Exhibit 2.1
-----------
PURCHASE AGREEMENT
dated as of March 15, 1996
between
XXXXXXXX/NEW HERITAGE PARTNERSHIP
and
NEW HERITAGE ASSOCIATES
as Sellers
and
CONTINENTAL CABLEVISION, INC.
as Buyer
Page 1 of 78
Table of Contents
ARTICLE 1
DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Certain Defined Terms . . . . . . . . . . . . . . . 2
Section 1.2 Rules of Construction . . . . . . . . . . . . . . . 12
ARTICLE 2
PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.1 Purchase and Sale of Subject
Interests . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING SELLERS . . . . . . . . . . 13
Section 3.1 . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Ultimate Equity Holder Matters . . . . . . . . . . 15
Section 3.3 Title to the Subject Interests . . . . . . . . . . 18
Section 3.4 Brokers and Finders . . . . . . . . . . . . . . . . 19
ARTICLE 4
REPRESENTATIONS AND WARRANTIES REGARDING THE
MNH ENTITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.1 Organization, Qualification and
Business . . . . . . . . . . . . . . . . . . . . . 19
Section 4.2 Authority . . . . . . . . . . . . . . . . . . . . . 20
Section 4.3 No Conflict; Required Consents . . . . . . . . . . 20
Section 4.4 Capitalization . . . . . . . . . . . . . . . . . . 21
Section 4.5 Financial Statements . . . . . . . . . . . . . . . 21
Section 4.6 Absence of Undisclosed Liabilities . . . . . . . . 22
Section 4.7 Absence of Certain Changes . . . . . . . . . . . . 22
Section 4.8 Assets: Title; Sufficiency; Condition . . . . . . . 22
Section 4.9 Compliance with Legal Requirements . . . . . . . . 23
Section 4.10 Systems Franchises, etc. . . . . . . . . . . . . . 24
Section 4.11 Litigation and Judgments . . . . . . . . . . . . . 27
Section 4.12 Tax Returns . . . . . . . . . . . . . . . . . . . 28
Section 4.13 System Information . . . . . . . . . . . . . . . . 29
Section 4.14 Real Property . . . . . . . . . . . . . . . . . . 29
Section 4.15 Employees . . . . . . . . . . . . . . . . . . . . 30
Section 4.16 Environmental . . . . . . . . . . . . . . . . . . 31
Section 4.17 Employee Benefits; ERISA Matters . . . . . . . . . 31
Section 4.18 Full Disclosure . . . . . . . . . . . . . . . . . 36
Page 2 of 78
ARTICLE 5
REPRESENTATIONS AND WARRANTIES REGARDING BUYER . . . . . . . . . . . 37
Section 5.1 Organization and Authority . . . . . . . . . . . . 37
Section 5.2 No Conflict; Required Consents . . . . . . . . . . 37
Section 5.3 Approval of the Board . . . . . . . . . . . . . . . 38
Section 5.5 Financial Statements . . . . . . . . . . . . . . . 38
Section 5.6 . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.7 Absence of Certain Changes . . . . . . . . . . . . 38
Section 5.8 Compliance with Laws . . . . . . . . . . . . . . . 39
Section 5.9 Litigation . . . . . . . . . . . . . . . . . . . . 39
Section 5.10 [This Section has been intentionally
left blank.] . . . . . . . . . . . . . . . . . . . 39
Section 5.11 [This Section has been intentionally
left blank.] . . . . . . . . . . . . . . . . . . . 39
Section 5.12 Financing . . . . . . . . . . . . . . . . . . . . 39
Section 5.13 Investment Intent . . . . . . . . . . . . . . . . 40
ARTICLE 6
CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.1 Conduct of Business of the Sellers;
Ownership of MNH Entities . . . . . . . . . . . . . 40
Section 6.2 Conduct of the Business of the MNH
Entities . . . . . . . . . . . . . . . . . . . . . 40
Section 6.3 Certain Negative Covenants . . . . . . . . . . . . 42
Section 6.4 Conduct of Business of Buyer . . . . . . . . . . . 45
Section 6.5 Confidentiality and Publicity . . . . . . . . . . . 45
Section 6.6 Distant Broadcast Signals . . . . . . . . . . . . . 46
Section 6.7 Post-Closing Cooperation upon
Inquiries as to Rates or a la Carte
Packages . . . . . . . . . . . . . . . . . . . . . 46
Section 6.8 Use of Names and Logos . . . . . . . . . . . . . . 46
Section 6.9 Consents . . . . . . . . . . . . . . . . . . . . . 46
Section 6.10 Further Assurances . . . . . . . . . . . . . . . . 47
Section 6.11 No Related Party Agreements . . . . . . . . . . . 47
Section 6.12 Termination of Seller's Profit
Sharing Plan . . . . . . . . . . . . . . . . . . 48
Section 6.13 Cooperation with CCI Merger, etc . . . . . . . . . 48
Section 6.14 Access to Records . . . . . . . . . . . . . . . . 48
Section 6.15 Form 394 . . . . . . . . . . . . . . . . . . . . . 49
Section 6.16 Tax Returns . . . . . . . . . . . . . . . . . . . 49
Page 3 of 78
ARTICLE 7
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.1 Conditions to Buyer's Obligations . . . . . . . . . 50
Section 7.2 Conditions to Sellers' Obligations . . . . . . . . 53
Section 7.3 Exceptions to Conditions to
Obligations . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 8
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.1 Closing, Time and Place . . . . . . . . . . . . . . 58
Section 8.2 Sellers' Obligations . . . . . . . . . . . . . . . 58
Section 8.3 Buyer's Obligations . . . . . . . . . . . . . . . . 59
ARTICLE 9
TERMINATION AND DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.1 Termination . . . . . . . . . . . . . . . . . . . . 63
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . 63
ARTICLE 10
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.1 Indemnification by Sellers . . . . . . . . . . . . 64
Section 10.2 Indemnification by Buyer . . . . . . . . . . . . . 65
Section 10.3 Procedure for Indemnified Third
Party Claim . . . . . . . . . . . . . . . . . . . 65
Section 10.4 Payment of Indemnification Amounts . . . . . . . . 66
Section 10.5 Time and Manner of Certain Claims . . . . . . . . 66
Section 10.6 Certain Limitations on
Indemnification . . . . . . . . . . . . . . . . . 67
Section 10.7 Exclusive Remedy . . . . . . . . . . . . . . . . . 68
ARTICLE 11
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.1 Expenses . . . . . . . . . . . . . . . . . . . . . 69
Section 11.2 Brokerage . . . . . . . . . . . . . . . . . . . . 69
Section 11.3 Waivers . . . . . . . . . . . . . . . . . . . . . 69
Section 11.4 Notices . . . . . . . . . . . . . . . . . . . . . 70
Section 11.5 Entire Agreement; Prior
Representations; Amendments . . . . . . . . . . . 71
Section 11.6 Binding Effect; Benefits . . . . . . . . . . . . . 71
Section 11.7 Counterparts . . . . . . . . . . . . . . . . . . . 72
Section 11.8 GOVERNING LAW . . . . . . . . . . . . . . . . . . 72
Page 4 of 78
Section 11.9 Severability . . . . . . . . . . . . . . . . . . . 72
Section 11.10 Third Parties, Joint Ventures . . . . . . . . . . 72
Section 11.11 Attorneys' Fees . . . . . . . . . . . . . . . . . 72
Section 11.12 Tax Consequences . . . . . . . . . . . . . . . . 72
Section 11.13 Specific Performance . . . . . . . . . . . . . . 73
Exhibits
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A Excluded Assets
B Guaranty Agreement
C Xxxx of Sale and Assignment (MNHP)
D Xxxx of Sale and Assignment (NHA)
Schedule No. Schedules
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1.1 Cable Data Report (Oct. 31, 1995)
2.1(d)(ii) Buyer executed releases from Toronto-Dominion Bank Loan
3.1(c)(ii) Sellers provide MNH Partnership Agreement
3.2(a)(ii) Xxxxxxxx Charter and By-laws from Seller to Buyer
3.2(a)(iv) Xxxxxxxx Capital Stock
3.2(b)(i) Sellers provide NHA Partnership Agreement
3.2(b)(ii) NHA Capital Stock
3.2(b)(iii) Sellers provide Ingersoll Charter, By-laws
3.2(b)(v) Ingersoll and New Heritage Capital Stock
4.1(a) MNH Partnership Agreement and Certificate of Limited
Partnership from Seller to Buyer
4.3 Sellers Required Consents
4.4 MNH entity equity interests
4.5 Financial statements for MNH entities (audited as of 6/30/95)
(unaudited as of 12/31/95)
4.6 Absence of undisclosed liabilities
4.7 Absence of certain changes
4.8 Assets
4.9 Compliance with legal requirements
4.10(a) Systems franchises (list)
4.10(b) Systems licenses (list)
4.10(c) Systems contracts (list)
4.10(d) Systems leases (lists)
4.10(e) MNH entities fixed asset records as to tangible personal
property
4.10(f) Systems franchises since 9/15/95
Page 5 of 78
4.10(g) Copies of Systems franchises, licenses, contracts and leases
and owned property ownership evidence
4.10(h) Validity of Systems franchises, licenses, contracts and leases
4.10(i) Restrictions on transfer of control of Systems franchises
4.10(k) Material commitments
4.10(m) Compliance with Communications Acts and FCC rules and
regulations
4.10(n) Television signals/Sellers make retransmission consents
available
4.10(o) Rate complaints/letters of inquiry. Sellers have made
available (i) all FCC Forms 393, 1200, 1205, 1210 and 1215;
and (ii) all complaints filed with the FCC with respect to
rates
4.11 Litigation
4.12 Tax returns
4.13(a)(i)-(iv) Plant miles, service, stations, areas served
4.13(b) Cable data reports (10/31/95 - 2/29/96)
4.14 Owned property
4.15(b) Labor Union Representation or Proceedings
4.15(d) Full-time employees whose annual compensation exceeds $50,000
4.15(e) Employment Agreements
4.16 Environmental liabilities
4.17(a) Employee Benefits
4.17(e) Retiree Welfare Benefit Plans
4.17(i) Sellers make available (i) two most recently filed Federal
Form 5500 series and accountant's opinion; and (ii) two most
recent actuarial valuation reports
4.17(n) Additional employee benefits
5.2 Buyer required consents
5.7 Absence of certain changes
5.9 Litigation
6.1(a) Amendments to Seller's Partnership Agreements
6.2(e) Modifications and Amendments to Systems Franchises, Licenses,
Contracts or Leases
6.2(h) Bonds
6.2(i) Seller furnish Buyer FCC Forms 1200, 1205, 1210 and 1215
6.3(a)(iv) Capital Expenditures Budget
6.3(a)(vi) Material Increases in Compensation of MNH Employees
6.3(a)(vii) Contracts for the Purchase of Equipment, Materials, Supplies
or Services
Page 6 of 78
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made and entered as of
March 15, 1996 by and between Xxxxxxxx/New Heritage Partnership, an Iowa
general partnership ("MNHP"), New Heritage Associates, an Iowa general
partnership ("NHA") (MNHP and NHA are sometimes hereinafter referred to,
collectively, as "Sellers" and, singly, as a "Seller"), and Continental
Cablevision, Inc., a Delaware corporation ("Buyer" or "CCI").
RECITALS
X. Xxxxxxxx/New Heritage Strategic Partners L.P. ("MNH") is an Iowa
limited partnership. MNH owns and operates indirectly through its
subsidiaries certain cable television systems.
B. MNHP is the sole general partner of MNH. MNHP owns a general
partnership interest (the "MNHP General Partnership Interest") representing at
the date hereof a 62.1% Ownership Interest (as defined in the Restated
Agreement of Limited Partnership of Xxxxxxxx/New Heritage Strategic Partners
L.P., dated as of December 30, 1991 (the "MNH Partnership Agreement"), among
MNHP, NHA and Continental Cablevision of Minnesota, Inc., a Minnesota
corporation ("CCM")) in MNH.
C. NHA is a limited partner of MNH. NHA owns a limited partnership
interest in MNH (the "NHA Limited Partnership Interest") (the MNHP General
Partnership Interest and the NHA Limited Partnership Interest are sometimes
hereinafter referred to, collectively, as the "Subject Interests" and, singly,
as a "Subject Interest") representing at the date hereof a 0.0% Ownership
Interest (as defined in the MNH Partnership Agreement) in MNH and a carried
interest in MNH effective pursuant to Section 3.7 of the MNH Partnership
Agreement at such time as CCM is deemed to have received distributions from
MNH equal to its capital contributions to MNH.
D. Buyer desires to purchase, and Sellers desire to sell to Buyer, the
Subject Interests on and subject to the terms and conditions hereinafter set
forth.
Page 7 of 78
AGREEMENTS
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
Section 1.1 Certain Defined Terms. The following terms with initial
capital letters, when used in this Agreement, shall have the meanings set
forth below:
"Accounts Receivable" means all subscriber, trade and other accounts
receivable and receivables of the MNH Entities.
"Accumulated Funding Deficiency" is defined in Section 4.17(q).
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting
interests, by contract or otherwise.
"Assets" means all of the assets and properties, real and personal,
tangible and intangible, owned or leased by any of the MNH Entities that are
not Excluded Assets, including Tangible Personal Property, Owned Property,
Systems Franchises, Systems Licenses, Systems Contracts, Systems Leases,
Accounts Receivable and Books and Records.
"Banks" is defined in Section 2.1(d).
"Bank Co-Agents" is defined in Section 2.1(d).
"Bank Agent" is defined in Section 2.1(d).
"Basic Subscriber" means any basic subscriber of a System, with the
number of such basic subscribers as of any date to be determined using the
same methods and criteria as used in determining the number of basic
subscribers of the MNH Entities at October 31, 1995 set forth in line 01 of
the page of the CableData Report for the month of October 1995 with respect to
the MNH Entities (which number of basic subscribers was 119,781 at October 31,
1995) attached hereto as Schedule 1.1.
"Benefit Arrangement" is defined in Section 4.17(q).
Page 8 of 78
"Books and Records" means all engineering records, files, data, drawings,
blueprints, schematics, reports, lists, plans and processes of the MNH
Entities and all files of correspondence, lists, records and reports of the
MNH Entities, including all files of correspondence, lists, records and
reports concerning subscribers and prospective subscribers, signal and program
carriage and dealings with Governmental Authorities and all reports filed by
or on behalf of any MNH Entity with the FCC and all statements of account
filed by or on behalf of any MNH Entity with the United States Copyright
Office.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banks in Boston, Massachusetts or Des Moines, Iowa are closed.
"Buyer" is defined in the preamble preceding the Recitals to this
Agreement.
"Buyer Purchase Price Calculation" is defined in Section 8.3(b).
"Buyer Required Consents" means any and all Consents identified on
Schedule 5.2.
"Cable Act" means the Cable Television Consumer Protection and
Competition Act of 1992, and the rules and regulations promulgated thereunder.
"Cable Benefit Arrangement" is defined in Section 4.17(q).
"Cable Employee Plan" is defined in Section 4.17(q).
"Cable Employee" is defined in Section 4.17(q).
"Cable Franchise Areas" is defined in Section 7.1(k).
"Cable Plan" is defined in Section 4.17(q).
"Capital Expenditures" shall mean, for any period, any and all
expenditures in respect of any one or more of the Systems made, accrued or
incurred by any MNH Entity which, under GAAP, would be classified as capital
expenditures for such period.
"Capital Expenditures Adjustment" is defined in Section 8.3(b).
"CCI" is defined in the preamble preceding the Recitals to this
Agreement.
"CCI Balance Sheet" is defined in Section 5.5.
Page 9 of 78
"CCI Balance Sheet Date" is defined in Section 5.5.
"CCI Counsel Opinion" is defined in Section 7.2(e).
"CCI Merger Agreement" means the Agreement and Plan of Merger, dated as
of February 27, 1996, between CCI and U S WEST, Inc., a Delaware corporation,
as heretofore or hereafter amended.
"CCI Proxy Statement" means the Proxy Statement and the exhibits thereto
to be filed with the SEC and delivered to the stockholders of CCI in
connection with the CCI Merger Agreement, including any amendments and
supplements thereto.
"CCI SEC Filings" means (i) the Registration Statement on Form S-4 and
the exhibits thereto, as filed by CCI with the SEC on January 27, 1995,
including Amendment Xx. 0, Xxxxxxxxx Xx. 0, Xxxxxxxxx Xx. 0 and Amendment No.
4 thereto, each as filed with the SEC, and Prospectus Supplement No. 1, dated
September 22, 1995, to the Joint Proxy-Prospectus included in said
Registration Statement on Form S-4, (ii) all reports on Form 10-K, Form 10-Q
or Form 8-K filed by CCI with the SEC on or after January 1, 1995 and (iii)
the CCI Proxy Statement and all amendments thereto.
"CCM" is defined in Recital B.
"Closing" is defined in Section 8.1.
"Closing Date" means the date on which the Closing occurs.
"Closing Time" means 11:59 P.M., eastern local time, on the Closing Date.
"COBRA" is defined in Section 4.17(q).
"Code" means the Internal Revenue Code of 1986, as amended, and, unless
the context otherwise requires, the rules and regulations promulgated
thereunder.
"Communications Act" means the Communications Act of 1934, as amended to
date, and the rules and regulations thereunder.
"Communications Acts" means the Communications Act, the Cable
Communications Policy Act of 1984 and the Cable Act, all as amended to date,
and the rules and regulations thereunder.
"Consent" means any vote, consent, permit, approval or authorization of,
or filing of any certificate, notice, application, report or other document
with, any Governmental Authority or other Person.
Page 10 of 78
"Contract" means any written contract, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant,
right or other instrument, document, obligation or agreement, and any oral
obligation, right or agreement.
"Deal Price" is defined in Section 8.3(b).
"Eligible Accounts Receivable" is defined in Section 8.3(b).
"Employee Benefit Plan" is defined in Section 4.17(q).
"Enforceability Exceptions" is defined in Section 3.1(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
"ERISA Affiliate" means, as to any Person, any trade or business, whether
or not incorporated, which together with such Person would be deemed, at any
time through the Closing Date, a single employer within the meaning of Section
4001 of ERISA or Section 414(b), (c), (m) or (o) of the Code; provided that
"ERISA Affiliate" shall, as to any MNH Entity, not include at any time
(whether before or after September 1, 1992) any trade or business that would
not be deemed at any time on or after September 1, 1992 to be such a single
employer with any MNH Entity.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Excluded Assets" means the assets of the MNH Entities located in Des
Moines, Iowa that are described in Exhibit A hereto.
"Expenses" means any and all expenses reasonably incurred in connection
with investigating, preparing, defending, bringing or prosecuting any claim,
action, suit or proceeding (including court filing fees, court costs,
arbitration fees or costs, witness fees and reasonable fees of legal counsel,
investigators, expert witnesses, accountants and other professionals).
"FCC" means the Federal Communications Commission.
"FCC Licenses" means all Licenses issued by the FCC.
"Franchise" means any governmental franchise or similar authorization
(other than FCC Licenses) pursuant to which a Person is authorized to provide
cable television service.
Page 11 of 78
"GAAP" means generally accepted accounting principles as in effect in the
United States of America on the date hereof.
"Governmental Authority" means (i) the United States of America, (ii) any
state, commonwealth, territory or possession of the United States of America
and any political subdivision thereof (including counties, municipalities,
provinces, parishes and the like), (iii) any foreign (as to the United States
of America) sovereign entity and any political subdivision thereof and (iv)
any court, tribunal, department, commission, board, bureau, agency, authority
or instrumentality of any of the foregoing.
"Group Health Plan" is defined in Section 4.17(q).
"Hazardous Substances" means (i) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C.A. Sections
6901 et seq.), as amended, and the rules and regulations promulgated
thereunder; (ii) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA)(42
U.S.C.A. Sections 9601 et seq.), as amended, and the rules and regulations
promulgated thereunder; (iii) any substance regulated by the Toxic Substances
Control Act (TSCA) (42 U.S.C. Section 2601 et seq.), as amended, and the rules
and regulations promulgated thereunder; (iv) asbestos; (v) polychlorinated
biphenyls; (vi) any substances regulated under the provisions of Subtitle I of
RCRA relating to underground storage tanks; (vii) any substance the presence,
use, treatment, storage or disposal of which on the Owned or Leased Property
is prohibited by any Legal Requirement; and (viii) any other substance which
by any Legal Requirement requires special handling, reporting to or
notification of any Governmental Authority in its collection, storage, use,
treatment or disposal.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"Indemnitee" is defined in Section 10.3.
