the TCI Owned Property or TCI Leased Property, which
could reasonably give rise to any liability under any Environmental Law and, to
TCI's Knowledge, no other present or previous owner, tenant, occupant or user of
any TCI Owned Property or TCI Leased Property or any other Person has committed
or suffered any of the foregoing. To TCI's Knowledge, no release of Hazardous
Substances outside the TCI Owned Property or TCI Leased Property has entered or
threatens to enter any TCI Owned Property or TCI Leased Property, nor is there
any pending or threatened Litigation based on Environmental Laws which arises
from any condition of the land adjacent to or immediately surrounding any TCI
Owned Property or TCI Leased Property. No Litigation based on Environmental Laws
which relates to any TCI Owned Property or TCI Leased Property or any operations
or conditions on it (y) has been asserted or conducted in the past or is
currently pending against or with respect to TCI or, to TCI's Knowledge, any
other Person, or (z) to TCI's Knowledge, is threatened or contemplated.
(b) Except as disclosed on SCHEDULE 6.7, to TCI's Knowledge, (i) no
aboveground or underground storage tanks are currently or have been located on
any TCI Owned Property or TCI Leased Property, (ii) no TCI Owned Property or TCI
Leased Property has been used at any time as a gasoline service station or any
other facility for storing, pumping, dispensing or producing gasoline or any
other petroleum products or wastes and (iii) no building or other structure on
any TCI Owned Property or TCI Leased Property contains asbestos,
asbestos-containing material or material presumed to be asbestos-containing
material under any Environmental Law.
(c) TCI has provided the Partnership with complete and correct copies
of (i) all studies, reports, surveys or other written materials in TCI's
possession relating to the presence or alleged presence of Hazardous Substances
at, on, under or affecting the TCI Owned Property or TCI Leased Property, (ii)
all notices (other than general notices made by general publication) or other
materials in TCI's possession that were received from any Governmental Authority
having the power to administer or enforce any Environmental Laws relating to
current or past ownership, use or operation of the TCI Owned Property or TCI
Leased Property or activities at the TCI Owned Property or TCI Leased Property
and (iii) all materials in TCI's possession relating to any Litigation or
allegation by any private third party concerning any Environmental Law.
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6.8 Compliance with Legal Requirements.
(a) The ownership, leasing and use of the TCI Assets as they are
currently owned, leased and used and the conduct of TCI's Cable Business and the
operation of the TCI Systems as they are currently conducted and operated do not
violate or infringe in any material respect any Legal Requirements currently in
effect (other than Legal Requirements described in Sections 6.7, 6.8(d) and
6.13, as to which the representations and warranties set forth in those
subsections shall apply), including (i) the Communications Act, (ii) Section 111
of the Copyright Act and (iii) all other applicable Legal Requirements relating
to the construction, maintenance, ownership and operation of the TCI Assets, the
TCI Systems and TCI's Cable Business. Except as disclosed on SCHEDULE 6.8, TCI
has received no written notice of any violation by TCI or TCI's Cable Business
of any Legal Requirement applicable to the operation of TCI's Cable Business as
currently conducted, or the TCI Systems as currently operated and to TCI's
Knowledge, there is no existing fact, circumstance or condition that could
reasonably form the basis for a finding by any Governmental Authority of any
such violation.
(b) A valid request for renewal has been duly and timely filed under
Section 626 of the Communications Act with the proper Governmental Authority
with respect to all TCI System Franchises that have expired prior to or will
expire within 36 months after the date of this Agreement.
(c) Except as set forth in SCHEDULE 6.8, (i) no written notices or
demands have been received from the FCC, from any television station, or from
any other Person or Governmental Authority (A) challenging the right of the TCI
Systems to carry any television broadcast station or deliver the same or (B)
claiming that any TCI System has failed to carry a television broadcast station
required to be carried pursuant to the Communications Act or has failed to carry
a television broadcast station on a channel designated by such station
consistent with the requirements of the Communications Act; (ii) all necessary
FAA approvals have been obtained with respect to the height and location of
towers used in connection with the operation of the TCI Systems and are listed
in SCHEDULE 6.8, and such towers are being operated in compliance in all
material respects with applicable FCC and FAA rules; and (iii) TCI has received
no written notice from any Governmental Authority with respect to an intention
to enforce customer service standards pursuant to the 1992 Cable Act and except
as set forth in its System Franchises, TCI has not agreed with any Governmental
Authority to establish customer service standards that exceed the FCC standards
promulgated pursuant to the 1992 Cable Act.
(d) Notwithstanding the foregoing, to TCI's Knowledge, each TCI System
is in compliance in all material respects with the provisions of the 1992 Cable
Act as such Legal Requirements relate to the rates and other fees charged to
subscribers of TCI's Cable Business. TCI has used reasonable good faith efforts
to establish rates charged to subscribers, effective since September 1, 1993,
that are or were allowable under the 1992 Cable Act and any authoritative
interpretation thereof now or then in effect, to the extent such rates are or
were subject to regulation at such time by any Governmental Authority, including
any local franchising authority and/or the
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FCC. Notwithstanding the foregoing, TCI makes no representation or warranty that
any of its rates that are not subject to rate regulation would be allowable if
such rates were subject to regulation and makes no representation or warranty
that the rates charged to subscribers would be allowable under any rules and
regulations of the FCC or any authoritative interpretation thereof, promulgated
after the Closing Date. TCI has delivered to the Partnership complete and
correct copies of all FCC Forms and other information reasonably requested by
the Partnership relating to rate regulation generally or specific rates charged
to subscribers with respect to the TCI Systems. Except as set forth on SCHEDULE
6.8, TCI has not made any Cost of Service Election with respect to any of the
TCI Systems. Except as set forth in SCHEDULE 6.8, TCI has not entered into and
is not subject to any so-called social contract or proposed resolution with the
FCC or any local franchising authority with respect to rates charged for cable
television services in the TCI Systems and is not currently negotiating or
anticipating entering into or being subject to the same. Except as otherwise
described on SCHEDULE 6.8, as of the date of this Agreement, (i) to the
Knowledge of TCI, there are no outstanding or unresolved proceedings or
investigations (other than those affecting the cable industry generally) dealing
with or otherwise affecting the rates that any cable television system included
in the TCI Systems can charge (whether for programming, equipment, installation,
service or otherwise) including appeals, (ii) no cable television system
included in the TCI Systems is subject to any currently effective order issued
by a Governmental Authority that reduced the rates that it may charge (whether
for programming, equipment, installation, service, or otherwise), (iii) no local
franchising authority has been certified by the FCC as a rate regulating
authority with respect to any of the TCI Systems, and (iv) there is no
unresolved complaint pending with respect to the CPST tier of any TCI System and
no rate order with respect to the TCI Systems that is being appealed.
(e) The TCI Systems that serve more than 10,000 subscribers will have
emergency alert capability as required by the FCC prior to January 1, 1999 or
such later date as may hereafter be specified by the FCC.
6.9 Patents, Trademarks and Copyrights. TCI has deposited with the U.S.
Copyright Office all statements of account and other documents and instruments,
and has paid all royalties, supplemental royalties, fees and other sums to the
U.S. Copyright Office under the Copyright Act with respect to the business and
operations of the TCI Systems as are required to obtain, hold and maintain the
compulsory license for cable television systems prescribed in Section 111 of the
Copyright Act. To TCI's Knowledge, there is no inquiry, claim, action or demand
pending before the U.S. Copyright Office or from any other Person which
questions the copyright filings or payments made by TCI with respect to the TCI
Systems. TCI has delivered to the Partnership complete and correct copies of all
current reports and filings for the past three years, made or filed pursuant to
copyright rules and regulations with respect to TCI's Cable Business. TCI does
not possess any patent, patent right, trademark or copyright related to or
material to the operation of the TCI Systems and TCI is not a party to any
license or royalty agreement with respect to any such patent, patent right,
trademark or copyright, except for licenses respecting program material and
obligations under the Copyright Act applicable to cable television systems
generally. The TCI Systems and TCI's Cable Business have been operated in such a
manner so as not to violate or
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infringe upon the rights, or give rise to any rightful claim of any Person for
copyright, trademark, service xxxx, patent or license infringement or the like.
6.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events. TCI has delivered to the Partnership complete and correct
copies of (a) an unaudited balance sheet for each TCI System as of December 31,
1997 and an unaudited statement of operations for the year ended December 31,
1997 for each TCI System, including all notes and Schedules thereto and (b) an
unaudited balance sheet for each TCI System as of June 30, 1998 and the related
unaudited statement of operations for the period ended June 30, 1998 (all of
such financial statements and notes being hereinafter referred to as "TCI's
Financial Statements"). TCI's Financial Statements are in accordance with the
books and records of TCI, were prepared in accordance with GAAP, applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of TCI at the dates and for the periods indicated, subject,
in the case of unaudited TCI Financial Statements, only to standard year-end
adjustments and the omission of footnotes. The unaudited Balance Sheets of the
TCI Systems as of June 30, 1998 are herein collectively called the "TCI Balance
Sheet." At the date of the TCI Balance Sheet, TCI had no material liabilities
with respect to the Systems required by GAAP to be reflected or reserved against
therein that were not fully reflected or reserved against on the TCI Balance
Sheet, other than liabilities as set forth on SCHEDULE 6.10. Except as set forth
on SCHEDULE 6.10, since the date of the TCI Balance Sheet: (x) TCI has not
incurred any obligation or liability (contingent or otherwise) with respect to
the Systems, except normal trade or business obligations incurred in the
ordinary course of business, the performance of which will not, to TCI's
Knowledge, individually or in the aggregate, have a material adverse effect on
the financial condition of TCI or the results of operations of TCI's Cable
Business; (y) there has been no material adverse change in the TCI Assets
comprising any TCI System or in the business, condition, financial or otherwise,
or liabilities of TCI's Cable Business or any TCI System and, to TCI's
Knowledge, no fact or condition exists or is contemplated or threatened which
would result in such a change in the future; and (z) TCI's Cable Business has
been conducted only in the ordinary course of business consistent with past
practice. For the purpose of this Agreement, the impact of general economic
conditions (including changes in capital and financial markets), governmental
legislation and regulations and other events which affect the cable industry as
a whole in the State of California or the United States, shall not be considered
in determining whether there has been a material adverse change in the business,
condition, financial or otherwise or liabilities of TCI's Cable Business or any
TCI System or the TCI Assets.
6.11 Litigation. Except as set forth in SCHEDULE 6.11: (a) there is no
Litigation pending or, to TCI's Knowledge, threatened, and, to TCI's Knowledge,
there is no investigation pending or threatened, by or before any Governmental
Authority or private arbitration tribunal against TCI which, if adversely
determined, would materially adversely affect the financial condition or
operations of TCI's Cable Business, TCI Systems, the TCI Assets or the ability
of TCI to perform its obligations under this Agreement, or which, if adversely
determined, would result in the modification, revocation, termination,
suspension or other limitation of any of the TCI System Franchises, TCI System
Licenses, TCI System Contracts or leases or other documents evidencing the TCI
Leased Property or the TCI Other Real Property Interests; and (b) there is not
in existence
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any Judgment requiring TCI to take any action of any kind with respect to the
TCI Assets or the operation of the TCI Systems, or to which TCI (with respect to
the TCI Systems), the TCI Systems or the TCI Assets are subject or by which they
are bound or affected.
6.12 Tax Returns; Other Reports. TCI has duly and timely filed in correct
form all federal, state, local and foreign Tax returns and other Tax reports
required to be filed by TCI, and has timely paid all Taxes which have become due
and payable, whether or not so shown on any such return or report, the failure
of which to be filed or paid could adversely affect or result in the imposition
of a Lien upon the TCI Assets or that could impose on the Partnership any
transferee liability for any taxes, penalties or interest due or to become due
from TCI, except such amounts as are being contested diligently and in good
faith and are not in the aggregate material. TCI has received no notice of, nor
does TCI have any Knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect or result in the imposition of a Lien upon the TCI Assets.
6.13 Employment Matters.
(a) SCHEDULE 6.13(a) contains a complete and correct list of the
names and positions of all employees engaged principally in TCI's Cable Business
as of the date set forth on SCHEDULE 6.13(a). TCI has complied in all material
respects with all applicable Legal Requirements relating to the employment of
labor, including, WARN, ERISA, continuation coverage requirements with respect
to group health plans and those relating to wages, hours, collective bargaining,
unemployment insurance, worker's compensation, equal employment opportunity, age
and disability discrimination, immigration control and the payment and
withholding of Taxes.
(b) Each employee benefit plan (as defined in Section 3(3) of ERISA)
or any multi-employer plan (as defined in Section 3(37) of ERISA) with respect
to which TCI or any of its ERISA Affiliates has any liability or in which any
employees or agents, or any former employees or agents, of TCI or any of its
ERISA Affiliates participate is set forth in SCHEDULE 6.13 (the "TCI Plans").
