Conformed Copy
ASSET PURCHASE AGREEMENT
AS OF DECEMBER 8, 1999
BY AND AMONG
TELERAMA, INC.
CABLEVISION OF CLEVELAND, L.P.
AND
ADELPHIA COMMUNICATIONS CORPORATION
TABLE OF CONTENTS
Page
Section 1. Definitions....................................................1
1.01 Certain Definitions............................................1
1.02 Other Definitional Provisions..................................7
Section 2. Purchase and Sale..............................................7
2.01 Transfer of Assets.............................................7
2.02 Purchase Price.................................................8
2.03 Estimated Working Capital Statement............................8
2.04 Adjustments....................................................8
2.05 Assumption of Liabilities.....................................11
2.06 Sales and Transfer Taxes......................................11
Section 3. Representations and Warranties of Sellers.....................11
3.01 Organization and Authority....................................11
3.02 Legal Capacity; Approvals and Consents........................11
3.03 Financial Statements..........................................12
3.04 Changes in Operation..........................................12
3.05 Tax Returns...................................................12
3.06 Acquired Assets...............................................13
3.07 The CATV Business.............................................13
3.08 Labor Contracts and Actions...................................15
3.09 Employee Benefit Plans........................................15
3.10 Contracts.....................................................16
3.11 Legal and Governmental Proceedings and Judgments..............16
3.12 Finders and Brokers...........................................16
3.13 Year 2000.....................................................16
3.14 Restoration...................................................17
3.15 Pole Attachment Agreements....................................17
3.16 Right of First Refusal........................................17
3.17 Insurance.....................................................17
3.18 Internet Service Agreements...................................17
Section 4. Representations and Warranties of Buyer.......................17
4.01 Organization and Authority of Buyer...........................17
4.02 Legal Capacity: Approvals and Consents........................17
4.03 Legal and Governmental Proceedings and Judgments..............18
4.04 Finders and Brokers...........................................18
4.05 Buyer Consents................................................18
4.06 Acquisition of Rights.........................................18
4.07 Buyer's Financial Capability..................................18
Section 5. Covenants Pending Closing.....................................19
5.01 Business of Sellers...........................................19
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5.02 Access to Information.........................................19
5.03 Change in Channel Lineup......................................20
5.04 Required Consents.............................................20
5.05 Lien Searches.................................................20
Section 6. Deliveries at Closing.........................................20
6.01 Deliveries by Seller..........................................20
6.02 Deliveries by Buyer...........................................21
Section 7. Conditions to the Obligations of Buyer........................21
7.01 Receipt of Consents...........................................21
7.02 Sellers' Authority............................................21
7.03 Performance by the Sellers....................................21
7.04 Absence of Breach of Warranties and Representations...........22
7.05 Absence of Proceedings........................................22
Section 8. Conditions to the Obligations of Sellers......................22
8.01 Receipt of Consents...........................................22
8.02 Corporate Action..............................................22
8.03 Performance by Buyer..........................................22
8.04 Absence of Breach of Representations and Warranties...........22
8.05 Absence of Proceedings........................................22
Section 9. Covenants.....................................................23
9.01 Compliance with Conditions....................................23
9.02 Compliance with HSR Act and Rules.............................23
9.03 Applications for Assignment of Contracts or CATV Instruments..24
9.04 Records, Taxes and Related Matters............................24
9.05 Determination and Allocation of Consideration.................24
9.06 Non-Assignment................................................25
9.07 Real Estate Proration And Adjustment Items....................25
9.08 Covenant Not to Compete.......................................25
9.09 Remaining Franchises..........................................25
Section 10. Survival of Representations, Warranties, Covenants and
Other Agreements; Indemnification.........................26
10.01 Survival of Representations, Warranties, Covenants and
Other Agreements..........................................26
10.02 Indemnification by the Sellers................................26
10.03 Indemnification by Buyer......................................27
10.04 Third Party Claims............................................27
Section 11. Further Assurances............................................28
Section 12. Closing.......................................................28
12.01 Closing.......................................................28
12.02 Termination...................................................28
Section 13. Miscellaneous.................................................29
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13.01 Amendments; Waivers...........................................29
13.02 Entire Agreement..............................................29
13.03 Cablevision Name..............................................29
13.04 Binding Effect; Assignment....................................29
13.05 Construction; Counterparts....................................29
13.06 Notices.......................................................29
13.07 Expenses of the Parties.......................................30
13.08 Non-Recourse..................................................31
13.09 Third Party Beneficiary.......................................31
13.10 Governing Law.................................................31
13.11 Press Releases................................................31
13.12 Severability..................................................31
13.13 Specific Performance..........................................31
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EXHIBITS
Exhibit A - Sellers
Exhibit B - Service Territory
Exhibit C - Assumption Agreement
Exhibit D - Xxxx of Sale and General Assignment
Exhibit E - Form of Opinion of Sellers' Counsel
Exhibit F - Form of Opinion of Buyer's Counsel
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SCHEDULES
Schedule 1.01(a) - CATV Licenses/Franchises
Schedule 1.01(b) - Current Assets
Schedule 1.01(c) - Liabilities
Schedule 1.01(d) - Excluded Assets
Schedule 1.01(e) - Excluded Liabilities
Schedule 1.01(f) - Permitted Encumbrances
Schedule 3.02 - Consents and Approvals
Schedule 3.05 - Tax Notices and Assessments
Schedule 3.06(b) - Real Property
Schedule 3.06(d) - Environmental Matters
Schedule 3.07(c) - Material Contracts
Schedule 3.07(d) - Notice of Claims or Purported Defaults in CATV
Instruments
Schedule 3.07(e) - Non-compliance with applicable laws; documents not
filed with the FCC
Schedule 3.07(f) - Copyrights
Schedule 3.07(g) - Rates
Schedule 3.07(h) - Pending Claims
Schedule 3.07(i) - Subscriber Obligations
Schedule 3.07(j) - Free Service Liability/Refunds
Schedule 3.07(k) - Local Office Requirements
Schedule 3.07(l) - Overbuilds
Schedule 3.09 - Employee Benefit Plans
Schedule 3.10 - Contracts in Default
Schedule 3.11 - Legal Proceedings
Schedule 3.13 - Year 2000
Schedule 3.14 - Restoration
Schedule 3.15 - Pole Attachment Agreements
Schedule 3.16 - Right of First Refusal
Schedule 3.17 - Insurance
Schedule 4.05 - Consents and Approvals
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ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement is made and entered into as of December
8, 1999, by and among the sellers listed in Exhibit A (each, a "Seller" and
together, the "Sellers") and Adelphia Communications Corporation, a Delaware
corporation ("Buyer").
R E C I T A L S
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WHEREAS, the Sellers own and operate cable television systems serving
the communities described in Exhibit B.
WHEREAS, the Sellers desire to transfer to Buyer, and Buyer desires to
acquire from the Sellers , the CATV Business and the assets used or held for the
operation thereof in accordance with the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows, each intending to be
legally bound as and to the extent herein provided.
1. DEFINITIONS.
1.01 Certain Definitions. For the purposes of this Agreement, the
following terms shall have the meanings set forth below:
Acquired Assets means all of the properties, assets, privileges,
rights, interests, claims and goodwill, real and personal, tangible and
intangible, of every type and description, including each Seller's leasehold
interests or rights to possession, whether owned or leased or otherwise
possessed, primarily used by the Sellers in connection with the CATV Business,
now in existence or hereafter acquired by the Sellers prior to the Closing,
including, without limitation, the CATV Instruments, the Equipment, the Real
Property, the Contracts, the Inventory and the Intangible Property; provided
that Acquired Assets shall exclude the Excluded Assets and any assets disposed
of prior to the Closing in the usual and ordinary course of business and not in
violation of this Agreement.
Agreement means this Asset Purchase Agreement and the Exhibits and
Schedules attached hereto.
Agreement and Plan of Reorganization means the Agreement and Plan of
Reorganization, dated as of the date hereof, among Cablevision of the Midwest,
Inc., Cablevision of the Midwest Holding Co., Inc, Adelphia General Holdings II,
Inc. and Adelphia Communications Corporation.
Appraiser has the meaning set forth in Section 9.05.
Asserted Claim has the meaning set forth in Section 10.04.
Assumed Liabilities means all liabilities, obligations and commitments
(whether direct or indirect, matured or unmatured, known or unknown, absolute,
accrued, contingent or otherwise) of each Seller relating to or arising from the
CATV Business or the condition of the Acquired Assets,
including, without limitation, all liabilities, obligations and commitments
arising after the Closing Date under CATV Instruments and the Contracts or in
respect of the operation of the CATV Business after the Closing Date, other than
the Excluded Liabilities.
Basic Subscriber means as at any date of determination thereof, the sum
of (a) the total number of households (exclusive of "second outlets," as such
term is commonly understood in the cable television industry, and exclusive of
customers billed on a bulk-billing or commercial-account basis) subscribing on
such date to at least the most basic tier of service offered by the CATV
Business and paying the monthly service fees and charges imposed in respect of
such service, and who are not, as of the Closing Date, 90 days or more in
arrears in payment for service, as measured from the date that payment due
became a receivable and (b) the total number of Equivalent Subscribers on such
date.
Benefit Plans has the meaning set forth in Section 3.09(a).
Business Day means a day other than a Saturday, Sunday, national or New
York State holiday or other day on which commercial banks in New York City are
authorized or required by law to close.
Buyer has the meaning set forth in the Preamble to this Agreement.
Buyer Indemnified Party has the meaning set forth in Section 10.03(a).
Buyer's Counsel means Xxxxx X. Xxxxxx, Deputy General Counsel to Buyer.
Buyer's Subscriber Objection has the meaning set forth in Section
2.04(b)(iii).
Buyer's Working Capital Objection has the meaning set forth in Section
2.04(a)(iii).
CATV means cable television, which term also includes satellite master
antenna television not yet converted to cable television service.
CATV Business means the CATV business to be transferred to Buyer,
presently owned and operated by the Sellers, which consists of the transmission,
distribution and local origination of audio and video signals over the system
used by the CATV Business, located in the Service Territory.
CATV Instruments means (a) all franchises listed in Schedule 1.01(a) or
ordinances granted to Sellers by any Governmental Authority; (b) permits for
wire crossings over or under highways, railroads, and other property; (c)
construction permits and certificates of occupancy; pole attachment and other
Contracts with utilities; (d) state, county and municipal permits, orders,
variances, exemptions, approvals, consents, licenses and other authorizations;
(e) agreements for the purchase, sale, receipt or distribution of news, data and
microwave relay signals, or for satellite services; and (f) all other approvals,
consents and authorizations used or held for use in the CATV Business.
CATV Licenses means the licenses issued by the FCC used in the CATV
Business as presently conducted by the Sellers, all of which are listed in
Schedule 1.01(a).
