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Exhibit 2.6(e)
ASSET EXCHANGE AGREEMENT
dated as of April 20, 1999
among
INTERMEDIA PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP
BRENMOR CABLE PARTNERS, L.P.
on the one hand
and
XXXXX MEDIA GROUP, INC.
on the other hand
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TABLE OF CONTENTS
1. DEFINITIONS.............................................................2
1.1 1992 Cable Act....................................................2
1.2 Affiliate.........................................................2
1.3 Agreement.........................................................2
1.4 Antitrust Division. .............................................2
1.5 Assets............................................................2
1.6 Basic Services....................................................2
1.7 Business Day......................................................2
1.8 Cable Act.........................................................2
1.9 Cable Business....................................................2
1.10 Closing...........................................................3
1.11 Closing Time......................................................3
1.12 Communications Act................................................3
1.13 Contract..........................................................3
1.15 Environmental Law.................................................3
1.16 ERISA.............................................................3
1.17 ERISA Affiliate...................................................3
1.18 Expanded Basic Services...........................................3
1.19 FCC...............................................................3
1.20 Governmental Authority............................................3
1.21 Hazardous Substances..............................................4
1.22 HSR Act...........................................................4
1.23 Intellectual Property.............................................4
1.24 IP-I Assets.......................................................4
1.25 IP-I Books and Records............................................5
1.26 IP-I Leased Property..............................................5
1.27 IP-I Other Intangibles............................................5
1.28 IP-I Other Real Property Interests................................5
1.29 IP-I Owned Property...............................................5
1.30 IP-I Required Consents............................................5
1.31 IP-I Systems Contracts............................................6
1.32 IP-I Systems Franchises...........................................6
1.33 IP-I Systems Licenses.............................................6
1.34 IP-I Tangible Personal Property...................................6
1.35 IP-I's Cable Business.............................................6
1.36 Judgment..........................................................7
1.37 Knowledge.........................................................7
1.38 Leased Property...................................................7
1.39 Legal Requirement.................................................7
1.40 Lien..............................................................7
(i)
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1.41 Litigation........................................................7
1.42 Losses............................................................7
1.43 MVPD..............................................................7
1.44 Other Real Property Interests.....................................8
1.45 Owned Property....................................................8
1.46 Party.............................................................8
1.47 Pay TV............................................................8
1.48 Permitted Liens...................................................8
1.49 Person............................................................8
1.50 Required Consents.................................................8
1.51 RMG Assets........................................................8
1.52 RMG Books and Records.............................................9
1.53 RMG Leased Property...............................................9
1.54 RMG Other Intangibles.............................................9
1.55 RMG Other Real Property Interests.................................9
1.56 RMG Owned Property................................................9
1.57 RMG Required Consents.............................................9
1.58 RMG Systems Contracts............................................10
1.59 RMG Systems Franchises...........................................10
1.60 RMG Systems Licenses.............................................10
1.61 RMG Tangible Personal Property...................................10
1.62 RMG's Cable Business.............................................10
1.63 Six-Month Date...................................................10
1.64 System...........................................................10
1.65 Systems Contracts................................................10
1.66 Systems Franchises...............................................11
1.67 Systems Licenses.................................................11
1.68 Tangible Personal Property.......................................11
1.69 Taxes............................................................11
1.70 Third Party......................................................11
1.71 Transaction Documents............................................11
1.72 Other Definitions................................................11
1.73 Usage............................................................13
2. EXCHANGE...............................................................13
2.1 Exchange of Assets...............................................13
2.2 Method of Exchange...............................................14
3. CONSIDERATION..........................................................14
3.1 Calculation of Values; Cash Consideration........................14
4. ASSUMED LIABILITIES AND EXCLUDED ASSETS................................15
4.1 RMG's Assumed Obligations and Liabilities........................15
(ii)
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4.2 RMG Excluded Assets..............................................15
4.3 IP-I's Assumed Obligations and Liabilities.......................15
4.4 IP-I Excluded Assets.............................................16
5. IP-I'S REPRESENTATIONS AND WARRANTIES..................................17
5.1 Organization and Qualification of IP-I...........................17
5.2 Authority and Validity...........................................17
5.3 No Conflict; Required Consents...................................17