Neither TCI, any of its ERISA Affiliates nor any TCI Plan is in material
violation of any provision of the Code or ERISA. No "reportable event" (as
defined in Section 4043 of ERISA) has occurred and is continuing with respect to
any TCI Plan and no "prohibited transaction" (as defined in Section 406 of
ERISA) has occurred with respect to any TCI Plan which reasonably could result
in material liability to TCI or any of its ERISA Affiliates. No material
"accumulated funding deficiency" or "withdrawal liability" (as defined in
Section 302 of ERISA) exists with respect to any of the TCI Plans. After the
Closing Time, the Partnership will not be required, under ERISA, the Code or any
collective bargaining agreement, to establish, maintain or continue any Plan
currently maintained by TCI or any of its ERISA Affiliates.
(c) Except as set forth on SCHEDULE 6.13, there are no union or
collective bargaining agreements applicable to any Person employed by TCI that
renders services in connection with the TCI Systems and TCI has no duty to
bargain with any labor organization with respect to any such Person. There are
not pending any unfair labor practice charges against TCI, any demand
-39-
for recognition or any other effort of or request or demand from, a labor
organization for representative status with respect to any Person employed by
TCI that renders services in connection with the TCI Systems. Except as
described on SCHEDULE 6.13, TCI has no employment Contracts, either written or
oral, with any employee of the TCI Systems and none of the employment Contracts
listed on SCHEDULE 6.13 requires TCI or will require the Partnership to employ
any Person after the Closing Time.
6.14 TCI Systems Information. SCHEDULE 6.14 sets forth a materially true
and accurate description of the following information relating to TCI's Cable
Business as of the date specified in SCHEDULE 6.14 or, if no date is specified,
as of August 20, 1998:
(a) the approximate number of miles (both underground and aerial) of
plant included in the TCI Assets;
(b) the number of Equipment Basic Subscribers (including the number
that are individually billed and the number that are bulk-billed) served by the
TCI Systems for each TCI System service area (by franchise area or community);
(c) the approximate number of single family homes and residential
dwelling units passed by the TCI Systems;
(d) a description of basic and optional or tier services available
from the TCI Systems, the rates charged by TCI for each and the number of
customers receiving each optional or tier service;
(e) the stations and signals carried by the TCI Systems and the
channel position of each such signal and station and the basis for carriage of
all television broadcast signals; and
(f) the cities, towns, villages, townships, boroughs, counties or
other communities served by the TCI Systems (with or without the requirement of
a franchise).
6.15 Accounts Receivable. TCI's accounts receivable for its Cable Business
are actual and bona fide receivables representing obligations for the total
dollar amount of such receivables, as shown on the books of TCI, that resulted
from the regular course of TCI's Cable Business. Such receivables are subject to
no offset or reduction of any nature, except for a reserve for uncollectible
amounts consistent with the reserve established by TCI in TCI's Financial
Statements and those credits or reductions to such accounts made in the ordinary
course of business.
6.16 Bonds; Letters of Credit. Except as set forth on SCHEDULE 6.16, there
are no franchise, construction, fidelity, performance, or other bonds,
guaranties in lieu of bonds or letters of credit posted by TCI in connection
with its operation or ownership of any of the TCI Systems or TCI Assets.
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6.17 Finders and Brokers. TCI has not employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which the Partnership could be
liable.
SECTION 7. ADDITIONAL COVENANTS
7.1 Access to Premises and Records. Between the date of this Agreement and
the Closing Date each party will give to the other and its representatives, and
the Partnership will cause Century to give to TCI and its representatives, full
access during normal business hours to all the premises and books and records of
its Cable Business and to all its Assets and Systems' personnel and will furnish
to the other and its representatives all such documents, financial information
and other information regarding its Cable Business and its Assets as the other
from time to time reasonably may request; provided that no investigation by TCI
or the Partnership will affect or limit the scope of any of the representations,
warranties, covenants and indemnities of the other party in this Agreement or in
any Transaction Document or limit such party's liability for breach of any of
the foregoing.
7.2 Continuity and Maintenance of Operations; Certain Deliveries and
Notices. Except as the other party may otherwise consent in writing, between the
date of this Agreement and the Closing, TCI with respect to TCI's Cable
Business, the TCI Systems and the TCI Assets and Century with respect to
Century's Cable Business, the Century Systems and the Century Assets:
(a) will conduct its Cable Business and operate its Systems only in
the usual, regular and ordinary course and consistent with past practices,
including continuing to make ordinary marketing, advertising and promotional
expenditures and continuing its current policies and procedures for
disconnection and discontinuance of service to subscribers whose accounts are
delinquent or terminated, and, to the extent consistent with such conduct and
operation, will use its commercially reasonable efforts to (i) preserve its
current business intact in all material respects, including preserving existing
relationships with franchising authorities, suppliers, customers and others
having business dealings with its Systems, and (ii) keep available the services
of its employees and agents providing services in connection with the Cable
Business;
(b) will maintain its Assets in good repair, order and condition,
ordinary wear and tear excepted; will maintain equipment and inventory for its
Systems at not less than normal historical levels consistent with past
practices; will maintain in full force and effect policies of insurance with
respect to its Cable Business consistent with its past practices; and will
maintain its books, records and accounts with respect to its Assets and the
operation of its Systems in the usual, regular and ordinary manner on a basis
consistent with past practices;
(c) except with respect to Excluded Assets, will not (i) modify,
terminate, renew, suspend, abrogate or enter into any System Contract or other
instrument that would be included in its Assets, other than in the ordinary
course of business; provided that the other party's consent, not
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to be unreasonably withheld or delayed, will be required to modify, terminate,
renew, suspend, abrogate or enter into any System Franchise (except as required
or expressly permitted by another provision of this Agreement), any agreement
regarding Non-TV Products and Services or any other agreement that contemplates
payments to or by the transferring party in any 12-month period exceeding
$250,000 individually; (ii) take or omit to take any action that would result in
the condition set forth in Section 8.1(a) with respect to TCI or Section 8.2(a)
with respect to the Partnership not being satisfied at any time prior to the
Closing; (iii) engage in any marketing, subscriber installation, disconnection
or collection practices other than in the ordinary course of business consistent
with its past practices; (iv) make any Cost of Service Election; (v) enter into
any agreement with or commitment to any competitive access providers with
respect to the System; (vi) sell, transfer or assign any portion of its Assets
other than sales in the ordinary course of business and assets sold or disposed
of and replaced by other assets of comparable utility and value or permit the
creation of a Lien, other than a Permitted Lien, on any Asset; (vii) engage in
any hiring or employee compensation practices that are inconsistent with past
practices except for changes in such practices implemented by such party and its
Affiliates (or, in the case of the Partnership, by Century and its Affiliates)
on a company-wide basis; or (viii) take any actions that would cause the
transactions contemplated hereby to fail to qualify as a like-kind exchange
under Section 1031 of the Code;
(d) will promptly deliver to the other true and complete copies of all
quarterly financial statements and all monthly and quarterly operating reports
with respect to the operation of the Cable Business prepared in the ordinary
course of business by or for such party at any time from the date of this
Agreement until the Closing;
(e) will give or cause to be given to the other and its counsel,
accountants and other representatives, as soon as reasonably possible but in any
event seven (7) Business Days prior to the date of submission to the appropriate
Governmental Authority, copies of all FCC Forms 1200, 1205, 1210, 1215, 1220,
1225, 1235 and 1240 or any other FCC forms required to be filed with any
Governmental Authority under the 1992 Cable Act with respect to rates and
prepared with respect to any of its Systems, such forms to be reasonably
satisfactory in form and substance to the other;
(f) will duly and timely file a valid notice of renewal under Section
626 of the Cable Act with the appropriate Governmental Authority with respect to
any System Franchise that will expire within 36 months after any date between
the date of this Agreement and the Closing Date;
(g) will promptly notify the other of any fact, circumstance, event or
action by it or otherwise (i) which if known at the date of this Agreement would
have been required to be disclosed by it in or pursuant to this Agreement or
(ii) the existence, occurrence or taking of which would result in the condition
set forth in Section 8.1(a) with respect to TCI or Section 8.2(a) with respect
to the Partnership not being satisfied at any time prior to the Closing, and,
with respect to clause (ii), will use its commercially reasonable efforts to
remedy the same, subject to Section 12.16; and
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(h) will consult the other prior to decreasing or increasing the rate
charged for any level of Basic Services, Expanded Basic Services or Pay TV and
prior to adding, deleting, retiering or repackaging any programming services;
provided that the other's consent is not required for any such action.
7.3 Employees.
(a) Each party may, but shall have no obligation to employ or offer
employment to any employee of the other party's Cable Business. Not more than 60
days after the date of this Agreement, each party shall provide to the other a
list of all active employees of their respective Systems as of a recent date,
showing then-current positions and indicating which of such employees such party
desires to retain as its employees (the "Retained Employees"). Within 30 days
after receipt of this list, the party receiving such list will provide to the
other in writing a list of employees that such party or its Affiliates may
desire to employ following the Closing (subject to the satisfaction of such
party's conditions for employment), which list shall not include any Retained
Employees. At the Closing, each party shall terminate as of the Closing Time the
employment of all its employees who were employed incidental to the conduct of
such party's Cable Business other than Retained Employees and any other
employees not hired by the other party that such party determines to retain.
(b) Each party will pay to all employees of its Cable Business all
compensation, including salaries, commissions, bonuses, deferred compensation,
severance, insurance, accrued vacation in excess of the amount the other party
assumes pursuant to Section 7.3(g), sick pay and other compensation or benefits
to which they are entitled for periods through and including the Closing Time,
including, without limitation, all amounts, if any, payable on account of the
termination of their employment as of the Closing Time by such party at Closing.
Each party agrees to cooperate in all reasonable respects with the other party
to allow such party to evaluate and interview employees of the Cable Business in
order to make hiring decisions. Such cooperation shall include but not be
limited to allowing the other party to contact employees during normal business
hours and making personnel records available.
(c) Each party will be responsible for the maintenance and
distribution of benefits accrued under any employee benefit plan (as defined in
ERISA) maintained by such party pursuant to the provisions of any Legal
Requirement and of such plans. Neither party will assume any obligation or
liability for any such accrued benefits or any fiduciary or administrative
responsibility to account for or dispose of any such accrued benefits under any
employee benefit plans maintained by the other party.
(d) All claims and obligations under, pursuant to or in connection
with any welfare, medical, insurance, disability or other employee benefit plans
of either party or arising under any Legal Requirement affecting employees of
such party incurred through and including the Closing Time or resulting from or
arising from events or occurrences occurring or commencing through and including
the Closing Time will remain the responsibility of such party, whether or not
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such employees are hired by the other party after the Closing Time. Neither
party will have and assume any obligation or liability under or in connection
with any such plan maintained by the other party.
(e) Each party will remain solely responsible for, and will indemnify and
hold harmless the other from and against all Losses arising from or with respect
to, all salaries and all severance, accrued vacation in excess of the amount
included in the adjustments calculated pursuant to Section 3.2(c), medical,
sick, holiday, continuation coverage and other compensation or benefits to which
its employees may be entitled, whether or not such employees may be hired by the
other party, as a result of their employment by it through and including the
Closing Time, the termination of their employment as of the Closing Time by such
party at Closing, the obligation, if any, to notify and/or bargain with any
labor organization, the consummation of the transactions contemplated hereby or
pursuant to any applicable Legal Requirement (including without limitation WARN)
or otherwise relating to their employment through and including the Closing
Time.
(f) Each party will retain full responsibility and liability for offering
and providing "continuation coverage" of any "qualified beneficiary" who is
covered by a "group health plan" sponsored or contributed to by such party and
who has experienced a "qualifying event" or is receiving "continuation coverage"
through and including the Closing Time. "Continuation coverage," "qualified
beneficiary," "group health plan," and "qualifying event" shall have the
meanings given such terms under Code Section 4980B.
(g) Notwithstanding anything to the contrary herein, each party (a
"Hiring Party") shall (i) credit each employee of the other party who becomes an
employee of such Hiring Party as of the Closing Time (a "Hired Employee") with
the amount of accrued vacation for which such Hiring Party received credit
pursuant to Section 3, such amount not to exceed the amount of accrued vacation
permitted to be accrued by employees of the Hiring Party in accordance with the
Hiring Party's standard practices; (ii) permit each Hired Employee to
participate in the Hiring Party's employee benefit plans to the same extent as
similarly situated employees of the Hiring Party and their dependents; (iii)
give each Hired Employee credit for his or her past service with the other party
at the Closing Time (including past service with any prior owner or operator of
such party) for purposes of eligibility and vesting under the Hiring Party's
employee benefit and other plans to the same extent as other similarly situated
employees of the Hiring Party; and (iv) not subject any Hired Employee to any
waiting periods or limitations on benefits for pre-existing conditions under the
Hiring Party's employee benefit plans, including any group health and disability
plans, except to the extent such employees were subject to such limitations
under the other party's employee benefit plans.