"Indemnitor" is defined in Section 10.3.
"Ingersoll" is defined in Section 3.2(b).
"Ingersoll Equity Holders" means the registered holders at the date
hereof of the issued and outstanding shares of capital stock of Ingersoll,
which registered holders are listed in Schedule 3.2(b)(v).
"IRS" means the Internal Revenue Service.
Page 12 of 78
"Judgment" means any judgment, writ, order, decision, injunction, award
or decree of or by any Governmental Authority or private arbitration tribunal.
"Lease" means any written or oral lease, sublease, license, easement,
grant, pole attachment or conduit or reach agreement or other attachment right
or similar instrument under which a Person has the right to use real or
personal property or a right of way.
"Leased Property" is defined in Section 4.14.
"Legal Requirement" means applicable common law and any statute,
ordinance, code, law, rule, regulation, order or other written standard,
requirement or procedure enacted, adopted, promulgated, applied or followed by
any Governmental Authority, and includes any Judgment.
"License" means any approval, consent, right, certificate, order,
franchise, determination, permission, license, authority or grant granted,
issued, declared, designated or adopted by any Governmental Authority,
including any Franchise.
"Lien" means any security agreement, conditional sale, financing lease or
other title retention agreement, any consignment or bailment given for
purposes of security, any lien, mortgage, pledge, option, encumbrance,
security interest, rights of entry, possibilities of reverter, encroachments,
easements, rights-of-way, restrictive covenants and licenses of any kind,
which otherwise constitutes an interest in or claim against property, whether
arising pursuant to any Legal Requirement, any Contract or otherwise.
"Litigation" means, with respect to any Person, any claim, action, suit,
proceeding, arbitration, investigation, hearing or other activity or procedure
that could result in a Judgment, and any written notice of any of the
foregoing.
"Losses" means any claims, losses, liabilities, obligations, costs,
damages, Liens, penalties, fines, settlement payments, awards, judgments,
deficiencies and other charges, including interest which may be imposed in
connection therewith.
"Material Adverse Effect" means, with respect to any Person or Persons, a
material adverse effect on the business, condition (financial or other),
operations or assets of such Person or such Persons taken as a whole (as the
case may be).
"Xxxxxxxx" is defined in Section 3.2(a).
Page 13 of 78
"Xxxxxxxx Equity Holder" means the registered holder at the date hereof
of the issued and outstanding shares of capital stock of Xxxxxxxx, which
registered holder is listed in Schedule 3.2(a)(iv).
"Minimum Damage Requirement" is defined in Section 10.6(d).
"MNH" is defined in Recital A.
"MNH Balance Sheet" is defined in Section 4.6.
"MNH Balance Sheet Date" is defined in Section 4.6.
"MNH Employees" is defined in Section 4.15.
"MNH Entity" means any of MNH and the MNH Subsidiaries.
"MNH FCC Counsel Opinion" is defined in Section 7.1(e).
"MNH Financial Statements" is defined in Section 4.5.
"MNH Loan Agreement" is defined in Section 2.1(d).
"MNH Partnership Agreement" is defined in Recital B.
"MNH Subsidiary" means any Subsidiary of MNH.
"MNHP" is defined in the preamble preceding the Recitals to this
Agreement.
"MNHP General Partnership Interest" is defined in Recital B.
"MNHP Partnership Agreement" is defined in Section 3.2(a).
"Multiemployer Plan" is defined in Section 4.17(q).
"New Heritage" is defined in Section 3.2(b).
"New Heritage Equity Holders" means the registered holders at the date
hereof of the issued and outstanding shares of capital stock of New Heritage,
which registered holders are listed in Schedule 3.2(b)(v).
"NHA" is defined in the preamble preceding the Recitals to this
Agreement.
"NHA Equity Holders" means the partners of NHA at the date hereof, which
partners are Ingersoll and New Heritage.
Page 14 of 78
"NHA Limited Partnership Interest" is defined in Recital C.
"NHA Partnership Agreement" is defined in Section 3.2(b).
"NLRB" means the National Labor Relations Board.
"Outside Closing Date" is defined in Section 9.1.
"Owned Property" is defined in Section 4.14.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" is defined in Section 4.17(q).
"Permitted Liens" means any (i) Liens securing current Taxes, assessments
and governmental charges not yet due and payable or being contested in good
faith, (ii) materialmen's, mechanics', carriers', workmen's, warehousemen's,
repairmen's or other like Liens arising in the ordinary course of business, or
deposits to obtain the release of such Liens, and (iii) Liens or minor
imperfection of title that do not, individually or in the aggregate, in any
material respect interfere with or detract from the ownership, use, operation,
value or marketability of the affected property; provided that "Permitted
Liens" shall not include any Lien which could prevent or inhibit in any
material respect the conduct of the business of any System as it is currently
being conducted.
"Person" means any human being, Governmental Authority, corporation,
limited liability company, partnership, joint venture, trust, association or
unincorporated entity of any kind.
"Prime Rate" means the "Prime Rate" or base rate on corporate loans at
large U.S. money center commercial banks as published in The Wall Street
Journal or, if publication of such rate shall be suspended or terminated,
"Prime Rate" shall mean the annual rate of interest, determined daily and
expressed as a percentage, from time to time announced by CitiBank, N.A. as
its prime or base rate on corporate loans. Each change in the Prime Rate
shall take effect simultaneously with the date of publication or announcement,
as applicable, of each corresponding change in the Prime Rate.
"Proceeds" is defined in Section 7.1(k)(iii).
"Prohibited Transaction" is defined in Section 4.17(q).
"Purchase Price" is defined in Section 8.3(b).
"Reportable Event" is defined in Section 4.17(q).
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"Required Percentage" is defined in Section 7.1(k).
"SEC" means the Securities and Exchange Commission.
"Section 3.1(c) Exceptions" is defined in Section 3.1(c).
"Section 4.3(a) Exceptions" is defined in Section 4.3(a).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Seller Benefit Arrangement" is defined in Section 4.17(q).
"Sellers" is defined in the preamble preceding the Recitals to this
Agreement.
"Sellers Counsel Opinions" is defined in Section 7.1(f).
"Sellers Indemnification Percentage" means the quotient (expressed as a
percentage) of the Purchase Price (other than the $5,000,000 payable by Buyer
pursuant to Section 8.3(b)(i)(C)), as estimated at Closing pursuant to Section
8.3(b)(iii)(A), divided by the Deal Price.
"Sellers Purchase Price Calculation" is defined in Section 8.3(b).
"Sellers Required Consents" means any and all Consents identified on
Schedule 4.3.
"Subject Interests" is defined in Recital C.
"Subsidiary" means, with respect to any Person, any other Person, whether
or not incorporated, of which (i) such Person or any other Subsidiary of such
Person is a general partner or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such other Person is directly or indirectly owned or controlled by
such Person, by one or more Subsidiaries of such Person, or by such Person and
one or more of its Subsidiaries.
"System" means any of the cable television systems in and around
Minneapolis and St. Xxxx, Minnesota owned and operated by an MNH Entity,
including any extension or additions thereto made after the date hereof.
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"Systems Contracts" means any and all (i) pole line and joint line
agreements, underground conduit agreements, crossing agreements, bulk or
commercial service or multiple dwelling unit agreements, and retransmission
consent agreements, (ii) other Contracts which contemplate payments by or to
any MNH Entity exceeding $50,000 in any 12-month period or $100,000 in the
aggregate, and (iii) other Contracts that are material to the operation of the
Systems taken as a whole (other than the Systems Franchises).
"Systems Franchises" means any and all Franchises used or useful by the
MNH Entities in the operation of the Systems.
"Systems Leases" means (i) any and all Leases of real property to which
any MNH Entity is a party or by which any of the Assets are bound, and (ii)
any and all written Leases of personal property to which any MNH Entity is a
party or by which any of the Assets are bound, under which the annual rental
exceeds $50,000 in any 12-month period or $100,000 in the aggregate.
"Systems Licenses" means (i) any and all Licenses, including all of the
intangible cable television channel distribution rights, cable television
relay service (CARS), business radio and other licenses, and other licenses,
authorizations, consents or permits issued by the FCC that are used or useful
by the MNH Entities in the operation of the Systems and (ii) all other
material Licenses that are used by the MNH Entities in the operation of the
System.
"Tangible Personal Property" means all tangible personal property of the
MNH Entities, including all tangible personal property used or useful by the
MNH Entities in the operation of the Systems (including towers, tower
equipment, aboveground and underground cable, distribution systems, headend
amplifiers, line amplifiers, microwave equipment, converters, testing
equipment, motor vehicles, office equipment, furniture, fixtures, supplies,
inventory and other physical assets).
"Taxes" means 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, together with any interest thereon and
any penalties, additions to tax or additional amounts applicable thereto.
"Transaction Documents" means the agreements, instruments and documents
executed and delivered in connection with this Agreement or the transactions
contemplated hereby, including the agreements, instruments and documents
described in Sections 8.2 and 8.3 which are being executed and delivered by or
on behalf of a Seller or Buyer, as the case may be, or, an Affiliate or direct
or indirect equity holder of either of them in connection with this Agreement
or the transactions contemplated hereby.
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"Transferable Franchise Areas" is defined in Section 7.1(k).
"U S WEST, Inc. Registration Statement" means the Registration Statement
on Form S-4 and the exhibits thereto to be filed with the SEC by U S WEST,
Inc. in connection with the CCI Merger Agreement, including any amendments
thereto filed with the SEC, and the Prospectus included in said Registration
Statement on Form S-4 and any supplements to such Prospectus.
"Ultimate Equity Holder Guaranties" is defined in Section 7.1(m).
"Ultimate Equity Holders" means the Xxxxxxxx Equity Holders, the
Ingersoll Equity Holders and the New Heritage Equity Holders.
"Welfare Plans" is defined in Section 4.17(q).
"Withdrawal Liability" is defined in Section 4.17(q).
"Working Capital Adjustment" is defined in Section 8.3(b).
Section 1.2 Rules of Construction.
(a) Unless otherwise expressly provided in this Agreement,
accounting terms used in this Agreement will have the meaning ascribed to them
under GAAP.
(b) Words used in this Agreement, regardless of the gender and
number used, will be deemed and construed to include any other gender,
masculine, feminine, or neuter, and any other number, singular or plural, as
the context requires.
(c) As used in this Agreement, the word "including" is not
limiting, and the word "or" is not exclusive.
(d) The words "this Agreement", "hereto", "herein", "hereunder",
"hereof", and words or phrases of similar import refer to this Agreement as a
whole, together with any and all Appendices, Schedules and Exhibits hereto,
and not to any particular article, section, subsection, paragraph, clause or
other portion of this Agreement.
(e) Unless the context requires otherwise, a reference herein to a
particular article, section, subsection, paragraph or clause shall refer to
such article, section, subsection, paragraph or clause of this Agreement.
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(f) This Agreement has been negotiated by Sellers and Buyer 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.
(g) The section and other headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement. Reference to Schedules and Exhibits shall, unless
otherwise indicated, refer to the Schedules and Exhibits attached to this
Agreement, which shall be incorporated in and constitute a part of this
Agreement by such reference.
(h) The words "to the knowledge of Sellers" and words or phrases of
similar import shall, except as may be otherwise expressly stated herein,
refer to the knowledge after due inquiry (or what would reasonably be the
knowledge if due inquiry were made) of Xxxxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxx or Xxxxx Xxxxxxx.
ARTICLE 2
PURCHASE AND SALE
Secion 2.1 Purchase and Sale of Subject Interests. Subject to the terms
and conditions set forth in this Agreement, at the Closing:
(a) MNHP shall convey, assign and transfer to Buyer the MNHP
General Partnership Interest, free and clear of all Liens;
(b) NHA shall convey, assign and transfer to Buyer the NHA Limited
Partnership Interest, free and clear of all Liens;
(c) Buyer shall pay to the Sellers the Purchase Price in accordance
with Section 8.3, subject to adjustment as provided in Section 8.3(b)(iii);
and
(d) Buyer shall either (i) pay in full the principal indebtedness
of MNH, all interest accrued thereon and any other amounts otherwise due
arising under that certain Loan Agreement, dated as of March 31, 1992, among
MNH, Toronto-Dominion Bank and the other banks named therein (the "Banks"),
The Bank of New York, The First National Bank of Chicago and NationsBank of
Texas, N.A., as co-agents (the "Bank Co-Agents"), and Toronto-Dominion Bank
Trust Company as agent (the "Bank Agent") for the Banks and the Co-Agents,
including any security or other agreements entered into pursuant thereto, in
each case, as amended (collectively, the "MNH Loan Agreement") or (ii) deliver
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to the Sellers releases duly executed by the Banks, the Co-Agents and the
Agent in favor of the Sellers releasing the Sellers from any liability under
the MNH Loan Agreement and the other agreements and instruments delivered in
connection with the MNH Loan Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING SELLERS
Section 3.1 Seller Matters. Each Seller severally and not jointly
represents and warrants as to itself and not as to any other Seller to Buyer
as follows:
(a) Organization and Qualification of each Seller. Such Seller is
a general partnership duly formed and validly existing under the laws of the
State of Iowa. Such Seller has all requisite partnership power and authority
to own and lease its assets and properties and to conduct its activities as
such activities are currently conducted.
(b) Authority. Such Seller has all requisite partnership power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and each Transaction Document to which such Seller is or will
be a party, and the consummation by such Seller of the transactions
contemplated hereby or thereby, have been duly and validly authorized by all
necessary partnership action on the part of such Seller and its partners.
This Agreement and each Transaction Document to which such Seller is or will
be a party have been or will be (as the case may be) duly executed and
delivered by such Seller and are or will be (as the case may be) the valid and
binding obligations of such Seller, enforceable against such Seller and its
general partners in accordance with their respective terms, except (i) as the
same may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws of general application relating to or affecting creditors'
rights, including without limitation, the effect of statutory or other laws
regarding fraudulent conveyances and preferential transfers, and (ii) for the
limitations imposed by general principles of equity. The foregoing exceptions
are hereinafter referred to as the "Enforceability Exceptions".
(c) No Conflict; Required Consents.
(i) Except for (A) obtaining the Sellers Required Consents
identified on Schedule 4.3 and for (B) such other exceptions (the "Section
3.1(c) Exceptions") from which the aggregate amount of resulting Losses and
Expenses suffered or incurred by Buyer or the MNH Entities, together with the
aggregate amount of Losses and Expenses resulting from any Section 4.3(a)
Page 20 of 78
Exceptions, would not exceed $250,000, neither the execution, delivery or
performance by such Seller of this Agreement or any Transaction Document to
which such Seller is or will be a party, nor the consummation of the
transactions contemplated hereby or thereby, does or will:
(A) conflict with or violate any provision of the MNHP
Partnership Agreement (in the case of MNHP) or the NHA Partnership Agreement
(in the case of NHA);
(B) violate any provision of any Legal Requirement
applicable to such Seller;
(C) conflict with, violate, result in a breach of,
constitute a default under (without regard to requirements of notice, lapse of
time, or elections of other Persons, or any combination thereof), accelerate
or permit the acceleration of the performance required by, any Contract or
License to which such Seller is a party or by which such Seller or any of the
assets or properties owned or leased by such Seller are bound;
(D) result in the creation or imposition of any Lien
against or upon any of the Subject Interests; or
(E) require any Consent.
(ii) Sellers have delivered to Buyer a true and complete copy
of the MNH Partnership Agreement, as in effect at the date hereof.
(d) Compliance with Legal Requirements. Such Seller holds all
Contracts and Licenses necessary for the lawful conduct of its business,
except where the failure to hold such Contracts and Licenses would not in the
aggregate have a Material Adverse Effect on such Seller. Such Seller has not
violated and is not in violation of any Contract or Legal Requirement, except
where such violations do not and will not have a material adverse effect on
the authorization, execution or delivery, or the consummation of the
transactions contemplated by, this Agreement or any Transaction Document.
(e) Litigation and Judgments. There is no Litigation pending or,
to the knowledge of such Seller, threatened by or before any Governmental
Authority or private arbitration tribunal against such Seller or any of its
partners or its partners' respective shareholders that, individually or in the
aggregate, could prevent, hinder or materially delay or affect in any material
respect the consummation of the transactions contemplated by this Agreement or
any Transaction Document.
Section 3.2 Ultimate Equity Holder Matters.
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(a) MNHP. MNHP represents and warrants to Buyer as follows:
(i) Sellers have delivered to Buyer a true and complete copy
of the Xxxxxxxx/New Heritage Partnership Agreement, dated as of September 1,
1991, as in effect at the date hereof (the "MNHP Partnership Agreement"). The
Management Committee (as defined in the MNHP Partnership Agreement) has
approved and consented to this Agreement and the transactions contemplated
hereby.
(ii) Xxxxxxxx Cable, Inc., an Iowa corporation ("Xxxxxxxx"),
and NHA are the only partners of MNHP. Sellers have delivered to Buyer true
and complete copies of the charter and bylaws of Xxxxxxxx, each as in effect
at the date hereof.
(iii) Xxxxxxxx is a corporation duly organized, validly existing
and in good standing under the laws of the State of Iowa. Xxxxxxxx has all
requisite corporate power and authority to own and lease its assets and
properties and to conduct its activities as such activities are currently
conducted, except where the failure to have such power or authority would not
have a Material Adverse Effect on the ability of Xxxxxxxx to execute, deliver
or perform its obligations under this Agreement and any Transaction Document
to which it is or will be a party. Xxxxxxxx has all requisite corporate power
and authority to execute, deliver and perform, for itself and in its capacity
as a general partner of MNHP each of the Transaction Documents to which it is
or will be a party and to consummate the transactions contemplated thereby.
The execution, delivery and performance of each Transaction Document to which
Xxxxxxxx is or will be a party, and the consummation by Xxxxxxxx of the
transactions contemplated thereby, have been duly and validly authorized by
all necessary corporate action on the part of Xxxxxxxx and its shareholders.
Each Transaction Document to which Xxxxxxxx is or will be a party has been or
will be (as the case may be) duly executed and delivered by Xxxxxxxx and is or
will be (as the case may be) the valid and binding obligation of Xxxxxxxx
enforceable against Xxxxxxxx in accordance with its terms, subject to the
Enforceability Exceptions. The Board of Directors and the sole shareholder of
Xxxxxxxx have, by resolutions duly adopted in accordance with all Legal
Requirements and the charter and bylaws of Xxxxxxxx, approved and adopted this
Agreement and the transactions contemplated hereby on the terms and conditions
set forth herein and authorized MNHP to execute and deliver this Agreement and
the other Transaction Documents and perform its obligations hereunder and
thereunder.
(iv) Schedule 3.2(a)(iv) sets forth the authorized and issued
and outstanding shares of capital stock or other equity interests of Xxxxxxxx
and the registered and beneficial holders thereof. All such outstanding
shares are duly authorized, validly issued and fully paid and nonassessable.
There are no outstanding options, warrants, rights, puts, calls, commitments,
Page 22 of 78
or other contracts, arrangements or understandings requiring or providing for,
and there are no outstanding debt or equity securities of Xxxxxxxx which upon
the conversion, exchange or exercise thereof would require or provide for, the
issuance or transfer of any shares of capital stock or other equity interests
of Xxxxxxxx (or any other securities which, with notice, lapse of time and/or
payment of monies, are or would be convertible into or exercisable or
exchangeable for shares of capital stock or other equity interests of
Xxxxxxxx). There are no voting trusts or other agreements or understandings
with respect to the voting of capital stock or other equity interests of
Xxxxxxxx.
(b) NHA. NHA represents and warrants to Buyer as follows:
(i) Sellers have delivered to Buyer a true and complete copy
of the New Heritage Associates Partnership Agreement, dated as of September 1,
1991, as in effect at the date hereof (the "NHA Partnership Agreement").