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CATV System means a complete CATV reception and distribution system
consisting of one or more head-ends, trunk cable, subscriber drops and
associated electronic equipment, which is, or is capable of being, operated as
an independent system without interconnections to other systems.
Closing means a meeting for the purpose of concluding the transactions
contemplated by this Agreement held at the place and on the date fixed in
accordance with Section 12.01.
Closing Date; Date of Closing means the date fixed for the Closing in
accordance with Section 12.01.
Code means the Internal Revenue Code of 1986, as amended.
Combined Basic Subscriber has the meaning set forth in Section
2.04(b)(i).
Combined Basic Subscriber Amount has the meaning set forth in Section
2.04(b)(i).
Combined Basic Subscriber Estimate has the meaning set forth in Section
2.03.
Combined Basic Subscriber Statement has the meaning set forth in
Section 2.04(b)(i).
Combined CATV Business means the CATV Business as defined in this
Agreement together with the CATV Business as defined in the Agreement and Plan
of Reorganization.
Combined Current Assets means Current Assets as defined in this
Agreement together with Current Assets as defined in the Agreement and Plan of
Reorganization.
Combined Liabilities means Liabilities as defined in this Agreement
together with Liabilities as defined in the Agreement and Plan of
Reorganization.
Combined Working Capital means Combined Current Assets less Combined
Liabilities.
Communications Act has the meaning set forth in Section 3.07(e).
Contract means any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, certificate, option, warrant, right, or other instrument,
document or written agreement relating to the CATV Business to which a Seller is
a party or by which a Seller or the assets of a Seller included within the CATV
Business are bound, excluding any CATV Instrument.
Copyright Act has the meaning set forth in Section 3.07(f).
CPA Firm has the meaning set forth in Section 2.04(a)(iii).
Current Assets means xxxxx cash, marketable securities, 100% of active
subscriber accounts receivable that are 60 days or less past due and 90% of
active subscriber accounts that are between 61 and 90 days past due (in each
case measured from the date the accounts became receivable), all deposits with
utilities, under leases or related to guides, billing service, postage, the pro
rata portion of any prepaid taxes (as of the Closing Date), all prepaid
expenses, including in respect of pole rental or equipment maintenance
agreements that are Assumed Liabilities, and in respect of rent, postage,
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promotional expenditures, guides, security service or two-way radio and other
current assets (excluding Inventory), each as determined in accordance with GAAP
(unless otherwise specified herein) and consistent with Schedule 1.01(b) hereto,
which Schedule sets forth the type and amounts of Current Assets of Midwest and
Sellers as of September 30, 1999.
DOJ means the United States Department of Justice.
Employees mean all current active employees of Sellers.
Encumbrances means liens, charges, encumbrances, security interests,
options, restrictions or any other similar third party rights other than liens
for taxes not yet due and payable.
Environmental Law means any law or regulation governing the protection
of the environment (including air, water, soil and natural resources) or the
use, storage, handling, release or disposal of any hazardous or toxic substance.
Equipment means all tangible personalty; electronic devices; towers;
trunk and distribution cable; decoders and spare decoders for scrambled
satellite signals; amplifiers; power supplies; conduit; vaults and pedestals;
grounding and pole hardware; installed subscriber's devices (including, without
limitation, drop lines, converters, encoders, transformers behind television
sets and fittings); "head-ends" and "hubs" (origination, transmission and
distribution system) hardware; tools; inventory; spare parts; maps and
engineering data; vehicles; supplies, tests and closed circuit devices;
furniture and furnishings; and all other tangible personal property and
facilities owned by Seller and used in the CATV Business.
Equivalent Subscriber means, as at any date of determination thereof,
the total number of households served by the CATV Business on a bulk-billed
basis and the total number of establishments served on a commercial account
basis, or on a basis less than the standard monthly service fees and charges
imposed by the Sellers, which shall be deemed to be equal to the quotient
obtained by dividing (i) the total fees and charges for basic service billed by
Sellers during the month including such date on a bulk-billed or commercial
account basis, or on a basis less than the standard monthly service fees and
charges imposed by Sellers, by (ii) the fees and charges for basic service that
a Basic Subscriber of the type described in clause (a) of the definition of such
term in this Section 1.01 was billed during such month.
ERISA means the Employee Retirement Income Security Act of 1974, as the
same has been and may be amended from time to time.
ERISA Affiliate of any entity means any other entity that, together
with such entity, would be considered one employer under Section 4001 of ERISA
or Section 414 of the Code.
Estimated Adjustment Amount means (i) if Combined Working Capital as
reflected on the Estimated Working Capital Statement is less than zero, the
amount by which the Purchase Price shall be decreased, or (ii) if Combined
Working Capital as reflected on the Estimated Working Capital Statement is more
than zero, the amount by which the Purchase Price shall be increased.
Estimated Working Capital Statement has the meaning set forth in
Section 2.03.
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Excluded Assets means (i) the assets and properties of Sellers listed
on Schedule 1.01(d); (ii) programming Contracts (including cable guide
Contracts) and retransmission consent Contracts; (iii) insurance policies and
rights and claims thereunder up to Sellers' self-insured retention or
deductible; (iv) Contracts relating to national advertising sales
representation; (v) bonds, letters of credit, surety instruments and other
similar items of Sellers; and (vi) trademarks, tradenames, service marks,
service names, logos and similar proprietary rights.
Excluded Liabilities means all of the following liabilities,
obligations and commitments: (i) those of Sellers identified on Schedule
1.01(e); (ii) those arising as a result of a breach by Sellers of any of their
representations, warranties, covenants, agreements or obligations under this
Agreement but only to the extent that such representations, warranties,
covenants, agreements or obligations survive the consummation of the Closing as
provided in Section 10.1; and (iii) those relating to the Excluded Assets.
FCC means the United States Federal Communications Commission.
Final Combined Basic Subscriber Statement has the meaning set forth in
Section 2.04(b)(iii).
Final Working Capital Amount means Combined Working Capital as
reflected on the Final Working Capital Statement.
Final Working Capital Statement has the meaning set forth in Section
2.04(a)(iii).
FTC means the United States Federal Trade Commission.
GAAP means United States generally accepted accounting principles as in
effect from time to time and consistently applied.
Governmental Authority means the United States Federal Government, any
state, county, municipal, local or foreign government and any governmental
agency, bureau, commission, authority or body.
Hazardous Substance means any substance listed, defined, designated or
classified as hazardous, toxic or radioactive under any applicable Environmental
Law, including petroleum products.
Holdings means Cablevision of the Midwest Holding Co., Inc., a Delaware
corporation.
HSR Act and Rules means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder, as from time
to time in effect prior to the Closing.
HSR Report means the Notification and Report Form for certain mergers
and acquisitions mandated by the HSR Act and Rules.
Income Statements has the meaning set forth in Section 3.03.
Indemnitee has the meaning set forth in Section 10.04.
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Indemnitor has the meaning set forth in Section 10.04.
Intangible Property means the copyrights, patents, trademarks, service
marks and trade names used in the CATV Business excluding the right to use the
names "Cablevision," "Cablevision Systems," "Optimum," "Optimum Cable," "Optimum
TV," or any and all derivatives thereof or any name which may include any of
such terms, and all applications for, or licenses or other rights to use any
thereof, and the value associated therewith, which are owned by Midwest and used
in the CATV Business.
Interim Financial Statements has the meaning set forth in Section 3.03.
Inventory means all inventory as defined under GAAP, plus, without
limitation, all supplies, all maintenance equipment, all converters, all cables
and all amplifiers owned by a Seller on the Closing Date as determined by
Sellers' inventory control system and used in the CATV Business.
Judgment means any judgment, writ, order, injunction, award or decree
of or by any court, or judge, justice or magistrate, including any bankruptcy
court or judge, and any order of or by any Governmental Authority.
Law means the common law and any statute, ordinance, code or other law,
rule, regulation, order, technical or other standard, requirement or procedure
enacted, adopted, promulgated, applied or followed by any Governmental Authority
or court.
Liabilities means accounts payable, accrued expenses and other
liabilities of the Sellers determined in accordance with GAAP (including accrued
vacation pay for employees of Sellers hired by Buyer), except that the current
portion of any indebtedness for borrowed money and Excluded Liabilities shall
not be included, consistent with Schedule 1.01(c) hereto, which Schedule sets
forth the type and amounts of Liabilities of Midwest and Sellers as of September
30, 1999.
LMDS has the meaning set forth in Section 9.08.
Losses has the meaning set forth in Section 10.02(a).
Material Adverse Effect means a material adverse effect on the assets,
financial condition or results of operations of the Combined CATV Business taken
as a whole other than any such effect resulting from changes in general economic
or political conditions or legal, governmental, regulatory or competitive
factors affecting CATV system operators generally or in the State of Ohio.
Midwest means Cablevision of the Midwest, Inc., a Delaware corporation.
MMDS has the meaning set forth in Section 9.08.
Outside Date has the meaning set forth in Section 12.01.
Permitted Encumbrances means those Encumbrances set forth in Schedule
1.01(f) hereto and all other Encumbrances, if any, which do not materially
detract from the value of the tangible property subject thereto and which do not
materially interfere with the present and continued use of such property in the
operation of the CATV Business.
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Person means any natural person, Governmental Authority, corporation,
general or limited partner, partnership, limited liability company, joint
venture, trust, association, or unincorporated entity of any kind.
Preliminary Working Capital Statement has the meaning set forth in
Section 2.04(a)(i).
Purchase Price has the meaning set forth in Section 2.02.
Real Property means all realty, fixtures, easements, rights-of-way,
leasehold and other interests in real property, buildings and improvements used
in the CATV Business.
Required Consents means the consents and approvals designated as such
on Schedules 3.02 and 4.05 by an asterisk.
Sellers has the meaning set forth in the Preamble to this Agreement.
Seller Indemnified Party has the meaning set forth in Section 10.02(a).
Sellers' Account has the meaning set forth in Section 2.02.
Subscriber Adjustment means an amount equal to (i) $4,996.21 multiplied
by (ii) the difference between (x) 306,232 less (y) the number of Basic
Subscribers of the Combined CATV Business on the Closing Date, multiplied by
(iii) 99/153; provided, that if the product obtained in the foregoing clause is
negative, the Subscriber Adjustment shall be zero.
Subsidiary of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof, (ii) a
partnership of which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, is the general partner and has the power to direct the policies,
management and affairs of the partnership, (iii) a limited liability company of
which such Person or one or more Subsidiaries of such Person or such Person and
one or more Subsidiaries of such Person, directly or indirectly, is the managing
member and has the power to direct the policies, management and affairs of the
company, or (iv) any other Person (other than a corporation, partnership or
limited liability company) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries
thereof, directly or indirectly, has at least a majority ownership and power to
direct the policies, management and affairs thereof.
Service Territory means the geographical area as described in Exhibit B
hereto.
Tax Returns has the meaning set forth in Section 3.05.
Voting Stock has the meaning set forth in the Agreement and Plan of
Reorganization.