5.4 Assets...........................................................18
5.5 IP-I Systems Franchises, IP-I Systems Licenses, IP-I Systems
Contracts and IP-I Other Real Property Interests.................18
5.6 Real Property....................................................20
5.7 Environmental....................................................20
5.8 Compliance with Legal Requirements...............................21
5.9 Intellectual Property............................................24
5.10 Financial Statements.............................................24
5.11 Absence of Certain Changes or Events.............................24
5.12 Litigation.......................................................24
5.13 Tax Returns; Other Reports.......................................25
5.14 Employment Matters...............................................25
5.15 IP-I Systems Information.........................................26
5.16 Taxpayer Identification Number...................................27
5.17 Finder and Brokers...............................................27
5.18 Related Party Transactions.......................................27
6. RMG'S REPRESENTATIONS AND WARRANTIES...................................28
6.1 Organization and Qualification of RMG............................28
6.2 Authority and Validity...........................................28
6.3 No Conflict; Required Consents...................................28
6.4 Assets...........................................................29
6.5 RMG Systems Franchises, RMG Systems Licenses, RMG Systems
Contracts and RMG Other Real Property Interests..................29
6.6 Real Property....................................................31
6.7 Environmental....................................................31
6.8 Compliance with Legal Requirements...............................32
6.9 Intellectual Property............................................34
6.10 Financial Statements.............................................35
6.11 Absence of Certain Changes or Events.............................35
6.12 Litigation.......................................................35
6.13 Tax Returns; Other Reports.......................................35
6.14 Employment Matters...............................................36
6.15 RMG Systems Information..........................................37
6.16 Taxpayer Identification Number...................................38
(iii)
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6.17 Finder and Brokers...............................................38
6.18 Related Party Transactions.......................................38
7. ADDITIONAL COVENANTS...................................................38
7.1 Access to Premises and Records...................................38
7.2 Continuity and Maintenance of Operations, Certain
Deliveries and Notice............................................38
7.3 Employees........................................................41
7.4 Leased Vehicles; Other Capital Leases............................44
7.5 Required Consents; Franchise Renewal.............................45
7.6 Title Commitments and Surveys....................................48
7.7 HSR Notification.................................................49
7.8 Sales and Transfer Taxes.........................................49
7.9 Programming......................................................50
7.10 Updated Schedules................................................50
7.11 Use of Name and Logo.............................................51
7.12 Transitional Billing Services....................................51
7.13 Confidentiality and Publicity....................................51
7.14 Bulk Transfer....................................................52
7.15 Lien Searches....................................................52
7.16 Further Assurances...............................................52
7.17 Post-Closing Cooperation as to Rates.............................53
7.18 Distant Broadcast Signals........................................54
7.19 Environmental Assessment.........................................55
7.20 Year 2000 Matters................................................56
7.21 Satisfaction of Conditions.......................................58
7.22 Offers...........................................................58
7.23 Retention of Books and Records...................................59
7.24 Cooperation......................................................59
7.25 Post-Closing Holding Period......................................59
8. CONDITIONS PRECEDENT...................................................59
8.1 Conditions to IP-I's Obligations.................................59
8.2 Conditions to RMG's Obligations..................................61
9. THE CLOSING............................................................62
9.1 The Closing; Time and Place......................................62
9.2 RMG's Delivery Obligations.......................................63
9.3 IP-I's Delivery Obligations......................................64
10. TERMINATION AND DEFAULT................................................65
10.1 Termination Events...............................................65
10.2 Effect of Termination............................................65
(iv)
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11. SURVIVAL; REMEDIES.....................................................65
11.1 Survival of Representations, Warranties Covenants
and Agreements...................................................65
11.2 Exclusive Remedy.................................................66
11.3 Nonrecourse......................................................66
12. MISCELLANEOUS PROVISIONS...............................................67
12.1 Parties Obligated and Benefitted.................................67
12.2 Notices..........................................................67
12.3 Right to Specific Performance....................................67
12.4 Waiver...........................................................67
12.5 Captions.........................................................67
12.6 Governing Law....................................................67
12.7 Time.............................................................68
12.8 Late Payments....................................................68
12.9 Counterparts.....................................................68
12.10 Entire Agreement.................................................68
12.11 Severability.....................................................68
12.12 Construction.....................................................68
12.13 Expenses.........................................................68
12.14 Risk of Loss.....................................................68
12.15 Tax Consequences.................................................69