(ii) Schedule 3.2(b)(ii) sets forth all of the authorized and
issued and outstanding partnership interests or other equity interests of NHA
and the legal and beneficial holders thereof. There are no outstanding
options, warrants, rights, puts, calls, commitments, or other contracts,
arrangements or understandings requiring or providing for, and there are no
outstanding debt or equity securities of NHA which upon the conversion,
exchange or exercise thereof would require or provide for, the issuance or
transfer of any shares of partnership interests or other equity interests of
NHA (or any other securities which, with notice, lapse of time and/or payment
of monies, are or would be convertible into or exercisable or exchangeable for
shares of partnership interests or other equity interests of NHA). There are
no voting trusts or other agreements or understandings with respect to the
voting of partnership interests or other equity interests of NHA.
(iii) Ingersoll Group, Inc., an Iowa corporation ("Ingersoll"),
and New Heritage Associates, Inc., an Iowa corporation ("New Heritage"), are
the only partners of NHA. Sellers have delivered to Buyer true and complete
copies of the charter and bylaws of Ingersoll, each as in effect at the date
hereof.
(iv) Each of Ingersoll and New Heritage is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Iowa. Each of Ingersoll and New Heritage has all requisite corporate power
and authority to own and lease its assets and properties and to conduct its
activities as such activities are currently conducted, except where the
failure to have such power or authority could not reasonably be expected to
have a Material Adverse Effect on the ability of Ingersoll or New Heritage to
execute, deliver or perform, for itself and in its capacity as a general
partner of NHA, its obligations under this Agreement and any Transaction
Page 23 of 78
Document to which it is or will be a party. Each of Ingersoll and New
Heritage has all requisite corporate power and authority to execute, deliver
and perform, for itself and in its capacity as a general partner of NHA, each
of the Transaction Documents to which it is or will be a party and to
consummate the transactions contemplated thereby. The execution, delivery and
performance, for itself and in its capacity as a general partner of NHA, of
this Agreement and each Transaction Document to which Ingersoll or New
Heritage is or will be a party, and the consummation by Ingersoll or New
Heritage of the transactions contemplated hereby or thereby, have been duly
and validly authorized by all necessary corporate action on the part of
Ingersoll and New Heritage and their respective shareholders. Each
Transaction Document to which Ingersoll or New Heritage is or will be a party
has been or will be (as the case may be) duly executed and delivered by
Ingersoll or New Heritage (as the case may be) and is or will be (as the case
may be) its valid and binding obligation enforceable against it in accordance
with such Transaction Document's terms, subject to the Enforceability
Exceptions. The Board of Directors and the shareholders of each of Ingersoll
and New Heritage have, by resolutions duly adopted in accordance with all
Legal Requirements and the charter and bylaws of Ingersoll and New Heritage
(as the case may be) approved and adopted this Agreement and the transactions
contemplated hereby on the terms and conditions set forth herein and
authorized each of MNHP and NHA to execute and deliver this Agreement and the
other Transaction Documents and perform their respective obligations hereunder
and thereunder.
(v) Schedule 3.2(b)(v) sets forth the authorized and issued
and outstanding shares of capital stock or other equity interests of each of
Ingersoll and New Heritage and the registered and beneficial holders thereof.
All such outstanding shares are duly authorized, validly issued and fully paid
and nonassessable. There are no outstanding options, warrants, rights, puts,
calls, commitments, or other contracts, arrangements or understandings
requiring or providing for, and there are no outstanding debt or equity
securities of Ingersoll or New Heritage which upon the conversion, exchange or
exercise thereof would require or provide for, the issuance or transfer of any
shares of capital stock or other equity interests of Ingersoll or New Heritage
(or any other securities which, with notice, lapse of time and/or payment of
monies, are or would be convertible into or exercisable or exchangeable for
shares of capital stock or other equity interests of Ingersoll or New
Heritage). There are no voting trusts or other agreements or understandings
with respect to the voting of capital stock or other equity interests of
Ingersoll or New Heritage.
Section 3.3 Title to the Subject Interests.
Page 24 of 78
(a) MNHP represents and warrants to Buyer that MNHP has good and
marketable title to the MNHP General Partnership Interest, free and clear of
all Liens. Subject to the Closing, upon the execution and delivery by MNHP of
the Xxxx of Sale and Assignment to be executed and delivered by MNHP pursuant
to Section 8.2(a), MNHP will have assigned, transferred and conveyed to and
vested in Buyer (or its permitted assignee) legal and valid title to the MNHP
General Partnership Interest, free and clear of all Liens.
(b) NHA represents and warrants to Buyer that NHA has good and
marketable title to the NHA Limited Partnership Interest, free and clear of
all Liens, except for any lien and security interest granted by NHA in
connection with the MNH Loan Agreement. Subject to the Closing, upon the
execution and delivery by NHA of the Xxxx of Sale and Assignment to be
executed and delivered by NHA pursuant to Section 8.2(b), NHA will have
assigned, transferred and conveyed to and vested in Buyer (or its permitted
assignee) legal and valid title to the NHA Limited Partnership Interest, free
and clear of all Liens.
Section 3.4 Brokers and Finders. Each of Sellers represents and
warrants, jointly and severally, to Buyer that neither of Sellers nor any MNH
Entity nor any partner, director, officer, employee, agent or Affiliate of
either Seller or any MNH Entity has employed any broker or finder or incurred
any liability for any brokerage fees, commissions, finder's fees or similar
fees or liabilities in connection with the transactions contemplated herein,
except that MNH has employed Xxxxxxx & Associates, for whose fees and expenses
MNH shall be exclusively responsible.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES REGARDING THE MNH ENTITIES
Each of Sellers represents and warrants, jointly and severally, to Buyer
as follows:
Section 4.1 Organization, Qualification and Business.
(a) MNH is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of Iowa. MNH has all requisite
partnership power and authority to own and lease its assets and properties and
to conduct its activities as such activities are currently conducted. MNH is
duly qualified to do business as a foreign partnership and is in good standing
in Minnesota. True and complete copies of the MNH Partnership Agreement and
the certificate of limited partnership of MNH, each as in effect at the date
hereof, have been delivered by Sellers to Buyer.
Page 25 of 78
(b) Each MNH Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation.
Each MNH Subsidiary has all requisite corporate power and authority to own and
lease its assets and properties and to conduct its activities as such
activities are currently conducted. Each MNH Subsidiary is duly qualified to
do business as a foreign corporation and is in good standing in Minnesota.
(c) The MNH Entities engage in no material business other than the
construction, ownership, operation and management of the Systems. All of the
Systems are located entirely within Minnesota. No MNH Entity has a place of
business, or owns or leases any material assets or properties, located in any
jurisdiction other than in Minnesota and Iowa.
Section 4.2 Authority. Each MNH Entity has all requisite partnership
(in the case of MNH) or corporate (in the case of each MNH Subsidiary) power
and authority to execute, deliver and perform, and to consummate the
transactions contemplated by, any Transaction Document to which such MNH
Entity is or will be a party. The execution, delivery and performance and the
consummation by each MNH Entity of the transactions contemplated by each
Transaction Document to which such MNH Entity is or will be a party have been
duly and validly authorized by all necessary action on the part of such MNH
Entity and its respective partners (in the case of MNH) and shareholders (in
the case of each MNH Subsidiary). Each Transaction Document to which any MNH
Entity is or will be a party has been or will be (as the case may be) duly
executed and delivered by such MNH Entity and is or will be (as the case may
be) the valid and binding obligation of such MNH Entity, enforceable against
such MNH Entity in accordance with its terms, subject to the Enforceability
Exceptions.
Section 4.3 No Conflict; Required Consents.
(a) Subject to obtaining the Sellers Required Consents identified
on Schedule 4.3, and except for such other exceptions (the "Section 4.3(a)
Exceptions") from which the aggregate amount of resulting Losses and Expenses
suffered or incurred by Buyer or the MNH Entities, together with the aggregate
amount of Losses and Expenses resulting from any Section 3.1(c) Exceptions,
would not exceed $250,000, neither the execution, delivery or performance by
any MNH Entity of any Transaction Document to which such MNH Entity is or will
be a party, nor the consummation of the transactions contemplated thereby,
does or will:
(i) conflict with or violate any provision of the MNH
Partnership Agreement or the certificate of limited partnership of MNH;
(ii) conflict with or violate any provision of the charter or
bylaws of any MNH Subsidiary;
Page 26 of 78
(iii) violate any provision of any Legal Requirement;
(iv) conflict with, violate, result in a breach of, constitute
a default under (without regard to requirements of notice, lapse of time, or
elections of other Persons, or any combination thereof), accelerate or permit
the acceleration of the performance required by, any Contract or License to
which such MNH Entity is a party or by which such MNH Entity or any of the
assets or properties owned or leased by such MNH Entity are bound;
(v) result in the creation or imposition of any Lien against
or upon any of the assets or properties owned or leased by such MNH Entity; or
(vi) require any Consent.
(b) Except as specified in Schedule 4.3, no MNH Entity is a party
to or bound by any Contract that restricts or purports to restrict in any
material respect the ability of any MNH Entity or any Affiliate of any MNH
Entity to engage in any location in the cable television business or in any
other business.
Section 4.4 Capitalization.
(a) Schedule 4.4 sets forth the name, jurisdiction of organization
and the authorized and issued and outstanding shares of capital stock,
partnership interests or other equity interests of each MNH Entity and the
registered and beneficial holders thereof. All such outstanding shares are
duly authorized, validly issued and fully paid and nonassessable. Other than
the transactions contemplated by this Agreement or as specified in Schedule
4.4, there are no outstanding options, warrants, rights, puts, calls,
commitments, or other contracts, arrangements or understandings issued by or
binding upon any MNH Entity requiring or providing for, and there are no
outstanding debt or equity securities of any MNH Entity which upon the
conversion, exchange or exercise thereof would require or provide for the
issuance or transfer of any shares of capital stock, partnership interests or
other equity interests of any MNH Entity (or any other securities which, with
notice, lapse of time and/or payment of monies, are or would be convertible
into or exercisable or exchangeable for shares of capital stock, partnership
interests or other equity interests of any MNH Entity). There are no voting
trusts or other agreements or understandings to which any MNH Entity is a
party with respect to the voting of capital stock, partnership interests or
other equity interests of any MNH Entity.
(b) All of the Subsidiaries of MNH are at the date hereof and will
at the Closing Time be wholly owned, directly or indirectly, by MNH.
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Section 4.5 Financial Statements. Schedule 4.5 contains (i) the audited
consolidated balance sheet of the MNH Entities as of June 30, 1995 and the
related statements of operations and cash flows (including the notes thereto)
for the year then ended and (ii) the unaudited consolidated balance sheet of
the MNH Entities as of December 31, 1995 and the related statement of
operations for the six months then ended. The financial statements referred
to in clauses (i) and (ii) of the preceding sentence are herein referred to
collectively as the "MNH Financial Statements." The MNH Financial Statements
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby except to the extent otherwise indicated therein.
The MNH Financial Statements present fairly the financial condition of the MNH
Entities at the respective dates thereof, and the results of their operations
and their cash flows for each of the respective periods covered thereby, all
in accordance with GAAP, subject in the case of unaudited financial statements
to normal year-end accruals and audit adjustments and to the lack of
footnotes.
Section 4.6 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 4.6, as of the date (the "MNH Balance Sheet Date") of the most recent
consolidated balance sheet (including the notes thereto) forming part of the
MNH Financial Statements (the "MNH Balance Sheet"), no MNH Entity had any
indebtedness, liabilities or obligations, contingent or otherwise, except as
reflected or reserved against in the MNH Balance Sheet and except for such
indebtedness, liabilities and obligations as do not and will not in the
aggregate have a Material Adverse Effect on the MNH Entities. Since the MNH
Balance Sheet Date, no MNH Entity has incurred any such indebtedness,
liabilities or obligations other than in the ordinary course of business or as
permitted or contemplated by this Agreement or any Transaction Document.
Section 4.7 Absence of Certain Changes. Except as set forth in Schedule
4.7 or as permitted or contemplated by this Agreement or any Transaction
Document, since the MNH Balance Sheet Date:
(i) the MNH Entities have conducted their respective business
solely in the ordinary course; and
(ii) there has not occurred (A) any Material Adverse Effect on
the MNH Entities or (B) other events or conditions of any character that,
individually or in the aggregate, have or would reasonably be expected to have
a Material Adverse Effect on the MNH Entities, except in each case for any
Material Adverse Effect or other event or condition that is due to general
economic or industry-wide conditions (including, without limitation,
determinations by the FCC, state or local franchising authorities affecting or
applicable to the offering or packaging of a la carte channels or cost-of-
service showings and any rate adjustments pursuant to such determinations).
Page 28 of 78
Section 4.8 Assets: Title; Sufficiency; Condition.
(a) Except as set forth on Schedule 4.8 and except for leased
Assets, each MNH Entity has good title to its Assets (other than Owned
Property and Leased Property, which are covered by Section 4.14), free and
clear of all Liens other than Permitted Liens. Each MNH Entity has valid
leasehold interests in all of the Assets leased by it pursuant to the System
Leases.
(b) Except as does not and will not result in any Material Adverse
Effect on the MNH Entities, each MNH Entity owns or has the lawful right to
use all assets, properties, Contracts and Licenses necessary to operate its
business lawfully and to maintain the same as presently conducted. Without
limiting the generality of the foregoing, except for the office equipment,
furniture and supplies located at the date hereof in MNH's executive offices
in Des Moines, Iowa and described in Schedule 4.8, the Assets constitute all
of the assets necessary to permit Buyer to operate the Systems substantially
as they are being operated on the date of this Agreement and in compliance in
all material respects with all applicable Legal Requirements and requirements
of Systems Contracts, except for such non-compliances as do not and will not
in the aggregate have Material Adverse Effect on the MNH Entities. The
Tangible Personal Property is in all material respects in good condition and
repair, ordinary wear and tear excepted.
Section 4.9 Compliance with Legal Requirements. Except as set forth in
Schedule 4.9:
(a) To the knowledge of Sellers, the operation of the business of
the MNH Entities (including the operation of the Systems) as it is currently
operated does not violate or infringe in any material respect any Legal
Requirement. Each MNH Entity holds all Contracts and Licenses (including the
Systems Franchises) necessary for the lawful conduct of its business
(including the operation of each System) directly or indirectly owned or
operated by it, except where any failures to hold any such Contract or License
do not and will not in the aggregate have a Material Adverse Effect on the MNH
Entities.
(b) Each MNH Entity and System has not violated and is not in
violation of any Contract or Legal Requirement (including any Systems
Franchise), except for any such violations as do not and will not in the
aggregate have a Material Adverse Effect on the MNH Entities. Neither of
Sellers nor any MNH Entity (i) has received on or after September 1, 1992
written notice of any violation by any MNH Entity or any System of any Legal
Requirement, or (ii) knows (without having made any inquiry with respect
thereto) of any basis for the allegation of any material violation of any
Legal Requirement by any MNH Entity or any System.
Page 29 of 78
(c) The MNH Entities are each in compliance in all material
respects with the Communications Acts, and have submitted to the FCC all fees
and filings, including cable television registration statements, annual
reports and aeronautical frequency usage notices, that are required under the
rules and regulations of the FCC, except for such failures to submit such
filings which do not and (as far as can be reasonably foreseen) will not in
the aggregate have a Material Adverse Effect on the MNH Entities. The
operation of the Assets (including the Systems) has been and is in compliance
in all material respects with the rules and regulations of the FCC (including
rules and regulations of the FCC pertaining to customer service standards),
and neither of Sellers nor any MNH Entity has received written notice from the
FCC of any violation of its rules and regulations with respect to the Assets
(including the Systems). Each relevant MNH Entity has been certified for the
years ended December 31, 1993 and 1994 as in compliance with the FCC's equal
employment opportunity rules. The Assets (including the Systems) are in
compliance in all material respects with all signal leakage criteria
prescribed by the FCC. For each relevant semi-annual reporting period, each
MNH Entity has timely filed with the United States Copyright Office all
required statements of account in proper form, and has paid when due all
required copyright royalty fee payments, relating to the carriage of
television broadcast signals and is otherwise in compliance in all material
respects with all applicable rules and regulations of the United States
Copyright Office. Sellers have delivered to Buyer true and complete copies of
all reports and filings for the past year, made or filed pursuant to FCC and
United States Copyright Office rules and regulations and will make available
to Buyer all other past reports and filings made or filed pursuant to FCC and
United States Copyright Office rules and regulations.
(d) Each MNH Entity has used reasonable good faith efforts to
establish rates charged and a la carte packages provided to subscribers of the
Systems, effective as of September 2, 1993, that would be allowable under the
Cable Act, whether or not such rates or packages were subject to regulation at
that date by any Governmental Authority, including any local franchising
authority or the FCC.
(e) No MNH Entity possesses any patent, patent right, trademark or
copyright and neither is a party to any license or royalty agreement with
respect to any patent, trademark or copyright, except for licenses respecting
program material and obligations under the Copyright Act of 1976 applicable to
cable television systems generally. To the knowledge of Sellers (without
having made any inquiry with respect thereto), the Assets are free of the
rightful claim of any third party by way of copyright infringement (excluding
claims involving music performance rights).
Section 4.10 Systems Franchises, etc.
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(a) Schedule 4.10(a) sets forth a list of each of the Systems
Franchises.
(b) Schedule 4.10(b) sets forth a list (including the name of the
licensor) of each of the Systems Licenses.
(c) Schedule 4.10(c) sets forth a list (including the name of the
contracting parties and the general subject matter) of each of the Systems
Contracts other than Systems Leases and Systems Licenses and Systems
Franchises.
(d) Schedule 4.10(d) sets forth a list (including the name of the
lessor and a general description of the property leased) of each of the
Systems Leases. None of the MNH Entities is party to or bound by any material
oral Lease.
(e) Sellers have made, and will make, available to CCI the fixed
asset records of the MNH Entities as to tangible personal property (including,
without limitation, all equipment, machinery and vehicles) owned by the MNH
Entities. Such records have been prepared in the ordinary course of business
and the MNH Entities have used reasonable efforts to keep such records
accurate in all material respects, it being understood that no such
representation is being made with respect to the records relating to personal
property acquired by the MNH Entities prior to September 1, 1992.
(f) Except as described on Schedule 4.10(a), (b), (c), (d) or (k),
no MNH Entity is bound or affected by any Franchise or any material License,
Contract or Lease. Except as set forth on Schedule 4.10(f), since September
15, 1995, no MNH Entity has amended, terminated, extended or renewed any
Systems Franchise or entered into any Franchise.
(g) Sellers have caused to be delivered or made available to Buyer
true and complete copies of each of the Systems Franchises, Systems Licenses,
Systems Contracts and Systems Leases described in Schedule 4.10(a), (b), (c)
or (d) (together with any written notices alleging non-compliance with any of
the requirements thereof) and of each document evidencing an MNH Entity's
ownership of any Owned Property. Except as described in Schedule 4.10(g):
(i) the MNH Entities are in compliance in all material respects with each of
the Systems Franchises and Systems Licenses; (ii) the MNH Entities have
fulfilled in all material respects when due, or have taken all action
necessary to enable it to fulfill in all material respects when due, all of
their obligations under each of the Systems Contracts and Systems Leases; and
(iii) to the knowledge of each Seller, there has not occurred any material
default (without regard to lapse of time or the giving of notice, or both) by
any Person under any of the Systems Franchises, Systems Contracts or Systems
Leases.
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(h) Except as set forth on Schedule 4.10(h), each Systems
Franchise, Systems License, Systems Contract and Systems Lease of the MNH
Entities is the validly existing, legally enforceable obligation of each MNH
Entity party thereto and, to the knowledge of Sellers, of the other parties
thereto.
(i) Except as previously disclosed to Buyer in writing or in
Schedule 4.10(i), no Person (including any Governmental Authority) has any
right to acquire any interest in any cable television system or assets of any
MNH Entity (including any right of first refusal or similar right) upon an
assignment or transfer of control of a Systems Franchise, other than rights of
condemnation or eminent domain afforded by Legal Requirement.