(h) If the Hiring Party discharges without cause within 90 days after the
Closing any Hired Employee and such Hired Employee would have been entitled to
severance payments pursuant to the other party's severance benefits plan (or, if
TCI is the Hiring Party, Century's severance benefits plan) if such Hired
Employee had been discharged without cause at Closing by the other party or its
predecessor as of the Closing Time, then the Hiring Party shall pay severance
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benefits to such Hired Employee in accordance with the other party's severance
benefit plan (or, if TCI is the Hiring Party, Century's severance benefits plan)
to the extent such plan would have paid severance to such Hired Employee.
(i) Nothing in this Section 7.3 or elsewhere in this Agreement shall be
deemed to make any employee of the parties a third party beneficiary of this
Agreement.
7.4 Leased Vehicles; Other Capital Leases. Each party will pay the
remaining balances on any leases for vehicles included in its Tangible Personal
Property and will deliver valid and good title to such vehicles free and clear
of all Liens (other than Permitted Liens) to the other party at the Closing.
7.5 Required Consents, Estoppel Certificates, Franchise Renewal.
(a) Each party will use its commercially reasonable efforts to obtain
in writing as promptly as possible and at its expense, all of its Required
Consents in form and substance reasonably satisfactory to the other party, and
will deliver to the other party copies of such Required Consents promptly after
they are obtained by such party; provided however that each party will afford
the other party the opportunity to review, approve and revise the form of
Required Consent prior to delivery to the party whose consent is sought. Each
party will cooperate with the other party in its efforts to obtain its Required
Consents; provided that (i) in the case of System Franchises, neither party will
be required to accept or agree or accede to any modifications or amendments to,
or the imposition of any condition to the transfer of, any of the System
Franchises that in either case, would make, or are reasonably likely to make,
the underlying System Franchise materially more onerous in any respect or that
would materially reduce, or are reasonably likely to materially reduce, the
benefits available under the System Franchise in respect of which the consent
relates and (ii) in the case of System Licenses, System Contracts or leases or
documents evidencing Leased Property or Other Real Property Interests, neither
party will be required to accept or agree or accede to any modifications or
amendments to, or the imposition of any condition to the transfer of, any of
them that in either case, would be material to the transactions contemplated by
this Agreement. Notwithstanding the foregoing, as soon as practicable after the
date of this Agreement, but in any event no later than 45 days after the date of
this Agreement, the parties will cooperate with each other to complete, execute
and deliver, or cause to be completed, executed and delivered to the appropriate
Governmental Authority, a request for such Governmental Authority's consent to
transfer each System Franchise as to which such consent is required. The
Partnership acknowledges that the applications for consent to transfer the
System Franchises may contain, if necessary under the terms of any System
Franchise and if requested by TCI, an application for such consent to transfer
from the applicable Governmental Authority with respect to the merger of AT&T
Corp. and Tele-Communications, Inc. (the "TCI/AT&T Transaction"). In the
alternative, the Partnership acknowledges that TCI may file a request for
consent and FCC Form 394 for the TCI/AT&T Transaction with applicable
Governmental Authorities with respect to the transactions contemplated by this
Agreement but prior to Closing.
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(b) Each party will use its commercially reasonable efforts to obtain
a certificate executed by the lessor of each parcel of Leased Property
substantially in the form of EXHIBIT 7.5(b), the substance of which may be
included as part of the consent obtained pursuant to Section 7.5(a) (an
"Estoppel Certificate").
(c) Each party will use commercially reasonable efforts to obtain and
cooperate with the other party to obtain renewals or extensions of any System
Franchise for which a valid notice of renewal pursuant to the formal renewal
procedures established by Section 626 of the Cable Act has not been timely
delivered to the appropriate Governmental Authority for a period expiring no
earlier than three years after the Closing Date without the imposition of any
conditions or other modifications that would make, or are reasonably likely to
make, the underlying instrument materially more onerous or that would materially
reduce, or are reasonably likely to materially reduce, the benefits available
under the instrument in respect of which the renewal or extension relates.
(d) Notwithstanding Section 7.5(a), no party will have any further
obligation to obtain Required Consents: (i) with respect to license agreements
relating to pole attachments where the licensing party will not, after the
assigning party's exercise of commercially reasonable efforts, consent to an
assignment of such license agreement but requires that the proposed assignee
enter into a new agreement with such licensing authority, in which case the
proposed assignee shall use its commercially reasonable efforts to enter into
such agreement prior to the Closing or as soon as practicable thereafter and the
party to the license agreement will cooperate with and assist the other party in
obtaining such agreements; provided however that the proposed assignee's
commercially reasonable efforts shall not require it to take any action of the
type that such party is not required to take pursuant to this Section 7.5; and
(ii) for any business radio license which such party reasonably expects can be
obtained within 120 days after the Closing and so long as a temporary
authorization is available to the other party under FCC rules with respect
thereto.
7.6 Title Commitments and Surveys. The Partnership and TCI each will
provide to the other, within 60 days after the date of this Agreement, (a)
current commitments to issue title insurance policies on the 1992 CLTA owner's
form ("Title Commitments") by an agent writing for Old Republic Insurance
Company, Chicago Title Insurance Company or another nationally recognized title
insurance company (the "Title Company") and containing policy limits and other
terms reasonably acceptable to the other, and, legible photocopies of all
recorded items described as exceptions therein, committing to insure fee simple
title in the other party to each parcel of the Owned Property and access to such
Owned Real Property included in its Assets, subject only to Permitted Liens, and
(b) surveys of each parcel of Owned Property, in such form as is necessary to
obtain the title insurance to be issued pursuant to the Title Commitments with
the standard printed exceptions relating to survey matters deleted (the
"Surveys"), certified to the other party and to the Title Company issuing a
Title Commitment. The cost to obtain such Title Commitments and Surveys and
other documents required by the Title Company to issue such policies and Surveys
shall be split equally between the Partnership and TCI; provided however that
(x) each party shall pay for the cost to delete or insure over any Title Defects
relating to its Owned Property and (y) the
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requesting party will pay the premiums and charges for any additional
endorsements such party requests with respect to any Title Policy other than the
endorsements to delete the standard survey exceptions from such Title Policy and
to delete or insure over any Title Defects. If Century or TCI notifies the other
within 30 days following its receipt of both the Title Commitments and the
Surveys of any Lien (other than a Permitted Lien or a Lien set forth in
SCHEDULES 5.4 or 6.4, as applicable) or other matter affecting title to Owned
Property of the other which prevents access to or which could prevent or impede
in any way the use or operation of any parcel of Owned Property for the purposes
for which it is currently used or operated by the other (each a "Title Defect"),
the other will exercise commercially reasonable efforts to (i) remove such Title
Defect, or (ii) with the consent of the objecting party, cause the Title Company
to commit to insure over each such Title Defect prior to the Closing. If such
Title Defect cannot be removed prior to Closing or the Title Company does not
commit to insure over such Title Defect prior to Closing and if the objecting
party elects to waive such Title Defect and proceed towards consummation of the
transaction in accordance with this Agreement in its reasonable discretion, the
objecting party and the other party shall enter into a written agreement at
Closing containing the other party's commitment to use commercially reasonable
efforts to remedy the Title Defect following Closing on terms satisfactory to
the objecting party, in its reasonable discretion.
7.7 HSR Notification. As soon as practicable but in any event no later than
60 days after the date of this Agreement, Century and TCI will each complete and
file, or cause to be completed and filed, any notification and report required
to be filed under the HSR Act and each such filing shall request early
termination of the waiting period imposed by the HSR Act. The parties shall use
their commercially reasonable efforts to respond as promptly as reasonably
practicable to any inquiries received from the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") for additional information or documentation and to respond as
promptly as reasonably practicable to all inquiries and requests received from
any other Governmental Authority in connection with antitrust matters. The
parties shall use their respective commercially reasonable efforts to overcome
any objections which may be raised by the FTC, the Antitrust Division or any
other Governmental Authority having jurisdiction over antitrust matters.
Notwithstanding the foregoing, no party shall be required to make any
significant change in the operations or activities of the business (or any
material assets employed therein) of such party or any of its Affiliates, if a
party determines in good faith that such change would be materially adverse to
the operations or activities of the business (or any material assets employed
therein) of such party or any of its Affiliates having significant assets, net
worth or revenue. Each of the parties will coordinate with the other with
respect to its filings and will cooperate to prevent inconsistencies between
their respective filings and will furnish to each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or submissions under the
HSR Act.
7.8 Transfer Taxes. All sales, use or excise Taxes arising from or payable
by reason of the transfer of any of the TCI Assets and the Century Assets will
be shared equally by TCI and the Partnership. All transfer and similar Taxes or
assessments, including transfer and recording fees and similar assessments for
or under System Franchises, System Licenses and System Contracts,
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arising from or payable by reason of the conveyance of the TCI Assets and the
Century Assets will be paid by TCI with respect to the TCI Assets and by the
Partnership with respect to the Century Assets.
7.9 Programming. Each of the Partnership and TCI will execute and deliver
such documents as may be reasonably requested by the other party in order for
the Partnership or TCI to comply with the requirements of its programming
Contracts and channel line-up requirements with respect to acquisitions and
divestitures of cable television systems. Neither party will be required to make
any payments to the other's programmers in the fulfillment of its obligations
under this Section 7.9.
7.10 Schedules and Exhibits.
(a) Schedule and exhibit references contained in this Agreement are
for convenience only and matters disclosed pursuant to one section, subsection
or other provision of this Agreement are deemed disclosed for all purposes of
this Agreement.
(b) Not less than ten Business Days prior to Closing, each party will
deliver to the other revised copies of each of the Schedules prepared by it and
delivered to the other party on the date of this Agreement, except for SCHEDULES
5.14 and 6.14 or SCHEDULES 5.13(a) and 6.13(a), in each case updated and marked
to show any changes occurring between the date of this Agreement and the date of
delivery; provided however that for purposes of such party's representations and
warranties and covenants in this Agreement, all references to the Schedules will
mean the version of the Schedules attached to this Agreement on the date of
signing, and provided further that if the effect of any such updates to
Schedules is to disclose any one or more additional properties, privileges,
rights, interests or claims acquired or arising after the date of this Agreement
as Assets, the party to whom such Assets would otherwise be transferred at the
Closing will have the right (to be exercised by written notice to the other
party at or before Closing) to cause any one or more of such items to be
designated as and deemed to constitute Excluded Assets for all purposes under
this Agreement unless such items are Contracts that were not required to be
scheduled or that were entered into after the date of this Agreement in
accordance with the terms of this Agreement. Without changing the result set
forth in the preceding sentence that a party's updated Schedules do not serve to
update such party's representations and warranties, the updated Schedules
delivered pursuant to this Section shall be accompanied by an officer's
certificate of the party delivering such Schedules, certifying that the
information set forth in such Schedules is true and accurate in all material
respects as of the date of delivery thereof and that all information required to
be given in the Schedules "as of the date of this Agreement" has been updated to
the date of delivery of the updated Schedules or other date permitted to be
specified in such Schedules.
7.11 Use of Names and Logos. For a period of 90 days after the Closing, the
Partnership and TCI will be entitled to use the trademarks, trade names, service
marks, service names, logos and similar proprietary rights of TCI and Century,
respectively, to the extent incorporated in or on the Assets transferred to it
at the Closing, provided that each will exercise reasonable efforts to remove
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all such names, marks, logos and similar proprietary rights of the other from
the Assets by such earlier date as reasonably practicable following the Closing.
Notwithstanding the foregoing, the transferee party will not be required to
remove or discontinue using any such name or xxxx that is affixed to converters
or other items in or to be used in customer homes or properties, or as are used
in similar fashion making such removal or discontinuation impracticable for the
transferee party.
7.12 Transitional Billing Services. The Partnership and TCI will each
provide to the other, upon request, access to and the right to use its billing
system computers, software and related fixed assets in connection with the
Systems acquired by the other party for a period of up to 90 days following the
Closing to allow for conversion of existing billing arrangements ("Transitional
Billing Services"). Each party will notify the other at least 10 days prior to
the Closing as to whether it desires Transitional Billing Services from the
other party. All Transitional Billing Services that are requested by a party
will be provided on terms and conditions reasonably satisfactory to each party;
provided however that the amount to be paid by the party receiving Transitional
Billing Services will not exceed the cost to the other party of providing such
Transitional Billing Services. Each party will notify the other party at least
45 days prior to the Closing of the cost to such party of providing such
Transitional Billing Services.