Year 2000 Problem has the meaning set forth in Section 3.13.
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1.02 Other Definitional Provisions. Terms defined in the singular shall
have a comparable meaning when used in plural, and vice versa.
2. PURCHASE AND SALE.
2.01 Transfer of Assets. At the Closing, upon the terms and conditions set
forth in this Agreement, the Sellers shall sell, convey, transfer, assign and
deliver to Buyer, and Buyer shall purchase, accept and receive, all of the
Sellers' right, title and interest in and to the Acquired Assets, such
transaction to be effective as of the opening of business on the Closing Date.
2.02 Purchase Price. In consideration for the transfer of the Acquired
Assets, pursuant to Section 2.01, and the other covenants, agreements,
representations and warranties contained herein, Buyer shall at Closing (i) pay
to the Sellers $990 million plus, if a positive number, or minus, if a negative
number, an amount equal to the product of (x) the Estimated Adjustment Amount,
determined in accordance with Section 2.03, and (y) 99/153, less, the Subscriber
Adjustment, if any, based on the Combined Basic Subscriber Estimate (together,
the "Purchase Price") by federal funds wire transfer of immediately available
funds in New York, New York to such account at a United States bank as shall be
designated by the Sellers (the "Sellers' Account") and (ii) assume and agree to
pay, discharge and perform the Assumed Liabilities as and when due in accordance
with the Assumption Agreement attached as Exhibit C hereto.
2.03 Estimated Working Capital Statement. At least three Business Days
prior to the Closing Date, the Sellers shall deliver to Buyer an estimated
working capital statement as of the Closing Date, which statement shall set
forth the Sellers' good faith estimate of the Combined Current Assets and
Combined Liabilities of the Combined CATV Business and the Estimated Adjustment
Amount as of the Closing Date as determined in accordance with GAAP and in a
manner consistent with the preparation of the Interim Financial Statements,
except as otherwise required by this Agreement (the "Estimated Working Capital
Statement").
On the date that Sellers deliver the Estimated Working Capital Statement,
the Sellers shall also deliver to Buyer an estimate of the number of Basic
Subscribers to be transferred to Buyer under this Agreement and the Agreement
and Plan of Reorganization as of the Closing Date (the "Combined Basic
Subscriber Estimate"). The number of Basic Subscribers set forth in the Combined
Basic Subscriber Estimate shall be used on the Closing Date for computing the
Purchase Price and the Subscriber Adjustment, if any. Basic Subscribers
transferred to Buyer under this Agreement and the Agreement and Plan of
Reorganization shall be deemed to include all Basic Subscribers of the Combined
CATV Business, irrespective of the lack of approval or consent of Governmental
Authorities to transfer to Buyer any franchises containing Basic Subscribers.
2.04 Adjustments.
(a) (i) Within 90 days after the Closing Date, the Sellers shall
prepare, or cause to be prepared, and deliver to Buyer a working
capital statement of the Combined CATV Business as of the Closing Date,
which statement shall be prepared in accordance with GAAP and in a
manner consistent with the preparation of the Interim Financial
Statements, except as otherwise required by this Agreement, and shall
set forth the Combined Current Assets and Combined Liabilities of the
Combined CATV Business and the Estimated Adjustment Amount, each as of
the Closing Date (the "Preliminary Working Capital
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Statement"). Buyer shall cooperate in providing to Sellers all relevant
books, records and personnel of the Combined CATV Business in order to
facilitate the preparation of the Preliminary Working Capital
Statement.
(ii) During the 30-day period following the delivery of the
Preliminary Working Capital Statement to Buyer, Buyer shall have the
right to examine the Preliminary Working Capital Statement and all
records used to prepare the Preliminary Working Capital Statement.
(iii) In the event Buyer determines that the Preliminary
Working Capital Statement has not been prepared on the basis set forth
in Section 2.04(a)(i) hereof, Buyer shall so inform Sellers in writing
(the "Buyer's Working Capital Objection"), setting forth a reasonably
specific description of the basis of the Buyer's Working Capital
Objection on or before the last day of the 30-day period referred to in
Section 2.04(a)(ii) hereof. In the event Buyer delivers a Buyer's
Working Capital Objection, Buyer and Sellers shall attempt to resolve
the differences underlying the Buyer's Working Capital Objection within
20 days of Sellers' receipt thereof. If Sellers and Buyer are unable to
resolve all their differences within such 20-day period, they shall
refer their remaining differences to KPMG LLP, certified public
accountants, or such other nationally recognized firm of independent
public accountants as to which Buyer and Sellers may mutually agree
(the "CPA Firm"), who shall, acting as experts and not as arbitrators,
determine on the basis of the standard set forth in Section 2.04(a)(i)
hereof and only with respect to the remaining differences so submitted,
whether and to what extent, if any, the Preliminary Working Capital
Statement requires adjustment. The CPA Firm will base its determination
only on evidence brought to it by the parties and shall not conduct an
audit. The CPA Firm shall deliver its written determination to Buyer
and Sellers no later than the 20th business day after the remaining
differences underlying the Buyer's Working Capital Objection are
referred to the CPA Firm. The CPA Firm's determination shall be
conclusive and binding upon the parties. The fees and disbursements of
the CPA Firm shall be allocated between Buyer and Sellers in the same
proportion that the aggregate amount of any disputed items submitted to
the CPA Firm that are unsuccessfully disputed by each (as finally
determined by the CPA Firm) bears to the total amount of any disputed
items so submitted. Buyer and Sellers shall make readily available to
the CPA Firm all relevant books and records and any work papers
relating to the Preliminary Working Capital Statement and all other
items reasonably requested by the CPA Firm. The "Final Working Capital
Statement" shall be (i) the Preliminary Working Capital Statement in
the event that (x) the Buyer's Working Capital Objection is not
delivered to Sellers in the period set forth in Section 2.04(a)(ii)
hereof or (y) Sellers and Buyer so agree; or (ii) the Preliminary
Working Capital Statement, as adjusted by either (x) the agreement of
Sellers and Buyer or (y) the CPA Firm.
(iv) If the Final Working Capital Amount exceeds the Estimated
Adjustment Amount, then Buyer shall pay to Sellers an amount equal to
the product of (i) such excess and (ii) 99/153. If the Estimated
Adjustment Amount exceeds the Final Working Capital Amount, then
Sellers shall pay to Buyer an amount equal to the product of (i) such
excess and (ii) 99/153.
(v) Any amount payable pursuant to Section 2.04(a)(iv) hereof
shall be paid by wire transfer of immediately available funds in New
York, New York to a bank account
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designated by Buyer or Sellers, as the case may be, on or before the
fifth business day following the determination of the Final Working
Capital Statement pursuant to Section 2.04(a)(iii) hereof.
(b)(i) Within ninety (90) days after the Closing Date, Sellers
shall prepare, or cause to be prepared, and deliver to Buyer a
statement setting forth the number of Basic Subscribers to the "CATV
Business" as defined herein and to the "CATV Business" as defined in
the Agreement and Plan of Reorganization as of the Closing Date (each,
a "Combined Basic Subscriber" and such number, the "Combined Basic
Subscriber Amount"), which statement (the "Combined Basic Subscriber
Statement") shall be prepared in conformity with the definition of
Basic Subscriber contained herein. Buyer shall cooperate in providing
to Sellers access, upon reasonable notice, to all relevant books,
records and personnel of the CATV Business in order to facilitate the
preparation of the Combined Basic Subscriber Statement.
(ii) During the thirty (30) day period following the delivery
of the Combined Basic Subscriber Statement to Buyer, Buyer shall have
the right to examine the Combined Basic Subscriber Statement and all
records used to prepare the Combined Basic Subscriber Statement.
(iii) In the event Buyer determines that the Combined Basic
Subscriber Statement has not been prepared on the basis set forth in
Section 2.04(b)(i) hereof, Buyer shall so inform Seller in writing (the
"Buyer's Subscriber Objection"), setting forth a reasonably specific
description of the basis of the Buyer's Subscriber Objection on or
before the last day of the thirty (30) day period referred to in
Section 2.04(b)(ii) hereof. If Buyer delivers a Buyer's Subscriber
Objection, Buyer and Sellers shall attempt to resolve the differences
underlying the Buyer's Subscriber Objection within twenty (20) days of
the Sellers' receipt thereof. If Sellers and Buyer are unable to
resolve all their differences within such twenty (20) day period, they
shall refer their remaining differences to the CPA Firm, who shall
determine on the basis of the standard set forth in Section 2.04(b)(i)
hereof and only with respect to the remaining differences so submitted,
whether and to what extent, if any, the Combined Basic Subscriber
Statement requires adjustment. The CPA Firm will base its determination
only on evidence brought to it by the parties and shall not conduct an
audit. The CPA Firm shall deliver its written determination to Buyer
and Sellers no later than the twentieth (20th) business day after the
remaining differences underlying the Buyer's Subscriber Objection are
referred to the CPA Firm. The CPA Firm's determination shall be
conclusive and binding upon the parties. The fees and disbursements of
the CPA Firm shall be allocated between Buyer and Sellers in the same
proportion that the aggregate number of any disputed Combined Basic
Subscribers submitted to the CPA Firm that is unsuccessfully disputed
by each (as finally determined by the CPA Firm) bears to the total
amount of any Combined Basic Subscribers so submitted. Buyer and
Sellers shall make readily available to the CPA Firm all relevant
invoices, books and records and any work papers relating to the
Combined Basic Subscriber Statement and all other items reasonably
requested by the CPA Firm. The "Final Combined Basic Subscriber
Statement" shall be the Combined Basic Subscriber Statement in the
event that (x) a Buyer's Subscriber Objection is not delivered to the
Sellers in the period set forth in Section 2.04(b)(iii) hereof, or (y)
the Sellers and Buyer so agree; or (ii) the Combined Basic Subscriber
Statement, as adjusted by either (x) the agreement of Sellers and Buyer
or (y) the CPA Firm.
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(iv) On the fifth (5th) business day following the determination
of the Final Combined Basic Subscriber Statement pursuant to Section
2.04(b)(iii), if the number of Combined Basic Subscribers included in
the Final Combined Basic Subscriber Statement is less than 306,232 and
less than the number of Combined Basic Subscribers included in the
Combined Basic Subscriber Estimate, then Sellers shall pay the Buyer an
amount equal to the product of (a) $4,996.21 times the difference
between the number of Combined Basic Subscribers included in the
Combined Basic Subscriber Estimate (but not above 306,232) and the
number of Combined Basic Subscribers included in the Final Combined
Basic Subscriber Statement and (b) 99/153. If the number of Combined
Basic Subscribers included in the Final Combined Basic Subscriber
Statement is more than the number of Combined Basic Subscribers
included in the Combined Basic Subscriber Estimate and the number of
Combined Basic Subscribers in the Combined Basic Subscriber Estimate
was less than 306,232, then on such fifth (5th) business day, Buyer
shall pay to Sellers an amount equal to (a) $4,996.21 multiplied by (b)
the difference between (i) the number of Combined Basic Subscribers
included in the Final Combined Basic Subscriber Statement (but not
above 306,232) and (ii) the number of Combined Basic Subscribers
included in the Combined Basic Subscriber Estimate multiplied by (c)
99/153.