(j) To the knowledge of Sellers, as of the date hereof no Person
(other than an MNH Entity) (i) has been granted or has sought the Consent of
any Governmental Authority for the installation, construction, development,
ownership, or operation of a cable television system (as defined in the
Communications Acts) within all or part of the geographic area served by any
of the Systems or (ii) operates, or has commenced the construction,
installation or development of, any cable television system within all or part
of the geographic area served by any cable television system of the MNH
Entities, regardless of whether the Consent of any Governmental Authority is
required or has been obtained.
(k) Except as set forth in Schedule 4.10(k), no MNH Entity has made
any material commitments in writing to any Governmental Authority with respect
to the operation and construction of the Systems which are not fully reflected
in the Systems Franchises, Systems Licenses, Systems Contracts or Systems
Leases, and no MNH Entity has entered into any written agreements with
community groups or similar third parties restricting or limiting the types of
programming that may be shown on any of the Systems.
(l) No Governmental Authority has advised any MNH Entity in
writing, or otherwise formally notified in accordance with the terms of any
applicable Systems Franchise, of its intention to deny renewal of an existing
Systems Franchise. The MNH Entities have duly and timely filed notices of
renewal in accordance with the Communications Act with all Governmental
Authorities with respect to each Systems Franchise expiring within 36 months
after the date of this Agreement. Such notices of renewal have been filed
pursuant to the formal renewal procedures established by Section 626(a) of the
Communications Act. As of the Closing Date, an MNH Entity will have
maintained a controlling ownership in each System in its entirety for at least
36 consecutive months following the initial construction or acquisition of
such System by such MNH Entity.
Page 32 of 78
(m) Except as set forth in Schedule 4.10(m), the MNH Entities are
operating the Systems in compliance in all material respects with the
provisions of the Communications Acts and the rules and regulations of the FCC
relating to carriage of signals, syndicated exclusivity, network non-
duplication, and retransmission consent except where the failure to comply,
individually or in the aggregate, would not result in a Material Adverse
Effect on the MNH Entities. Except as previously disclosed to Buyer in
writing, no written notices or demands have been received since January 1,
1993 from any television station or from any other Person claiming to have a
right, or objecting to or challenging the right under Sections 614 or 615 of
the Cable Act of the Systems, to carry any signal or deliver the same, or
challenging the channel position on which any television station is carried.
(n) Schedule 4.10(n) indicates which television signals carried by
the Systems are carried without retransmission consent agreements (other than
stations which have elected must-carry status or for which retransmission
consents are not required). Sellers have delivered or made available to Buyer
full and complete copies of all retransmission consent agreements of the MNH
Entities. For each commercial television signal on each System that has
elected must-carry status, but that is not being carried because of signal
quality problems or potential copyright liability, Schedule 4.10(n) lists the
signal and the reason for non-carriage.
(o) Sellers have made available to Buyer true and complete copies
of (i) all FCC Forms 393, 1200, 1205, 1210 and 1215 that have been prepared
with respect to the Systems, and (ii) all complaints filed with the FCC with
respect to any rates charged to subscribers of the Systems which have been
received by Sellers. No MNH Entity has sought or claims exemption from the
rate regulation provisions of the Communications Acts with respect to any of
the Systems. Schedule 4.10(o) sets forth (A) a list of all rate complaints
(if any) filed pursuant to the Communications Acts and received by any MNH
Entity which have not been deemed invalid by the FCC, and further sets forth
those Systems Franchises that have been certified or, to Sellers' knowledge,
filed for certification under the Communications Acts with respect to rate
regulation, and (B) a list of all docketed letters of inquiry from the FCC
received by any MNH Entity since September 1, 1993 with regard to rate
restructuring.
Section 4.11 Litigation and Judgments. Except as set forth in Schedule
4.11, there is no Litigation pending or, to Sellers' knowledge, threatened
against any MNH Entity (other than proceedings or investigations affecting the
cable television industry generally) that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the MNH
Entities or the Systems taken as a whole or prevent, hinder or materially
delay the consummation of the transactions contemplated by this Agreement, or
seeks or could result in the modification, revocation, termination, suspension
Page 33 of 78
or other limitation of any of the Systems Franchises, Systems Licenses,
Systems Contracts or Systems Leases. There is not any Judgment outstanding
against any MNH Entities or any of their properties, unsatisfied or
unperformed which could reasonably be expected to have a Material Adverse
Effect on the MNH Entities or the Systems taken as a whole.
Section 4.12 Tax Returns.
(a) Each MNH Entity has timely filed all tax returns and other tax
reports required to be filed by it on or after September 1, 1992; and, to the
knowledge of Sellers (without having made any inquiry with respect thereto),
each MNH Entity has timely filed all tax returns and other tax reports
required to be filed by it prior to September 1, 1992. Subject to Section
4.12(c), all such tax returns and other tax reports are true, correct and
complete in all material respects; each MNH Entity has timely paid all Taxes
payable by such MNH Entity which have become due and payable, whether or not
shown on any such tax return or other tax report, other than Taxes that are
currently being contested in good faith (all of which Taxes are fully reserved
for on the MNH Balance Sheet); and all Taxes payable by any MNH Entity that
were not yet due and payable at the MNH Balance Sheet Date have been fully
paid or adequate provision therefor has been made and reflected on the MNH
Balance Sheet.
(b) Except as set forth on Schedule 4.12, there is no claim,
deficiency, assessment or investigation involving an amount greater than
$10,000 pending or threatened against any MNH Entity for past Taxes, and
adequate provision for the claims or investigations set forth on Schedule 4.12
has been made as reflected on the MNH Balance Sheet or will have been made at
Closing (either as (i) an inclusion in the consolidated liabilities of the MNH
Entities to be deducted pursuant to Section 8.3(b)(i)(A)(I)(x) in determining
the Purchase Price or (ii) as an inclusion in the Consolidated Current
Liabilities to be deducted pursuant to Section 8.3(b)(iv)(E) in determining
the Working Capital Adjustment). Except as set forth on Schedule 4.12, no MNH
Entity has waived or extended any applicable statute of limitations relating
to the assessment of any Taxes on or after September 1, 1992; and, to the
knowledge of Sellers (without having made any inquiry with respect thereto),
no MNH Entity has waived or extended any applicable statute of limitations
relating to the assessment of any Taxes prior to September 1, 1992.
(c) No representation is being made pursuant to this Section 4.12
to the extent that any representation or warranty contained herein relates to
net operating losses or investment tax credits reflected on tax returns filed
prior to September 1, 1992.
Section 4.13 System Information.
Page 34 of 78
(a) Schedule 4.13(a) sets forth a materially true and complete
description of the following information as of December 31, 1995:
(i) the number of miles of plant included in each System;
(ii) a description of basic and optional or tier services
available from each of the Systems, and the rates charged by each MNH Entity
for each System.
(iii) the stations and signals carried by each of the Systems
and the channel position of each such signal and station; and
(iv) the cities, towns, villages, boroughs and counties served
by each of the Systems.
(b) The subscriber information set forth on the CableData Reports,
dated as of October 31, 1995, November 30, 1995, December 31, 1995, January
31, 1996 and February 29, 1996, included in Schedule 4.13(b) is true and
accurate in all material respects as of the respective dates of such reports,
and the subscriber information reported thereon has been compiled in a manner
consistent with the past practices of Sellers. Except as set forth on
Schedule 4.13(b), there has been no material adverse change since October 31,
1995 in such subscriber information, taken as a whole, as reported in such
CableData Report, dated as of October 31, 1995.
Section 4.14 Real Property. Except under the Systems Leases, no MNH
Entity holds or uses under lease or leases to others any land or buildings
relating to the Systems or otherwise. Except for the land and buildings
described (including the record owner) on Schedule 4.14 (the "Owned
Property"), no MNH Entity has other ownership interests in land or buildings
relating to the Systems or otherwise. The MNH Entity that is the record owner
of each parcel of Owned Property has good and marketable title in fee simple
absolute to each such parcel and all buildings, structures and other
improvements thereon, in each case free and clear of all Liens except for
Permitted Encumbrances. Except as set forth in Schedule 4.14, there are no
leases, subleases, tenancies or rights of occupancy affecting any Owned
Property. Complete and correct copies of any title opinions, surveys and
appraisals in the Sellers' or MNH's possession, and of any policies of title
insurance currently in force, with respect to any Owned Property have been
delivered by the Sellers to CCI. Except for routine repairs, all of the Owned
Property and the land and buildings demised under the Systems Leases (the
"Leased Property") are, taken as a whole, in good condition and repair and are
suitable for the purposes used.
Section 4.15 Employees.
Page 35 of 78
(a) No MNH Entity is a party to any labor or collective bargaining
agreement and there are no collective bargaining agreements applicable to any
Persons employed by any MNH Entity ("MNH Employees").
(b) Except as set forth on Schedule 4.15(b), (i) no MNH Employees
are represented by any labor organization and (ii) as of the date hereof, no
labor organization or group of employees of any MNH Entities has made a
pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the knowledge of Sellers,
threatened to be brought or filed with any Governmental Authority. To the
knowledge of Sellers, there are no formal organizing activities involving a
material number of MNH Employees pending with, or threatened by, any labor
organization.
(c) There are (i) no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor disputes
pending or, to the knowledge of Sellers, threatened against or involving any
of the MNH Entities and (ii) no unfair labor practice charges, grievances or
complaints pending or, to the knowledge of Sellers, threatened by or on behalf
of any MNH Employee or group of MNH Employees.
(d) Schedule 4.15(d) is a true and complete list as of January 31,
1996 of the names and positions of all full-time MNH Employees whose annual
compensation (including bonuses) was in excess of $50,000 in 1995 or is
expected to be in excess of $50,000 in 1996. Each MNH Entity has complied in
all material respects with all applicable Legal Requirements relating to (i)
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, and the payment and withholding of Taxes and, (ii) to the
knowledge of Sellers (without having made any inquiry with respect thereto),
equal employment opportunity, age and disability discrimination and
immigration control.
(e) Except as described on Schedule 4.15(e), no MNH Entity has any
employment agreement, either written or, to the knowledge of Sellers, oral,
with any MNH Employee and none of the employment agreements listed on Schedule
4.15(e) requires Buyer or any MNH Entity to employ any Person after the
Closing.
Section 4.16 Environmental. Except as disclosed on Schedule 4.16:
(a) Neither of Sellers nor any MNH Entity has received notice that
it is the subject of any "Superfund" evaluation or investigation, or that it
is the subject of any investigation or proceeding of any Governmental
Authority evaluating whether any remedial action is necessary to respond to
any release of Hazardous Substances on or in connection with any of the Owned
Property or Leased Property.
Page 36 of 78
(b) Each MNH Entity is in compliance in all material respects with
all Legal Requirements with respect to pollution or protection of the
environment, including Legal Requirements relating to actual or threatened
emissions, discharges or releases of Hazardous Substances into ambient air,
surface water, ground water, land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances, insofar as they relate to any of the Owned
Property or Leased Property. Neither of Sellers nor any MNH Entity has
received notice of, and Sellers have no knowledge of, any circumstances
relating to, any past, present or future events, conditions, circumstances,
activities, practices or incidents (including but not limited to the presence,
use, generation, manufacture, disposal, release or threatened release of any
Hazardous Substances from or on any of the Owned Property or the Leased
Property), which are reasonably likely to give rise to any material liability,
based upon or related to the processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge, release
or threatened release into the environment, of any Hazardous Substance from or
attributable to any of the Owned Property or Leased Property.
Section 4.17 Employee Benefits; ERISA Matters.
(a) Plans and Seller Benefit Arrangements. Schedule 4.17(a) lists
each Employee Benefit Plan and Benefit Arrangement covering Cable Employees.
Sellers have made available to Buyer with respect to each Employee Benefit
Plan and Benefit Arrangement covering Cable Employees true and complete copies
of (i) all written documents comprising such plans and arrangements (including
amendments and individual agreements relating thereto); (ii) the two most
recent Federal Form 5500 series (including all schedules thereto) filed with
respect to each Employee Benefit Plan; (iii) the most recent financial
statements and actuarial reports, if any, pertaining to each such plan or
arrangement; and (iv) the summary plan description currently in effect and all
material modifications thereto, if any, for each Employee Benefit Plan.
(b) Multiemployer Plans.
(i) No MNH Entity nor any ERISA Affiliate of any MNH Entity
has incurred any unsatisfied Withdrawal Liability with respect to any
Multiemployer Plan to which any MNH Entity or any ERISA Affiliate of any MNH
Entity is required to make or accrue a contribution or has, either at any time
on or after September 1, 1992 or, to the knowledge of Sellers (without having
made any inquiry with respect thereto), at any time from January 1, 1990
through August 31, 1992, been required to make or accrue a contribution, nor,
to the knowledge of either of Sellers or any MNH Entity, is any MNH Entity or
any present ERISA Affiliate of any MNH Entity reasonably expected to incur any
Withdrawal Liability with respect to any such Multiemployer Plan.
Page 37 of 78
(ii) No MNH Entity nor any ERISA Affiliate of any MNH Entity
has been notified by the sponsor of any Multiemployer Plan to which any MNH
Entity or any ERISA Affiliate of any MNH Entity is required to make or accrue
a contribution or has, either at any time on or after September 1, 1992 or, to
the knowledge of Sellers (without having made any inquiry with respect
thereto), at any time from January 1, 1990 through August 31, 1992, been
required to make or accrue a contribution, that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and to the knowledge of Sellers no such Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated, within the
meaning of Title IV of ERISA.
(c) Union Welfare Funds. No MNH Entity nor any ERISA Affiliate of
any MNH Entity has, at any time on or after September 1, 1992 or, to the
knowledge of Sellers (without having made any inquiry with respect thereto),
at any time prior to September 1, 1992, incurred any liability based on
withdrawal from any union-sponsored multiemployer welfare benefit fund
maintained pursuant to any Welfare Plan to which any MNH Entity or any ERISA
Affiliate of any MNH Entity contributes pursuant to the terms of a collective
bargaining agreement.
(d) Welfare Plans. No MNH Entity nor any ERISA Affiliate of any
MNH Entity maintains any plan which is funded through a "welfare benefit fund"
as defined in Section 419(e) of the Code.
(e) Retiree Welfare Benefits Plans. Except as set forth in
Schedule 4.17(e) and pursuant to the provisions of COBRA, no MNH Entity nor
any ERISA Affiliate of any MNH Entity maintains any Employee Benefit Plan or
Benefit Arrangement that provides benefits described in Section 3(l) of ERISA
to any former employees or retirees of any MNH Entity. Any disclosure in
Schedule 4.17(e) shall indicate the present value of accumulated plan
liabilities calculated in a manner consistent with FAS 106 and actual annual
expense for such benefits for each of the last two years.
(f) Pension Plans. All Cable Employee Plans that are Pension Plans
intended to be qualified under Section 401 of the Code maintained by any MNH
Entity or any ERISA Affiliate of any MNH Entity have received favorable
determinations with respect to such qualified status from the IRS. To the
knowledge of Sellers, nothing has occurred since such determinations to affect
adversely such determinations, and true and correct copies of such
determination letters have been made available to Buyer.
(g) Prohibited Transactions and Fiduciary Responsibility. To the
knowledge of Sellers, none of the Cable Employee Plans has participated in,
engaged in or been a party to any Prohibited Transaction which could result in
the imposition of a material liability upon any MNH Entity or any ERISA
Page 38 of 78
Affiliate of any MNH Entity. To the knowledge of Sellers, no officer,
partner, director or employee of any MNH Entity or any ERISA Affiliate of any
MNH Entity has committed a material breach of any responsibility or obligation
imposed upon fiduciaries by Title I of ERISA or engaged in any Prohibited
Transaction with respect to any Cable Employee Plan.
(h) Reporting and Disclosure. Except with respect to any violation
relating to any Multiemployer Plan where such violation could not result in
any liability to any MNH Entity or any ERISA Affiliate of any MNH Entity,
there have, at any time on or after September 1, 1992 and, to the knowledge of
Sellers (without having made any inquiry with respect thereto), at any time
prior to September 1, 1992, been no material violations of any reporting or
disclosure requirements under ERISA with respect to any Cable Employee Plan.
(i) Annual Reports. Sellers have made available to Buyer a copy of
(i) the two most recently filed Federal Form 5500 series and accountant's
opinion, if applicable, for each Cable Employee Plan other than Multiemployer
Plans and (ii) the two most recent actuarial valuation reports for each Cable
Employee Plan that is a Pension Plan subject to Title IV of ERISA. To the
knowledge of Sellers, all information provided by either Seller or any MNH
Entity, as applicable, to any actuary in connection with the preparation of
such actuarial valuation report was true, correct and complete in all
respects.
(j) Funding Obligations. No Cable Employee Plan that is a Pension
Plan subject to Title IV of ERISA (other than any Multiemployer Plan) has (i)
incurred an Accumulated Funding Deficiency, whether or not waived, (ii) an
accrued benefit obligation that exceeds the assets of the plan by more than
$25,000, determined as of the last applicable annual valuation date, using the
actuarial methods, factors and assumptions used for the most recent actuarial
report with respect to such plan, (iii) been a plan with respect to which a
Reportable Event has occurred and is continuing, or (iv) to the knowledge of
Sellers, been a plan with respect to which any termination liability to the
PBGC has been or is expected to be incurred or with respect to which there
exist conditions or events which have occurred presenting a significant risk
of termination by the PBGC.
(k) Liens and Penalties. No MNH Entity nor any ERISA Affiliate of
any MNH Entity has any unsatisfied material liability with respect to any
Cable Employee Plan (i) for the termination of any Cable Employee Plan that is
a single employer plan under ERISA Section 4062 or a multiple employer plan
under ERISA Section 4063, (ii) for any lien imposed under Section 302(f) of
ERISA or Section 412(n) of the Code, (iii) for any interest payments required
under Section 302(e) of ERISA or Section 412(m) of the Code, (iv) for any
excise tax imposed by Sections 4971, 4972, 4974, 4975, 4976, 4977, 4978,
4978B, 4979, 4979A, 4980 or 4980B of the Code, or (v) for any failure to make
any minimum funding contributions under Section 302(c)(11) of ERISA or Section
412(c)(11) of the Code.
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(l) Acts or Omissions. There have, at any time on or after
September 1, 1992 and, to the knowledge of Sellers (without having made any
inquiry with respect thereto), at any time prior to September 1, 1992, been no
acts or omissions with respect to any Cable Plan by any MNH Entity or any
ERISA Affiliate of any MNH Entity which have given rise to or may give rise to
any material fines, penalties or related charges under Section 502 or Section
4071 of ERISA or Chapter 43 of the Code for which the MNH Entity or any ERISA
Affiliate of any MNH Entity may be liable.
(m) COBRA. The MNH Entities and their ERISA Affiliates have, at
all times on or after September 1, 1992 and, to the knowledge of Sellers
(without having made any inquiry with respect thereto), at all times prior to
September 1, 1992, complied in all material respects with the provisions of
COBRA with respect to all Cable Employee Plans that are Group Health Plans.
(n) Additional Benefits. Except as set forth on Schedule 4.17(n),
no Cable Employee shall accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any Cable Plan or Seller
Benefit Arrangement, including the right to receive any parachute payment, as
defined in Section 280G of the Code, or become entitled to severance,
termination allowance or similar payments as a direct result of the
transactions contemplated by this Agreement.
(o) Claims. Other than claims for benefits in the ordinary course,
there is no claim pending or, to the knowledge of either of Sellers or any MNH
Entity, threatened involving any Cable Plan by any Person against such plan or
any of the MNH Entities or any of their ERISA Affiliates. There is no pending
or, to the knowledge of either of Sellers, threatened proceeding involving any
Cable Employee Plan before the IRS, the United States Department of Labor or
any other governmental authority.
(p) Compliance with Laws; Contributions. To the knowledge of
Sellers, each Cable Plan has, at all times on or after September 1, 1992 and,
to the knowledge of Sellers (without having made any inquiry with respect
thereto), at all times prior to September 1, 1992, been maintained in all
material respects, by its terms and in operation, in accordance with all Legal
Requirements (including Section 1862(b)(1) of the Social Security Act). The
MNH Entities and their ERISA Affiliates have made full and timely payment of
all amounts required to be contributed under the terms of each Cable Plan and
Legal Requirements or required to be paid as expenses under such Cable Plan,
and the MNH Entities and their ERISA Affiliates shall continue to do so
through the Closing, except as Sellers and Buyer may otherwise agree.