7.13 Confidentiality and Publicity.
(a) Each party will use commercially reasonable efforts to assure that
any non-public information that such party may obtain from the other in
connection with this Agreement with respect to the other's Cable Business and
Systems (it being understood and agreed that all proprietary information of the
transferring party that is included among the Assets of such transferring party
shall become the proprietary information of the transferee party at Closing)
will be kept confidential and such party will not disclose, and will cause its
employees, consultants, advisors and agents not to disclose, any such
information to any other Person (other than its directors, officers and
employees and representatives of its advisers and lenders whose knowledge
thereof is necessary in order to facilitate the consummation of the transactions
contemplated hereby) or use, and will cause its employees, consultants, advisors
and agents not to use, such information to the detriment of the other; provided
that (i) such party may use and disclose any such information once it has been
publicly disclosed (other than by such party in breach of its obligations under
this Section) or which rightfully has come into the possession of such party
(other than from the other party) and (ii) to the extent that such party may, in
the reasonable opinion of its counsel, be compelled by Legal Requirements to
disclose any of such information, such party may disclose such information if it
will have used all reasonable efforts, and will have afforded the other the
opportunity, to obtain an appropriate protective order or other satisfactory
assurance of confidential treatment, for the information compelled to be
disclosed. The obligation of either party to hold information in confidence
pursuant to this Section will be satisfied if such party exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information. In the event of termination of
this Agreement, each party will use all reasonable efforts to cause to be
delivered to the other, and retain no copies of, any documents, work papers and
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other materials obtained by such party or on its behalf from the other, whether
so obtained before or after the execution hereof.
(b) Neither party will issue any press release or make any other
public announcement or any oral or written statement to its or the other party's
employees concerning this Agreement and the transactions contemplated hereby,
except as required by applicable Legal Requirements, without the prior written
consent and approval of the other, which consent and approval may not be
unreasonably withheld.
7.14 Bulk Transfers. The Partnership and TCI each waives compliance by the
other with Legal Requirements relating to bulk transfers applicable to the
transactions contemplated hereby.
7.15 Allocation of Value to Exchanged Assets. No later than 60 days after
the Closing, each of TCI and the Partnership will deliver to the other a written
estimate of the value to be allocated by it to each of the exchange groups
pursuant to Internal Revenue Service regulations relating to like-kind exchanges
of assets under Section 1031 of the Code. The parties will use reasonable good
faith efforts to agree within 90 days after the Closing on the final values to
be allocated to each such exchange group. If TCI and the Partnership do not
agree on such allocation within ninety days after the Closing, then such
allocation shall be determined by an appraisal to be conducted by an independent
appraisal firm agreed to by the Partnership and TCI and retained by the
Partnership and TCI, with experience in the valuation and appraisal of similar
assets. TCI and the Partnership, for purposes of Sections 1031 and 1060 of the
Code and the regulations thereunder, will report the transactions contemplated
by this Agreement in accordance with such allocation, either as agreed to by
them or as determined by such appraiser. Liabilities assumed or taken subject to
by each party are being exchanged each for the other to the maximum extent
permitted under Section 1031 of the Code and regulations thereunder. Each party
promptly will give the other notice of any disallowance or challenge of asset
values by the Internal Revenue Service or any state or local tax authority.
7.16 Lien Searches. Prior to Closing, each party will obtain at its expense
and deliver to the other party, the results of a lien search conducted by a
professional search company of records in the offices of the secretaries of
state in each state and county clerks in each county where there exists any of
its Owned Property or Tangible Personal Property, and in the state and county
where such party's principal offices are located, including copies of all
financing statements or similar notices or filings (and any continuation
statements) discovered by such search company, which lien search will be current
as of a date that is no more than 30 days prior to Closing.
7.17 Further Assurances. At and after the Closing, each of the Partnership
and TCI at the request of the other, will promptly execute and deliver, or cause
to be executed and delivered, to the other all such documents and instruments,
in addition to those otherwise required by this Agreement, in form and substance
reasonably satisfactory to the other as the other may reasonably request in
order to carry out or evidence the terms of this Agreement or to collect on
behalf of the transferee party any accounts receivable or other claims included
in the Century Assets or the TCI Assets.
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Without limiting the generality of the foregoing, the Partnership and TCI will
take, or cause to be taken, all actions consistent with the terms of this
Agreement, including execution and delivery of any documents or instruments, as
the other may reasonably request to effect the qualification of the transactions
contemplated hereby as a like-kind exchange under Section 1031 of the Code.
7.18 Consents. If and to the extent the Partnership or TCI shall have
waived satisfaction of the condition to Closing set forth in Section 8.1(e) or
Section 8.2(e), respectively, subsequent to the Closing, each of TCI with
respect to the TCI Systems and the TCI Assets and the Partnership with respect
to the Century Systems and the Century Assets will continue to use commercially
reasonable efforts to obtain in writing as promptly as possible any Required
Consent which was not obtained on or before the Closing and will deliver copies
of the same, reasonably satisfactory in form and substance, to the other. The
obligations set forth in this Section will survive the Closing and will not be
merged in the consummation of the transactions contemplated hereby.
7.19 Cooperation as to Rates and Fees.
(a) Each party shall diligently pursue or cause to be diligently
pursued any current rate proceedings and shall make available to the other party
upon request copies of any documents, correspondence or notices sent by or
received by such party or its Affiliates in connection with the current rate
proceedings or any rate regulatory matter with respect to its Systems instituted
after the date of this Agreement.
(b) Prior to Closing, without the prior consent of the other party,
neither party shall settle or permit to be settled any rate proceeding with
respect to its Systems if such settlement would (i) impose upon the other party
any liability, or (ii) adversely affect the rates to be charged by the other
party during the post-Closing time period unless such party compensates the
other party therefor in the manner agreed by the parties, or if the parties do
not agree, as determined by an independent auditor in accordance with the
procedures established in Section 3.3(b).
(c) After the Closing, each party will be responsible for and follow
to conclusion any rate order of any Governmental Authority or proceeding with
respect to rates charged by it or its Affiliates in Systems owned by it
immediately prior to the Closing and will cooperate with and assist the other by
providing, upon reasonable request, all information in that party's or its
Affiliate's possession (and not previously made available to the requesting
party) relating directly to the rates charged for cable services that the
requesting party may reasonably require to justify such rates in response to any
inquiry, order or requirements of any Governmental Authority.
(d) If either TCI or Century is required following Closing pursuant to
any Legal Requirement, settlement or otherwise to reimburse to any subscribers
of the Systems owned by it prior to Closing, any subscriber payments previously
made by them, including fees for cable television service, late fees and similar
payments, then TCI, with respect to any Century System, or the Partnership, with
respect to any TCI System (in either case, the "Transferee Party"), agrees that
it will make such reimbursement through its billing system on terms specified by
Century, with
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respect to any Century System, or TCI, with respect to any TCI System (in either
case, the "Transferor Party"), and the Transferor Party will pay the Transferee
Party for all such payments made by the Transferee Party following Closing and
all reasonable expenses incurred by the transferee party in connection
therewith. Without limiting the foregoing, the Transferee Party will provide the
Transferor Party with all information in the Transferee Party's possession that
is reasonably required by the Transferor Party in connection with such
reimbursement.
(e) If either TCI or Century is permitted following Closing pursuant
to any Legal Requirement, settlement or otherwise to pass through to subscribers
of the Systems owned by it prior to Closing, the amount of any "franchise fees
on franchise fees" or other amounts that it is required to pay with respect to
the period prior to Closing, the Transferee Party agrees that it will collect
such amounts as specified by the Transferor Party from subscribers of the
Systems of the Transferor Party and will promptly remit such amounts to the
Transferor Party.
7.20 Satisfaction of Conditions. Each party will use its commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other party to consummate the transactions contemplated
by this Agreement, as set forth in Section 8, with "commercially reasonable
efforts" being determined with respect to any particular matter as set forth
elsewhere in this Agreement.
7.21 Offers. Neither party will offer its Assets or Cable Business for
sale, entertain offers for such Assets or Cable Business or otherwise negotiate
for the sale of such Assets or Cable Business or make information about such
Assets or Cable Business available to any third party in connection with the
possible sale of such Assets or Cable Business prior to the Closing Date or the
date this Agreement is terminated in accordance with its terms.
7.22 Environmental Reports. TCI may obtain at its expense, such
environmental assessments and reports with respect to the Century real property
as it may determine and the Partnership may obtain at its expense, such
environmental assessments and reports with respect to the TCI real property as
it may determine. Upon request, each of TCI and the Partnership shall give the
other and all environmental engineers and consultants acting on the other's
behalf such access during normal business hours to the sites and facilities
relating to the other's Systems as is reasonably required to permit such
engineers and consultants to conduct the physical on-site inspections and
prepare the environmental surveys and assessments with respect to such sites and
facilities as the requesting party shall reasonably request. If (a) TCI's or the
Partnership's environmental investigation reveals a matter that would be a
material breach of the other's representations given with respect to
environmental matters, without taking into account the Knowledge limitations in
such representations, or (b) if following TCI's or the Partnership's
investigation of any environmental matter or condition disclosed by the other
party (the "transferor") on its schedules to this Agreement or in the
environmental reports provided by the transferor to the party that commissioned
the investigation (the "transferee"), the transferee reasonably believes that
any such environmental matter or condition could give rise to liability on the
part of the transferee
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following Closing, then in either case the transferor shall remediate the
problem in a manner reasonably satisfactory to the transferee prior to Closing.
7.23 Year 2000 Matters.
(a) Certain Defined Terms. For purposes of this Section 7.23, the
following terms shall have the following meanings:
(i) "Computer and Other Systems" means any level of hardware or
software, equipment and cable plant, or building and other facilities used in
connection with the business of the Systems by TCI or Century and which will be
used in connection with the business of the TCI Systems by the Partnership or in
connection with the business of the Century Systems by TCI, which are date
dependent or which process date data, including any microcode, firmware,
application programs, user interfaces, files and databases, and which might be
adversely affected by the advent or changeover to the Year 2000 or to the advent
or changeover to any leap year.
(ii) "Year 2000 Ready" or "Year 2000 Readiness" means that the
referenced component, system, software, equipment or other item is designed to
be used prior to, during and after the calendar year 2000 A.D., and that such
component, system, software, equipment or other item will operate at all levels,
including microcode, firmware, application programs, user interfaces, files and
databases, during each such time period without error or interruption relating
to, or the product of, date data which represents or references different
centuries or more than one century or leap year.
(iii) "Year 2000 Remediation Program" means an enterprise-wide
program to make Year 2000 Ready all material components, systems, software,
equipment, facilities and other items related to the subject entity's business.
Such Year 2000 Remediation Program must be conducted by persons with experience
in issues related to Year 2000 Readiness and such persons must have organized an
enterprise-wide program management office which reports to executive level
management and the board of directors or other governing body of such entity.
(b) Year 2000 Readiness Covenants. Prior to the Closing Date, each of
TCI and Century shall establish and maintain a Year 2000 Remediation Program.
Pursuant to such Year 2000 Remediation Program, all material Computer and Other
Systems included in such party's Assets will be evaluated, remediated and tested
on an expedited basis.
If the Closing Date occurs on or before June 1, 1999, each party shall
deliver to the other on the Closing Date a certificate, signed by an authorized
officer who is responsible for the Year 2000 Remediation Program of such party
stating that the Computer and Other Systems have been fully and accurately
inventoried and stating that the material Computer and Other Systems have been
appropriately and professionally assessed and tested so that, upon completion of
the implementation plan specified by such party and approved by the other party,
the material Computer and Other Systems are reasonably expected to be Year 2000
Ready. If the Closing Date occurs after
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June 1, 1999, each party shall deliver to the other on the Closing Date a
certificate signed by an authorized officer who is responsible for the Year 2000
Remediation Program of such party, stating that the material Computer and Other
Systems are Year 2000 Ready.
(c) Cooperation and Information Sharing. Each of TCI and Century will
use commercially reasonable efforts to cooperate with each other at any time
prior to June 30, 2000 regarding the other's Year 2000 Remediation Program as
such program relates to the Computer and Other Systems to be received by the
other party. Such cooperation shall consist of providing the other party with
any non-confidential information possessed by such party and reasonably
requested by the other party regarding the Year 2000 Readiness of any material
component of such party's Computer and Other Systems.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to the Partnership's Obligations. The obligations of the
Partnership to consummate the transactions contemplated by this Agreement are
subject to the satisfaction at or before the Closing of the following
conditions, any of which may be waived by the Partnership.
(a) Accuracy of Representations and Warranties. The representations
and warranties of TCI in this Agreement and in any Transaction Document, if
specifically qualified by materiality, are true in all respects and, if not so
qualified, are true in all material respects, in each case at and as of the
Closing with the same effect as if made at and as of the Closing.
(b) Performance of Agreements. TCI has performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants in this Agreement and in any Transaction Document to be
performed and complied with by it at or before the Closing.
(c) Deliveries. TCI has delivered the items and documents required to
be delivered by it pursuant to this Agreement, including those required under
Section 9.2.