(v) Any amount payable pursuant to Section 2.04(b)(iv) hereof
shall be paid by wire transfer of immediately available funds in New
York, New York to a bank account designated by Buyer or Sellers, as the
case may be.
2.05 Assumption of Liabilities. At the Closing Date, Buyer shall assume the
Assumed Liabilities in accordance with the Assumption Agreement attached hereto
as Exhibit C, and all liabilities and obligations for the operations of the CATV
Business after the Closing Date.
2.06 Sales and Transfer Taxes. Buyer, on the one hand, and Sellers, on the
other hand, shall each be responsible for one-half of all sales and use taxes
and transfer taxes, if any, including realty transfer taxes, arising from the
transfer of the Acquired Assets.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS.
To induce Buyer to enter into this Agreement, Sellers represent and warrant
to Buyer as follows:
3.01 Organization and Authority. Sellers are duly organized under the laws
of the State of Delaware.
3.02 Legal Capacity; Approvals and Consents.
(a) Authority and Binding Effect. Subject to Section 9.02
hereof and the consents and approvals set forth on Schedule 3.02, the
Sellers have all requisite corporate power and authority to execute,
deliver and perform this Agreement. The Sellers have duly taken all
corporate and shareholder actions necessary to authorize the execution,
delivery and performance of this Agreement. This Agreement has been
duly executed and delivered by Sellers and is the valid and binding
obligation of each Seller enforceable in accordance with its terms,
except as such enforceability may be affected by laws of bankruptcy,
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insolvency, reorganization and creditors rights generally and by the
availability of equitable remedies.
(b) No Breach. Subject only to obtaining the consents and
approvals set forth on Schedule 3.02, the execution, delivery and
performance of this Agreement does not, and will not, contravene the
relevant organizational documents of Sellers, and does not, and will
not: (i) conflict with or result in a breach or violation by Sellers of
or constitute a default by a Seller under or result in the termination,
suspension, modification or impairment of any CATV Instrument, Law,
Judgment, or Contract to which a Seller is a party or by which a
Seller, the CATV Business or any of the Acquired Assets is subject or
bound or may be affected; or (ii) create or impose any Encumbrance upon
any of the Acquired Assets other than a Permitted Encumbrance, in each
case under clause (i) above, which conflict, breach, violation, default
or termination, suspension, modification or impairment would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(c) Required Consents. Except for the parties listed in
Schedule 3.02, there are no parties whose approval or consent, or with
whom the filing of any certificate, notice, application, report or
other document, is legally or contractually required or otherwise is
necessary in connection with the execution, delivery or performance of
this Agreement by Sellers, except where failure to obtain such consent
or approval or failure to make such filing would not reasonably be
expected to have a Material Adverse Effect.
3.03 Financial Statements. Sellers have delivered to Buyer true and
complete copies of the statements of income of the Combined CATV Business for
the years ending December 31, 1998, 1997 and 1996 (the "Income Statements"). The
Income Statements were prepared in accordance with GAAP except for footnotes and
certain items that would require reclassification and certain expenses as
described in the Income Statements and present fairly in all material respects
the results of its operations for the periods then ended. Sellers have also
provided to Buyer a balance sheet of the Combined CATV Business as of June 30,
1999 and a balance sheet and income statement of the Combined CATV Business as
of September 30, 1999 (the "Interim Financial Statements"), which Interim
Financial Statements were prepared in accordance with GAAP, as noted above, to
the extent applicable thereto and the practices customarily followed by the
Combined CATV Business in preparing the interim statements and, subject to
normal year-end adjustments and the procedures followed in interim statements,
present fairly in all material respects the financial position and results of
operation of the Combined CATV Business as at the dates and for the period
indicated and in the case of the income statement, are stated on a basis
generally consistent with the above-described Income Statements.
3.04 Changes in Operation. Since September 30, 1999, there has not been any
event or circumstance which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect.
3.05 Tax Returns. Sellers have duly filed all material federal, state,
local and foreign income, information, franchise, sales, use, property, excise
and payroll and other tax returns or reports (herein "Tax Returns") required to
be filed by a Seller on or prior to the date hereof. All material taxes, fees
and assessments that are shown on such Tax Returns as due or payable by a Seller
on or before the date hereof and that might result in an Encumbrance upon any of
the Acquired Assets have been duly paid. Except as set forth in Schedule 3.05,
no Seller has received
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notice or assessment to the effect that there is any unpaid tax, interest,
penalty or addition to tax due or claimed to be due from a Seller in respect of
such Tax Returns; no Seller has received notice of the assertion or threatened
assertion of any Encumbrances with respect to any Acquired Assets on account of
any unpaid taxes; and no audits of such Tax Returns by any Governmental
Authority are pending or, so far as Sellers know, threatened.
3.06 Acquired Assets.
(a) Title; Encumbrances. Sellers have, or will have at Closing,
(i) good and marketable title to all of the Equipment and Real Property
owned in fee and (ii) the right and authority (subject to the Required
Consents specified herein) to transfer to Buyer all of Sellers' right,
title and interest in and to the other property or rights included in
the Acquired Assets, in each instance free and clear of any
Encumbrances, except for any instance in which the failure to have such
title, right or authority would not reasonably be expected to have a
Material Adverse Effect.
(b) Real Property. Schedule 3.06(b) sets forth a list of all
Real Property owned or leased by a Seller in connection with the
operation of the CATV Business as presently conducted. Except as set
forth in Schedule 3.06(b), Sellers have title in fee simple to all such
Real Property except for leases, easements and other interests not
constituting ownership in fee. To the knowledge of Sellers, except as
set forth in Schedule 3.06(b), there are no oral leases with respect to
head-ends used in the CATV Business.
(c) Acquired Assets. The Acquired Assets include all assets
used by Sellers to conduct the CATV Business as it is presently being
conducted except as would not reasonably be expected to have a Material
Adverse Effect.
(d) Environmental Matters. Except as disclosed in Schedule
3.06(d), or as would not reasonably be expected to have a Material
Adverse Effect on the CATV Business as presently conducted: (i) the
Acquired Assets materially comply with applicable Environmental Laws;
(ii) no Seller has received written notice from any Governmental
Authority alleging that the Acquired Assets are in violation of any
applicable Environmental Law; (iii) the Acquired Assets are not the
subject of any court order, administrative order or decree arising
under any Environmental Law that is known by Sellers or which Sellers
should know with reasonable investigation; (iv) the Acquired Assets
have not been used by Sellers for the generation, storage, discharge or
disposal of any Hazardous Substances except as permitted under
applicable Environmental Laws.
3.07 The CATV Business. With respect to the CATV Business:
(a) As of September 30, 1999, the Combined CATV Business
included not less than 306,232 Basic Subscribers. As of September 30,
1999, approximately 59% of the cable plant of the Combined CATV
Business has been rebuilt to 750 MHz bandwidth with a minimum of 600
MHz analog channel capacity.
(b) Since September 30, 1999, the CATV Business has been
operated in the ordinary course in all material respects, and no
material assets previously used therein have been disposed of except in
the ordinary course of business.
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(c) Schedule 3.07(c) contains a complete list of all material
Contracts in effect on the date of this Agreement. As used in this
Section 3.07(c), the term "material Contracts" means any Contract
requiring in any calendar year payments aggregating $100,000 or more
and that cannot be terminated on 30 days' notice without liability.
(d) Sellers hold, or will hold at Closing, all of the
franchises, permits and licenses reasonably necessary to enable it to
operate the CATV Business as presently conducted except all such CATV
Instruments the failure of which to hold would not reasonably be
expected to have a Material Adverse Effect. Sellers are in compliance
with the terms and conditions of all such CATV Instruments except where
such non-compliance would not reasonably be expected to have a Material
Adverse Effect. Except as disclosed in Schedule 3.07(d), no Seller has
received notice of any claimed or purported default in any CATV
Instruments and there are no proceedings pending, or, to the knowledge
of Sellers, threatened, to cancel, modify or change any such CATV
Instruments, except in each case as would not reasonably be expected to
have a Material Adverse Effect.
(e) Except as set forth in Schedule 3.07(e), the CATV Business
is conducted by Sellers in compliance with all applicable laws,
regulations and other requirements of Governmental Authorities, CATV
Instruments, CATV Licenses and Contracts except where the violation of
any of the foregoing would not reasonably be expected to have a
Material Adverse Effect, including, but not limited to, compliance in
all material respects with the Communications Act of 1934, as amended,
and the rules and regulations promulgated thereunder (collectively, the
"Communications Act"). Except as set forth in Schedule 3.07(e), Sellers
have submitted to the FCC all filings, including, but not limited to,
cable television registration statements, annual reports and
aeronautical frequency usage notices, that are required under the rules
and regulations of the FCC; the CATV Business is in compliance with all
signal leakage criteria prescribed by the FCC for each relevant
reporting period. Sellers have made available to Buyer copies of all
reports and filings for the past year, made or filed pursuant to FCC
rules and regulations.
(f) Except as set forth in Schedule 3.07(f), Sellers have
filed all semi-annual statements of account and paid all compulsory
licensing fees required by Section 111 of the Copyright Act of 1976,
and the rules, regulations and orders of the Copyright Office of the
Library of Congress promulgated thereunder (collectively, the
"Copyright Act"), with respect to the CATV Business, for the three
years preceding the date of the Agreement.
(g) The monthly rates charged by Sellers for each service
provided by Sellers to subscribers of the CATV Business as of September
30, 1999 are set forth in all material respects on Schedule 3.07(g).
Such rates comply with the rules and regulations of the FCC as of the
date thereof, except to the extent that such failure to comply would
not reasonably be expected to have a Material Adverse Effect.
(h) Except as set forth in Schedule 3.07(h), and except for
customer claims (other than those on Forms 329 and 394, which are
listed on Schedule 3.07(h)) arising in the ordinary course of business,
there are no claims pending or, to Sellers' knowledge, threatened
against Sellers with respect to the operation of the CATV Business
which would reasonably be expected to have a Material Adverse Effect.
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(i) Except as set forth on Schedule 3.07(i), there are no
obligations or liabilities to subscribers of the CATV Business which
would reasonably be expected to have a Material Adverse Effect, except
(i) with respect to deposits made by such subscribers and (ii) the
obligation to supply services to subscribers in the ordinary course of
business, pursuant to the franchises.
(j) Except as set forth on Schedule 3.07(j), there is no free
service liability to subscribers existing with respect to the CATV
Business which would reasonably be expected to have a Material Adverse
Effect. Except with respect to deposits for converters, encoders,
decoders and related equipment, and any other prepaid income item which
is or will be reflected in the Final Working Capital Statement, Sellers
have no obligation or liability for the refund of monies to its
subscribers which would reasonably be expected to have a Material
Adverse Effect.