(q) Definitions.
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(i) "Accumulated Funding Deficiency" means an accumulated
funding deficiency, as defined in Section 302 of ERISA and Section 412 of the
Code.
(ii) "Benefit Arrangement" means any material benefit
arrangement that is not an Employee Benefit Plan, including (i) any employment
or consulting agreement, (ii) any arrangement providing for insurance coverage
or workers' compensation benefits, (iii) any incentive bonus or deferred bonus
arrangement, (iv) any arrangement providing termination allowance, severance
or similar benefits, (v) any equity compensation plan, (vi) any deferred
compensation plan and (vii) any compensation policy and practice.
(iii) "Cable Benefit Arrangement" means any Benefit Arrangement
that covers exclusively one or more of the employees, former employees,
directors and former directors of the MNH Entities and the beneficiaries of
any of them.
(iv) "Cable Employee" means any employee or former employee of
any MNH Entity.
(v) "Cable Employee Plan" means any Employee Benefit Plan that
is sponsored or contributed to by either Seller or any MNH Entity or any ERISA
Affiliate of any of them that covers any Cable Employees.
(vi) "Cable Plan" means any Cable Employee Plan or Cable
Benefit Arrangement.
(vii) "COBRA" means the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, as set forth in Section 4980B of the
Code and Part 6 of Title I of ERISA.
(viii) "Employee Benefit Plan" has the meaning given such term in
Section 3(3) of ERISA.
(ix) "Group Health Plan" means group health plan, as defined in
Section 5000(b)(1) of the Code.
(x) "Multiemployer Plan" means a multiemployer plan, as
defined in Sections 3(37) and 4001(a)(3) of ERISA.
(xi) "Pension Plan" means any employee pension benefit plan, as
defined in Section 3(2) of ERISA.
(xii) "Prohibited Transaction" means a transaction that is
prohibited under Section 4975 of the Code or Section 406 of ERISA and not
exempt under Section 4975 of the Code or Section 408 of ERISA respectively.
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(xiii) "Reportable Event" means a reportable event, as defined in
Section 4043 of ERISA to the extent that the reporting of such event to the
PBGC has not been waived.
(xiv) "Seller Benefit Arrangement" means any Benefit Arrangement
covering any employees, former employees, directors or former directors of
either Seller or the ERISA Affiliates of either of them, and the beneficiaries
of any of them, other than any Cable Benefit Arrangement.
(xv) "Welfare Plans" means any employee welfare benefit plan,
as defined in Section 3(1) of ERISA.
(xvi) "Withdrawal Liability" has the meaning given such term in
Section 4201 of ERISA.
Section 4.18 Full Disclosure. To the knowledge of Sellers (without
having made any inquiry with respect thereto), all of the statements made by
either Seller in this Article 4 (including the statements made by either
Seller in any Schedule referred to in this Article 4) do not include or
contain any untrue statement of a material fact, and do not omit to state any
material fact required to be stated in this Article 4 (including the
statements made by either Seller in any Schedule referred to in this Article
4) or necessary in order to make the statements in this Article 4 (including
the statements made by either Seller in any Schedule referred to in this
Article 4), in light of the circumstances under which they were made, not
misleading.
ATICLE 5
REPRESENTATIONS AND WARRANTIES REGARDING BUYER
Buyer represents and warrants to Sellers as follows:
Section 5.1. Organization and Authority. CCI and each of its corporate
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. CCI and each of its
Subsidiaries have all requisite power and authority (corporate or partnership,
as the case may be) to own, lease and operate their properties and to carry on
their business as now being conducted, except where the failure to have such
power or authority would not have a Material Adverse Effect on CCI and its
Subsidiaries. CCI has all requisite corporate power and authority to execute,
deliver and perform this Agreement and each Transaction Document to which CCI
is or will be a party and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of the Agreement and
each Transaction Document to which CCI is or will be a party, and the
consummation by CCI of the transactions contemplated thereby, have been duly
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and validly authorized by all necessary corporate action on the part of CCI.
The Agreement and each Transaction Document to which CCI is or will be a party
constitutes or will constitute (as the case may be) a valid and binding
obligation of CCI, enforceable against CCI in accordance with its terms,
subject to the Enforceability Exceptions.
Section 5.2 No Conflict; Required Consents.
(a) Subject to obtaining the Buyer Required Consents identified on
Schedule 5.2, neither the execution, delivery or performance by Buyer of this
Agreement or any Transaction Document to which Buyer is or will be a party,
nor the consummation of the transactions contemplated hereby or thereby, does
or will:
(i) conflict with or violate any provision of the charter or
bylaws of Buyer;
(ii) violate any provision of any Legal Requirement applicable
to Buyer;
(iii) conflict with, violate, result in a breach of, constitute
a default under (without regard to requirements of notice, lapse of time, or
elections of other Persons, or any combination thereof), accelerate or permit
the acceleration of the performance required by, any material Contract or
License to which Buyer is a party or by which Buyer or any of the assets or
properties owned or leased by Buyer are bound; or
(iv) result in the creation or imposition of any Lien against
or upon any of the assets or properties owned or leased by Buyer;
except as would not result in the aggregate in (A) a Material Adverse Effect
on CCI and its Subsidiaries or (B) a material adverse effect on the ability of
Buyer to execute, deliver or perform its obligations under this Agreement and
any Transaction Document to which it is or will be a party.
(b) Except for the Buyer Required Consents identified on Schedule
5.2, no Consent is required for the execution, delivery or performance by
Buyer of this Agreement or any Transaction Document to which Buyer is or will
be a party, or the consummation of the transactions contemplated hereby or
thereby, except for such Consents as, if not obtained or made, would not have
a Material Adverse Effect on CCI and its Subsidiaries.
Section 5.3 Approval of the Board. The Board of Directors of CCI has,
by resolutions duly adopted at a meeting duly called and held, unanimously
approved and adopted this Agreement and the transactions contemplated hereby
on the terms and conditions set forth herein.
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Section 5.4 [This Section has been intentionally left blank.]
Section 5.5 Financial Statements. The consolidated balance sheets of
CCI and its Subsidiaries and the notes thereto as of December 31, 1994, 1993
and 1992 and consolidated statements of income, shareholder's equity and cash
flows and the notes thereto for the three fiscal years ended December 31,
1994, 1993 and 1992 certified by Deloitte & Touche, whose reports thereon are
included therewith, and the unaudited condensed consolidated balance sheet
(the "CCI Balance Sheet") of CCI and its Subsidiaries as of September 30, 1995
(the "CCI Balance Sheet Date") and unaudited consolidated statements of income
and cash flow for the nine months then ended, were prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby
except to the extent otherwise indicated therein, and present fairly as of
their respective dates, in all material respects, the consolidated financial
position of CCI and its Subsidiaries as at the dates thereof and the
consolidated results of their operations and their consolidated cash flows for
each of the respective periods covered thereby, in conformity with GAAP.
Section 5.6 [This Section has been intentionally left blank.]
Section 5.7 Absence of Certain Changes. Except as disclosed on Schedule
5.7 or in the CCI SEC Filings filed prior to the date hereof, since the CCI
Balance Sheet Date there has not occurred (i) any Material Adverse Effect on
CCI and its Subsidiaries or (ii) other events or conditions of any character
that, individually or in the aggregate, have or would reasonably be expected
to have a Material Adverse Effect on CCI and its Subsidiaries or on the
ability of CCI or Buyer to perform (including a material delay in CCI's or
Buyer's ability to obtain any Consents necessary for the transfer of the
Systems Franchises) its material obligations under the Transaction Documents
to which it is or will be a party, except for any Material Adverse Effect or
other event or condition due to general economic or industry-wide conditions
(including, without limitation, determinations by the FCC or local franchising
authorities affecting or applicable to the offering or packaging of a la carte
channels or cost-of-service showings and any rate adjustments pursuant to such
determinations).
Section 5.8 Compliance with Laws. To Buyer's knowledge, none of CCI or
any of its Subsidiaries has violated, nor is CCI or are any of them in
violation of, any such Franchises or Licenses or any Legal Requirement, except
where such violations do not and, insofar as reasonably can be foreseen, will
not prevent, hinder, or materially delay (including a material delay in the
obtaining of any Consents necessary for the transfer of the Systems
Franchises) for CCI to be able to consummate the transactions contemplated by
this Agreement.
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Section 5.9 Litigation. Except as may be otherwise disclosed in
Schedule 5.9 hereto or the CCI SEC Filings filed prior to the date hereof,
there is no Litigation pending or, to the knowledge of CCI, threatened against
or affecting CCI or any of its Subsidiaries (except for proceedings or
investigations affecting the cable television industry generally) that,
individually or in the aggregate, would reasonably be expected to prevent,
hinder, or materially delay (including a material delay in the obtaining of
any Consents necessary for the transfer of the Systems Franchises) the ability
of CCI to consummate the transactions contemplated by this Agreement, nor is
there any Judgment outstanding, unsatisfied or unperformed against CCI or any
of its Subsidiaries which could have any such effect in the future.
Section 5.10 [This Section has been intentionally left blank.]
Section 5.11 [This Section has been intentionally left blank.]
Section 5.12 Financing. Buyer has sufficient cash on hand and
availability under its existing loan facilities to pay the Purchase Price
hereunder.
Section 5.13 Investment Intent. Buyer represents that it is acquiring
the Subject Interests for its own account or for one of its wholly owned
Subsidiaries for investment with no present intention of distributing or
reselling the same, subject nevertheless to its right to dispose of the
Subject Interests, or any part thereof, in compliance with applicable law if
at some future time in its sole discretion it deems it advisable to do so.
ARTICLE 6
CERTAIN COVENANTS
Section 6.1 Conduct of Business of the Sellers; Ownership of MNH
Entities. Except as contemplated by this Agreement or as Buyer may otherwise
consent in writing, which consent shall not be unreasonably withheld or
delayed, between the date hereof and the Closing Time neither of Sellers
shall:
(a) amend its partnership agreement or admit any new partners
except as set forth in Schedule 6.1(a); or
(b) issue, sell, deliver or agree to commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to acquire or otherwise) any partnership
interests or other equity securities or amend any of the terms of any
partnership interests or other equity securities or agreements outstanding on
the date hereof.
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Section 6.2 Conduct of the Business of the MNH Entities. Except as
contemplated by this Agreement or as Buyer may otherwise consent in writing,
which consent shall not be unreasonably withheld or delayed, between the date
hereof and the Closing Time, each of Sellers shall and shall cause the MNH
Entities to:
(a) operate or cause the business of the MNH Entities to be
operated (including the Systems) only in the ordinary course and consistent
with past practices (including completing line extensions, placing conduit or
cable in new developments, fulfilling installation requests and continuing
work on existing construction projects) and, to the extent consistent with
such operation, use its reasonable efforts to (i) preserve the current
business organization of the Systems intact (including preserving existing
relationships with Governmental Authorities, suppliers, subscribers, customers
and others having business dealings with any of the Systems) unless Buyer
requests otherwise in writing, (ii) keep available the services of the MNH
Employees and (iii) continue normal marketing, advertising and promotional
expenditures with respect to the business of the MNH Entities (including the
Systems);
(b) maintain (i) the Assets as a whole in good condition and repair
and consistent with past practices, ordinary wear and tear excepted, and (ii)
in full force and effect policies of insurance with respect to the Assets and
the business of the MNH Entities (including the Systems), in such amounts and
with respect to such risks as are customarily maintained by operators of cable
television systems of the size and in the geographic location of the Systems
(and in any event in such amounts and with respect to such risks as are
insured against at the date hereof);
(c) maintain their Books and Records with respect to the Assets and
the operation of the Systems in the ordinary course on a basis consistent with
past practices;
(d) (i) give to Buyer, and its counsel, accountants and other
representatives, upon reasonable request after reasonable notice shall have
been given to Sellers, access during normal business hours to the Assets
(including the Systems) and to the General Manager of the System and the MNH
Employees provided, that, Buyer shall obtain the prior approval of the General
Manager (which approval shall not be unreasonably withheld or delayed) prior
to being granted access to any other MNH Employee; and (ii) furnish or cause
to be furnished to Buyer and such representatives all such additional
documents, financial information and other information as Buyer from time to
time may reasonably request; provided that no investigation will affect or
limit the scope of any of the representations and warranties contained herein
or in any Transaction Document or limit liability for any breach of such
representations and warranties;
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(e) not accept or agree or accede to any modifications or
amendments to any of the Systems Franchises (including modifications or
amendments in connection with the renewal of any of the Systems Franchises),
or material adverse modifications to any of the Systems Licenses, Systems
Contracts or Systems Leases that are not acceptable to Buyer, other than the
modifications or amendments described in Schedule 6.2(e);
(f) promptly deliver to Buyer true and complete copies of all
monthly and quarterly financial statements and operating reports and any
reports with respect to the operation of any of the Systems prepared at any
time from the date hereof until Closing, and any other similar materials which
Buyer may reasonably request;
(g) promptly notify Buyer of any circumstance, event or action by
it or that comes to the knowledge of Sellers (i) which, if known at the date
of this Agreement, would have been required to be disclosed in or pursuant to
this Agreement or (ii) the existence, occurrence or taking of which would
result in any of the representations and warranties in this Agreement or in
any Transaction Document not being true and correct in all material respects
when made or at Closing, and, with respect to clause (ii), use its reasonable
efforts to remedy the same (subject, nonetheless, to the provisions of Section
7.1(c));
(h) deliver to Buyer, prior to the execution and delivery of this
Agreement, a schedule of all franchise, construction, fidelity, performance or
other bonds posted by any MNH Entity (and Buyer hereby acknowledges that
Sellers have heretofore delivered such schedule to Buyer, a copy of which is
attached hereto as Schedule 6.2(h));
(i) promptly furnish to Buyer, upon written request by Buyer, and
its counsel, accountants and other representatives copies of all FCC Forms
1200, 1205, 1210 and 1215 or any other FCC forms required under the
regulations of the FCC promulgated under the Cable Act that are prepared with
respect to any of the Systems; and
(j) use reasonable good faith efforts to establish or cause to be
established rates charged and a la carte packages provided to subscribers of
any of the Systems as of the Closing Date, that would be allowable under the
regulations of the FCC promulgated under the Cable Act.
Section 6.3 Certain Negative Covenants.
(a) Except as contemplated by this Agreement or as Buyer may
otherwise consent in writing, which consent shall not be unreasonably withheld
or delayed, between the date hereof and the Closing Time, each of Sellers
shall not and shall cause each MNH Entity not to:
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(i) (A) create, incur or assume any long-term debt not
currently outstanding (including obligations in respect of capital leases),
provided that the MNH Entities shall be permitted to extend the maturity date
of the indebtedness arising under the MNH Loan Agreement, (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person
other than another MNH Entity or (C) make any loans, advances or capital
contributions to, or investments in, any Person other than another MNH Entity;
(ii) acquire, sell, lease or dispose of any assets other than
sales of inventory and equipment in the ordinary course of business consistent
with past practice; provided, however, that notwithstanding anything in this
Agreement to the contrary MNH may assign and transfer the Excluded Assets to
any Person immediately prior to the Closing;
(iii) mortgage, pledge or subject to any Lien any of its
properties or assets, tangible or intangible (other than a Permitted Lien);
(iv) fail to use reasonable efforts to effect Capital
Expenditures substantially in accordance with the Capital Expenditure budget
attached hereto as Schedule 6.3(a)(iv) (it being understood that such
expenditures may be subject to construction and other delays, and other
factors including the availability of equipment and labor, beyond the control
of the MNH Entities), or fail in any event to effect Capital Expenditures for
the period from July 1, 1995 through the Closing Date in an aggregate amount
equal to at least 90% of the aggregate amount of Capital Expenditures provided
for in such Capital Expenditure budget for the period between July 1, 1995 and
the Closing Date;
(v) effect any Capital Expenditure at a time when the amount
of such Capital Expenditure together with the aggregate amount of all other
Capital Expenditures theretofore effected by the MNH Entities during the
period between July 1, 1995 and such time would exceed 105% of the aggregate
amount of Capital Expenditures provided for in the Capital Expenditure budget
attached hereto as Schedule 6.3(a)(iv) for the period between July 1, 1995 and
such time;
(vi) except as set forth in Schedule 6.3(a)(vi), (A) grant any
material increases in the compensation of any MNH Employees except in the
ordinary course of business consistent with past practice, (B) pay or agree to
pay any pension, retirement allowance or other material employee benefit not
required or contemplated by any of the existing benefit, severance, pension or
employment plans, agreements or arrangements as in effect on the date hereof
to any MNH Employee, whether past or present, (C) enter into any new or
materially amend any existing employment agreement with any MNH Employee,
except for employment agreements with new employees entered into in the
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ordinary course of business consistent with past practice, (D) enter into any
new or materially amend any existing severance agreement with any MNH Employee
or, (E) except as may be required to comply with applicable Legal
Requirements, become obligated under any new Pension Plan, Welfare Benefit
Plan, Multiemployer Plan, Employee Benefit Plan or similar plan or arrangement
that is not in existence on the date hereof, or amend any such plan or
arrangement in existence on the date hereof;
(vii) except as set forth on Schedule 6.3(a)(vii):
(A) enter into any Contract or Lease relating to the
purchase, lease or other acquisition of any goods, equipment, materials or
supplies involving an aggregate expenditure in excess of $100,000; or
(B) enter into any Lease or License or any Contract for
services which, by its terms, is not to expire or be completed or performed
in its entirety prior to the Closing Date and involves expenditures in excess
of (I) $50,000 during the one-year period immediately following the Closing
Date or (II) $100,000 in the aggregate;
(viii) amend or modify the MNH Partnership Agreement or admit any
new partner to MNH;
(ix) amend the charter or bylaws of any MNH Subsidiary or alter
through merger, liquidation, reorganization, restructuring or in any other
fashion the ownership of any MNH Entity;
(x) issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any other equity securities or amend any of the terms of any such
stock or other securities outstanding on the date hereof; or
(xi) knowingly take or agree in writing or otherwise to take
any action that would (A) make any representation or warranty contained in
this Agreement untrue or incorrect as of the date when made or as of the
Closing Time, (B) result in any of the conditions to Closing contained in this
Agreement not being satisfied or (C) be inconsistent with the terms of this
Agreement or the transactions contemplated hereby or by any Transaction
Document.
(b) Except as contemplated by this Agreement or as Buyer may
otherwise consent in writing, between the date hereof and the Closing Time,
each of Sellers shall not and shall cause each MNH Entity not to declare, set
aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock,
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partnership interests or other equity interests, or redeem or otherwise
acquire any of its securities or partnership interests; provided, however,
that (i) any MNH Entity may declare and pay dividends to any other MNH Entity
and (ii) MNH may distribute the Excluded Assets to any Person immediately
prior to the Closing.
(c) After the date hereof and prior to the Closing Date and
notwithstanding any other notice provision set forth in this Agreement, Buyer
hereby authorizes any of Xxxxxxxx Xxxxxxxxx-Xxxxx, Xxxxx Xxxxx, Xxxx
Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx or Xxxxxx Xxxx of Buyer (the "Authorized
Representative") to receive and respond, on Buyer's behalf, to any written
request for consent of Buyer required by Sellers pursuant to Section 6.2,
6.3(a) or 6.3(b) hereof. The Authorized Representative shall respond to any
such request for consent as soon as reasonably practicable and in any event
within fourteen days from the date of receipt of such request. If the
Authorized Representative fails to respond to such a request for consent
within such fourteen-day period, such consent shall have been deemed to have
been given by Buyer.
Section 6.4 Conduct of Business of Buyer. CCI shall not without the
prior written consent of Sellers, knowingly take or agree in writing or
otherwise to take any action that would (i) make any representation or
warranty of CCI contained in this Agreement untrue or incorrect as of the date
when made or as of the Closing Time, (ii) result in any of the conditions to
Closing contained in this Agreement not being satisfied or (iii) be
inconsistent with the terms of this Agreement or the transactions contemplated
hereby or by any Transaction Document.