12.16 Commercially Reasonable Efforts..................................69
(v)
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Exhibits:
Exhibit 9.2.2 - Xxxx of Sale and Assignment and Assumption Agreement
Exhibit 9.2.9 - Forms of Opinions
Schedules:
Schedule 1.26 - IP-I Leased Property
Schedule 1.28 - IP-I Other Real Property Interests
Schedule 1.29 - IP-I Owned Property
Schedule 1.31 - IP-I Systems Contracts
Schedule 1.32 - IP-I Systems Franchises
Schedule 1.33 - IP-I Systems Licenses
Schedule 1.34 - IP-I Tangible Personal Property
Schedule 1.53 - RMG Leased Property
Schedule 1.55 - RMG Other Real Property Interests
Schedule 1.56 - RMG Owned Property
Schedule 1.58 - RMG Systems Contracts
Schedule 1.59 - RMG Systems Franchises
Schedule 1.60 - RMG Systems Licenses
Schedule 1.61 - RMG Tangible Personal Property
Schedule 2.1 - Exchanges
Schedule 3.1.1-A - RMG System Value
Schedule 3.1.1-B - IP-I System Value
Schedule 4.2 - RMG Excluded Assets
Schedule 4.4(a) - IP-I Excluded Assets
Schedule 4.4(b) - Exceptions to IP-I Excluded Assets
Schedule 5.3 - IP-I Required Consents
Schedule 5.4.1 - IP-I Liens and Permitted Liens
Schedule 5.4.3 - IP-I Other Operators
Schedule 5.5.2 - IP-I Franchise Matters
Schedule 5.5.3 - IP-I Contract Matters
Schedule 5.6 - IP-I Real Property Matters
Schedule 5.7 - IP-I Environmental Matters
Schedule 5.8 - IP-I Compliance with Legal Requirements
Schedule 5.10 - IP-I Statements of Income
Schedule 5.11 - IP-I Changes and Events
Schedule 5.12 - IP-I Litigation
Schedule 5.13 - IP-I Tax Matters
Schedule 5.14 - IP-I Employee Matters
Schedule 5.15.1 - IP-I Systems Information
Schedule 5.15.2 - IP-I Systems
Schedule 5.18 - IP-I Related Party Transactions
(vi)
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Schedule 6.3 - RMG Required Consents
Schedule 6.4.1 - RMG Liens and Permitted Liens
Schedule 6.4.3 - RMG Other Operators
Schedule 6.5.2 - RMG Franchise Matters
Schedule 6.5.3 - RMG Contract Matters
Schedule 6.6 - RMG Real Property Matters
Schedule 6.7 - RMG Environmental Matters
Schedule 6.8 - RMG Compliance with Legal Requirements
Schedule 6.10 - RMG Statements of Income
Schedule 6.11 - RMG Changes and Events
Schedule 6.12 - RMG Litigation
Schedule 6.13 - RMG Tax Matters
Schedule 6.14 - RMG Employee Matters
Schedule 6.15.1 - RMG Systems Information
Schedule 6.15.2 - RMG Systems
Schedule 6.18 - RMG Related Party Transactions
Schedule 7.2 - Exceptions to Ordinary Course
Schedule 7.2-A - RMG 1999 Budgets
Schedule 7.2-B - IP-I 1999 Budgets
Schedule 7.2.4 - Form of Monthly Report
Schedule 7.20.1(b)-A - RMG's Year 2000 Assessment, High-Level
Inventory and Remediation Decisions
Schedule 7.20.1(b)-B - IP-I's Year 2000 Assessment, High-Level
Inventory and Remediation Decisions
Schedule 7.20.1(c)-A - RMG's Year 2000 Plan
Schedule 7.20.1(c)-B - IP-I's Year 2000 Plan
(vii)
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT is made as of the April __, 1999, by and
among InterMedia Partners, a California Limited Partnership ("IP-I Parent") and
Brenmor Cable Partners, L.P., a California limited partnership ("Brenmor," each
of IP-I Parent and Brenmor being referred to as an "IP-I Party" and
collectively, "IP-I"), on the one hand, and Xxxxx Media Group, Inc., a Nevada
corporation ("RMG"), on the other hand.
RECITALS
A. The IP-I Parties own and operate cable television systems that are franchised
or hold other operating authority and operate in and around the municipalities
listed on Schedule 5.15.2 (collectively, the "IP-I Systems" and reference to any
IP-I Party's Systems will be deemed to refer to the IP-I Systems owned and
operated by such IP-I Party).
B. RMG owns and operates cable television systems which are
franchised or hold other operating authority and operate in and around the
municipalities listed on Schedule 6.15.2 (collectively, the "RMG Systems").
C. This Agreement sets forth the terms and conditions upon which (i)
the IP-I Parties will convey, or cause to be conveyed, to RMG substantially all
of the assets comprising or used or useful in connection with IP-I's Cable
Businesses and (ii) RMG will convey, or cause to be conveyed, to the IP-I
Parties substantially all of the assets comprising or used or useful in
connection with RMG's Cable Business, all in such a manner as to effect, to the
extent reasonably possible, a like-kind exchange of such assets under Section
1031 of the United States Internal Revenue Code, as amended (the "Code").
D. Charter Communications, LLC, Charter Communications Properties,
LLC, and Marcus Cable Associates, L.L.C. (collectively, the "Charter Parties"),
IP-I, RMG, and certain of their respective Affiliates have entered into that
certain Common Agreement (the "Common Agreement") pursuant to which they have
agreed to certain issues common to each of the transfers made pursuant to this
Agreement and to certain other related transactions (each as more fully
described in the Common Agreement). The common issue addressed include certain
revenue and working capital adjustments, closing conditions, and indemnification
for breaches of representations, warranties, covenants and agreements. Certain
other revenue and working capital adjustments will be made pursuant to that
certain Exchange and Redemption Agreement dated the same date as this Agreement
and consummated as described in the Common Agreement (the "Redemption
Agreement").
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AGREEMENTS
In consideration of the covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this Agreement,
the following capitalized terms or terms otherwise defined in this Section 1
shall have the meanings set forth below:
1.1 1992 Cable Act. The Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
1.2 Affiliate. With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. As used in this
Agreement, "control" means the ownership, directly or indirectly, of voting
securities representing the right generally to elect a majority of the directors
(or similar officials) of a Person or the possession, by contract or otherwise,
of the authority to direct the management and policies of a Person.
Notwithstanding the foregoing, prior to the Closing Date, (a) neither AT&T
Corporation, Tele-Communications, Inc., nor any of their direct or indirect
subsidiaries (collectively, the "AT&T Affiliates"), shall be considered
Affiliates of any IP-I Party for any purpose herein or hereunder; and (b) IP-I,
Brenmor and TCIP IP-V, Inc., on the one hand, and InterMedia Partners Southeast,
InterMedia Partners of West Tennessee, L.P., InterMedia Partners IV, L.P., and
Xxxxx Media Group, Inc., on the other hand, shall not be deemed Affiliates of
each other.
1.3 Agreement. This Asset Exchange Agreement.
1.4 Antitrust Division. The Antitrust Division of the United States
Department of Justice.