(d) Legal Proceedings. No action, suit or proceeding is pending or
threatened by or before any Governmental Authority and no Legal Requirement has
been enacted, promulgated or issued or become or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority, which
would (i) prohibit the Partnership's ownership or operation of all or a material
portion of any TCI System, TCI's Cable Business or the TCI Assets, (ii) compel
the Partnership to dispose of or hold separately all or a material portion of
any TCI System, TCI's Cable Business or the TCI Assets as a result of any of the
transactions contemplated by this Agreement, (iii) if determined adversely to
the Partnership's interest, materially impair the ability of the Partnership to
realize the benefits of the transactions contemplated by this Agreement or have
a material adverse effect on the right of the Partnership to exercise full
rights of ownership of the TCI Systems or (iv) prevent or make illegal the
consummation of any transactions contemplated by this Agreement.
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(e) Consents. The Partnership has received evidence, in form and
substance reasonably satisfactory to it, that the following TCI Required
Consents have been obtained, such consents to be on the terms specified in
Section 7.5: TCI Required Consents for the TCI System Franchises, the TCI System
Licenses, and any TCI Leased Property or TCI Other Real Property Interest on
which a headend, tower or other reception site is located. In addition, the
Century Required Consents for the Century System Franchises and Century System
Licenses shall have been obtained. If a TCI Required Consent for a headend,
tower or other reception site has not been obtained as of the Closing and the
Partnership is not willing to waive such condition, TCI shall have the option of
replacing the affected site with a comparable site that is reasonably acceptable
to the Partnership.
(f) No Material Adverse Change. There has not been any material
adverse change in the TCI Assets or the financial condition or operations of
TCI's Cable Business or the TCI Systems since the date of this Agreement. In
making the determination required by the preceding sentence, the last sentence
of Section 6.10 shall be applicable.
(g) HSR Act. All filings required under the HSR Act have been made and
the applicable waiting period has expired or been earlier terminated.
(h) Franchise Renewals. Any TCI System Franchise required to be
renewed or extended pursuant to the provisions of Section 7.5(c) shall have been
renewed or extended for not less than the applicable period without the
imposition of any conditions or other modifications that make, or are reasonably
likely to make, the underlying instrument materially more onerous or that would
materially reduce, or are reasonably likely to materially reduce, the benefits
available under the instrument in respect of which the renewal or extension
relates.
(i) Contribution. The Contribution shall have been consummated.
8.2 Conditions to TCI's Obligations. The obligations of TCI to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
at or before the Closing of the following conditions, any of which may be waived
by TCI.
(a) Accuracy of Representations and Warranties. The representations
and warranties of the Partnership in this Agreement and in any Transaction
Document, if specifically qualified by materiality, are true in all respects
and, if not so qualified, are true in all material respects, in each case at and
as of the Closing with the same effect as if made at and as of the Closing.
(b) Performance of Agreements. Century has performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants in this Agreement and in any Transaction Document to be
performed and complied with by it at or before the Closing.
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(c) Deliveries. The Partnership has delivered the items and documents
required to be delivered by it pursuant to this Agreement, including those
required under Section 9.3.
(d) Legal Proceedings. No action, suit or proceeding is pending or
threatened by or before any Governmental Authority and no Legal Requirement has
been enacted, promulgated or issued or become or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority, which
would (i) prohibit TCI's ownership or operation of all or a material portion of
any Century System, Century's Cable Business or the Century Assets, (ii) compel
TCI to dispose of or hold separately all or a material portion of any Century
System, Century's Cable Business or Century Assets as a result of any of the
transactions contemplated by this Agreement, (iii) if determined adversely to
TCI's interest, materially impair the ability of TCI to realize the benefits of
the transactions contemplated by this Agreement or have a material adverse
effect on the right of TCI to exercise full rights of ownership of the Century
Systems or (iv) prevent or make illegal the consummation of any transactions
contemplated by this Agreement.
(e) Consents. TCI has received evidence, in form and substance
reasonably satisfactory to it, that the following Century Required Consents have
been obtained, such consents to be on the terms specified in Section 7.5:
Century Required Consents for the Century System Franchises, the Century System
Licenses, and any Century Leased Property or Century Other Real Property
Interest on which a headend, tower or other reception site is located. In
addition, the TCI Required Consents for the TCI System Franchises and TCI System
Licenses shall have been obtained. If a Century Required Consent for a headend,
tower or other reception site has not been obtained as of the Closing and TCI is
not willing to waive such condition, the Partnership shall have the option of
replacing the affected site with a comparable site that is reasonably acceptable
to TCI.
(f) No Material Adverse Change. There has not been any material
adverse change in the Century Assets or the financial condition or operations of
Century's Cable Business or the Century Systems since the date of this
Agreement. In making the determination required by the preceding sentence, the
last sentence of Section 5.10 shall be applicable.
(g) HSR Act. All filings required under the HSR Act have been made and
the applicable waiting period has expired or been earlier terminated.
(h) Franchise Renewals. Any Century System Franchise required to be
renewed or extended pursuant to the provisions of Section 7.5(c) shall have been
renewed or extended for not less than the applicable period without the
imposition of any conditions or other modifications that make, or are reasonably
likely to make, the underlying instrument materially more onerous or that would
materially reduce, or are reasonably likely to materially reduce, the benefits
available under the instrument in respect of which the renewal or extension
relates.
(i) Contribution. The Contribution shall have been consummated.
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SECTION 9. THE CLOSING
9.1 The Closing; Time and Place. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at a date (the
"Closing Date"), location and time mutually determined by TCI and the
Partnership, which Closing Date shall be within ten days after the date on which
all conditions set forth in Sections 8.1 and 8.2 (other than those based on acts
to be performed at the Closing) have either been satisfied or waived in writing
by the party entitled to the benefit of such condition.
9.2 TCI's Delivery Obligations. At the Closing, TCI will deliver or cause
to be delivered to the Partnership the following.
(a) Closing Payment. Amounts, if any, payable by TCI to the
Partnership pursuant to Section 3.
(b) Xxxx of Sale and Assignment and Assumption Agreement. The executed
Xxxx of Sale and Assignment and the executed Assumption Agreement in the forms
of EXHIBIT 9.2(b)(1), and EXHIBIT 9.2(b)(2), respectively, and such other
instruments of transfer, assignment or assumption, in form and substance
mutually satisfactory to TCI and the Partnership, as the Partnership may
reasonably require to further document the transfer and assignment of the TCI
Assets to the Partnership and TCI's assumption of the TCI Assumed Obligations
and Liabilities.
(c) Deeds. A California "grant deed" in a form reasonably acceptable
to the Partnership (and complying with applicable state laws) with respect to
each parcel of TCI Owned Property, duly executed and acknowledged and in
recordable form, warranting only to defend title to such TCI Owned Property in
the peaceable possession of the Partnership against all Persons claiming by,
through or under TCI, subject however, to any Permitted Liens and any Title
Defects insured over pursuant to Section 7.6, and in form sufficient to permit
the applicable Title Company to issue the TCI Title Policies referred to in
paragraph (d) below to the Partnership, together with any title affidavit
reasonably required by the title insurer provided any such title affidavit shall
not expand the aforesaid limited or special warranty of TCI.
(d) Title Policies. A policy of title insurance by an eligible Title
Company for each parcel of TCI Owned Property, updated to the Closing Date,
containing such endorsements as are required or permitted by Section 7.6,
deleting the survey exception and otherwise consistent with the form and
substance prescribed by Section 7.6 and the Title Commitments contemplated
thereby (the "TCI Title Policies"), or the irrevocable written commitment of the
Title Company to deliver the TCI Title Policies, provided that with respect to
each Title Defect affecting the TCI Owned Property, either (i) the TCI Title
Policy relating to the affected parcel of TCI Owned Property shall not contain
an exception for such Title Defect; or (ii) if the Partnership has consented as
provided in Section 7.6, such TCI Title Policy shall contain an endorsement
insuring over such Title Defect; or (iii) if, in lieu of a TCI Title Policy
satisfying either of the two preceding requirements, the
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Partnership has agreed to accept a written agreement of TCI as contemplated in
the last sentence of Section 7.6, TCI shall have executed and delivered such an
agreement.
(e) Estoppel Certificates. Each TCI Estoppel Certificate obtained
pursuant to Section 7.5(b).
(f) Lien Releases. Evidence reasonably satisfactory to the Partnership
that all Liens (other than Permitted Liens) affecting or encumbering the TCI
Assets have been terminated, released or waived, as appropriate, or original,
executed instruments in form reasonably satisfactory to the Partnership
effecting such terminations, releases or waivers.
(g) Vehicle Titles. Title certificates to all vehicles included among
the TCI Assets, endorsed for transfer of valid and good title to the
Partnership, free and clear of all Liens (other than Permitted Liens), and
separate bills of sale therefor or other transfer documentation, if required by
the laws of the States in which such vehicles are titled.
(h) Evidence of Authorization Actions. Evidence reasonably
satisfactory to the Partnership that TCI has taken all action necessary to
authorize the execution of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby.
(i) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that TCI is not a foreign person within the meaning of Section 1445
of the Code reasonably satisfactory in form and substance to the Partnership.
(j) Officer's Certificate. A certificate executed by an executive
officer of TCI dated as of the Closing Date, reasonably satisfactory in form and
substance to the Partnership certifying that the conditions specified in
Sections 8.1(a) and 8.1(b) have been satisfied.
(k) Documents and Records. All TCI Books and Records, including a list
of all pending subscriber hook-ups, disconnect and repair orders, supply orders
and any other lists reasonably necessary to the operation of the TCI Systems.
Delivery of the foregoing will be deemed made to the extent such TCI Books and
Records are then located at any of the offices included in the TCI Owned
Property or TCI Leased Property.
(l) Other. Such other documents and instruments as may be reasonably
necessary to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
9.3 The Partnership's Delivery Obligations. At the Closing, the Partnership
will deliver or cause to be delivered to TCI the following.
(a) Closing Payments. Amounts, if any, payable by the Partnership to
TCI pursuant to Section 3.
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(b) Xxxx of Sale and Assignment and Assumption Agreement. The executed
Xxxx of Sale and Assignment and the executed Assumption Agreement in the forms
of EXHIBIT 9.2(b)(1) and EXHIBIT 9.2(b)(2), respectively, and such other
instruments of transfer, assignment or assumption, in form and substance
mutually satisfactory to the Partnership and TCI, as TCI may reasonably require
to further document the transfer and assignment of the Century Assets to TCI and
the Partnership's assumption of the Century Assumed Obligations and Liabilities.
(c) Deeds. A California "grant deed" in a form reasonably acceptable
to TCI (and complying with applicable state laws) with respect to each parcel of
Century Owned Property, duly executed and acknowledged and in recordable form,
warranting only to defend title to such Century Owned Property in the peaceable
possession of TCI against all Persons claiming by, through or under Century,
subject however, to any Permitted Liens and any Title Defects insured over
pursuant to Section 7.6 and in form sufficient to permit the applicable Title
Company to issue the Century Title Policies referred to in paragraph (d) below
to TCI together with any title affidavit reasonably required by the title
insurer provided any such title affidavit shall not expand the aforesaid limited
or special warranty of the Partnership.
(d) Title Policies. A policy of title insurance by an eligible Title
Company for each parcel of Century Owned Property, updated to the Closing Date,
containing such endorsements as are required or permitted by Section 7.6,
deleting the survey exception and otherwise consistent with the form and
substance prescribed by Section 7.6 and the Title Commitments contemplated
thereby (the "Century Title Policies"), or the irrevocable written commitment of
the Title Company to deliver the Century Title Policies, provided that with
respect to each Title Defect affecting the Century Owned Property, either (i)
the Century Title Policy relating to the affected parcel of Century Owned
Property shall not contain an exception for such Title Defect; or (ii) if TCI
has consented as provided in Section 7.6, such Century Title Policy shall
contain an endorsement insuring over such Title Defect; or (iii) if, in lieu of
a Century Title Policy satisfying either of the two preceding requirements, TCI
has agreed to accept a written agreement of the Partnership as contemplated in
the last sentence of Section 7.6, the Partnership shall have executed and
delivered such an agreement.
(e) Estoppel Certificates. Each Century Estoppel Certificate obtained
pursuant to Section 7.5(b).
(f) Lien Releases. Evidence reasonably satisfactory to TCI that all
Liens (other than Permitted Liens) affecting or encumbering the Century Assets
have been terminated, released or waived, as appropriate, or original, executed
instruments in form reasonably satisfactory to TCI effecting such terminations,
releases or waivers.
(g) Vehicle Titles. Title certificates to all vehicles included among
the Century Assets, endorsed for transfer of valid and good title to TCI free
and clear of all liens (other than Permitted Liens) and separate bills of sale
therefor or other transfer documentation, if required by the laws of the States
in which such vehicles are titled.
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(h) Evidence of Authorization Actions. Certified resolutions of the
governing body of the Partnership or other evidence reasonably satisfactory to
TCI that the Partnership has taken all partnership action necessary to authorize
the execution of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby.
(i) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that the Partnership is not a foreign person within the meaning of
Section 1445 of the Code reasonably satisfactory in form and substance to TCI.