(k) Except as set forth on Schedule 3.07(k), with respect to
the CATV Business, Sellers have not made any commitments to any
franchising authority to maintain a local office in any location.
Further, Sellers have not made any commitment to any of the
municipalities served by the CATV Business to pay franchise fees to any
such municipality in excess of the amounts set forth on Schedule
3.07(k), except where such commitment would not reasonably be expected
to have a Material Adverse Effect.
(l) Except as set forth on Schedule 3.07(l), there is no
overbuild of the CATV Business at present, nor, to Sellers' knowledge,
is any overbuild pending.
3.08 Labor Contracts and Actions.
(a) No Seller is a party to a Contract with any labor
organization, nor has a Seller agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of the employees of
a Seller with respect to the operation of the CATV Business.
(b) As of the date of this Agreement, Sellers are not
experiencing any strikes, work stoppages, significant grievance
proceedings or, to the knowledge of Sellers, claims of unfair labor
practices filed with respect to the operation of the CATV Business.
3.09 Employee Benefit Plans.
(a) All "employee benefit plans" within the meaning of Section
3(3) of ERISA covering Employees, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, and other benefit plans,
contracts or arrangements covering Employees (collectively, the
"Benefit Plans") are listed on Schedule 3.09. True and complete copies
of all Benefit Plans and all amendments thereto have been provided or
made available to Buyer. Schedule 3.09 also lists all multiemployer
plans covering Employees.
(b) All Benefit Plans, to the extent subject to ERISA, are in
substantial compliance with ERISA. There is no material pending or, to
the knowledge of Sellers, threatened litigation relating to the Benefit
Plans. No Seller has engaged in a transaction with respect to any
Benefit Plan that, assuming the taxable period of such transaction
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expired as of the date hereof, could subject Seller to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA
in an amount which would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Sellers with respect to any
ongoing, frozen or terminated "single- employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by it, or the single-employer plan of any ERISA Affiliate of
Sellers. No Seller has incurred and no Seller expects to incur any
withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA. No notice of a "reportable event,"
within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be
filed for any Benefit Plan subject to Title IV of ERISA or by any ERISA
Affiliate of Sellers within the 12-month period ending on the date
hereof.
(d) Neither any Benefit Plan nor any single-employer plan of
an ERISA Affiliate of a Seller has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code
or Section 302 of ERISA and no ERISA Affiliate has an outstanding
funding waiver. No Seller has provided, nor is a Seller required to
provide, security to any Benefit Plan or to any single-employer plan of
an ERISA Affiliate of Sellers pursuant to Section 401(a)(29) of the
Code.
3.10 Contracts. Except as set forth in Schedule 3.10, there are no defaults
by a Seller under the Contracts (nor has a Seller received written notice of a
threatened default or notice of default) which would reasonably be expected to
have a Material Adverse Effect, and Sellers do not know of a default by any
other party to a Contract which would reasonably be expected to have a Material
Adverse Effect.
3.11 Legal and Governmental Proceedings and Judgments. Except as may affect
the cable television industry generally in the United States or the State of
Ohio, or as set forth on Schedule 3.11, there is no legal action or proceeding,
pending or, so far as is known to Sellers, any investigation pending or
threatened against a Seller, the CATV Business or the Acquired Assets, nor is
there any Judgment outstanding against a Seller or to or by which a Seller, any
of the Acquired Assets or the CATV Business is subject or bound, which (i)
results in any modification, termination, suspension, impairment or reformation
of any CATV Instrument or Contract or any right or privilege thereunder in a
manner that would reasonably be expected to have a Material Adverse Effect or
(ii) materially adversely affects the ability of a Seller to consummate any of
the transactions contemplated hereby.
3.12 Finders and Brokers. Sellers have employed Bear, Xxxxxxx & Co. Inc.
and Xxxxxxx Xxxxx & Co., Inc. as brokers in the sale provided for herein and
will pay and discharge the claim thereof for commission or expense reimbursement
in connection therewith. No Seller has entered into any other contract,
arrangement or understanding with any Person or firm, nor is it aware of any
claim or basis for any claim based upon any act or omission of a Seller or any
of their respective affiliates, which may result in the obligation of Buyer to
pay any finder's fees, brokerage or agent's commissions or other like payments
in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
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3.13 Year 2000. Except as set forth on Schedule 3.13, the Sellers are not
aware of any Year 2000 Problem with respect to the operation of the CATV Systems
that would reasonably be expected to have a Material Adverse Effect. The "Year
2000 Problem" as used herein means any significant risk that computer hardware
or software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the case
of dates or time periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to January
1, 2000.
3.14 Restoration. Except as disclosed on Schedule 3.14, or as would not
reasonably be expected to have a Material Adverse Effect, (i) no restoration,
repaving, repair or other work is required to be made by a Seller to any street,
sidewalk or abutting or adjacent area pursuant to the requirements of any
ordinance, code, permit, easement or contract relating to the installation,
construction or operation of the CATV Business; and (ii) no property of any
person or entity has been damaged, destroyed, disturbed or removed in the
process of construction or maintenance of the CATV System which has not been, or
will not be, prior to Closing, repaired, restored or replaced (if required by
the terms of any applicable ordinance, code, permit, easement or contract) or,
if not repaired, restored or replaced, for which an adequate reserve has not
been accrued by the Sellers prior to Closing.
3.15 Pole Attachment Agreements. Except as set forth on Schedule 3.15 or as
would not reasonably be expected to have a Material Adverse Effect, no Seller
has received any written notice of any claim against it that it is in default of
any pole attachment agreements.
3.16 Right of First Refusal. Except as set forth on Schedule 3.16, no
Person has any option, warrant or right of first refusal to purchase either the
CATV Business or any of the Acquired Assets.
3.17 Insurance. Schedule 3.17 is a list, accurate and complete in all
material respects, of insurance policies in full force and effect with respect
to Sellers as of September 30, 1999, and Sellers have not received any notice of
non-renewal or cancellation of such insurance policies. Except as Sellers may
determine, in the exercise of their business judgment, Sellers will maintain
such insurance policies in full force and effect up to and including the Closing
Date.
3.18 Internet Service Agreements. Neither Seller is a party to an agreement
with At Home Corporation requiring the offering of internet access services to
be provided by At Home Corporation across the CATV Business.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
To induce the Sellers to enter into this Agreement, Buyer represents and
warrants to the Sellers as follows:
4.01 Organization and Authority of Buyer.
(a) Buyer is a Delaware corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has all corporate power and authority necessary to
carry on its business as now conducted.
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4.02 Legal Capacity: Approvals and Consents.
(a) Authority; Binding Effect. Buyer has all requisite
corporate power and authority to execute, deliver and perform this
Agreement. Buyer has duly taken all corporate and shareholder actions
necessary to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered by Buyer
and is the valid and binding obligation of Buyer enforceable in
accordance with its terms, except as such enforceability may be
affected by laws of bankruptcy, insolvency, reorganization and
creditors rights generally and by the availability of equitable
remedies.
(b) No Breach or Violation. The execution, delivery and
performance of this Agreement does not, and will not, contravene the
organizational documents of Buyer, and does not and will not: (i)
conflict with or result in a breach or violation by Buyer of, or (ii)
constitute a default by Buyer under, any Law, Judgment, contract,
arrangement or understanding to which Buyer is a party or by which
Buyer is subject or bound or may be affected.
4.03 Legal and Governmental Proceedings and Judgments. There is no legal
action, proceeding, investigation or controversy pending or, to the knowledge of
Buyer, threatened against or otherwise involving Buyer, nor are there any
Judgments outstanding against Buyer or to or by which Buyer is, or may be,
subject or bound which adversely affect the ability of Buyer to consummate any
of the transactions contemplated hereby.
4.04 Finders and Brokers. Buyer has not entered into any contract,
arrangement or understanding with any Person, and is not aware of any claim or
basis for any claim based upon any act or omission of Buyer or any of its
affiliates, which may result in the obligation of a Seller to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
4.05 Buyer Consents. Other than as set forth on Schedule 4.05 hereto, no
consent, order, authorization, waiver, approval or any other action by, or
registration, declaration or filing with, any third party or Governmental
Authority is required for Buyer to execute and deliver this Agreement and
consummate the transactions contemplated hereby. Buyer does not have an
ownership interest in the Buffalo Sabres hockey team that would require any
party to the transactions contemplated by this Agreement to obtain any consent
of the National Hockey League.
4.06 Acquisition of Rights. Buyer is not aware of, and has no reason to
believe there is, any reason relating to Buyer that any Governmental Authority
or other party whose consent is required or contemplated hereunder would refuse
to consent to the transfer of CATV Instruments or any rights to Buyer hereunder
or would condition the granting of any such consent on the performance by
Sellers or Buyer of any material obligation not expressly set forth herein.
4.07 Buyer's Financial Capability. Buyer has the financial capability,
including all financing, necessary to consummate the transactions contemplated
in this Agreement and pay the Purchase Price.
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5. COVENANTS PENDING CLOSING.
5.01 Business of Sellers. From the date hereof to the Closing Date, and
except as otherwise consented to or approved by Buyer in writing (which consent
shall not be unreasonably withheld), the Sellers covenant and agree as follows:
(a) Business in Ordinary Course. Except as otherwise provided
herein, the Sellers shall conduct the CATV Business in the ordinary
course (including, without limitation, in accordance with currently
planned capital expenditures), consistent with past practices and will
not engage in any material transaction, including, without limitation,
entering into or amending in any material respect any CATV Instrument
or Contract, or making any material advance or expenditure, other than
in the ordinary course of business, nor change in any material respect
its business policies or practices. The Sellers shall use reasonable
commercial efforts to preserve the CATV Business intact, to retain the
services of its present employees and agents, and to preserve its
business relationships with, and the goodwill of, its customers,
suppliers and others. The Sellers shall pay before delinquent all taxes
and other charges upon or against the Sellers or any of their
respective properties or income, file when due all tax returns and
other reports required by Governmental Authorities and pay when due all
liabilities except those which they choose to contest in good faith and
by appropriate proceedings.
(b) Books and Records. The Sellers shall maintain their
respective books, accounts and records in the usual, regular and
ordinary manner.
(c) Litigation During Interim Period. The Sellers will advise
Buyer in writing promptly of the assertion, commencement or threat of
any claim, litigation, labor dispute, proceeding or investigation in
which any Seller is a party or the Acquired Assets or CATV Business may
be affected and which could reasonably be expected to have a Material
Adverse Effect or which relates to the transactions contemplated
hereby.
(d) Material Contracts. The Sellers shall deliver to Buyer
copies of all material Contracts that are entered into prior to the
Closing.