1.5 Assets. The IP-I Assets or the RMG Assets, as the context requires.
1.6 Basic Services. The lowest tier of service offered to subscribers of a
System.
1.7 Business Day. Any day other than a Saturday, Sunday or a day on which
the banking institutions in New York, New York, Denver, Colorado, San Francisco,
California or St. Louis, Missouri are required or authorized to be closed.
1.8 Cable Act. The Cable Communications Policy Act of 1984, as amended,
and the FCC rules and regulations promulgated thereunder.
1.9 Cable Business. IP-I's Cable Businesses, or any of them, or RMG's
Cable Business, as the context requires.
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1.10 Closing. The closing of the exchange transactions contemplated by
this Agreement.
1.11 Closing Time. 11:59 p.m., Eastern time, on the Closing Date.
1.12 Communications Act. The Communications Act of 1934, as amended, and
the FCC rules and regulations promulgated thereunder.
1.13 Contract. Any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
1.14 Copyright Act. The Copyright Act of 1976, as amended, including all
rules, regulations, orders and policies of the U.S. Copyright Office thereunder
applicable to cable television systems generally.
1.15 Environmental Law. Any Legal Requirement relating to pollution or the
protection of public health, safety, welfare or the environment, including
CERCLA, OSHA and RCRA and including Legal Requirements relating to emissions,
discharges, releases or threatened releases of Hazardous Substances into the
environment (including ambient air, surface water, ground water or land) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
1.16 ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.17 ERISA Affiliate. As to any Person, any trade or business, whether or
not incorporated, which together with such Person would be deemed a single
employer within the meaning of Section 4001 of ERISA.
1.18 Expanded Basic Services. Any video programming provided over a cable
television system, regardless of service tier, other than Basic Services and Pay
TV.
1.19 FCC. The Federal Communications Commission.
1.20 Governmental Authority. The United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
body, county, municipality, province, parish or other instrumentality of any of
the foregoing.
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1.21 Hazardous Substances. Any pollutant, contaminant, chemical,
industrial, toxic, hazardous or noxious substance or waste which is regulated by
a Governmental Authority, including (a) any petroleum or petroleum compounds
(refined or crude), flammable substances, explosives, radioactive materials or
any other materials or pollutants which pose a significant hazard or potential
significant hazard to the Owned Property or Other Real Property Interests or to
Persons in or about the Owned Property or Other Real Property Interests or cause
the Owned Property or Other Real Property Interests to be in violation of any
Legal Requirements; (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. xx.xx. 6901) and the
rules and regulations promulgated thereunder; (c) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. 9601 et seq.) (CERCLA), as amended, and the rules and
regulations promulgated thereunder; (d) any substance regulated by the Toxic
Substances Control Act (TSCA) (42 U.S.C. ss. 2601 et seq.) or the Insecticide,
Fungicide and Rodenticide Act (IFRA) (7 U.S.C. ss. 136 et seq.), each, as
amended, and the rules and regulations promulgated thereunder; (e) asbestos or
asbestos-containing material of any kind or character; (f) polychlorinated
biphenyls; (g) any substances regulated under the provisions of Subtitle I of
RCRA relating to underground storage tanks; (h) any materials or substances
designated as "hazardous substances" pursuant to the Clean Water Act (33 U.S.C.
ss. 1251 et seq.); (i) "economic poison," as defined in the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. ss. 135 et seq.); (j) any substance the
presence, use, handling, treatment, storage or disposal of which on the Owned
Property or Leased Property is regulated or prohibited by any Environmental Law;
and (k) any other substance which by any Environmental Law requires special
handling, reporting or notification of any Governmental Authority in its
collection, storage, use, treatment or disposal.
1.22 HSR Act. The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
1.23 Intellectual Property. With respect to any Cable Business, any (a)
trademarks, trade dress, trade names, service marks, logos and other similar
proprietary rights, (b) domain names, (c) copyrights and (d) patents and
patentable know-how, inventions and processes, in each case used in such Cable
Business.
1.24 IP-I Assets. All of the assets, privileges, contracts, licenses,
permits, franchises, authorizations, rights, interests, claims and other
properties, real and personal, tangible and intangible, of every type and
description (a) which are owned, leased, held for, used or useful in, or
otherwise related to, IP-I's Cable Businesses, (b) in which any IP-I Party or
its Affiliate has any right, title or interest or in which any IP-I Party or its
Affiliate acquires any right, title or interest on or before the Closing Time,
and (c) which are not IP-I Excluded Assets. The IP-I Assets include the IP-I
Tangible Personal Property, IP-I Owned Property, IP-I Leased Property, IP-I
Other Real Property Interests, IP-I Systems Franchises, IP-I Systems Licenses,
IP-I Systems Contracts, IP-I Books and Records and IP-I Other Intangibles.
Reference to any IP-I Party's Assets will be deemed to refer to the IP-I Assets
of such IP-I Party.
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1.25 IP-I Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and procedures and all
other files of correspondence, lists, records and reports concerning IP-I's
Cable Businesses, including subscribers and prospective subscribers of the IP-I
Systems, signal and program carriage and dealings with Governmental Authorities
with respect to the IP-I Systems, including all reports filed with respect to
the IP-I Systems by or on behalf of any IP-I Party or its Affiliate with the FCC
and statements of account filed with respect to the IP-I Systems by or on behalf
of any IP-I Party or its Affiliate with the U.S. Copyright Office, but excluding
all documents, reports and records relating to any employee of the IP-I Systems
who has not given consent to disclosure of such documents, reports and records.