(j) Documents and Records. All Century Books and Records, including a
list of all pending subscriber hook-ups, disconnect and repair orders, supply
orders and any other lists reasonably necessary to the operation of the Century
Systems. Delivery of the foregoing will be deemed made to the extent such
Century Books and Records are then located at any of the offices included in the
Century Owned Property or Century Leased Property.
(k) Evidence of Closing of Contribution. Evidence, satisfactory to
TCI, that the Contribution and all other transactions contemplated by the
Contribution Agreement shall have been consummated and the Century Systems shall
have been transferred to the Partnership.
(l) Other. Such other documents and instruments as may be reasonably
necessary to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
SECTION 10. TERMINATION AND DEFAULT
10.1 Termination Events. This Agreement may be terminated prior to Closing
and the transactions contemplated hereby may be abandoned:
(a) at any time by the mutual agreement of the Partnership and TCI;
(b) by either the Partnership or TCI at any time (if such party itself
is not then in material breach of any of its covenants, agreements or other
obligations contained in this Agreement), if the other is in material breach or
default of any of its covenants, agreements or other obligations herein or if
any of its representations herein if specifically qualified by materiality, is
not true in all respects or, if qualified by materiality, is not true in all
material respects when made or when otherwise required by this Agreement to be
true, if the non-breaching party provides the breaching party with prompt
written notice that provides a reasonably detailed explanation of the facts and
circumstances surrounding such breach or default; provided that such party shall
have no right to terminate if (i) the breaching Party cures such breach or
default within 30 days after its receipt of such written notice, unless such
breach or default cannot be cured within such 30-day period; or (ii) the breach
or default is capable of being cured prior to the first anniversary of the date
of this Agreement (the "Outside Closing Date") and the breaching party commences
to cure such breach or default within such 30-day period and diligently
continues to take all action reasonably
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necessary to cure such breach or default prior to the Outside Closing Date and
such breach or default is cured prior to the Outside Closing Date; or
(c) automatically if the Contribution Agreement has been terminated
prior to any closing thereunder in accordance with its terms; or
(d) as otherwise provided in this Agreement; or
(e) by any party, if the Closing has not occurred by the Outside
Closing Date for any reason other than a material breach or a material default
by the terminating party of its respective covenants, agreements or other
obligations under this Agreement, if any of its representations herein, if
specifically qualified by materiality, is not true in all respects or, if
qualified by materiality, is not true in all material respects when made or when
otherwise required by this Agreement to be true.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, all obligations of the parties under this Agreement will
terminate, except for the obligations set forth in Sections 7.13 and 12.15.
Notwithstanding the preceding sentence, termination of this Agreement pursuant
to Sections 10.1(b) or 10.1(c) or 10.1(d) or 12.16 will not limit or impair any
remedies that any of TCI or the Partnership may have with respect to a breach or
default by the other of its covenants, agreements or obligations under this
Agreement prior to Closing.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
11.1 Survival of Representations and Warranties. The representations and
warranties of TCI and the Partnership in this Agreement and in the Transaction
Documents and the covenants of TCI and the Partnership in this Agreement and the
Transaction Documents to be performed prior to or at Closing will survive until
the first anniversary of the Closing Date except that (a) all such
representations and warranties with respect to Taxes, rates, Environmental Laws,
ERISA, employment matters or copyright matters will survive until 60 days after
the expiration of the applicable statute of limitations (including any
extensions) for such Taxes, rates, Environmental Laws, ERISA, employment matters
or copyright matters, respectively, and (b) the representations and warranties
as to title to the Assets in Sections 5.4(a) and 6.4(a), respectively, and as to
title to Owned Property set forth in Sections 5.6 and 6.6, respectively, and in
the deeds delivered with respect to Owned Property will survive the Closing and
the delivery of such deeds and will continue in full force and effect without
limitation with the understanding that, notwithstanding any language contained
in any such deed, the representations and warranties as to title to Owned
Property set forth in Sections 5.6 and 6.6, respectively, will not be merged
into any such deed or other Transaction Document. The periods of survival of the
representations and warranties and covenants to be performed prior to or at
Closing prescribed by this Section 11.1 are referred to as the "Survival
Period." The liabilities of each party under its respective representations and
warranties and its respective covenants to be performed prior to or at the
Closing, will expire as of the expiration of the applicable Survival Period;
provided however that such expiration will not include, extend or
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apply to any such representation or warranty or covenant, the breach of which
has been asserted by a party in a written notice to the other party before such
expiration or about which a party has given the other party written notice
before such expiration indicating that facts or conditions exist that, with the
passage of time or otherwise, can reasonably be expected to result in a breach
(and describing such potential breach in reasonable detail). The covenants and
agreements of each party in this Agreement and in the Transaction Documents to
be performed after the Closing will survive the Closing and will continue in
full force and effect in accordance with their respective terms.
11.2 Indemnification by TCI. From and after the Closing, TCI will
indemnify, defend and hold harmless the Partnership and its partners and its and
their respective Affiliates, and the partners, members, shareholders, officers,
directors, employees, agents, successors and assigns and any Person claiming by
or through any of them, as the case may be, from and against any and all Losses
arising out of or resulting from (a) any breach of any representation or
warranty made by TCI in this Agreement or any Transaction Document or any
covenant of TCI in this Agreement or the Transaction Documents to be performed
prior to or at the Closing; (b) any breach of any post-Closing covenant,
agreement or obligation of TCI contained in this Agreement or any Transaction
Document; (c) any act or omission of TCI with respect to, or any event or
circumstance related to, the ownership or operation of the TCI Assets or the
conduct of TCI's Cable Business, which act, omission, event or circumstance
occurred or existed prior to or at the Closing Time, without regard to whether a
claim with respect to such matter is asserted before or after the Closing Time,
including any matter described on SCHEDULE 6.11; (d) any liability or obligation
not included in the Century Assumed Obligations and Liabilities; (e) any Title
Defect relating to any TCI Owned Property that is not deleted as an exception
in, or insured over by, the applicable TCI Title Policy; (f) any claim that the
transactions contemplated by this Agreement violate WARN or any Legal
Requirement or any bulk transfer or fraudulent conveyance laws of any
jurisdiction; (g) any claim relating to "continuation coverage" under Code
Section 4980B with respect to former employees of TCI at and after the Closing
Time or that the Partnership is deemed to be a successor employer of TCI under
Code Section 4980B; (h) any claim by a third party relating to the presence,
generation, removal or transportation of a Hazardous Substance on or from any of
the TCI Owned Property or TCI Leased Property through and including the Closing
Time, including the costs, in response to a third-party claim, of removal or
clean-up of such Hazardous Substance and other compliance with the provisions of
any Environmental Laws (whether before or after Closing); (i) any rate refund or
credit, penalty and/or interest payment with respect thereto ordered by any
Governmental Authority with respect to the TCI Systems for periods through and
including the Closing Time; or (j) the failure of TCI to perform the TCI Assumed
Obligations and Liabilities.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (j) of this Section, the Partnership's rights to
pursue its claim under clauses (b) through (j), as applicable, will exist
notwithstanding the expiration of the Survival Period applicable to such claim
under clause (a).
11.3 Indemnification by the Partnership. From and after the Closing, the
Partnership will indemnify, defend and hold harmless TCI and its partners and
its and their respective Affiliates and
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the partners, members, shareholders, officers, directors, employees, agents,
successors and assigns and any Person claiming by or through any of them, as the
case may be, from and against any and all Losses arising out of or resulting
from (a) any breach of any representation or warranty made by the Partnership in
this Agreement or any Transaction Document or any covenant of the Partnership in
this Agreement or any Transaction Document to be performed prior to or at the
Closing; (b) any breach of any post-Closing covenant, agreement or obligation of
Century contained in this Agreement or any Transaction Document; (c) any act or
omission of Century with respect to, or any event or circumstance related to,
the ownership or operation of the Century Assets or the conduct of Century's
Cable Business, which act, omission, event or circumstance occurred or existed
prior to or at the Closing Time, without regard to whether a claim with respect
to such matter is asserted before or after the Closing Time, including any
matter described on SCHEDULE 5.11; (d) any liability or obligation not included
in the TCI Assumed Obligations and Liabilities; (e) any Title Defect relating to
any Century Owned Property that is not deleted as an exception in, or insured
over by, the applicable Century Title Policy; (f) any claim that the
transactions contemplated by this Agreement violate WARN or any similar Legal
Requirement or any bulk transfer or fraudulent conveyance laws of any
jurisdiction; (g) any claim relating to "continuation coverage" under Code
Section 4980B with respect to former employees of Century at and after the
Closing Time or that TCI is deemed to be a successor employer of Century under
Code Section 4980B; (h) any claim by a third party relating to the presence,
generation, removal or transportation of a Hazardous Substance on or from any of
the Century Owned Property or Century Leased Property through and including the
Closing Time, including the costs, in response to a third-party claim, of
removal or clean-up of such Hazardous Substance and other compliance with the
provisions of any Environmental Laws (whether before or after Closing); (i) any
rate refund or credit, penalty and/or interest payment with respect thereto
ordered by any Governmental Authority with respect to the Century Systems for
periods through and including the Closing Time; or (j) the failure of the
Partnership to perform the Century Assumed Obligations and Liabilities.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (j) of this Section, TCI's rights to pursue its
claim under clauses (b) through (j), as applicable, will exist notwithstanding
the expiration of the Survival Period applicable to such claim under clause (a).
11.4 Third Party Claims. Promptly after the receipt by either party of
notice of any claim, action, suit or proceeding by any third party
(collectively, an "Action"), which Action is subject to indemnification under
this Agreement, such party (the "Indemnified Party") will give reasonable
written notice to the party from whom indemnification is claimed (the
"Indemnifying Party"). The Indemnified Party will be entitled, at the sole
expense and liability of the Indemnifying Party, to exercise full control of the
defense, compromise or settlement of any such Action unless the Indemnifying
Party, within a reasonable time after the giving of such notice by the
Indemnified Party, (a) admits in writing to the Indemnified Party the
Indemnifying Party's liability to the Indemnified Party for such Action under
the terms of this Section 11, (b) notifies the Indemnified Party in writing of
the Indemnifying Party's intention to assume such defense, (c) provides evidence
reasonably satisfactory to the Indemnified Party of the Indemnifying Party's
ability to pay the
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amount, if any, for which the Indemnified Party may be liable as a result of
such Action and (d) retains legal counsel reasonably satisfactory to the
Indemnified Party to conduct the defense of such Action. The other party will
cooperate with the party assuming the defense, compromise or settlement of any
such Action in accordance with this Agreement in any manner that such party
reasonably may request. If the Indemnifying Party so assumes the defense of any
such Action, the Indemnified Party will have the right to employ separate
counsel and to participate in (but not control) the defense, compromise or
settlement of the Action, but the fees and expenses of such counsel will be at
the expense of the Indemnified Party unless (x) the Indemnifying Party has
agreed to pay such fees and expenses, (y) any relief other than the payment of
money damages is sought against the Indemnified Party or (z) the Indemnified
Party will have been advised by its counsel that there may be one or more
defenses available to it which are different from or additional to those
available to the Indemnifying Party, and in any such case that portion of the
fees and expenses of such separate counsel that are reasonably related to
matters covered by the indemnity provided in this Section 11 will be paid by the
Indemnifying Party. No Indemnified Party will settle or compromise any such
Action for which it is entitled to indemnification under this Agreement without
the prior written consent of the Indemnifying Party, unless the Indemnifying
Party has failed, after reasonable notice, to undertake control of such Action
in the manner provided in this Section 11.4. No Indemnifying Party will settle
or compromise any such Action (A) in which any relief other than the payment of
money damages is sought against any Indemnified Party or (B) in the case of any
Action relating to the Indemnified Party's liability for any Tax, if the effect
of such settlement would be an increase in the liability of the Indemnified
Party for the payment of any Tax for any period beginning after the Closing
Date, unless the Indemnified Party consents in writing to such compromise or
settlement.
11.5 Limitations on Indemnification - TCI. TCI will not be liable to the
Partnership with respect to any matter or claim for which indemnification could
be sought pursuant to Sections 11.2(a) for (a) any Losses of or to the
Partnership or any other Person entitled to indemnification from TCI or (b) any
Losses incidental to or relating to or resulting from any of the foregoing (the
items described in clauses (a) and (b) collectively being referred to for
purposes of this Section 11 as "Century Damages") unless the amount of Century
Damages for which TCI would, but for the provisions of this Section, be liable
exceeds, on an aggregate basis, $250,000, in which case TCI will be liable for
all such Century Damages, which will be due and payable within 15 days after
TCI's receipt of a statement therefor. TCI will not have any liability under
Section 11.2(a) to the extent that the aggregate amount of Losses otherwise
subject to its indemnification obligation thereunder exceeds $10,000,000. The
limitations set forth in this Section 11.5 do not apply to (i) the Pro Rata
Adjustments to the extent they are included in the calculation of Pro Rata
Adjustments pursuant to Section 3.2 and 3.3; or (ii) any claim made pursuant to
Sections 11.2(b)-(j), including, without limitation, any Losses related to any
liability or obligation for late fees; any liability or obligation with respect
to paying franchise fees on franchise fees; subscriber refunds; or TCI
litigation listed in the Schedules to this Agreement.