(e) Renewal of Franchises. The Sellers shall use reasonable
commercial efforts to obtain renewals or extensions of any franchises
that have expired or will expire within 12 months subsequent to the
date of this Agreement.
5.02 Access to Information.
(a) Access by Buyer. Between the date of this Agreement and
the Closing, Buyer shall have reasonable access during normal business
hours to all of the properties, books, reports, records, CATV
Instruments and Contracts of Sellers, and Sellers shall furnish Buyer
with all information it may reasonably request; provided that no
investigation pursuant to this Section shall affect or be deemed to
modify any representation or warranty made by Sellers. After the
Closing, Sellers agree to provide reasonable access during normal
business hours for reasonable business purposes, at Buyer's expense, to
their independent public accountants. All information obtained by Buyer
pursuant to this Agreement and in connection with the negotiation
hereof shall be used by Buyer solely for
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purposes related to this Agreement and the acquisition of the Acquired
Assets and, in the case of non-public information, shall, except as may
be required for the performance of this Agreement or by Law, be kept in
strict confidence by Buyer in accordance with the terms of the
Confidentiality Agreement dated October 6, 1999 between Buyer and
Cablevision Systems Corporation.
(b) Access by Sellers. Subsequent to the Closing, Buyer shall
preserve and give to Sellers reasonable access during normal business
hours to all of the books, reports, records, CATV Instruments and
Contracts from files and records transferred to Buyer at the time of
Closing, for the purposes of the preparation of tax returns, the
preparation of the Preliminary Working Capital Statement, the defense
of any claims asserted or which may be asserted with respect to which
Sellers are the Indemnitor as contemplated by the Agreement, or other
proper business purposes.
5.03 Change in Channel Lineup. Sellers will consult with Buyer with respect
to any decision by the Sellers to adjust the channel lineup of the CATV System.
5.04 Required Consents. The parties hereto shall proceed as promptly as
practicable and in good faith and shall each use reasonable commercial efforts
to obtain each consent or approval required to be obtained prior to the
consummation of the transactions contemplated hereby, subject to Section 9.03
5.05 Lien Searches. Sellers shall have delivered to Buyer copies of lien
searches conducted by Sellers not more than thirty (30) days prior to the
Closing Date.
6. DELIVERIES AT CLOSING.
6.01 Deliveries by Seller. At the Closing, Sellers will deliver or cause to
be delivered to Buyer:
(a) such warranty deeds, bills of sale, endorsements, and
other good and sufficient instruments of conveyance, transfer and
assignment as are necessary to vest in Buyer the right, title and
interest of the Sellers in accordance herewith in and to the Acquired
Assets in a form reasonably satisfactory to Buyer, which shall include,
without limitation, a form of Xxxx of Sale and General Assignment in
the form of Exhibit D hereto.
(b) A certificate signed by a principal officer of each Seller,
Seller, dated as of the Closing, representing and certifying to Buyer
as to the matters set forth in Sections 7.03 and 7.04.
(c) The Assumption Agreement in the form of Exhibit C hereto.
(d) An opinion of internal counsel to the Sellers or of outside
counsel, including local counsel, appointed by the Sellers,
substantially in the form of Exhibit E hereto.
(e) Evidence that the waiting period under the HSR Act and
Rules, if applicable, has expired.
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(f) Evidence in a form and substance reasonably satisfactory
to Buyer that the Required Consents listed on Schedule 3.02 have been
obtained.
6.02 Deliveries by Buyer. At the Closing, Buyer will deliver or cause to be
delivered to the Sellers:
(a) The Purchase Price as provided in Section 2.02.
(b) The Assumption Agreement in the form of Exhibit C hereto.
(c) A certificate signed by a principal officer of Buyer,
dated as of the Closing, representing and certifying to the Sellers as
to the matters set forth in Sections 8.03 and 8.04.
(d) An opinion of Buyer's Counsel, substantially in the form
of Exhibit F hereto.
(e) Evidence in a form and substance reasonably satisfactory
to the Sellers that the Required Consents listed on Schedule 4.05 have
been obtained.
(f) Evidence that the waiting period under the HSR Act and
Rules, if applicable, has expired.
7. CONDITIONS TO THE OBLIGATIONS OF BUYER.
The obligations of Buyer to complete the transactions provided for herein
are subject to the fulfillment of all of the following conditions, any of which
may be waived in writing by Buyer:
7.01 Receipt of Consents. The conditions specified in Section 9.02 shall
have been satisfied and all of the approvals and consents described in Schedule
4.05 shall have been obtained and shall be in full force and effect; provided
that if the approvals and consents of Governmental Authorities for franchises
which represent at least 80% of the Combined Basic Subscribers shall have been
obtained, then this condition shall have been deemed to have been satisfied if
the conditions specified in Section 9.02 shall have been satisfied and all
Required Consents on Schedule 4.05 shall have been obtained and shall be in full
force and effect.
7.02 Sellers' Authority. All actions under the documents governing the
Sellers necessary to authorize (i) the execution and delivery of this Agreement
by the Sellers and the performance by the Sellers of their respective
obligations under this Agreement and (ii) the consummation of the transactions
contemplated hereby, shall have been duly and validly taken by the Sellers and
shall be in full force and effect on the Closing Date.
7.03 Performance by the Sellers. The Sellers shall have performed in all
material respects their respective agreements and covenants hereunder
(including, without limitation, their respective covenants in Articles 5 and 6)
to the extent such are required to be performed at or prior to the Closing and
are material to the CATV Business as a whole.
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7.04 Absence of Breach of Warranties and Representations. The
representations and warranties of the Sellers contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as if made on and as of such date, except (i) to the
extent that such representations and warranties describe a condition on a
specified time or date or are affected by the conclusion of the transactions
permitted or contemplated hereby or the conduct of the CATV Business in
accordance with Article 5 hereof between the date hereof and the Closing Date,
or (ii) where the failure of such representations and warranties to be true and
correct, individually or in the aggregate, does not have, has not had and would
not reasonably be expected to have, a Material Adverse Effect.
7.05 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by any Governmental Authority,
enjoining or preventing the consummation of the transactions contemplated
hereby.
8. CONDITIONS TO THE OBLIGATIONS OF SELLERS.
The obligations of the Sellers to complete the transactions provided for
herein are subject to the fulfillment of all of the following conditions, any of
which may be waived in writing by the Sellers:
8.01 Receipt of Consents. The conditions specified in Section 9.02 shall
have been satisfied and all of the approvals and consents described in Schedule
3.02 shall have been obtained and shall be in full force and effect; provided
that if the approvals and consents of Governmental Authorities for franchises
which represent at least 80% of the Combined Basic Subscribers shall have been
obtained, this condition shall have been deemed to have been satisfied if the
conditions specified in Section 9.02 shall have been satisfied and all Required
Consents on Schedule 3.02 shall have been obtained and shall be in full force
and effect.
8.02 Corporate Action. All corporate and other actions necessary to
authorize (i) the execution, delivery and performance by Buyer of this Agreement
and (ii) the consummation of the transactions contemplated hereby, shall have
been duly and validly taken by Buyer and shall be in full force and effect on
the Closing Date.
8.03 Performance by Buyer. Buyer shall have performed in all material
respects all covenants and agreements to be performed by it hereunder to the
extent such are required to be performed at or prior to the Closing.
8.04 Absence of Breach of Representations and Warranties. All
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as if then made except where the failure of such representations and
warranties to be true and correct, individually or in the aggregate, does not
have, has not had and would not reasonably be expected to have, a material
adverse effect on Buyer's ability to consummate the transactions contemplated by
this Agreement.
8.05 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by any Governmental Authority,
enjoining or preventing the consummation of the transactions contemplated
hereby.
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9. COVENANTS.
9.01 Compliance with Conditions. Each of the parties hereto covenants and
agrees with the other to use reasonable commercial efforts to perform, comply
with and otherwise satisfy each and every one of the conditions to be satisfied
by such party hereunder, and each party shall use reasonable commercial efforts
to notify promptly the other if it shall learn that any conditions to
performance of either party will not be fulfilled.
9.02 Compliance with HSR Act and Rules.
(a) The performance of the obligations of all parties under
this Agreement is subject to the condition that, if the HSR Act and
Rules are applicable to the transactions contemplated hereby, the
waiting period specified therein, as the same may be extended, shall
have expired or been terminated without action taken to prevent the
consummation of the transactions contemplated hereby.
(b) Each of the parties hereto will use its reasonable
commercial efforts to comply promptly with any applicable requirements
under the HSR Act and Rules relating to filing and furnishing of
information to the FTC and the Antitrust Division of the DOJ, the
parties' actions to include, without limitation, (i) filing or causing
to be filed the HSR Report required to be filed by them, or by any
other Person that is part of the same "person" (as defined in the HSR
Act and Rules) or any of them, and taking all other action required by
the HSR Act or Rules; (ii) coordinating the filing of such HSR Reports
(and exchanging mutual information required to be disclosed therein) so
as to present both HSR Reports to the FTC and the DOJ at the time
selected by the mutual agreement of the Sellers and Buyer, and to avoid
substantial errors or inconsistencies between the two in the
description of the transaction; and (iii) using their reasonable
commercial efforts to comply with any additional request for documents
or information made by the FTC or the DOJ or by a court and assisting
the other parties to so comply.
(c) Notwithstanding anything herein to the contrary, in the
event that the consummation of the transactions contemplated hereby is
challenged by the FTC or the DOJ or any agency or instrumentality of
the federal government by an action to stay or enjoin such
consummation, then either Buyer or the Sellers shall have the right to
terminate this Agreement unless the other of such parties, at its sole
cost and expense, elects to contest such action, in which case the
noncontesting party shall cooperate with the contesting party and
assist the contesting party, as reasonably requested, to contest such
action until such time as either party terminates this Agreement under
this Section or Article 12. In the event that such a stay or injunction
is granted (preliminary or otherwise), then either Buyer or the Sellers
may terminate this Agreement by prompt written notice to the other. If
any other form of equitable relief affecting any party is granted to
the FTC, the DOJ or other such agency or instrumentality, then such
party may terminate this Agreement by prompt written notice to the
other party. To effectuate the intent of the foregoing provisions of
this Section 9.02, the parties agree to exchange requested or required
information in making the filings and in complying as provided above,
and the parties agree to take all necessary steps to preserve the
confidentiality of the information set forth in any filings including,
without
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limitation, limiting disclosure of exchanged information to counsel for
the nondisclosing party.