Reference to any IP-I Party's Books and Records will be deemed to refer to the
IP-I Books and Records included among such IP-I Party's Assets.
1.26 IP-I Leased Property. The leaseholds of real property included among
the IP-I Assets and described as IP-I Leased Property on Schedule 1.26.
Reference to any IP-I Party's Leased Property will be deemed to refer to the
IP-I Leased Property included among such IP-I Party's Assets.
1.27 IP-I Other Intangibles. All intangible assets, other than the IP-I
Systems Franchises, IP-I Systems Licenses and IP-I Systems Contracts, including
subscriber lists, claims (excluding any claims relating to IP-I Excluded
Assets), and Intellectual Property, if any, included among the IP-I Assets.
Reference to any IP-I Party's Other Intangibles will be deemed to refer to the
IP-I Other Intangibles included among such IP-I Party's Assets.
1.28 IP-I Other Real Property Interests. The easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property held by any IP-I Party or its Affiliate in connection
with IP-I's Cable Business, including those interests described as IP-I Other
Real Property Interests on Schedule 1.28, but not including IP-I Leased Property
or IP-I Owned Property. Reference to any IP-I Party's Other Real Property
Interests will be deemed to refer to the IP-I Other Real Property Interests
included among such IP-I Party's Assets.
1.29 IP-I Owned Property. The fee interests in the real property included
among the IP-I Assets and described as IP-I Owned Property on Schedule 1.29 and
all improvements and towers thereon and appurtenances thereto. Reference to any
IP-I Party's Owned Property will be deemed to refer to the IP-I Owned Property
included among such IP-I Party's Assets.
1.30 IP-I Required Consents. Any and all consents, authorizations and
approvals under or in connection with the IP-I Assets (including the IP-I
Systems Franchises, IP-I Systems Licenses, and IP-I Systems Contracts) or any
Contract, Lien or Legal Requirement by which any IP-I Party, any of its
Affiliates or their respective Assets are bound, required (a) for each IP-I
Party to transfer its Assets to RMG pursuant to this Agreement, (b) for RMG to
operate the IP-I Systems and to own, lease, use and operate the IP-I Assets and
the IP-I Systems at the places and in the manner in which the IP-I Assets are
used and the IP-I Systems are operated as of the date of this Agreement and as
of the Closing, or (c) for RMG to assume and perform the IP-I Systems
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Franchises, the IP-I Systems Licenses, the IP-I Systems Contracts and the RMG
Assumed Obligations and Liabilities.
1.31 IP-I Systems Contracts. All Contracts (other than IP-I Systems
Franchises and IP-I Systems Licenses) that are included among the IP-I Assets,
including the lease agreements for IP-I Tangible Personal Property, pole
attachment agreements, underground conduit agreements, crossing agreements,
retransmission consent agreements, multiple dwelling, bulk billing or commercial
service agreements and other Contracts described on Schedule 1.31 and the
Contracts documenting IP-I Leased Property and IP-I Other Real Property
Interests described on Schedules 1.26 and 1.28. Reference to any IP-I Party's
Systems Contracts will be deemed to refer to the IP-I Systems Contracts included
among such IP-I Party's Assets.
1.32 IP-I Systems Franchises. The franchises, permits and similar
authorizations included among the IP-I Assets (other than the IP-I Systems
Licenses) described on Schedule 1.32, and all rights and benefits of the IP-I
Parties and their Affiliates pertaining thereto, including the rights and
benefits arising under Section 626 of the Communications Act (47 U.S.C. 546) to
the extent applicable to a IP-I Systems Franchise. Reference to any IP-I Party's
Systems Franchises will be deemed to refer to the IP-I Systems Franchises
included among such IP-I Party's Assets.
1.33 IP-I Systems Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, earth station registrations, authorizations, consents or permits
issued by the FCC or any other Governmental Authority included among the IP-I
Assets and described on Schedule 1.33 (other than the IP-I Systems Franchises
and IP-I Systems Contracts) and all rights and benefits of the IP-I Parties and
their Affiliates pertaining thereto. Reference to any IP-I Party's Systems
Licenses will be deemed to refer to the IP-I Systems Licenses included among
such IP-I Party's Assets.
1.34 IP-I Tangible Personal Property. All tangible personal property
included among the IP-I Assets, including towers (other than towers on IP-I
Owned Property which are fixtures thereon and a part thereof), tower equipment,
aboveground and underground cable, distribution systems, headend amplifiers,
line amplifiers, microwave equipment, converters, testing equipment, motor
vehicles, office equipment, computers and billing equipment, furniture,
fixtures, supplies, inventory and other physical assets, the principal items of
which are identified and described on Schedule 1.34. Reference to any IP-I
Party's Tangible Personal Property will be deemed to refer to the IP-I Tangible
Personal Property included among such IP-I Party's Assets.
1.35 IP-I's Cable Businesses. The cable television businesses and other
revenue-generating businesses and operations relating to the IP-I Systems
conducted by the IP-I Parties and their Affiliates through the IP-I Systems.