11.6 Limitations on Indemnification - the Partnership. The Partnership will
not be liable to TCI with respect to any matter or claim for which
indemnification could be sought pursuant to
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Section 11.3(a) for (a) any Losses of or to TCI or any other Person entitled to
indemnification from it or (b) any Losses incidental to or relating to or
resulting from any of the foregoing (the items described in clauses (a) and (b)
collectively being referred to for purposes of this Section 11 as "TCI Damages")
unless the amount of TCI Damages for which it would, but for the provisions of
this Section, be liable exceeds, on an aggregate basis, $250,000, in which case
it will be liable for all such TCI Damages, which will be due and payable within
15 days after the Partnership's receipt of a statement therefor. The Partnership
will not have any liability under Section 11.3(a) to the extent that the
aggregate amount of Losses otherwise subject to their indemnification
obligations thereunder exceeds $10,000,000. The limitations set forth in this
Section 11.6 do not apply to (i) the Pro Rata Adjustments to the extent they are
included in the calculation of Pro Rata Adjustments pursuant to Section 3.2 or
3.3; or (ii) any claim made pursuant to Section 11.3(b)-(j), including, without
limitation, any Losses related to any liability or obligation for late fees; any
liability or obligation with respect to paying franchise fees on franchise fees;
subscriber refunds, or the Century litigation listed in the Schedules to this
Agreement.
11.7 Other Indemnification. The provisions of Sections 11.1, 11.5 and 11.6
will be applicable to any claim for indemnification made under any other
provision of this Agreement and all references in Sections 11.1, 11.5 and 11.6
to Sections 11.2 and 11.3 will be deemed to be references to such other
provisions of this Agreement.
SECTION 12. MISCELLANEOUS PROVISIONS
12.1 Parties Obligated and Benefited. Subject to the limitations set forth
below, this Agreement will be binding upon the parties and their respective
assigns and successors in interest and will inure solely to the benefit of the
parties and their respective assigns and successors in interest, and no other
Person will be entitled to any of the benefits conferred by this Agreement.
Without the prior written consent of the other parties, no party will assign any
of its rights under this Agreement or delegate any of its duties under this
Agreement, provided that a party may, without the prior written consent of the
other party (i) assign all of its rights under this Agreement, but not its
obligations, to a Qualified Intermediary and (ii) assign all of its rights and
obligations under this Agreement to an Affiliate of such party; provided that
such Affiliate assignee can make all of the representations and warranties
applicable to the assigning party hereunder (other than those relating to
jurisdiction of incorporation), the assigning party can provide reasonable
assurances that such Affiliate assignee can otherwise perform the covenants,
agreements and obligations applicable to the assigning party hereunder and such
assignment would not materially delay or hinder the consummation of the
transactions contemplated by this Agreement.
12.2 Notices. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement will be in writing and
will be deemed to have been duly given only if delivered in person or by first
class, prepaid, registered or certified mail, or sent by courier or, if receipt
is confirmed, by telecopier:
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To TCI at:
TCI of East San Xxxxxxxx Valley, L.P.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Telecopy: (000) 000-0000
With a copy similarly addressed to the attention of Legal
Department:
To the Partnership at:
Century Communications Corp.
00 Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
Attention: Office of the President
Telecopy: (000) 000-0000
With a copy to:
Dow, Xxxxxx & Xxxxxxxxx, PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section. All notices
will be deemed to have been received on the date of delivery, which in the case
of deliveries by telecopier will be the date of the sender's confirmation.
12.3 Right to Specific Performance. The parties acknowledge that the unique
nature of the Assets to be exchanged by the parties pursuant to this Agreement
renders money damages an inadequate remedy for the breach by the parties of its
obligations under this Agreement, and the parties agree that in the event of
such breach, the parties will upon proper action instituted by either of them,
be entitled to a decree of specific performance of this Agreement.
12.4 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
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12.5 Captions. The section and other captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
12.6 CHOICE OF LAW. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES UNDER IT
WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF COLORADO, WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES OF
COLORADO.
12.7 Terms. Terms used with initial capital letters or otherwise defined in
this Agreement will have the meanings specified, applicable to both singular and
plural forms, for all purposes of this Agreement. The word "include" and
derivatives of that word are used in this Agreement in an illustrative sense
rather than limiting sense.
12.8 Rights Cumulative. All rights and remedies of each of the parties
under this Agreement will be cumulative, and the exercise of one or more rights
or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
12.9 Time. Time is of the essence under this Agreement. If the last day
permitted for the giving of any notice or the performance of any act required or
permitted under this Agreement falls on a day which is not a Business Day, the
time for the giving of such notice or the performance of such act will be
extended to the next succeeding Business Day.
12.10 Late Payments. If either party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the annual rate publicly announced from time to
time by The Bank of New York as its prime rate (the "Prime Rate") plus 2%,
adjusted as and when changes in the Prime Rate are made.
12.11 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed an original.
12.12 Entire Agreement. Except for the Contribution Agreement, this
Agreement (including the Transaction Documents and the Schedules and Exhibits
referred to in this Agreement, which are incorporated in and constitute a part
of this Agreement) contains the entire agreement of the parties and supersedes
all prior oral or written agreements and understandings with respect to the
subject matter. This Agreement may not be amended or modified except by a
writing signed by the parties.
12.13 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law of public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement
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so as to effect the original intent of the parties as closely as possible in an
acceptable manner that is not invalid, illegal or against public policy, to the
end that the transactions contemplated hereby are fulfilled to the greatest
extent possible.
12.14 Construction. This Agreement has been negotiated by the parties and
their respective legal counsel, and legal or equitable principles that might
require the construction of this Agreement or any provision of this Agreement
against the party drafting this Agreement will not apply in any construction or
interpretation of this Agreement.
12.15 Expenses. Except as otherwise expressly provided in this Agreement or
the Contribution Agreement (which expenses the parties shall pay as so
provided), each party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
12.16 Risk of Loss. The risk of any loss or damage to the Century Assets or
TCI Assets resulting from fire, theft or other casualty (except reasonable wear
and tear) will be borne by the Partnership or TCI, respectively, at all times
through and including the Closing. If any such loss or damage is sufficiently
substantial so as to preclude and prevent resumption of normal operations of any
material portion of a System or the replacement or restoration of the lost or
damaged property within twenty days or, if earlier, prior to the Outside Closing
Date, the Partnership or TCI as appropriate, will immediately notify the other
in writing of that fact and the other, at any time within 10 days after receipt
of such notice, may elect by written notice to the notifying party to either (a)
waive such defect and proceed toward consummation of the transaction in
accordance with terms of this Agreement or (b) terminate this Agreement. If the
other elects to so terminate this Agreement, both parties will stand fully
released and discharged of any and all obligations under this Agreement. If the
other elects to consummate the transactions contemplated by this Agreement
notwithstanding such loss or damage and does so, all insurance proceeds payable
as a result of the occurrence of the event resulting in such loss or damage (to
the extent not used to replace or restore such lost or damaged property), except
for any proceeds from business interruption insurance relating to the loss of
revenue for the period through and including the Closing Time, will be delivered
by the notifying party to the other or the rights to such proceeds will be
assigned by the notifying party to the other if not yet paid over to the
notifying party, and the notifying party will pay to the other an amount equal
to the difference between the amount of such insurance costs and the full
replacement cost of the damaged or lost Assets.
If, prior to the Closing, any part of or interest in any material Century
Assets or any material TCI Assets is taken or condemned as a result of the
exercise of the power of eminent domain, or if a Governmental Authority having
such power informs the Partnership or TCI that it intends to condemn all or any
part of any material Assets of such party (such event being called, in either
case, a "Taking"), then the other party may terminate this Agreement. If the
other party does not elect to terminate this Agreement, then (i) the other party
will have the sole right, in the name of the party, if the other party so
elects, to negotiate for, claim, contest and receive all damages with respect to
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the Taking, (ii) the party will be relieved of its obligation to convey to the
party the Assets or interests that are the subject of the Taking, (iii) at the
Closing the party will assign to the other party all of the party's rights to
all damages payable with respect to the Taking and (iv) following the Closing,
the party will give the other party such further assurances of such rights and
assignment with respect to the Taking as the other party may from time to time
reasonably request.
12.17 Tax Consequences. No party to this Agreement makes any representation
or warranty, express or implied, with respect to the Tax implications of any
aspect of this Agreement on any other party to this Agreement, and all parties
expressly disclaim any such representation or warranty with respect to any Tax
consequences arising under this Agreement. Each party has relied solely on its
own Tax advisors with respect to the Tax implications of this Agreement.
12.18 Commercially Reasonable Efforts. For purposes of this Agreement,
unless a different standard is expressly provided with respect to any particular
matter "commercially reasonable efforts" will not be deemed to require a party
to undertake extraordinary measures, including the initiation or prosecution of
legal proceedings or the payment of amounts in excess of normal and usual filing
fees and processing fees, if any.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
TCI OF EAST SAN XXXXXXXX VALLEY, L.P.
BY: UNITED CABLE TELEVISION OF LOS ANGELES,
INC., ITS GENERAL PARTNER
By:________________________________________
Name:______________________________________
Title:_____________________________________
CENTURY-TCI CALIFORNIA, L.P.