9.03 Applications for Assignment of Contracts or CATV Instruments. In order
to secure requisite consents or approvals of the transfer of control to Buyer of
any Contracts or CATV Instruments, Buyer (with respect to CATV Instruments) and
the Sellers (with respect to Contracts) shall proceed as promptly as practicable
and in good faith and using reasonable commercial efforts, to prepare, file and
prosecute such application or applications as may be necessary to obtain each
such consent or approval. Buyer and the Sellers shall use reasonable commercial
efforts to promptly assist each other and shall take such prompt and affirmative
actions as may be reasonably necessary in obtaining such approvals and shall
cooperate with each other in the preparation, filing and prosecution of such
applications as may be reasonably necessary, and agree to furnish all
information required by the approving entity, and to be represented at such
meetings or hearings as may be scheduled to consider such applications. Without
limiting in any respect the foregoing, each party agrees to file mutually
acceptable applications to all appropriate Governmental Authorities for all
consents or approvals required to consummate the transactions hereunder within
45 days after the date of this Agreement. Buyer further agrees that it will not,
without the prior written consent of the Sellers, take any action to amend or
that would amend or modify any application filed as provided in this Section
9.03 after the date that such application is accepted as complete. In the event
that Buyer amends or modifies any such application for transfer of control of
any Contracts or CATV Instruments without the Sellers prior written consent,
and the approval period for such transfer is extended by any such Governmental
Authority or other third party, then the Sellers may (if they so elect) (i)
extend the Outside Date in Section 12.01 to a date that will give effect to any
resulting delay or (ii) terminate this Agreement under Section 12.02 hereof. The
Sellers shall use commercially reasonable efforts to include a provision in each
consent referred to in this Section 9.03 that permits Buyer to assign such
contract to a wholly-owned Subsidiary of Buyer subsequent to the Closing Date.
If a governmental authority refuses to include such a provision, the Sellers
shall notify Buyer and Buyer may discuss such refusal with the governmental
authority; provided, however, that upon such refusal, the Sellers shall have no
further obligation to seek or to obtain such a provision in the relevant
contract.
9.04 Records, Taxes and Related Matters. The Sellers and Buyer shall each
make their respective books and records (including work papers in the possession
of their respective accountants) available for inspection by the other party, or
by its duly authorized representatives, for reasonable business purposes at all
reasonable times during normal business hours, for a seven year period after the
Closing Date with respect to all transactions of the CATV Business occurring
prior to or relating to the Closing, and the historical financial condition,
assets, liabilities, results of operation and cash flows of the CATV Business
for any period prior to the Closing. In the case of records owned by the
Sellers, such records shall be made available at the Sellers executive office,
and in the case of records owned by Buyer, such records shall be made available
at the office at which such records are maintained. As used in this Section
9.04, the right of inspection includes the right to make copies at the
requesting parties' expense for reasonable business purposes.
9.05 Determination and Allocation of Consideration. Xxxx Xxxxx Associates,
Inc. or such other nationally recognized appraiser as shall be mutually
acceptable to Sellers and Buyer (the "Appraiser") shall determine the amount of
(including any changes resulting from payments after the Closing Date) and
allocate the total consideration transferred from Buyer to the Sellers pursuant
to this Agreement in accordance with the fair market value of the assets and
liabilities transferred,
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as determined by the Appraiser. Buyer and the Sellers shall file all necessary
tax returns and forms in a manner consistent with such allocation and shall not
take any tax position inconsistent therewith.
9.06 Non-Assignment. Notwithstanding any provision to the contrary
contained herein (but not in limitation of the Sellers' obligations under
Section 9.03 or the conditions set forth in Section 7.01), the Sellers shall not
be obligated to assign to Buyer any Contract or CATV Instrument which provides
that it may not be assigned without the consent of the other party thereto and
for which such consent is not obtained, but in any such event, the Sellers
shall, to the extent reasonably necessary and at Buyer's cost, cooperate with
Buyer in any commercially reasonable arrangement designed to provide the
benefits thereof to Buyer. Without limiting the generality of any provision
elsewhere herein contained, the non-assignment of any of the foregoing shall
not, to the extent that it is otherwise an Assumed Liability hereunder, alter
its status as such or relieve Buyer of its obligations or liabilities with
respect thereto.
9.07 Real Estate Proration And Adjustment Items. Water and sewer charges,
municipal garbage and rubbish removal charges, rents, interest, real estate
taxes, utilities and other charges of an annual or recurrent nature assessed
against or paid in conjunction with the ownership or operation of any real
property owned by the Sellers to be transferred to Buyer hereunder shall be
prorated as of Closing Date. Real estate taxes shall be prorated as of the
Closing Date. Real estate taxes for the calendar year of Closing shall be
prorated based upon real estate taxes levied or estimated to be levied in that
year by each taxing body (without regard to the date of levy or the fiscal year
of the taxing body); provided, however, if any of such real estate taxes have
not yet been levied as of the Closing Date for the calendar year in which the
Closing Date occurs, the tax proration shall be based upon the prior year's tax
levy, taking into account any adjustments in real estate tax assessments which
may have been made.
9.08 Covenant Not to Compete. Sellers covenant and agree that for a period
of three years after Closing (or such period as allowed by law if less than
three years), Sellers will not, and will cause Cablevision Systems Corporation
and its Subsidiaries not to, acquire, manage, operate or control, any cable
television system, multichannel multipoint distribution system ("MMDS"),
satellite master antenna system ("SMATV") or local multipoint distribution
system ("LMDS") within the Service Territory. Notwithstanding anything contained
herein, (i) the ownership of securities of any company which is "publicly held"
and which do not constitute more than five percent (5%) of the voting rights or
equity interests of such entity shall not constitute a violation of this
covenant and (ii) this Section 9.08 shall not be construed to restrict ownership
of entities in the direct broadcast satellite business or wireless personal
communications services business or ownership of licenses related to the
foregoing.
9.09 Remaining Franchises. In the event that a Closing under this Agreement
occurs without the receipt of all consents and approvals to transfer all
franchises, Buyer and Sellers covenant and agree to act in good faith to obtain
the approval or consent of any Governmental Authorities that have not consented
to the transfer of any franchises included in the CATV Business. Until such time
as approval or consent to transfer such franchises is obtain, Buyer covenants
and agrees to satisfy all obligations of Sellers arising after Closing under the
applicable franchise agreement. Buyer and Sellers agree to enter into such
agreements, including, without limitation, management agreements, as are
reasonably necessary to cause Sellers not to be in breach of Sellers'
obligations under the applicable franchise agreements and to permit Buyer to
receive the economic benefits of such franchise agreements.
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10. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND OTHER AGREEMENTS;
INDEMNIFICATION.
10.01 Survival of Representations, Warranties, Covenants and Other
Agreements. All representations and warranties made by Buyer and the Sellers in
this Agreement shall survive the Closing for a period of six months, and shall
thereafter terminate with the exception of (i) Sections 3.05 and Section 3.06(a)
(relating to title matters) which shall survive for the applicable statute of
limitations periods and Section 3.06(d) which shall survive the Closing a for a
period of two years. The obligations to indemnify and hold harmless a party
hereto pursuant to this Article 10 shall terminate when the applicable
representation or warranty terminates pursuant to this Section 10.01; provided,
however, that such obligations to indemnify and hold harmless shall not
terminate with respect to any item as to which the person to be indemnified or
the related party thereto shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice of such claim (stating in
reasonable detail the basis of such claim) to the indemnifying party.
10.02 Indemnification by the Sellers.
(a) Subject to Section 10.01, the Sellers agree to indemnify,
defend and hold harmless Buyer, its affiliates and their respective
shareholders, directors, officers, partners, employees, agents,
successors and assigns (a "Seller Indemnified Party"), from and against
all losses, damages, liabilities, deficiencies or obligations,
including, without limitation, all claims, actions, suits, proceedings,
demands, judgments, assessments, fines, interest, penalties, costs and
expenses (including, without limitation, settlement costs and
reasonable legal fees) (collectively, "Losses") to which they may
become subject as a direct result of (x) the Excluded Liabilities, (y)
any and all misrepresentations or breaches of a representation or
warranty of the Sellers herein or the nonperformance or breach of any
covenants or agreements of the Sellers contained herein, or (z) the
ownership and operation of the Acquired Assets and the CATV Business
before the Closing.
(b) Any obligations of the Sellers under the provisions of
this Article 10 shall be paid promptly to a Seller Indemnified Party by
a Seller and shall represent a retrospective adjustment to the Purchase
Price. The amount of such payment (and adjustment) shall be an amount
in cash equal to the amount of the Loss incurred by a Seller
Indemnified Party on account of the matter for which indemnification is
required hereunder less any payments made or to be made to the Seller
Indemnified Party under any insurance, indemnity or similar policy or
arrangement. Notwithstanding anything contained herein to the contrary,
the indemnification provided above shall only apply to the extent that,
and not until, the aggregate of all amounts subject to indemnification
under this Section 10.02 and Section 10.02 of the Agreement and Plan of
Reorganization exceeds $10 million (in which event Buyer shall be
entitled to indemnification as provided herein for all such Losses and
not just the excess over $10 million) and as to any particular
indemnity claim or series of related indemnity claims only to the
extent that, and only if, such indemnity claim or series of related
indemnity claims equals or exceeds $100,000. In any event, the maximum
aggregate amount that the Sellers will be required to pay under this
Section 10.02 and that Holdings will be required to pay under Section
10.02 of the Agreement and Plan of Reorganization in respect of all
claims by all parties under both agreements is $100 million.
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(c) In the event that Sellers elect to proceed to Closing at
any time that approvals and consents of Governmental Authorities to
transfer franchises which represent less than 90% of the Combined Basic
Subscribers shall not have been obtained, and prior to Closing Buyer
gives written notice to Sellers that Buyer desires not to proceed to
Closing, Sellers agree to indemnify, defend and hold harmless the
Seller Indemnified Parties, from and against all losses, damages,
liabilities, deficiencies or obligations including, without limitation,
all Losses to which they may become subject as a result of such
election.
(d) In no event will a claim to be indemnified by Holdings
under the Agreement and Plan of Reorganization be entitled to
indemnification by Sellers under this Agreement. Buyer further
acknowledges and agrees that, should the Closing occur, its sole and
exclusive remedy with respect to any and all claims relating to this
Agreement and the transactions contemplated hereby shall be pursuant to
the indemnification provisions set forth in this Section 10.02. In
furtherance of the foregoing, Buyer hereby waives, from and after the
Closing, to the fullest extent permitted under applicable law, any and
all rights, claims and causes of action it may have against Holdings
and its affiliates arising under or based upon any Federal, state,
local or foreign statute, law, ordinance, rule or regulation or
otherwise (except pursuant to the indemnification provisions set forth
in this Section 10.02).