Reference to any IP-I Party's Cable Business will be deemed to refer to the
IP-I's Cable Business operated by such IP-I Party.
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1.36 Judgment. Any judgment, writ, order, injunction, award or decree of
any court, judge, justice or magistrate, including any bankruptcy court or judge
or the arbitrator in any binding arbitration, and any order of or by any
Governmental Authority.
1.37 Knowledge. The actual knowledge of a particular matter with respect
to any IP-I System or RMG System of Xxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxx, Xxxxxx
X. Xxxxx, Xxxx X. Xxxxx or Xxxxxx X. Xxxxxxxxx, and the general manager or one
or more of the managers of the System.
1.38 Leased Property. IP-I Leased Property or RMG Leased Property, as the
context requires.
1.39 Legal Requirement. Applicable common law and any statute, ordinance,
code or other law, rule, regulation, order, technical or other written standard,
requirement or procedure enacted, adopted, promulgated, applied or followed by
any Governmental Authority, including any Judgment.
1.40 Lien. Any security interest, security agreement, financing statement
filed with any Governmental Authority, conditional sale or other title retention
agreement, any lease, consignment or bailment given for purposes of security,
any mortgage, lien (including any lien for Taxes), indenture, pledge, option,
encumbrance, adverse interest, constructive trust or other trust, claim,
attachment, exception to, defect in, or other condition adversely affecting
title or other ownership interest (including reservations, rights of entry,
possibilities of reverter, encroachments, protrusions, easements, rights-of-way,
rights of first refusal, restrictive covenants, leases and licenses) of any
kind, which constitutes an interest in or claim against property, whether
arising pursuant to any Legal Requirement, Systems License, Systems Franchise,
Systems Contract or otherwise.
1.41 Litigation. Any claim, action, suit, proceeding, arbitration,
investigation or hearing that could result in a Judgment, any other activity or
procedure that could reasonably be expected to result in a Judgment, or any
notice of any of the foregoing.
1.42 Losses. Any claims, losses, liabilities, damages, penalties, costs
and expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and, as applicable, the cost to any Person making a claim or
seeking indemnification under this Agreement with respect to funds expended by
such Person by reason of the occurrence of any event or the existence or
assertion of any Liens (other than Permitted Liens) with respect to which
indemnification is sought.
1.43 MVPD. A distributor of cable television services, multichannel multi
point distribution service, direct broadcast satellite service or television
receive-only satellite programming, who makes available for purchase, by
subscribers or customers, multiple channels
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of video programming, other than Persons distributing such services only to
multiple dwelling unit or other commercial customers (including hotels, motels,
resorts, hospitals, dormitories, prisons, restaurants, bars and similar
establishments).
1.44 Other Real Property Interests. The IP-I Other Real Property Interests
or the RMG Other Real Property Interests, as the context requires.
1.45 Owned Property. IP-I Owned Property or RMG Owned Property, as the
context requires.
1.46 Party. IP-I or RMG, as the context requires.
1.47 Pay TV. Premium programming services selected by and sold to
subscribers on a per channel or per program basis.
1.48 Permitted Liens. (a) Liens for Taxes, assessments and governmental
charges, in each case not yet due and payable, (b) zoning laws or ordinances or
any similar Legal Requirements, (c) rights reserved to any Governmental
Authority to regulate the affected property, (d) Liens described on Schedule
5.4.1 (with respect to IP-I) and Schedule 6.4.1 (with respect to RMG), (e) as to
Leased Property or Tangible Personal Property that is leased, the interests of
the lessors thereof, and (f) as to Owned Property, Leased Property and Other
Real Property Interests, any easements, rights-of-way, servitudes, conditions,
covenants, restrictions and minor imperfections or irregularities in title, in
each case, which are reflected in the public records and which do not
individually or in the aggregate interfere with the right or ability of the
applicable Party to own, use, enjoy or operate the Owned Property, Leased
Property or Other Real Property Interests in the manner currently used or to
convey good, marketable and indefeasible fee simple title to the same; provided
that "Permitted Liens" will not include any Lien which could prevent or inhibit
in any way (other than as permitted under clause (f)) the conduct of the
business of the affected System, and provided further that classification of any
Lien as a "Permitted Lien" will not affect any liability which a Party may have
for any such Lien, including pursuant to any indemnity obligation under this
Agreement.
1.49 Person. Any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.50 Required Consents. The IP-I Required Consents or the RMG Required
Consents, as the context requires.
1.51 RMG Assets. All of the assets, privileges, contracts, licenses,
permits, franchises, authorizations, rights, interests, claims and other
properties, real and personal, tangible and intangible, of every type and
description (a) which are owned, leased, held for, used or useful in, or
otherwise related to, RMG's Cable Business, (b) in which RMG or any Affiliate of
RMG has
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any right, title or interest or in which RMG or any Affiliate of RMG acquires
any right, title or interest on or before the Closing Time, and (c) which are
not RMG Excluded Assets. The RMG Assets include the RMG Tangible Personal
Property, RMG Owned Property, RMG Leased Property, RMG Other Real Property
Interests, RMG Systems Franchises, RMG Systems Licenses, RMG Systems Contracts,
RMG Books and Records and RMG Other Intangibles.