BY: CENTURY EXCHANGE LLC, ITS MANAGING
PARTNER, BY CENTURY SOUTHWEST CABLE
TELEVISION, INC., ITS MANAGER
By:________________________________________
Name:______________________________________
Title:_____________________________________
and
BY: TCI CALIFORNIA HOLDINGS, LLC, BY TCI
CABLEVISION OF CALIFORNIA, INC., ITS
MANAGING MEMBER
By:________________________________________
Name:______________________________________
Title:_____________________________________
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 1992 Cable Act . . . . . . . . . . . . . . . . . . . .2
1.2 Affiliate. . . . . . . . . . . . . . . . . . . . . . .2
1.3 Annualized Cash Flow . . . . . . . . . . . . . . . . .2
1.4 Assets . . . . . . . . . . . . . . . . . . . . . . . .2
1.5 Basic Services . . . . . . . . . . . . . . . . . . . .2
1.6 Business Day . . . . . . . . . . . . . . . . . . . . .2
1.7 Cable Act. . . . . . . . . . . . . . . . . . . . . . .2
1.8 Cable Business . . . . . . . . . . . . . . . . . . . .2
1.9 Cash Flow. . . . . . . . . . . . . . . . . . . . . . .2
1.10 Century. . . . . . . . . . . . . . . . . . . . . . . .2
1.11 Century Assets . . . . . . . . . . . . . . . . . . . .2
1.12 Century Books and Records. . . . . . . . . . . . . . .3
1.13 Century Leased Property. . . . . . . . . . . . . . . .3
1.14 Century Other Intangibles. . . . . . . . . . . . . . .3
1.15 Century Other Real Property Interests. . . . . . . . .3
1.16 Century Owned Property . . . . . . . . . . . . . . . .3
1.17 Century Required Consents. . . . . . . . . . . . . . .3
1.18 Century System Contracts . . . . . . . . . . . . . . .4
1.19 Century System Franchises. . . . . . . . . . . . . . .4
1.20 Century System Licenses. . . . . . . . . . . . . . . .4
1.21 Century Tangible Personal Property . . . . . . . . . .4
1.22 Century's Cable Business . . . . . . . . . . . . . . .4
1.23 Closing Time . . . . . . . . . . . . . . . . . . . . .4
1.24 Communications Act . . . . . . . . . . . . . . . . . .4
1.25 Contract . . . . . . . . . . . . . . . . . . . . . . .4
1.26 Contribution . . . . . . . . . . . . . . . . . . . . .5
1.27 Equivalent Basic Subscribers (or "EBSs") . . . . . . .5
1.28 Environmental Law. . . . . . . . . . . . . . . . . . .6
1.29 ERISA. . . . . . . . . . . . . . . . . . . . . . . . .6
1.30 ERISA Affiliate. . . . . . . . . . . . . . . . . . . .6
1.31 Expanded Basic Services. . . . . . . . . . . . . . . .6
1.32 FCC. . . . . . . . . . . . . . . . . . . . . . . . . .6
1.33 Financial Statements . . . . . . . . . . . . . . . . .6
1.34 GAAP . . . . . . . . . . . . . . . . . . . . . . . . .6
1.35 Governmental Authority . . . . . . . . . . . . . . . .6
1.36 Hazardous Substances . . . . . . . . . . . . . . . . .6
1.37 HSR Act. . . . . . . . . . . . . . . . . . . . . . . .7
1.38 Judgment . . . . . . . . . . . . . . . . . . . . . . .7
1.39 Knowledge. . . . . . . . . . . . . . . . . . . . . . .7
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1.40 Leased Property. . . . . . . . . . . . . . . . . . . .7
1.41 Legal Requirement. . . . . . . . . . . . . . . . . . .7
1.42 Lien . . . . . . . . . . . . . . . . . . . . . . . . .7
1.43 Litigation . . . . . . . . . . . . . . . . . . . . . .7
1.44 Losses . . . . . . . . . . . . . . . . . . . . . . . .7
1.45 Non-TV Products and Services . . . . . . . . . . . . .8
1.46 Other Real Property Interests. . . . . . . . . . . . .8
1.47 Owned Property . . . . . . . . . . . . . . . . . . . .8
1.48 Pay TV . . . . . . . . . . . . . . . . . . . . . . . .8
1.49 Permitted Lien . . . . . . . . . . . . . . . . . . . .8
1.50 Person . . . . . . . . . . . . . . . . . . . . . . . .9
1.51 Required Consents. . . . . . . . . . . . . . . . . . .9
1.52 System . . . . . . . . . . . . . . . . . . . . . . . .9
1.53 System Contracts . . . . . . . . . . . . . . . . . . .9
1.54 System Franchises. . . . . . . . . . . . . . . . . . .9
1.55 System Licenses. . . . . . . . . . . . . . . . . . . .9
1.56 Tangible Personal Property . . . . . . . . . . . . . .9
1.57 Taxes. . . . . . . . . . . . . . . . . . . . . . . . .9
1.58 TCI Assets . . . . . . . . . . . . . . . . . . . . . .9
1.59 TCI Books and Records. . . . . . . . . . . . . . . . .9
1.60 TCI Leased Property. . . . . . . . . . . . . . . . . 10
1.61 TCI Other Intangibles. . . . . . . . . . . . . . . . 10
1.62 TCI Other Real Property Interests. . . . . . . . . . 10
1.63 TCI Owned Property . . . . . . . . . . . . . . . . . 10
1.64 TCI Required Consents. . . . . . . . . . . . . . . . 10
1.65 TCI System Contracts . . . . . . . . . . . . . . . . 10
1.66 TCI System Franchises. . . . . . . . . . . . . . . . 11
1.67 TCI System Licenses. . . . . . . . . . . . . . . . . 11
1.68 TCI Tangible Personal Property . . . . . . . . . . . 11
1.69 TCI's Cable Business . . . . . . . . . . . . . . . . 11
1.70 Third Party. . . . . . . . . . . . . . . . . . . . . 11
1.71 Transaction Documents. . . . . . . . . . . . . . . . 11
1.72 Other Definitions. . . . . . . . . . . . . . . . . . 11
1.73 Accounting Terms . . . . . . . . . . . . . . . . . . 13
SECTION 2. EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . . 13
2.1 Exchange . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3. CONSIDERATION. . . . . . . . . . . . . . . . . . . . . 13
3.1 Value of Assets; Cash Consideration. . . . . . . . . 13
3.2 Adjustments to Cash Consideration. . . . . . . . . . 14
3.3 Calculation of Adjustments . . . . . . . . . . . . . 15
3.4 Post-Closing Rate Adjustments. . . . . . . . . . . . 17
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SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS . . . . . . . . 18
4.1 TCI Assumed Obligations and Liabilities. . . . . . . 18
4.2 TCI Excluded Assets. . . . . . . . . . . . . . . . . 18
4.3 Century Assumed Obligations and Liabilities. . . . . 19
4.4 Century Excluded Assets. . . . . . . . . . . . . . . 20
SECTION 5. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES. . . . 21
5.1 Organization and Qualification of the Partnership. . 21
5.2 Authority and Validity . . . . . . . . . . . . . . . 21
5.3 No Conflict; Required Consents . . . . . . . . . . . 21
5.4 Assets . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Century System Franchises, Century System Licenses,
Century System Contracts and Century Other Real
Property Interests. . . . . . . . . . . . . . . . . 22
5.6 Real Property. . . . . . . . . . . . . . . . . . . . 24
5.7 Environmental. . . . . . . . . . . . . . . . . . . . 25
5.8 Compliance with Legal Requirements . . . . . . . . . 26
5.9 Patents, Trademarks and Copyrights . . . . . . . . . 27
5.10 Financial Statements; Undisclosed Liabilities;
Absence of Certain Changes or Events . . . . . . . . 28
5.11 Litigation . . . . . . . . . . . . . . . . . . . . . 28
5.12 Tax Returns; Other Reports . . . . . . . . . . . . . 29
5.13 Employment Matters . . . . . . . . . . . . . . . . . 29
5.14 Century Systems Information. . . . . . . . . . . . . 30
5.15 Accounts Receivable. . . . . . . . . . . . . . . . . 30
5.16 Bonds; Letters of Credit . . . . . . . . . . . . . . 31
5.17 Finders and Brokers. . . . . . . . . . . . . . . . . 31
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 31
6.1 Organization and Qualification of TCI. . . . . . . . 31
6.2 Authority and Validity . . . . . . . . . . . . . . . 31
6.3 No Conflict; Required Consents . . . . . . . . . . . 32
6.4 Assets . . . . . . . . . . . . . . . . . . . . . . . 32
6.5 TCI System Franchises, TCI System Licenses, TCI
System Contracts and TCI Other Real Property
Interests. . . . . . . . . . . . . . . . . . . . . . 33
6.6 Real Property. . . . . . . . . . . . . . . . . . . . 34
6.7 Environmental. . . . . . . . . . . . . . . . . . . . 35
6.8 Compliance with Legal Requirements . . . . . . . . . 36
6.9 Patents, Trademarks and Copyrights . . . . . . . . . 37
6.10 Financial Statements; Undisclosed Liabilities;
Absence of Certain Changes or Events . . . . . . . . 38
6.11 Litigation . . . . . . . . . . . . . . . . . . . . . 38
6.12 Tax Returns; Other Reports . . . . . . . . . . . . . 39
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6.13 Employment Matters . . . . . . . . . . . . . . . . . 39
6.14 TCI Systems Information. . . . . . . . . . . . . . . 40
6.15 Accounts Receivable. . . . . . . . . . . . . . . . . 40
6.16 Bonds; Letters of Credit . . . . . . . . . . . . . . 40
6.17 Finders and Brokers. . . . . . . . . . . . . . . . . 41
SECTION 7. ADDITIONAL COVENANTS. . . . . . . . . . . . . . . . . . 41
7.1 Access to Premises and Records . . . . . . . . . . . 41
7.2 Continuity and Maintenance of Operations; Certain
Deliveries and Notices. . . . . . . . . . . . . . . 41
7.3 Employees. . . . . . . . . . . . . . . . . . . . . . 43
7.4 Leased Vehicles; Other Capital Leases. . . . . . . . 45
7.5 Required Consents, Estoppel Certificates, Franchise
Renewal. . . . . . . . . . . . . . . . . . . . . . . 45
7.6 Title Commitments and Surveys. . . . . . . . . . . . 46
7.7 HSR Notification . . . . . . . . . . . . . . . . . . 47
7.8 Transfer Taxes . . . . . . . . . . . . . . . . . . . 47
7.9 Programming. . . . . . . . . . . . . . . . . . . . . 48
7.10 Schedules and Exhibits . . . . . . . . . . . . . . . 48
7.11 Use of Names and Logos . . . . . . . . . . . . . . . 48
7.12 Transitional Billing Services. . . . . . . . . . . . 49
7.13 Confidentiality and Publicity. . . . . . . . . . . . 49
7.14 Bulk Transfers . . . . . . . . . . . . . . . . . . . 50
7.15 Allocation of Value to Exchanged Assets. . . . . . . 50
7.16 Lien Searches. . . . . . . . . . . . . . . . . . . . 50
7.17 Further Assurances . . . . . . . . . . . . . . . . . 50
7.18 Consents . . . . . . . . . . . . . . . . . . . . . . 51
7.19 Cooperation as to Rates and Fees . . . . . . . . . . 51
7.20 Satisfaction of Conditions . . . . . . . . . . . . . 52
7.21 Offers . . . . . . . . . . . . . . . . . . . . . . . 52
7.22 Environmental Reports. . . . . . . . . . . . . . . . 52
7.23 Year 2000 Matters. . . . . . . . . . . . . . . . . . 53
SECTION 8. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . 54
8.1 Conditions to the Partnership's Obligations. . . . . 54
8.2 Conditions to TCI's Obligations. . . . . . . . . . . 55
SECTION 9. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . 57
9.1 The Closing; Time and Place. . . . . . . . . . . . . 57
9.2 TCI's Delivery Obligations . . . . . . . . . . . . . 57
9.3 The Partnership's Delivery Obligations . . . . . . . 58
SECTION 10. TERMINATION AND DEFAULT . . . . . . . . . . . . . . . 60
10.1 Termination Events . . . . . . . . . . . . . . . . . 60
10.2 Effect of Termination. . . . . . . . . . . . . . . . 61
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SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . 61
11.1 Survival of Representations and Warranties . . . . . 61
11.2 Indemnification by TCI . . . . . . . . . . . . . . . 62
11.3 Indemnification by the Partnership . . . . . . . . . 62
11.4 Third Party Claims . . . . . . . . . . . . . . . . . 63
11.5 Limitations on Indemnification - TCI . . . . . . . . 64
11.6 Limitations on Indemnification - the Partnership . . 64
11.7 Other Indemnification. . . . . . . . . . . . . . . . 65
SECTION 12. MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . 65
12.1 Parties Obligated and Benefited. . . . . . . . . . . 65
12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . 65
12.3 Right to Specific Performance. . . . . . . . . . . . 66
12.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . 66
12.5 Captions . . . . . . . . . . . . . . . . . . . . . . 67
12.6 Choice of Law. . . . . . . . . . . . . . . . . . . . 67
12.7 Terms. . . . . . . . . . . . . . . . . . . . . . . . 67
12.8 Rights Cumulative. . . . . . . . . . . . . . . . . . 67
12.9 Time . . . . . . . . . . . . . . . . . . . . . . . . 67
12.10 Late Payments . . . . . . . . . . . . . . . . . . . 67
12.11 Counterparts. . . . . . . . . . . . . . . . . . . . 67
12.12 Entire Agreement. . . . . . . . . . . . . . . . . . 67
12.13 Severability. . . . . . . . . . . . . . . . . . . . 67
12.14 Construction. . . . . . . . . . . . . . . . . . . . 68
12.15 Expenses. . . . . . . . . . . . . . . . . . . . . . 68
12.16 Risk of Loss. . . . . . . . . . . . . . . . . . . . 68
12.17 Tax Consequences. . . . . . . . . . . . . . . . . . 69
12.18 Commercially Reasonable Efforts . . . . . . . . . . 69
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LIST OF SCHEDULES AND EXHIBITS
Schedules
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Schedule 1.9 Cash Flow Adjustments
Schedule 1.12 Century Leased Property
Schedule 1.14 Century Other Real Property Interests
Schedule 1.15 Century Owned Property
Schedule 1.17 Century System Contracts
Schedule 1.18 Century System Franchises
Schedule 1.19 Century System Licenses
Schedule 1.20 Century Tangible Personal Property
Schedule 1.58 TCI Leased Property
Schedule 1.60 TCI Other Real Property Interests
Schedule 1.61 TCI Owned Property
Schedule 1.63 TCI System Contracts
Schedule 1.64 TCI System Franchises
Schedule 1.65 TCI System Licenses
Schedule 1.66 TCI Tangible Personal Property
Schedule 4.2 TCI Excluded Assets
Schedule 4.4 Century Excluded Assets
Schedule 5.3 Century Required Consents
Schedule 5.4 Century Liens and Permitted Liens
Schedule 5.7 Century Environmental Matters
Schedule 5.8 Century Rate Regulation Matters
Schedule 5.10 Century Financial Statements; Century Changes or
Events
Schedule 5.11 Century Litigation
Schedule 5.13(a) Century Employees
Schedule 5.13 Century Plans; Employee Matters
Schedule 5.14 Century Systems Information
Schedule 5.16 Century Bonds
Schedule 6.3 TCI Required Consents
Schedule 6.4 TCI Liens and Permitted Liens
Schedule 6.7 TCI Environmental Matters
Schedule 6.8 TCI Rate Regulation Matters
Schedule 6.10 TCI Financial Statements; TCI Changes or Events
Schedule 6.11 TCI Litigation
Schedule 6.13(a) TCI Employees
Schedule 6.13 TCI Plans; Employee Matters
Schedule 6.14 TCI Systems Information
Schedule 6.16 TCI Bonds
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Exhibits
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Exhibit A Century Systems
Exhibit B TCI Systems
Exhibit 7.5(b) Form of Estoppel Certificate
Exhibit 9.2(b)(1) Form of Xxxx of Sale and Assignment
Exhibit 9.2(b)(2) Form of Assumption Agreement
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