Section 6.5 Confidentiality and Publicity.
(a) Any non-public information that a party may obtain from another
party in connection with the negotiation and execution of this Agreement or
the consummation of the transactions contemplated hereby will be confidential
and, unless and until the Closing occurs, such party will not disclose any
such information to any other Person (other than its and its Affiliates'
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 such information
to the detriment of any other party; 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 that has
rightfully come into the possession of such party (other than in connection
with this Agreement) and, (ii) to the extent that such party may, in the
reasonable judgment of its counsel, be compelled by Legal Requirements to
disclose any of such information, such party may disclose such information.
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(b) Sellers and Buyer each will consult with and cooperate with the
other with respect to the content and timing of all press releases and other
public announcements, and any written statements to MNH Employees concerning
this Agreement and the transactions contemplated hereby. Prior to Closing,
neither of Sellers nor Buyer will make any such release, announcement or
statement without the prior written consent and approval of the other (which
approval shall not be unreasonably withheld or delayed), except as required by
applicable Legal Requirements, in which case the other party or parties shall
be consulted to the extent reasonably practicable as to the content and timing
of such release, announcement or statement to be issued.
Section 6.6 Distant Broadcast Signals. Unless otherwise restricted or
prohibited by any Governmental Authority or applicable Legal Requirements, if
requested by Buyer, Sellers will cause the MNH Entities to delete, prior to
the Closing Date, any distant broadcast signals which Buyer determines will
result in unacceptable liability for copyright payments with respect to
continued carriage of such signals after the Closing Date unless Sellers
reasonably object to any such deletion.
Section 6.7 Post-Closing Cooperation upon Inquiries as to Rates or a la
Carte Packages. For a period of 6 months after Closing, each Seller will
cooperate with and assist Buyer by providing, upon request, all information in
such Seller's possession (and not previously made available to Buyer) relating
directly to the rates set forth in Schedule 4.10 or on any of FCC Forms 393,
1200, 1205, 1210 or 1215, that Buyer may reasonably require to justify such
rates in response to any inquiry, order or requirement of any Governmental
Authority.
Section 6.8 Use of Names and Logos. For a period of 60 days after
Closing, Buyer shall have a non-exclusive license and be entitled to use the
trademarks, trade names, service marks, service names, logos and similar
proprietary rights of Sellers to the extent incorporated in or on the Assets
at Closing, provided that Buyer will exercise reasonable efforts to remove all
such names, marks, logos and similar proprietary rights of the other from the
Assets as soon as reasonably practicable following Closing.
Section 6.9 Consents.
(a) Each of Sellers and Buyer agrees to use all reasonable efforts
to obtain all Consents necessary for its execution and delivery of and the
performance of its obligations pursuant to this Agreement, and will cooperate
fully with the other parties in promptly seeking to obtain all such Consents.
Without limiting the foregoing, Sellers and Buyer shall each make an
appropriate filing of a notification and report form pursuant to the HSR Act
as promptly as practicable but in no event later than 30 days following the
execution of this Agreement. Each such filing shall request early termination
of the waiting period imposed by the HSR Act.
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(b) Any application to any Governmental Authority for a Consent
necessary for the transfer of control of any License or Systems Franchise
shall be mutually acceptable to Sellers and Buyer and, if applicable, shall
request that the relevant Governmental Authority agree that no further Consent
of such Governmental Authority will be required if a security interest is
granted in such License or Systems Franchise to any lender. Without limiting
the obligations of Sellers and Buyer under paragraph (a) of this Section, each
of Sellers and Buyer agrees, upon reasonable prior notice, to make appropriate
representatives available for attendance at meetings and hearings before
applicable Governmental Authorities in connection with the transfer of control
of any License or Systems Franchise.
(c) If any Consent of any Governmental Authority necessary for the
transfer of control of any License or Systems Franchise shall not have been
obtained prior to the Closing Time, Sellers and Buyer shall, at the option of
Buyer, cooperate with each other and use all reasonable efforts (i) to
restructure the ownership and control of such License or Systems Franchise
from and after the Closing Time in such a manner that, to the extent feasible,
prevents any violation of the terms of such License or Systems Franchise that
would have a Material Adverse Effect on Buyer and its Subsidiaries or on the
MNH Entities yet preserves the intent of the parties as set forth in this
Agreement with respect to the transactions contemplated hereby, and (ii)
notwithstanding the Closing, to continue to seek any Consent necessary for the
transfer of control of such License or Systems Franchise.
Section 6.10 Further Assurances. Each of the parties hereto shall
execute such documents and other instruments and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof and
consummate and evidence the transactions contemplated hereby or, at and after
the Closing Date, to evidence the consummation of the transactions
contemplated by this Agreement or any Transaction Document. Without limiting
the generality of the immediately preceding sentence, subsequent to Closing,
each of Sellers shall continue to use all reasonable efforts to obtain in
writing as promptly as possible any Consent required to be obtained by it in
connection with the transactions contemplated hereunder which was not obtained
on or before Closing and will deliver to Buyer copies of the same, reasonably
satisfactory in form and substance to Buyer. Upon the terms and subject to
the conditions hereof, each of the parties hereto shall take or cause to be
taken all actions and to do or cause to be done all other things necessary,
proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement.
Section 6.11 No Related Party Agreements. Except as otherwise
contemplated hereby, neither of Sellers nor any of either Seller's Affiliates
will at the Closing Time be a party to any material Contract with any MNH
Entity, including any material Contract providing for the furnishing of
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services or rental of real or personal property to or from or otherwise
relating to the business or operations of any MNH Entity or pursuant to which
any MNH Entity may have any obligation or liability.
Section 6.12 Termination of Seller's Profit Sharing Plan. Sellers
shall, on or prior to the Closing Date, arrange for termination of the New
Heritage Associates Profit Sharing Plan. In connection with the termination,
plan assets shall be distributed to, or as directed by, plan participants.
Section 6.13 Cooperation with CCI Merger, etc. Sellers shall, and prior
to the Closing Sellers shall cause the MNH Entities to, at the expense of CCI,
(i) furnish in writing to CCI such information (including audited and
unaudited financial statements), and in such form, regarding Sellers, the MNH
Entities, MNHP, NHA, Meredith, Ingersoll, New Heritage and the Ultimate Equity
Holders as CCI may reasonably request in connection with the CCI Proxy
Statement and the U S WEST, Inc. Registration Statement, (ii) cooperate with
CCI in its efforts to respond to any comments of the SEC with respect to the
CCI Proxy Statement or the U S WEST, Inc. Registration Statement relating to
Sellers, the MNH Entities, MNHP, NHA, Meredith, Ingersoll, New Heritage or the
Ultimate Equity Holders, (iii) cause the MNH Entities' independent auditors to
deliver a letter to CCI and U S WEST, Inc. in connection with the CCI Proxy
Statement and the U S WEST, Inc. Registration Statement, such letter to be in
form and substance reasonably satisfactory to CCI and U S WEST, Inc. and
customary in scope and substance for letters delivered by independent public
accountants in connection with proxy statements similar to the CCI Proxy
Statement and with registration statements similar to the U S WEST, Inc.
Registration Statement, and (iv) take any other action reasonably requested by
CCI in connection with the CCI Proxy Statement or the U S WEST, Inc.
Registration Statement. Sellers shall, prior to the Closing Date, similarly
cooperate with CCI and take such other actions, all as and consistent with the
cooperation and actions contemplated by the foregoing clauses (i), (ii), (iii)
and (iv) and at the expense of CCI, in connection with such other proxy
statements or registration statements as CCI may submit to or file with, or
propose to submit to or file with, the SEC after the date hereof, to the
extent that such cooperation and actions do not unreasonably interfere with
the normal operations of Sellers and the MNH Entities.
Section 6.14 Access to Records. Subject to the Closing, Buyer shall
cause MNH to (i) use its reasonable efforts to preserve all material Books and
Records pertaining to the MNH Entities operations of the Systems prior to the
Closing Date for a period of five years after the Closing Date, and (ii) give
such access during normal business hours to such Books and Records to Sellers,
their counsel, accountants and other authorized representatives, during such
five-year period, on reasonable advance written notice and in a manner that is
not disruptive of the operation of the Systems, as may be reasonably necessary
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in connection with any legitimate purpose (including, without limitation, the
preparation of tax reports and returns and the preparation of financial
statements). Sellers shall have the right to make copies at their own
expense.
Section 6.15 Form 394. Buyer shall use all reasonable efforts to
prepare, with the cooperation of Sellers, on or before April 15, 1996 a Form
394 for filing with each franchising authority for which such Form 394 is
required to be filed. Upon approval of Sellers as to the form and content of
such Form 394 (which approval shall not be unreasonably withheld or delayed),
Buyer shall immediately file such Form 394 with each such franchising
authority. Each of Buyer and Sellers represents that the information provided
by it in such filings will be, as of the date filed, true and correct in all
material respects and will comply in all material respects with the
requirements of such Form 394. Each of Buyer and Sellers agrees to use all
reasonable efforts to promptly respond to any request for additional
information by any such franchising authority and Buyer agrees to promptly
file any such additional information after any such request. Sellers
acknowledge and agree that, at Buyer's option, (i) each such Form 394 may
contain information regarding and seek approval from such franchising
authority of the transfer of (or the transfer of control of) the Systems
Franchises (including the particular Systems Franchise within the jurisdiction
of such franchising authority) from Buyer to U S WEST, Inc. by reason of the
transactions contemplated by the CCI Merger Agreement (or from Sellers
directly to U S WEST, Inc. if the transactions contemplated by the CCI Merger
Agreement are consummated prior to the transactions contemplated hereby), or
(ii) U S WEST, Inc. or Buyer or an Affiliate thereof may file a separate Form
394 with each such franchising authority containing information regarding and
seeking approval from such franchising authority of the transfer of (or the
transfer of control of) the Systems Franchises (including the particular
Systems Franchise within the jurisdiction of such franchising authority) from
Buyer to U S WEST, Inc. by reason of the transactions contemplated by the CCI
Merger Agreement (or from Sellers directly to U S WEST, Inc. if the
transactions contemplated by the CCI Merger Agreement are consummated prior to
the transactions contemplated hereby), either concurrently with or subsequent
to the filing of the Form 394 with such franchising authority relating to the
transactions contemplated by this Agreement.
Section 6.16 Tax Returns. Sellers shall prepare and cause to be filed
all tax returns and other tax reports required to be filed by MNH as a result
of or subsequent to the Closing, for the period ending on the Closing Date.
Buyer shall reimburse Sellers for the reasonable out-of-pocket costs incurred
by them in connection with the preparation and filing of such final tax
returns and other tax reports up to an amount equal to the product of (i) the
aggregate amount of such reasonable out-of-pocket costs, multiplied by (ii)
the remainder of 100% minus the Sellers Indemnification Percentage.
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ARTICLE 7
CONDITIONS PRECEDENT
Section 7.1 Conditions to Buyer's Obligations. The obligations of Buyer
to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction of the following conditions on or prior to the Closing
Date (any of which may be waived in writing by CCI):
(a) Accuracy of Representations and Warranties. The
representations and warranties of Sellers in this Agreement and of Sellers in
any Transaction Document shall be true and correct in all material respects at
and as of the Closing with the same effect as if made at and as of the
Closing, except for changes, if any, permitted or contemplated by this
Agreement or to which Buyer may consent in writing pursuant to Section 6.1,
6.2 or 6.3 or may be deemed to consent pursuant to Section 6.3(c).
(b) Performance of Agreements. Each Seller shall have performed or
caused to be performed in all material respects all of its obligations and
agreements contained in this Agreement or in any Transaction Document that is
to be performed by it at or before Closing.
(c) Officer's Certificate. Buyer shall have received a certificate
executed by a general partner of each Seller, dated as of the Closing Date,
reasonably satisfactory in form and substance to CCI, certifying that the
conditions specified in Sections 7.1 (a) and (b) have been satisfied.
(d) Legal Proceedings. There shall be (i) no Legal Requirement,
and no Judgment shall have been entered and not vacated by any Governmental
Authority of competent jurisdiction in any Litigation or arising therefrom,
which (i) enjoins, restrains, makes illegal or prohibits consummation of the
transactions contemplated by this Agreement or by any Transaction Document or
(ii) requires separation or divestiture by CCI of all or any portion of the
Assets after Closing, and no Governmental Authority shall have instituted or
threatened in writing any action, suit or similar proceeding seeking or which,
in the good faith judgment of Buyer, might reasonably be expected to have the
effect of, any of the foregoing.
(e) Opinion of FCC Counsel. Buyer shall have received an opinion
of Xxxxxxxxxx and Xxxxx, L.L.P., special FCC counsel to the MNH Entities,
dated as of the Closing Date, in form and substance reasonably satisfactory to
Buyer and its counsel (the "MNH FCC Counsel Opinion").
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(f) MNH Counsel Opinions. Buyer shall have received opinions of
Sidley & Austin and Nyemaster, Goode, McLaughlin, West, Xxxxxxx & X'Xxxxx,
counsel to Sellers, the MNH Entities, Meredith, Ingersoll, NHA and the
Ultimate Equity Holders, dated as of the Closing Date, in form and substance
reasonably satisfactory to Buyer and its counsel (the "Sellers Counsel
Opinions").
(g) HSR Act Waiting Period. The waiting period under the HSR Act
with respect to the transactions contemplated by this Agreement shall have
expired or been terminated.
(h) Consents. Except to the extent otherwise permitted by Section
7.1(k), Buyer shall have received evidence, in form and substance reasonably
satisfactory to it, that the Sellers Required Consents and Buyer Required
Consents have been obtained.
(i) No Material Adverse Change. There shall have been no material
adverse change in the Assets, or the financial condition or operations of the
Systems, in each case taken as a whole, since the date of this Agreement.
There shall not have occurred or been suffered any casualty or loss, whether
or not covered by insurance, which either alone or in the aggregate has had or
is reasonably likely to have a Material Adverse Effect on the MNH Entities.
(j) Subscribers. The Systems shall be serving at least 115,000
Basic Subscribers as of the end of the calendar month immediately preceding
the Closing Date.
(k) Transferable Franchise Areas. The aggregate number of Basic
Subscribers in the Cable Franchise Areas (as defined below) that are
Transferable Franchise Areas (as defined below) shall be not less than 95%
(the "Required Percentage") of the aggregate number of Basic Subscribers in
all Cable Franchise Areas; provided, however, that the condition set forth in
this Section 7.1(k) shall not be deemed to be satisfied until the earlier to
occur of (x) thirty (30) days following the date on which the Required
Percentage is obtained, (y) the date on which the condition set forth in this
Section 7.1(k) would be satisfied if the Required Percentage were one hundred
percent, or (z) December 31, 1996. For purposes of this Section 7.1(k):
(i) "Cable Franchise Area" means any of the geographic areas
in which the MNH Entities are authorized to provide cable television service
pursuant to a Systems Franchise or provide cable television service without a
Franchise;
(ii) A Cable Franchise Area is a "Transferable Franchise Area"
if (A) any Consent necessary for the transfer of control of the Systems
Franchise for such Cable Franchise Area in connection with the consummation of
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the transactions contemplated by this Agreement shall have been obtained; (B)
no Consent is necessary for the transfer of control of the Systems Franchise
for such Cable Franchise Area in connection with the consummation of the
transactions contemplated by this Agreement; or (C) no Franchise is required
for the provision of cable television service in the Cable Franchise Area;
(iii) If at any time prior to the Closing Date any Governmental
Authority exercises any right reserved to it in a Systems Franchise for any
Cable Franchise Area to acquire the Systems Franchise or related System upon
the actual or proposed transfer of control of such Systems Franchise, then
during the pendency of any proceeding with respect to the acquisition of such
Systems Franchise or related System by such Governmental Authority, and
notwithstanding any other action taken by such Governmental Authority, (A)
such Systems Franchise shall be deemed to be one with respect to which Consent
is required for the transfer of control of such Systems Franchise in
connection with the consummation of the transactions contemplated by this
Agreement, (B) such Governmental Authority shall be deemed not to have granted
its consent to the transfer of control of such Systems Franchise, (C) the
proceeds (the "Proceeds") received by any MNH Entity in connection with such
acquisition shall be held in escrow by such MNH Entity until after the
Closing, and, (D) anything herein to the contrary notwithstanding, the
Proceeds shall not be counted as current assets of the MNH Entities for
purposes of the Working Capital Adjustment; and
(iv) In calculating the number of Basic Subscribers in a Cable
Franchise Area, the number of Basic Subscribers in such Cable Franchise Area
on October 31, 1995 shall be used.
Notwithstanding the foregoing, Sellers and Buyers agree to use their
respective reasonable efforts to contest any attempt to so acquire a System
Franchise or a related System, including, without limitation, by commencing
and prosecuting such legal actions as may be necessary to prevent such
acquisition in circumstances where such action is appropriate.
(l) [This Section has been intentionally left blank.]
(m) Ultimate Equity Holder Guaranties. Each of the Ultimate Equity
Holders shall have duly executed and delivered to Buyer a Guaranty of
Indemnification Obligations in the form attached hereto as Exhibit B (the
"Ultimate Equity Holder Guaranties").
(n) Removal of Liens. Except as set forth in Schedule 7.1(n), all
Liens set forth in Schedule 4.8 shall have been removed, released or
discharged at or prior to Closing.
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Section 7.2 Conditions to Sellers' Obligations. The obligations of
Sellers to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction of the following conditions on or prior to the
Closing Date (any of which may be waived in writing by Sellers):
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer in this Agreement and in any
Transaction Document to which Buyer is a party shall be true and correct in
all material respects at and as of the Closing with the same effect as if made
at and as of the Closing.
(b) Performance of Agreements. Buyer shall have performed in all
material respects all of its obligations and agreements contained in this
Agreement or in any Transaction Document that is to be performed by it at or
before Closing.
(c) Officer's Certificate. Sellers shall have received a
certificate executed by an executive officer of Buyer, dated as of the Closing
Date, reasonably satisfactory in form and substance to Sellers, certifying
that the conditions specified in Section 7.2(a) and (b) have been satisfied.
(d) Legal Proceedings. There shall be no Legal Requirement, and no
Judgment shall have been entered and not vacated by any Governmental Authority
of competent jurisdiction in any Litigation or arising therefrom, which
enjoins, restrains, makes illegal or prohibits consummation of the
transactions contemplated hereby or by any Transaction Document, and no
Governmental Authority shall have instituted or threatened any action, suit or
similar proceeding which, in the good faith judgment of Sellers, might
reasonably be expected to have the effect of, any of the foregoing.
(e) Buyer Counsel Opinion. Sellers shall have received an opinion
of Xxxxxxxx & Worcester, dated as of Closing, in form and substance
reasonably satisfactory to Sellers and their counsel (the "CCI Counsel
Opinion").
(f) HSR Act Waiting Period. The waiting period under the HSR Act
with respect to the transactions contemplated by this Agreement shall have
expired or been terminated.
(g) Consents. Except to the extent otherwise permitted by Section
7.1(k), Sellers shall have received evidence, in form and substance reasonably
satisfactory to them, that the Buyer Required Consents have been obtained.
(h) [This Section has been intentionally left blank.]
(i) [This Section has been intentionally left blank.]
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(j) [This Section has been intentionally left blank.]
Section 7.3 Exceptions to Conditions to Obligations.
(a) Exception to Section 7.1(a).