1.52 RMG Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and procedures and all
other files of correspondence, lists, records and reports concerning RMG's Cable
Business, including subscribers and prospective subscribers of the RMG Systems,
signal and program carriage and dealings with Governmental Authorities with
respect to the RMG Systems, including all reports filed with respect to the RMG
Systems by or on behalf of RMG or any Affiliate of RMG with the FCC and
statements of account filed with respect to the RMG Systems by or on behalf of
RMG or any Affiliate of RMG with the U.S. Copyright Office, but excluding all
documents, reports and records relating to any employee of the RMG Systems who
has not given consent to disclosure of such documents, reports and records.
1.53 RMG Leased Property. The leaseholds of real property included among
the RMG Assets and described as RMG Leased Property on Schedule 1.53.
1.54 RMG Other Intangibles. All intangible assets, other than the RMG
Systems Franchises, RMG Systems Licenses and RMG Systems Contracts, including
subscriber lists, claims (excluding any claims relating to RMG Excluded Assets),
and Intellectual Property, if any, included among the RMG Assets.
1.55 RMG Other Real Property Interests. The easements and rights of access
(other than those relating to multiple dwelling units) and other interests in
real property held by RMG or any Affiliate of RMG in connection with RMG's Cable
Business, including those interests described as RMG Other Real Property
Interests on Schedule 1.55, but not including RMG Leased Property or RMG Owned
Property.
1.56 RMG Owned Property. The fee interests in the real property included
among the RMG Assets and described as RMG Owned Property on Schedule 1.56 and
all improvements and towers thereon and appurtenances thereto.
1.57 RMG Required Consents. Any and all consents, authorizations and
approvals under or in connection with the RMG Assets (including the RMG Systems
Franchises, RMG Systems Licenses, and RMG Systems Contracts) or any Contract,
Lien or Legal Requirement by which RMG, any of its Affiliates or their
respective Assets are bound, required (a) for RMG to transfer the RMG Assets to
the IP-I Parties pursuant to this Agreement, (b) for the IP-I Parties to operate
the RMG Systems and to own, lease, use and operate the RMG Assets and the RMG
Systems at the places and in the manner in which the RMG Assets are used and the
RMG Systems are operated as of the date of this Agreement and as of the Closing,
or (c) for the IP-I
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Parties to assume and perform the RMG Systems Franchises, the RMG Systems
Licenses, the RMG Systems Contracts and the IP-I Assumed Obligations and
Liabilities.
1.58 RMG Systems Contracts. All Contracts (other than RMG Systems
Franchises and RMG Systems Licenses) that are included among the RMG Assets,
including the lease agreements for RMG Tangible Personal Property, pole
attachment agreements, underground conduit agreements, crossing agreements,
retransmission consent agreements, multiple dwelling, bulk billing or commercial
service agreements and other Contracts described on Schedule 1.58 and the
Contracts documenting RMG Leased Property and RMG Other Real Property Interests
described on Schedules 1.53 and 1.55.
1.59 RMG Systems Franchises. The franchises, permits and similar
authorizations included among the RMG Assets (other than RMG Systems Licenses)
described on Schedule 1.59, and all rights and benefits of RMG and its
Affiliates pertaining thereto, including the rights and benefits arising under
Section 626 of the Communications Act (47 U.S.C. 546) to the extent applicable
to an RMG Systems Franchise.
1.60 RMG Systems Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, earth station registrations, authorizations, consents or permits
issued by the FCC or any other Governmental Authority included among the RMG
Assets and described on Schedule 1.60 (other than the RMG Systems Franchises and
RMG Systems Contracts) and all rights and benefits of RMG and its Affiliates
pertaining thereto.
1.61 RMG Tangible Personal Property. All tangible personal property
included among the RMG Assets, including towers (other than towers on RMG Owned
Property which are fixtures thereon and a part thereof), tower equipment,
aboveground and underground cable, distribution systems, headend amplifiers,
line amplifiers, microwave equipment, converters, testing equipment, motor
vehicles, office equipment, computers and billing equipment, furniture,
fixtures, supplies, inventory and other physical assets, the principal items of
which are identified and described on Schedule 1.61.
1.62 RMG's Cable Business. The cable television businesses and other
revenue-generating businesses and operations relating to the RMG Systems
conducted by RMG or an Affiliate of RMG through the RMG Systems.
1.63 Six-Month Date. The date that is six months after the Closing Date.
1.64 System. Any of the IP-I Systems or the RMG Systems, as the context
requires.
1.65 Systems Contracts. The IP-I Systems Contracts or the RMG Systems
Contracts, as the context requires.
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1.66 Systems Franchises. The IP-I Systems Franchises or the RMG Systems
Franchises, as the context requires.
1.67 Systems Licenses. The IP-I Systems Licenses or the RMG Systems
Licenses, as the context requires.
1.68 Tangible Personal Property. The IP-I Tangible Personal Property or
the RMG Tangible Personal Property, as the context requires.
1.69 Taxes. Levies and assessments of any kind or nature imposed by any
Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies or assessments related to
unclaimed property, together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto. For purposes of
determining any Tax cost or Tax benefit to any Person, such amount will be the
actual cost or benefit recognized by such Person at the time of actual payment
of the additional Tax or actual receipt of the Tax benefit. In the event that
any Loss, payment or other amount is required to be determined on an after-Tax
basis, such payment or other amount will be determined without regard to any Tax
cost or Tax benefit not actually recognized at the time of the determination,
and appropriate adjustments will be made when and to the extent that such Tax
cost or Tax benefit is actually recognized.