10.03 Indemnification by Buyer.
(a) Buyer agrees to indemnify, defend and hold harmless
Sellers and their respective affiliates and their shareholders,
partners, directors, officers, employees, agents, successors and
assigns (a "Buyer Indemnified Party"), from and against all losses,
damages, liabilities, deficiencies or obligations including, without
limitation, all Losses to which they may become subject as a direct
result of: (i) any and all misrepresentations or breaches of a
representation herein or warranty or the nonperformance or breach of
any covenant or agreement of Buyer contained herein; (ii) the Assumed
Liabilities; or (iii) the ownership and operation of the Acquired
Assets and the CATV Business after the Closing. Any obligations of
Buyer under the provisions of this Article shall be paid promptly to
Buyer Indemnified Party by Buyer. Notwithstanding anything contained
herein to the contrary, the indemnification provided above shall apply
as to any particular indemnity claim or series of related indemnity
claims only to the extent that, and only if, such indemnity claim or
series of related indemnity claims equals or exceeds $100,000. In any
event, the maximum aggregate amount that Buyer will be required to pay
under this Section 10.03 and under Section 10.03 of the Agreement and
Plan of Reorganization in respect of all claims by all parties under
both agreements is $250 million.
(b) In the event that Buyer elects to proceed to Closing at
any time that approvals and consents of Governmental Authorities to
transfer franchises which represent less than 90% of the Combined Basic
Subscribers shall not have been obtained, and prior to Closing Sellers
give written notice to Buyer that they desire not to proceed to
Closing, Buyer agrees to indemnify, defend and hold harmless the Buyer
Indemnified Parties, from and against all losses, damages, liabilities,
deficiencies or obligations including, without limitation, all Losses
to which they may become subject as a result of such election.
(c) In no event will a claim to be indemnified by Buyer under
the Agreement and Plan of Reorganization be entitled to indemnification
by Buyer under this Agreement.
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Sellers further acknowledge and agree that, should the Closing occur,
their sole and exclusive remedy with respect to any and all claims
relating to this Agreement and the transactions contemplated hereby
shall be pursuant to the indemnification provisions set forth in this
Section 10.03. In furtherance of the foregoing, Sellers hereby waive,
from and after the Closing, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action they
may have against Buyer and its affiliates arising under or based upon
any Federal, state, local or foreign statute, law, ordinance, rule or
regulation or otherwise (except pursuant to the indemnification
provisions set forth in this Section 10.03).
10.04 Third Party Claims. If any claim ("Asserted Claim") covered by the
foregoing indemnities is asserted against any indemnified party ("Indemnitee"),
it shall be a condition to the obligations under this Article that the
Indemnitee shall promptly give the indemnifying party ("Indemnitor") notice
thereof in accordance with Section 13.06. The Indemnitee shall give Indemnitor
an opportunity to control negotiations toward resolution of such claim without
the necessity of litigation, and, if litigation ensues, to defend the same with
counsel reasonably acceptable to Indemnitee, at Indemnitor's expense, and
Indemnitee shall extend reasonable cooperation in connection with such defense.
If the Indemnitor fails to assume control of the negotiations prior to
litigation or to defend such action within a reasonable time, Indemnitee shall
be entitled, but not obligated, to assume control of such negotiations or
defense of such action, and Indemnitor shall be liable to the Indemnitee for its
expenses reasonably incurred in connection therewith which Indemnitor shall
promptly pay. Neither Indemnitor nor Indemnitee shall settle, compromise, or
make any other disposition of any Asserted Claims, which would or might result
in any liability to Indemnitee or Indemnitor, respectively, under this Article
10 without the written consent of Indemnitee or Indemnitor, respectively, which
shall not be unreasonably withheld.
11. FURTHER ASSURANCES.
From time to time after the Closing, each party will execute and deliver
such other instruments of conveyance and transfer, fully cooperate with the
other party and take such other actions as the other party reasonably may
request to effect the purposes and intent of this Agreement.
12. CLOSING.
12.01 Closing. The Closing shall take place at the offices of Xxxxxxxx &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m., local time, on the
date which is (i) the fifth business day after all consents required as
conditions to the sale as provided in Section 7.01 have been received or, if
permitted under applicable law, waived, and (ii) designated by Buyer or Sellers
in a written notice to the other specifying that all conditions to Closing
(other than those that can only be satisfied at Closing) have been satisfied or
waived (the "Closing Date"); provided, however, that if the Closing shall not
have occurred prior to December 21, 2000 or as extended pursuant to Section 9.03
(the "Outside Date"), this Agreement shall terminate unless otherwise provided
by the mutual written agreement of Buyer and Sellers; provided, further,
however, that in no event shall the Closing under this Agreement occur unless it
shall occur simultaneously with the Closing as defined in the Agreement and Plan
of Reorganization. If, as of the Outside Date, the Closing cannot be effected,
all parties hereto shall be released from all obligations hereunder other than
obligations arising from a breach or default hereunder, and each party hereto
will bear expenses as provided in Section 13.07 hereof. At the Closing, the
parties hereto shall execute and deliver all instruments and
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documents as shall be necessary in the reasonable opinion of counsel for the
respective parties to consummate the transactions contemplated herein.
12.02 Termination. In addition to the termination provided for in Section
12.01, this Agreement may be terminated and the transactions contemplated hereby
may be abandoned:
(a) At any time, by the mutual written agreement of Buyer and
Sellers;
(b) By Buyer, upon and effective as of the date of written
notice to Sellers, if any of the conditions to the obligations of
Sellers set forth in Article 7 shall not have been waived or materially
satisfied at the time of the Closing or, if applicable, the Outside
Date, as the case may be;
(c) By Sellers, upon and effective as of the date of written
notice to Buyer, if any of the conditions to the obligations of Sellers
set forth in Article 8 shall not have been waived or materially
satisfied at the time of the Closing or, if applicable, the Outside
Date, as the case may be;
(d) By Sellers or Buyer, upon and effective as of the date of
written notice to the other, pursuant to the termination provisions of
Section 9.02; or
(e) By Sellers, upon and effective as of the date of written
notice to Buyer, pursuant to the termination provisions of Section
9.03.
13. MISCELLANEOUS.
13.01 Amendments; Waivers. This Agreement cannot be changed or terminated
orally and no waiver of compliance with any provision or condition hereof and no
consent provided for herein shall be effective unless evidenced by an instrument
in writing duly executed by the party hereto sought to be charged with such
waiver or consent. No waiver of any term or provision hereof shall be construed
as a further or continuing waiver of such term or provision or any other term or
provision. Any condition to the performance of any party hereto which may
legally be waived at or prior to the Closing may be waived in writing at any
time by the party or parties entitled to the benefit thereof.
13.02 Entire Agreement. This Agreement sets forth the entire understanding
and agreement of the parties and supersedes any and all prior agreements,
memoranda, arrangements and understandings relating to the subject matter hereof
other than the Confidentiality Agreement referred to in Section 5.02(a). No
representation, warranty, promise, inducement or statement of intention has been
made by any party which is not contained in this Agreement, and no party shall
be bound by, or be liable for, any alleged representation, promise, inducement
or statement of intention not contained herein or therein.
13.03 Cablevision Name. The parties agree that the Sellers and their
respective affiliates shall retain the right to use the names "Cablevision,"
"Cablevision Systems," "Optimum," "Optimum Cable" or any and all derivations
thereof or any name which may include any of such terms, and after the Closing,
Buyer shall remove or delete the names "Cablevision," "Cablevision Systems,"
"Optimum," "Optimum Cable," "Optimum TV" or any and all derivations thereof or
any name
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which may include any of such terms from the Acquired Assets as soon as
reasonably practicable but in any event by the 60th day following the Closing.
From and after the 60th day following the Closing, Sellers and their respective
affiliates shall retain the sole and exclusive right to use the names
"Cablevision," "Cablevision Systems," "Optimum," "Optimum Cable" or any and all
derivations thereof or any name which may include any of such terms.
13.04 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any party without the
prior written consent of the other parties hereto; provided, however, that Buyer
may assign its rights under this Agreement to one or more Subsidiaries of Buyer
with respect to which Buyer owns at least 66 2/3% of the Voting Stock, without
the prior written consent of the Sellers, provided Buyer remains liable to fully
perform the obligations and terms of this Agreement.
13.05 Construction; Counterparts. The Article and Section headings of this
Agreement are for convenience of reference only and do not form a part hereof
and do not in any way modify, interpret or construe the intentions of the
parties. This Agreement may be executed in one or more counterparts, and all
such counterparts shall constitute one and the same instrument.
13.06 Notices. All notices and communications hereunder shall be in writing
and shall be deemed to have been duly given to a party when delivered in person,
faxed (with confirmation) or three business days after such notice is enclosed
in a properly sealed envelope, certified or registered, and deposited (postage
and certification or registration prepaid) in a post office or collection
facility regularly maintained by the United States Postal Service, or one
business day after delivery to a nationally recognized overnight courier
service, and addressed as follows:
If to Sellers: Telerama, Inc.
Cablevision of Cleveland, L.P.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
copies to: Cablevision Systems Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
and
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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Attention: Xxxx X. Xxxx
If to Buyer: Xxxxx X. Xxxxxx
Adelphia Communications Corporation
Xxx Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Deputy General Counsel
copies to: Xxxxxxxx Ingersoll P.C.
One Oxford Centre
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
Any party may change its address for the purpose of notice by giving notice in
accordance with the provisions of this Section 13.06.
13.07 Expenses of the Parties. Except as otherwise provided herein, all
expenses incurred by or on behalf of the parties hereto in connection with the
authorization, preparation and consummation of this Agreement, including,
without limitation, all fees and expenses of agents, representatives, counsel
and accountants employed by the parties hereto in connection with the
authorization, preparation, execution and consummation of this Agreement shall
be borne solely by the party who shall have incurred the same. Buyer, on the one
hand, and Sellers, on the other hand, agree to share equally the filing fee
payable under the HSR Act and Rules.
13.08 Non-Recourse. No partner, officer, director, shareholder or other
holder of an ownership interest of or in any party to this Agreement shall have
any personal liability in respect of any such party's obligations under this
Agreement by reason of his or its status as such partner, officer, director,
shareholder or other holder.
13.09 Third Party Beneficiary. This Agreement is entered into only for the
benefit of the parties and their respective successors and assigns, and nothing
hereunder shall be deemed to constitute any person a third party beneficiary to
this Agreement.
13.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
NEW YORK.
13.11 Press Releases. No press release or other public information relating
to the purchase and sale contemplated in this Agreement shall be made or
disclosed by either party hereto without the consent of the other party;
provided, however, that either party may disclose such information if reasonably
deemed to be required by law by the legal counsel for such party; provided
further that such party shall notify the other as soon as reasonably practicable
prior to the issuance of such press release.
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13.12 Severability. If any provision of this Agreement is finally
determined to be illegal, void or unenforceable, such determination shall not,
of itself, nullify this Agreement which shall continue in full force and effect
subject to the conditions and provisions hereof.
13.13 Specific Performance. So long as Buyer is not then in breach or in
default of its obligations under this Agreement, Buyer shall be entitled to
require Sellers to specifically perform and consummate the transactions
described herein in accordance with this Agreement in the event of a failure by
Sellers to perform their respective obligations hereunder.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLERS:
TELERAMA, INC.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
CABLEVISION OF CLEVELAND, L.P.
By: Cablevision of Cleveland G.P., Inc.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice Chairman
BUYER:
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
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