(i) The condition contained in Section 7.1(a) to the
obligations of Buyer to consummate the transactions contemplated by this
Agreement shall be deemed satisfied notwithstanding any failures of any
representations and warranties of Sellers to be true and correct as of the
Closing Date due to events or occurrences or other circumstances (other than
any intentional breach by either Seller of any of its obligations under this
Agreement to be performed prior to Closing) taking place or arising after the
date hereof if (A) the aggregate amount of Losses and Expenses that could
reasonably be expected to be suffered or incurred by Buyer as a result of such
failures as of the Closing Date would not exceed $5,000,000 and (B) there
shall be no failure of any of the representations and warranties of Sellers
contained in Sections 3.1(b), 3.1(c)(i)(A), 3.2(a)(iii) (other than the first
and second sentences) and (iv), 3.2(b)(ii), (iv) (other than the first and
second sentences) and (v), 3.3, 4.2, 4.3(a)(i) and (ii) and 4.4 to be true and
correct in all material respects; provided, however, that nothing contained in
this Section 7.3(a) shall limit in any way whatsoever the obligations of
Sellers under this Agreement to indemnify Buyer against any and all Losses and
Expenses arising out of or resulting from such failures or otherwise except as
otherwise provided in Section 7.3(a)(ii)(B). Sellers shall use all reasonable
efforts to give written notice to Buyer of any such failures, which notice (I)
shall state with reasonable specificity the facts and circumstances underlying
each such failure, (II) shall set forth Sellers' good faith estimate of the
aggregate amount of Losses and Expenses that could reasonably be expected to
be suffered by Buyer as a result of such failures (which estimate shall be for
information purposes only and shall in no way be binding on Buyer or Seller or
determinative of the amount of such Losses and Expenses for purposes of
Section 7.3(a)(ii)), and (III) shall state that such notice is being given
pursuant to this Section 7.3(a). Sellers shall use all reasonable efforts to
give any such notice to Buyer at least seven Business Days prior to the
Closing Date. Anything in this Agreement to the contrary notwithstanding, if
any such notice is given less than seven Business Days prior to the Closing
Date, the Closing Date may be postponed at the option of Buyer for up to seven
Business Days after the date such notice is given. Subject to the Closing,
any such notice given by Sellers pursuant to this Section 7.3(a) shall be
deemed to constitute the giving of any initial notice pertaining to such
failures from Buyer or any Indemnitee required under or contemplated by any
provision of Article 10, including Section 10.5 and Section 10.6(d) but
excluding the second sentence of Section 10.3.
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(ii) If the aggregate amount of Losses and Expenses that could
reasonably be expected to be suffered by Buyer as a result of such failures as
of the Closing Date would exceed $5,000,000, Buyer may at its option:
(A) Refuse to proceed with Closing, whereupon this
Agreement shall be deemed to have been terminated (I) pursuant to Section
9.1(a) of this Agreement so long as neither Seller has materially breached any
of its obligations hereunder and (II) pursuant to Section 9.1(d) of this
Agreement if either Seller has materially breached any of its obligations
hereunder; or
(B) Proceed with Closing (subject to satisfaction of the
other conditions contained in Section 7.1), whereupon Sellers shall not be
liable to Buyer under Section 10.1 of this Agreement or otherwise for any
Losses or Expenses of Buyer in excess of $5,000,000 arising from any such
failures that are described in the notice given by Sellers pursuant to Section
7.3(a)(i) hereof.
(b) Exception to Section 7.2(a).
(i) The condition contained in Section 7.2(a) to the
obligations of Sellers to consummate the transactions contemplated by this
Agreement shall be deemed satisfied notwithstanding any failures of any
representations and warranties of Buyer to be true and correct as of the
Closing Date due to events or occurrences or other circumstances (other than
any intentional breach by Buyer of any of its obligations under this Agreement
to be performed prior to Closing) taking place or arising after the date
hereof if (A) such failures, in the aggregate, would reasonably be expected
not to have a Material Adverse Effect on CCI and its Subsidiaries and (B)
there shall be no failure of any of the representations and warranties of
Buyer contained in Sections 5.1 (third and fourth sentences only), 5.2(a)(i)
and (ii), and 5.3. to be true and correct in all material respects; and Buyer
shall not be liable to either of Sellers under Section 10.2 of this Agreement
or otherwise for any Losses or Expenses of either of Sellers arising from such
failures to the extent that (I) Buyer shall have given written notice to
Sellers of such failures, (II) such notice states with reasonable specificity
the facts and circumstances underlying each such failure upon which such
notice is based, and (III) it is expressly stated in such notice that it is
being given pursuant to this Section 7.3(b). Buyer shall use all reasonable
efforts to give any such notice to Sellers at least seven Business Days prior
to the Closing Date. Anything in this Agreement to the contrary
notwithstanding, if any such notice is given less than seven Business Days
prior to the Closing Date, the Closing Date may be postponed at the option of
Sellers for up to seven business days after the date such notice is given.
Subject to the Closing, any such notice given by Buyer pursuant to this
Section 7.3(b) shall be deemed to constitute the giving of any initial notice
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pertaining to such failures from Sellers or any Indemnitee required under or
contemplated by any provision of Article 10, including Section 10.5 and
Section 10.6(d) but excluding the second sentence of Section 10.3.
(ii) If such failures, in the aggregate, would reasonably be
expected to have a Material Adverse Effect on CCI and its Subsidiaries,
Sellers may at their option:
(A) Refuse to proceed with Closing, whereupon this
Agreement shall be deemed to have been terminated (i) pursuant to Section
9.1(a) of this Agreement so long as Buyer has not materially breached any of
its obligations hereunder and (ii) pursuant to Section 9.1(c) of this
Agreement if Buyer has materially breached any of its obligations hereunder;
or
(B) Proceed with Closing (subject to satisfaction of the
other conditions contained in Section 7.2), whereupon Buyer shall not be
liable to Sellers under Section 10.2 of this Agreement or otherwise for any
Losses or Expenses of either Seller arising from such failures.
(c) Exception to Section 7.1(h).
(i) The condition contained in Section 7.1(h) to the
obligations of Buyer to consummate the transactions contemplated by this
Agreement shall be deemed satisfied notwithstanding any failures of Sellers to
obtain any Sellers Required Consents (other than any failure to obtain any
Consents necessary for the transfer of control of any Systems Franchise
(except to the extent otherwise expressly permitted under Section 7.1(k) and
other than any failure where the consummation of the transactions contemplated
hereby, without having obtained the Sellers Required Consent in question,
would result in a material violation of any Legal Requirement) if the
aggregate amount of Losses and Expenses that could reasonably be expected to
be suffered or incurred by Buyer or the MNH Entities as a result of such
failures as of the Closing Date, together with the aggregate amount of Losses
and Expenses that could reasonably be expected to be suffered or incurred by
Buyer or the MNH Entities resulting from any Section 3.1(c) Exceptions and
Section 4.3(a) Exceptions, would not exceed $1,000,000; provided, however,
that nothing contained in this Section 7.3(c) shall limit in any way
whatsoever the obligations of Sellers under this Agreement to indemnify Buyer
against any and all Losses and Expenses arising out of or resulting from such
failures or otherwise. Sellers shall use all reasonable efforts to give
written notice to Buyer of any failures to obtain any Sellers Required
Consents, which notice (A) shall state with reasonable specificity the facts
and circumstances underlying each such failure, (B) shall set forth Sellers'
good faith estimate of the aggregate amount of Losses and Expenses that could
reasonably be expected to be suffered or incurred by Buyer or the MNH Entities
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as a result of such failures (which estimate shall be for information purposes
only and shall in no way be binding on Buyer or Seller or determinative of the
amount of such Losses and Expenses for purposes of Section 7.3(c)(ii)), and
(III) shall state that such notice is being given pursuant to this Section
7.3(c). Sellers shall use all reasonable efforts to give any such notice to
Buyer at least seven Business Days prior to the Closing Date. Anything in
this Agreement to the contrary notwithstanding, if any such notice is given
less than seven Business Days prior to the Closing Date, the Closing Date may
be postponed at the option of Buyer for up to seven Business Days after the
date such notice is given. Subject to the Closing, any such notice given by
Sellers pursuant to this Section 7.3(c) shall be deemed to constitute the
giving of any initial notice pertaining to such failures from Buyer or any
Indemnitee required under or contemplated by any provision of Article 10,
including Section 10.5 and Section 10.6(d) but excluding the second sentence
of Section 10.3.
(ii) If the aggregate amount of Losses and Expenses that could
reasonably be expected to be suffered by Buyer or the MNH Entities as a result
of such failures as of the Closing Date, together with the aggregate amount of
Losses and Expenses that could reasonably be expected to be suffered or
incurred by Buyer or the MNH Entities resulting from any Section 3.1(c)
Exceptions and Section 4.3(a) Exceptions, would exceed $1,000,000, Buyer may
at its option:
(A) Refuse to proceed with Closing, whereupon this
Agreement shall be deemed to have been terminated (I) pursuant to Section
9.1(a) of this Agreement so long as neither Seller has materially breached any
of its obligations hereunder and (II) pursuant to Section 9.1(d) of this
Agreement if either Seller has materially breached any of its obligations
hereunder; or
(B) Proceed with Closing (subject to satisfaction of the
other conditions contained in Section 7.1), whereupon Sellers shall be liable
to Buyer under and to the extent provided in Section 10.1(d) for any Losses or
Expenses of Buyer or any MNH Entity arising from any such failures.
ARTICLE 8
CLOSING
Section 8.1 Closing, Time and Place. The closing of the transactions
contemplated by this Agreement ("Closing") will take place at the offices of
Xxxxxxxx & Worcester LLP in Boston, Massachusetts at a time mutually
determined by Sellers and Buyer on the last day of the calendar month during
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which all conditions set forth in Sections 7.1 and 7.2 have either been
satisfied or waived in writing by the party entitled to the benefit of such
condition; provided, however, that all conditions set forth in Sections 7.1
and 7.2 have either been satisfied or waived in writing by the party entitled
to the benefit of such condition.
Section 8.2 Sellers' Obligations. At the Closing, Sellers shall deliver
to Buyer (or its nominee) the following:
(a) MNHP Xxxx of Sale and Assignment. A Xxxx of Sale and
Assignment duly executed by MNHP in the form attached hereto as Exhibit C and
with such modifications, if any, as may be necessary or advisable to cause
such forms to be effective under applicable Legal Requirements.
(b) NHA Xxxx of Sale and Assignment. A Xxxx of Sale and Assignment
duly executed by NHA in the form attached hereto as Exhibit D and with such
modifications, if any, as may be necessary or advisable to cause such forms to
be effective under applicable Legal Requirements.
(c) Evidence of Necessary Actions. Certified resolutions, or other
evidence reasonably satisfactory to Buyer, that Sellers, the MNH Entities,
Xxxxxxxx, Ingersoll and the Ultimate Equity Holders have taken all actions
necessary to authorize the execution of this Agreement and all other
Transaction Documents and the consummation of the transactions contemplated
hereby.
(d) Officer's Certificate. The certificate described in Section 7.1
(c).
(e) FCC Counsel Opinion. The MNH FCC Counsel Opinion.
(f) Sellers Counsel Opinions. The Sellers Counsel Opinions.
(g) [This Section has been intentionally left blank.]
(h) Ultimate Equity Holder Guaranties. The Ultimate Equity Holder
Guaranties.
(i) Lien Releases. Evidence satisfactory to Buyer that all Liens
(other than Permitted Liens and the Liens specified in Schedule 7.1(n))
affecting or encumbering the Assets have been terminated, released or waived,
as appropriate, or original, executed instruments in form satisfactory to
Buyer effecting such terminations, releases or waivers.
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(j) Instruments under MNH Partnership Agreement. Such instruments
as may be necessary or advisable under the MNH Partnership Agreement to permit
the transfer of the Subject Interests to Buyer (or its nominee) and the
admission of Buyer (or its nominee) as a successor limited partner and
successor general partner of MNH.
(k) Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby or as Buyer may reasonably request.
Section 8.3 Buyer's Obligations.
(a) At the Closing, Buyer shall deliver or cause to be delivered to
Sellers the following:
(i) Purchase Price. The Purchase Price (subject to adjustment
as provided in Section 8.3(b)(iii)), which shall be determinable and payable
as provided in Section 8.3(b). The amount of the Purchase Price to be paid at
the Closing shall be equal to the estimate thereof set forth in the Sellers
Purchase Price Calculation (subject to any changes or modifications thereto
agreed to by Sellers and Buyer on or before the Closing Date).
(ii) Evidence of Authorization of Actions. Certified
resolutions of the Board of Directors of CCI, or other evidence reasonably
satisfactory to Sellers, that Buyer has taken all action necessary to
authorize the execution of this Agreement and all other Transaction Documents
and the consummation of the transactions contemplated hereby.
(iii) Officer's Certificate. The certificate described in
Section 7.2(c).
(iv) CCI Counsel Opinion. The CCI Counsel Opinion.
(v) [This Section has been intentionally left blank.]
(vi) [This Section has been intentionally left blank.]
(vii) Interest. An amount equal to interest accruing, at the
Prime Rate from October 1, 1996 through the earlier of (A) the Closing Date
and (B) December 31, 1996, on the Purchase Price payable at Closing. Such
amount shall be payable, in cash, by wire transfer of immediately available
funds to such accounts as designated in writing by Sellers to Buyer at least 5
Business Days prior to the Closing Date.
(viii) Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
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In addition to the foregoing, Buyer shall either (i) pay in full the principal
indebtedness of MNH, all interest accrued thereon and any other amounts
otherwise due through the Closing Date arising under the MNH Loan Agreement or
(ii) deliver to the Sellers releases duly executed by the Banks, the Co-Agents
and the Agent in favor of the Sellers releasing the Sellers from any liability
under the MNH Loan Agreement and the other agreements and instruments
delivered in connection with the MNH Loan Agreement.
(b) Purchase Price. The purchase price (subject to adjustment as
provided in Section 8.3(b)(iii), the "Purchase Price") to be paid by Buyer at
the Closing for the Subject Interests shall be determined and payable as
follows:
(i) The Purchase Price shall be equal to the greater of $-0-
and the sum of:
(A) the product of (I) the sum (such sum being referred
to herein as the "Deal Price") of (x) the remainder of $257,500,000 minus the
consolidated liabilities of the MNH Entities as of the Closing Time other than
the Consolidated Current Liabilities (as defined below), determined in
accordance with GAAP as consistently applied by the MNH Entities, plus (y) the
Working Capital Adjustment (as defined below), plus (z) the Capital
Expenditures Adjustment (as defined below), multiplied by (II) 0.7378, plus
(B) the product of (I) the Deal Price minus $138,250,000,
multiplied by (II) 0.020976, plus
(C) $5,000,000.
(ii) The Purchase Price shall be payable entirely in cash,
which shall be payable by wire transfer of immediately available funds, in an
aggregate amount equal to the Purchase Price in such amounts and to such
accounts as designated in writing by Sellers to Buyer at least 5 Business Days
prior to the Closing Date.
(iii) The Purchase Price shall be determined as follows:
(A) At least 5 Business Days prior to the Closing Date,
Sellers shall prepare and deliver to Buyer a detailed schedule showing
Sellers' best good faith estimate of the Purchase Price as of the Closing Time
(the "Sellers Purchase Price Calculation"). Buyer shall have the opportunity
to review the Sellers Purchase Price Calculation prior to the Closing (and
shall have full access to the Assets, including the Books and Records for that
purpose) and Sellers and Buyer shall negotiate in good faith to resolve any
disagreement that may exist between Sellers and Buyer as to proper calculation
of the Purchase Price for purposes of the Closing.
Page 65 of 78
(B) As promptly as practicable after the Closing Date,
but in any event within 45 days thereafter, Buyer shall prepare and deliver to
Sellers a schedule showing Buyer's determination of the Purchase Price as of
the Closing Time (the "Buyer Purchase Price Calculation"). If Sellers
disagree with the Buyer Purchase Price Calculation, Sellers shall give notice
thereof to Buyer within fifteen days after delivery of the Buyer Purchase
Price Calculation to Sellers.
(C) Buyer and Sellers shall attempt to settle any such
disagreement; any such settlement shall be final and binding upon Buyer and
Sellers. If, however, Buyer and Sellers are unable to settle such
disagreement within 15 days after receipt by Buyer of such notice of
disagreement, such disagreement shall be submitted to an independent certified
public accounting firm mutually acceptable to Buyer and Sellers for
resolution, and the decision of such certified public accountants shall be
final and binding upon Buyer and Sellers. All costs incurred in connection
with the resolution of such disagreement by such certified public accountants,
including expenses and fees for services rendered, shall be paid one half by
Buyer and one half by Sellers. Buyer and Sellers shall use reasonable efforts
to have any such disagreement resolved within 30 days after such disagreement
is submitted to such certified public accountants, but neither Buyer nor
Sellers shall have any liability to any party if such disagreement is not
resolved within such 30-day period.
(D) Within 5 Business Days following a final
determination of the Purchase Price (whether as a result of Sellers failing to
give timely notice of Sellers's disagreement with the Buyer Purchase Price
Calculation, a resolution by Buyer and Sellers of any such disagreement, or a
determination by such a certified public accounting firm selected pursuant to
paragraph (C) above to resolve any disagreement among the parties), Buyer
shall pay to Sellers the amount of any underpayment plus interest on such
amount from the Closing Date to the date of payment at a per annum rate equal
to the Prime Rate or Sellers shall pay to Buyer the amount of any overpayment
plus interest on such amount from the Closing Date to the date of payment at a
per annum rate equal to the Prime Rate, as the case may be, of the Purchase
Price as adjusted pursuant to this Section by wire transfer in immediately
available funds.
(iv) For purposes of this Agreement:
(A) "Capital Expenditures Adjustment" means an amount
equal to the remainder (which may be a negative number, which, in such case,
would reduce the Purchase Price) of (I) all amounts actually expended by the
MNH Entities in respect of Capital Expenditures (determined in accordance with
GAAP applied consistently with the past practices of the MNH Entities) between
July 1, 1995 and the Closing Date, minus (II) the aggregate amount of Capital
Page 66 of 78
Expenditures provided for in the Capital Expenditure budget attached hereto as
Schedule 6.3(a)(iv) for the period between July 1, 1995 and the Closing Date.
(B) "Consolidated Current Assets" means the consolidated
current assets of the MNH Entities as of the Closing Time other than (I) any
Accounts Receivable, (II) any Proceeds and (III) any current assets arising
out of the CCM Note (as defined in the MNH Partnership Agreement), all
determined in accordance with GAAP applied consistently with the past
practices of the MNH Entities.
(C) "Consolidated Current Liabilities" means the
consolidated current liabilities of the MNH Entities (including any and all
accrued unpaid taxes but excluding any unearned revenue) as of the Closing
Time other than the current portion of any principal indebtedness owed by MNH
under the MNH Loan Agreement, all determined in accordance with GAAP applied
consistently with the past practices of the MNH Entities.
(D) "Eligible Accounts Receivable" means an amount equal
to the sum of (I) 95% of advertising Accounts Receivables (other than
interconnect advertising Accounts Receivables) not more than 90 days past due,
60% of such advertising Accounts Receivables more than 90 days and not more
than 120 days past due, and 0% of such advertising Accounts Receivables more
than 120 days past due; (II) 97% of all interconnect advertising Accounts
Receivables; and (III) 100% of all other Accounts Receivables not more than 30
days past due, 75% of such other Accounts Receivables more than 30 days and
not more than 90 days past due, and 0% of such other Accounts Receivables more
than 90 days past due, all determined in accordance with GAAP applied
consistently with the past practices of the MNH Entities. In valuing Accounts
Receivables not more than 30 days past due, unearned revenue shall first be
netted and the amount of Accounts Receivable shall be determined without
deducting any reserves for bad accounts.
(E) Working Capital Adjustment" means an amount equal to
(which may be a negative number, which, in such case, would reduce the
Purchase Price) (I) the sum of (x) the Consolidated Current Assets plus (y)
Eligible Accounts Receivable, minus (II) the Consolidated Current Liabilities.
ARTICLE 9
TERMINATION AND DEFAULT
Section 9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
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(a) By mutual written consent of Sellers and Buyer;
(b) By either Buyer or Sellers, so long as the terminating party
has not breached any of its obligations hereunder, after December 31, 1996 or
such later date to which the Closing may be extended by Sellers or Buyer
pursuant to Section 7.3 (such date being herein referred to as the "Outside
Closing Date"), if the Closing shall not have occurred on or before such date;
(c) By Sellers, so long as neither Seller has breached any of its
obligations hereunder, if either (i) Buyer fails to perform any covenant in
this Agreement when performance thereof is due and does not cure such failure
within 20 Business Days after Sellers deliver written notice thereof to Buyer,
or (ii) any condition in Section 7.2 of this Agreement is not satisfied or
capable of being satisfied on or before the Outside Closing Date;
(d) By Buyer, so long as Buyer has not breached any of its
obligations hereunder, if either (i) either of Sellers fails to perform any
covenant in this Agreement when performance thereof is due, and does not cure
the failure within 20 Business Days after written notice by Buyer thereof to
Sellers, or (ii) any condition in Section 7.1 of this Agreement is not
satisfied or capable of being satisfied on or before the Outside Closing Date.
Section 9.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, all rights and obligations of the parties hereunder
shall terminate, except for the rights and obligations set forth in Sections
6.5(a), 11.1, 11.2 and 11.11. Subject to the provisions of Section 7.3,
termination of this Agreement pursuant to Section 9.l(c) or (d) shall not
limit or impair any remedies that either Sellers or Buyer may have with
respect to a breach or default by the other of its representations,
warranties, covenants or agreements or obligations hereunder.
ARTICLE 10
INDEMNIFICATION
Section 10.1 Indemnification by Sellers. From and after Closing, each
Seller shall indemnify and hold harmless CCI and its Affiliates, directors,
officers, employees, agents and representatives, and any Person claiming by or
through any of them, as the case may be, from and against any and all Losses
and Expenses arising out of or resulting from:
(a) Any representations and warranties made by either Seller, any
MNH Entity, Xxxxxxxx, Xxxxxxxxx or any of the Ultimate Equity Holders in this
Agreement or in any Transaction Document not being true and accurate in all
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material respects, when made or at Closing, provided that indemnification
under this paragraph is sought within the applicable time periods and in the
manner stated in Section 10.5;
(b) Any failure by either Seller, any MNH Entity, MNHP, NHA,
Meredith, Ingersoll or any of the Ultimate Equity Holders to perform in all
material respects any of its covenants, agreements, or obligations in this
Agreement or in any Transaction Document;
(c) Any indebtedness, liability or obligation set forth on Schedule
4.6 to the extent not provided for in determining the Purchase Price (either
as (i) an inclusion in the consolidated liabilities of the MNH Entities to be
deducted pursuant to Section 8.3(b)(i)(A)(I)(x) in determining the Purchase
Price or (ii) as an inclusion in the Consolidated Current Liabilities to be
deducted pursuant to Section 8.3(b)(iv)(E) in determining the Working Capital
Adjustment); and
(d) The non-delivery or non-obtaining on or before the Closing Date
of any Sellers Required Consents to the extent that the aggregate Losses and
Expenses arising out of or resulting therefrom, together with the aggregate
amount of Losses and Expenses arising out of or resulting from any Section
3.1(c) Exceptions and Section 4.3(a) Exceptions, exceed $250,000; provided,
however, that Sellers shall be liable to Buyer under this Section 10.1(d) for
any Losses or Expenses of Buyer arising from the non-delivery or non-obtaining
of any Sellers Required Consents that are described in a notice given by
Sellers pursuant to Section 7.3(c)(i) hereof to the extent (and only to the
extent) that the aggregate amount of such Losses and Expenses, together with
the aggregate amount of Losses and Expenses resulting from any Section 3.1(c)
Exceptions and Section 4.3(a) Exceptions, (i) exceed $250,000 but (ii) do not
exceed $1,000,000.
Section 10.2 Indemnification by Buyer. From and after Closing, Buyer
shall indemnify and hold harmless each Seller and its Affiliates, partners,
directors, officers, employees, agents and representatives, and any Person
claiming by or through any of them, as the case may be, from and against any
and all Losses and Expenses arising out of or resulting from:
(a) Any representations and warranties made by Buyer in this
Agreement or in any Transaction Document not being true and accurate in all
material respects when made or at Closing, provided that indemnification under
this paragraph is sought within the applicable time periods and in the manner
stated in Section 10.5;
(b) Any failure by Buyer to perform in all material respects any of
its covenants, agreements, or obligations in this Agreement or in any
Transaction Document; and
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(c) The operation of the Systems after the Closing Time.
Section 10.3 Procedure for Indemnified Third Party Claim. If any person
entitled to indemnification hereunder (the "Indemnitee") believes that it has
suffered or incurred any Losses and Expenses for which it is entitled to
indemnification hereunder, such Indemnitee shall notify the party or parties
from whom indemnification is sought (the "Indemnitor") with reasonable
promptness and with reasonable particularity in light of the circumstances
then existing. Promptly after receipt by an Indemnitee of written notice of
the assertion or the commencement of any Litigation by a third party giving
rise to any claim for indemnification with respect to any matter referred to
in this Article 10, the Indemnitee shall give written notice thereof to each
Indemnitor from whom indemnification is sought and thereafter will keep the
Indemnitor reasonably informed with respect thereto if the Indemnitor does not
assume the defense of such claim; provided, however, that failure of the
Indemnitee to give the Indemnitor notice as provided in this Section 10.3
shall not relieve any Indemnitor of its obligations hereunder except to the
extent that such Indemnitor shall have been prejudiced by such failure. In
case any Litigation is brought against any Indemnitee, the Indemnitor shall be
entitled to assume the defense thereof, at the Indemnitor's sole expense. If
the Indemnitor assumes the defense of any Litigation, it will not settle the
Litigation without the prior written consent of the Indemnitee (which consent
shall not be unreasonably withheld or delayed); provided, however, that the
Indemnitor may settle any Litigation without the Indemnitee's consent if such
settlement (i) makes no admission or acknowledgment of liability or
culpability with respect to the Indemnitee, (ii) includes a complete release
of the Indemnitee and (iii) does not require the Indemnitee to make any
payment or take (or forgo) any action. The Indemnitee shall cooperate in all
reasonable respects with the Indemnitor and its attorneys in the
investigation, trial and defense of any Litigation and any appeal arising
therefrom (including the filing in the Indemnitee's name of appropriate cross
claims and counterclaims). The Indemnitee may, at its own cost, participate
in any investigation, trial and defense of such Litigation controlled by the
Indemnitor and any appeal arising therefrom. If, after receipt of a written
notice pursuant to this Section 10.3, the Indemnitor does not undertake to
defend any such Litigation, the Indemnitee may, but shall have no obligation
to, contest or defend against any Litigation and the Indemnitor shall be bound
by the result obtained with respect thereto by the Indemnitee (including,
without limitation, the settlement thereof without the consent of the
Indemnitor). If there are one or more legal defenses available to the
Indemnitee that conflict with those available to the Indemnitor, the
Indemnitee shall have the right, at the expense of the Indemnitor, to assume
the defense of the Litigation; provided, however, that the Indemnitee may not
settle such Litigation without the consent of the Indemnitor, which consent
shall not be unreasonably withheld or delayed.
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Section 10.4 Payment of Indemnification Amounts. Amounts payable by the
Indemnitor to the Indemnitee in respect of any Losses and Expenses under
Sections 10.1 or 10.2 shall be payable by the Indemnitor as incurred by the
Indemnitee, and shall bear interest at the Prime Rate from the date of demand
by the Indemnitee for indemnification of such Losses and Expenses until the
date of payment of indemnification by the Indemnitor.
Section 10.5 Time and Manner of Certain Claims. The representations and
warranties of Sellers and Buyer in this Agreement and any Transaction Document
shall survive Closing for a period of six months except that,
(a) The representations and warranties in Sections 4.9(c), 4.9(d)
and 4.9(e) shall survive closing for a period of one year;
(b) The representations and warranties contained in Sections
3.1(b), 3.1(c)(i)(A), 3.2(a)(iii) (other than the first and second sentences)
and (iv), 3.2(b)(ii), (iv) (other than the first and second sentences) and
(v), 3.3, 4.2, 4.3(a)(i) and (ii), 4.4, 4.12, 5.1 (third and fourth sentences
only), 5.2(a)(i) and (ii), and 5.3 shall survive until the expiration of the
applicable statute of limitations; and
(c) The obligations of Sellers to indemnify Buyer with respect to
any Litigation by a third party (including any claim against or contingent
liability of MNH under section 3.01 or 9.01 of the Contract of Sale, dated
December 20, 1994, between MNH and Sioux Falls Cable), that relates to any
claim, indebtedness, liability or obligation existing at the Closing Time
(whether or not contingent at such time) to the extent that such claim,
indebtedness, liability or obligation (i) was not reflected or reserved
against on the MNH Balance Sheet or (ii) was incurred or arose after the MNH
Balance Sheet Date (other than in the ordinary course of business of the MNH
Entities or otherwise as permitted by this Agreement or with the consent of
Buyer) and was not provided for in determining the Purchase Price (either as
(A) an inclusion in the consolidated liabilities of the MNH Entities to be
deducted pursuant to Section 8.3(b)(i)(A)(I)(x) in determining the Purchase
Price or (B) as an inclusion in the Consolidated Current Liabilities to be
deducted pursuant to Section 8.3(b)(iv)(E) in determining the Working Capital
Adjustment), shall survive closing for a period of one year from the Closing
Date; provided, however, that in any of the foregoing cases the liability of
the parties shall extend beyond such applicable survival periods with respect
to any specific breach which has been asserted in a written notice before the
expiration of the applicable survival period. No claim for indemnification
arising out of an alleged breach of any representation or warranty hereunder
shall be valid unless notice of the breach thereof shall have been given in
writing (or deemed to have been given in writing pursuant to Section 7.3(a) or
(b) hereof) prior to the expiration of the applicable survival period
specified in the preceding sentence.
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Section 10.6 Certain Limitations on Indemnification. Anything in this
Article 10 to the contrary notwithstanding:
(a) The amount of any particular Losses and Expenses required to be
indemnified against under Section 10.1 or 10.2 shall be reduced by (i) the
amount of any insurance proceeds paid to the Indemnitee or any of its
Affiliates with respect to such Losses and Expenses (and no right of
subrogation shall accrue to any insurer hereunder), and (ii) the amount of any
tax benefit actually realized by the Indemnitee or any of its Affiliates with
respect to such Losses and Expenses (after giving effect to the tax effect of
receipt of the indemnification payments). With respect to any claim for which
indemnity has been paid hereunder, the Indemnitor shall be subrogated to all
rights of recovery of the Indemnitee and its Affiliates against any insurer or
other third party.
(b) Neither CCI nor any of its Affiliates shall be entitled to
indemnification under Section 10.1 for any Losses and Expenses to the extent
that such Losses and Expenses arise out of breaches of representations or
warranties of Sellers contained herein that constitute breaches of
representation or warranties for which, as at the Closing Time, MNH would be
entitled to indemnification under Section 12.3 of the Stock Purchase
Agreement, dated as of February 11, 1992, Regarding North Central Cable
Communications Corporation, as amended through the date hereof.
(c) The amount of any particular Losses that Sellers are required
to indemnify CCI and its Affiliates against pursuant to Section 10.1(a) of
this Agreement shall be limited to the product of (i) the aggregate amount of
such Losses (after giving effect to Sections 10.8(a) and (b)), multiplied by
(ii) the Sellers Indemnification Percentage.
(d) Subject to the Closing, Sellers shall have no liability under
Section 10.1(a) or (b) unless and until the aggregate amount of Losses and
Expenses otherwise subject to their indemnification obligations thereunder
exceeds $600,000 (the "Minimum Damage Requirement"), in which case all such
Losses and Expenses in excess of $125,000 shall be indemnifiable by Sellers;
provided, however, that the Minimum Damage Requirement shall not apply to any
Losses or Expenses resulting from or arising out of any default by Sellers of
their obligations under Section 6.10 or 8.3(b)(iii). Subject to the Closing,
Sellers shall have no liability under Section 10.1, and Buyer shall have no
liability under Section 10.2 to the extent that the aggregate amount of Losses
and Expenses otherwise subject to indemnification obligations of Sellers or
Buyer, as the case may be, hereunder exceeds $20,000,000, which amount shall
be reduced to $10,000,000 with respect to any claims with respect to which
notice is not given to Sellers or Buyer (as the case may be) on or prior to
the first anniversary of the date hereof.
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Section 10.7 Exclusive Remedy. Subject to the Closing, the
indemnification rights provided for in this Article 10 shall be the exclusive
remedy for Sellers or Buyer, as the case may be, for damages for any breach of
any representation, warranty, covenant or agreement contained in this
Agreement or in any certificate delivered by either Seller or Buyer at or
prior to the Closing pursuant to this Agreement; provided that the provisions
of this Section 10.7 shall not apply to, or limit in any way the remedies of
Sellers or Buyer, as the case may be, with respect to any breach of, Section
8.3(b)(iii), 11.1, 11.2 or 11.11 or the respective rights of Buyer and Sellers
under Section 11.13 or the rights of Buyer under any of the Ultimate Equity
Holder Guaranties.
ARTICLE 11
MISCELLANEOUS PROVISIONS
Section 11.1 Expenses. Except as otherwise provided in Section 11.11 or
elsewhere in this Agreement or as may otherwise be agreed to in writing by the
parties, each of the parties will pay its own expenses and the fees and
expenses of its counsel, accountants, and other experts in connection with
this Agreement and the consummation of the transactions contemplated hereby;
provided, however, that (i) filing fees under the HSR Act shall be borne one-
half by MNH and one-half by Buyer; (ii) fees, costs and expenses to be paid to
third parties that Sellers and Buyer mutually agree to in connection with
obtaining any Consents necessary for the transfer of control of any Systems
Franchise or License shall be borne by the MNH Entities (except that Buyer
shall be solely responsible for all costs and expenses which result from
material amendments to the terms of a Systems Franchise made solely at the
request of Buyer).
Section 11.2 Brokerage. Except as otherwise expressly provided in
Section 3.4 as to the fees and expenses of Xxxxxxx & Associates, Sellers shall
indemnify and hold CCI harmless from and against any and all Losses and
Expenses arising from any employment by either of Sellers or any of the MNH
Entities of, or services rendered to any of them by, any finder, broker,
agency or other intermediary, in connection with the transactions contemplated
hereby or any allegation of any such employment or services; and Buyer shall
indemnify and hold Sellers harmless from and against any and all Losses and
Expenses arising from any employment by CCI of, or services rendered to it by,
any finder, broker, agency or other intermediary, in connection with the
transactions contemplated hereby or any allegation of any such employment or
services. The obligations of Sellers and Buyer under this Section 11.2 shall
not be limited or otherwise affected by the provisions of Article 10 of this
Agreement, including Section 10.5 and Section 10.6.
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Section 11.3 Waivers. In the absence of a written waiver delivered by a
party hereto, no action taken pursuant to this Agreement, including any
investigation by or on behalf of such party, will be deemed to constitute a
waiver by such party of compliance by any other party hereto with any
representation, warranty, covenant or agreement contained herein or in any
Transaction Document. No waiver by any party hereto of any condition or of a
breach of another provision of this Agreement or any Transaction Document
shall be effective unless in writing; and no such waiver shall operate or be
construed as a waiver of any other condition or subsequent breach. The waiver
by any party of any of the conditions precedent to its obligations under this
Agreement shall not preclude it from seeking redress for breach of this
Agreement other than with respect to the condition so waived.
Section 11.4 Notices. All notices and other communications which are
required to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if sent by telecopy or facsimile transmission,
answer back requested, or delivered by courier or mailed, certified first
class mail, postage prepaid, return receipt requested, to the parties at the
following addresses:
To Sellers:
(Prior to the Closing)
New Heritage Associates
0000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopy: 515/246-8210
and
(After the Closing)
New Heritage Associates
0000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopy: [To be supplied at Closing]
Copy:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
Telecopy: 312/853-7036
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To Buyer:
Continental Cablevision, Inc.
The Xxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Telecopy: 617/742-0530
Copy:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy: 617/338-2880
or to such other address as any party will have furnished to the other by
notice given in accordance with this Section. Such notice or other
communication shall be effective (i) if delivered in person or by courier,
upon actual receipt by the intended recipient, or (ii) if sent by telecopy or
facsimile transmission, when answer back is received, or (iii) if mailed, upon
the earlier of five days after deposit in the mail and the date of delivery as
shown by the return receipt therefor.
Section 11.5 Entire Agreement; Prior Representations; Amendments. This
Agreement embodies the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior representations,
agreements and understandings, oral or written, with respect thereto.
Notwithstanding any representations which may have been made by either party
in connection with the transactions contemplated by this Agreement, each party
acknowledges that (i) it has not relied on any representation by the other
party with respect to such transactions, the Assets, or the Systems except
those contained in this Agreement or the Schedules and Exhibits hereto and
(ii) its execution of this Agreement specifically precludes any negligent
misrepresentation or other claims by it based on any representation made by
the other party which is not contained in this Agreement or the Schedules or
Exhibits hereto. This Agreement may not be modified orally, but only by an
agreement in writing signed by the party or parties against whom any waiver,
change, amendment, modification or discharge may be sought to be enforced.
Section 11.6 Binding Effect; Benefits. This Agreement will inure to the
benefit of and will be binding upon the parties hereto and their respective
heirs, legal representatives, successors and permitted assigns. Neither of
Sellers nor Buyer may assign this Agreement prior to the Closing or delegate
any of its duties hereunder prior to the Closing to any other Person without
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the prior written consent of the other; except that Buyer may assign its
rights or delegate its duties under this Agreement to any Affiliate of CCI,
provided that in the case of any such assignment (i) the assignee shall assume
in writing all of Buyer's obligations hereunder, (ii) Buyer shall not be
released from any of its representations, warranties and obligations hereunder
by reason of such assignment, and (iii) the obligations of the Sellers to
consummate the transactions contemplated by Article 2 of this Agreement shall
be subject to the delivery by such assignee, on or prior to the Closing Date,
of an agreement signed on its behalf and in form reasonably acceptable to the
Sellers containing representations and warranties substantially similar to
those made by Buyer in Article 5 and an opinion of counsel to the assignee
similar to the CCI Counsel Opinion.
Section 11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which, when executed, will be deemed to be an
original and all of which together will be deemed to be one and the same
instrument.
Section 11.8 GOVERNING LAW. THE VALIDITY, PERFORMANCE AND ENFORCEMENT
OF THIS AGREEMENT AND ALL TRANSACTION DOCUMENTS, UNLESS EXPRESSLY PROVIDED TO
THE CONTRARY, WILL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW OF
SUCH COMMONWEALTH.
Section 11.9 Severability. Any term or provision of this Agreement
which is held to be invalid or unenforceable for any reason will be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining rights of the Person intended
to be benefitted by such provision or any other provisions of this Agreement.
Section 11.10 Third Parties, Joint Ventures. This Agreement constitutes
an agreement solely among the parties hereto and, except as otherwise provided
herein, is not intended to and will not confer any rights, remedies,
obligations or liabilities, legal or equitable, including any right of
employment, on any Person other than the parties hereto and their respective
successors or permitted assigns, or otherwise constitute any Person a third
party beneficiary under or by reason of this Agreement. Nothing in this
Agreement, express or implied, is intended to or will constitute the parties
hereto partners or participants in a joint venture.
Section 11.11 Attorneys' Fees. If any Litigation between Sellers and
Buyer with respect to this Agreement or the transactions contemplated hereby
will be resolved or adjudicated by a Judgment of any court, the party
prevailing under such Judgment shall be entitled, as part of such Judgment, to
recover from the other party its reasonable attorneys' fees and costs and
expenses of litigation.
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Section 11.12 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.
Section 11.13 Specific Performance. Sellers acknowledge that money
damages are not an adequate remedy for violations of this Agreement by either
of Sellers and that Buyer may, in its sole discretion, apply to a court of
competent jurisdiction for specific performance or injunctive or other relief
as such court may deem just and proper in order to enforce this Agreement or
prevent any violation hereof by either of Sellers and, to the extent permitted
by applicable Legal Requirements, Seller waives any objection to the
imposition of such relief.
[The remainder of this page has been intentionally left blank.]
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Sellers and Buyer have duly executed this Agreement as of the date first
written above.
SELLERS:
XXXXXXXX/NEW HERITAGE PARTNERSHIP
By: New Heritage Associates, General Partner
By: Ingersoll Group, Inc., General Partner
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
NEW HERITAGE ASSOCIATES
By: Ingersoll Group, Inc., General Partner
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
BUYER:
CONTINENTAL CABLEVISION, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice Chairman
Page 78 of 78