1.70 Third Party. Any Person other than RMG and its Affiliates or IP-I and
its Affiliates.
1.71 Transaction Documents. The Common Agreement and all instruments and
documents described in Sections 9.2 and 9.3 which are being executed and
delivered by or on behalf of any IP-I Party or RMG in connection with this
Agreement or the transactions contemplated hereby.
1.72 Other Definitions. The following terms have the meanings set forth in
the sections indicated in the table below:
Term Section
---- -------
Agent's Fees 5.18
ALTA 7.6
AT&T Affiliates 1.2
Brenmor First Paragraph
Cash Consideration 3.1.1
Charter Parties Recital D
Closing Date 9.1
Code Recital C
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commercially reasonable efforts 12.16
control 1.2
Common Agreement Recital D
Computer and Other Systems 7.20.1(a)
Confidential Information 7.13.1
Cost of Service Election 5.8.4
Exchange 2.1
FCC Rate Forms 5.8.4
FTC 7.7
Hired Employee 7.3.6(a)
IP-I First Paragraph
IP-I Parent First Paragraph
IP-I Party First Paragraph
IP-I Excluded Assets 4.4
IP-I Matching Franchise 7.5.5(a)
IP-I Retained Franchise 7.5.5(b)
IP-I System Value 3.1.1
IP-I Systems Recital A
IP-I's Assumed Obligations and Liabilities 4.3
Matching Franchise 7.5.5(a)
New Properties 7.10(b)
Nonrecourse 11.3
Operating Agreements 7.5.5(c)
Phase I Assessment 7.19.1
Phase II Assessment 7.19.1
Primary Transfer 7.5.5(d)
Prime Rate 12.8
Redemption Agreement Recital D
Retained Franchise 7.5.5(a)
RMG First Paragraph
RMG Excluded Assets 4.2
RMG Matching Franchise 7.5.5(b)
RMG Retained Franchise 7.5.5(a)
RMG System Value 3.1.1
RMG Systems Recital B
RMG's Assumed Obligations and Liabilities 4.1
Specified RMG Obligations 11.2
Subsequent Transfer 7.5.5(e)
Surveys 7.6
Survival Period 11.1
System Employees 7.3.1
Taking 12.14
Third Party Testing 7.20.2(c)
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Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Transfer Tax Returns 7.8
Transfer Taxes 7.8
Transferee Party 7.17.3
Transferor Party 7.17.3
Transitional Billing Services 7.12
WARN 5.14.1
Year 2000 High-Level Inventory,
Assessment and Remediation Decisions 7.20.1(b)
Year 2000 Plan 7.20.1(c)
Year 2000 Ready or Year 2000 Readiness 7.20.1(d)
Year 2000 Remediation Program 7.20.1(e)
1.73 Usage. The definitions in Article 1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed to be references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. All Exhibits and Schedules attached hereto shall be deemed incorporated
herein as if set forth in full herein and, unless otherwise defined therein, all
terms used in any Exhibit or Schedule shall have the meaning ascribed to such
term in this Agreement. The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise expressly provided herein, any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. All accounting terms
not otherwise defined in this Agreement will have the meanings ascribed to them
under generally acceptable accounting principles as in effect from time to time
in the United States, consistently applied.
2. EXCHANGE.
2.1 Exchange of Assets. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, RMG and the IP-I Parties agree to
exchange simultaneously (a) certain RMG Assets for the IP-I Assets held by IP-I
Parent, as set forth on Schedule 2.1, and (b) certain RMG Assets for the IP-I
Assets held by Brenmor, as set forth in Schedule 2.1, in each case free and
clear of all Liens (except Permitted Liens) (the "Exchanges"), including the
assignment and transfer of all interests in Leased Property and leased Tangible
Personal
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Property. RMG and the IP-I Parties agree to use all reasonable efforts to
structure the Exchanges in such a way that to the extent reasonably possible it
will be a tax free exchange of like-kind assets under Section 1031 of the Code,
including either Party's assignment of its rights under this Agreement to a
"qualified intermediary" engaged by such Party to effectuate a deferred
like-kind exchange under Section 1031 of the Code. Schedule 2.1 will be attached
to this Agreement in form and substance mutually satisfactory to the Parties
prior to Closing, and when attached to this Agreement will be deemed for all
purposes to be attached as of the date hereof.
2.2 Method of Exchange. Each Exchange of Assets as described in Schedule
2.1 is to occur as follows: (A) the RMG Tangible Personal Property and the IP-I
Tangible Personal Property are being exchanged each for the other in "Exchange
Groups" as defined under Internal Revenue Regulations Sections 1.1031(a)-2 and
1.1031(j)-1(b)(2); (B) the RMG Owned Property, RMG Leased Property and RMG Other
Real Property Interests, and the IP-I Owned Property, IP-I Leased Property and
IP-I Other Real Property Interests, are being exchanged each for the other; and
(C) the RMG Systems Contracts, RMG Systems Franchises, RMG Systems Licenses and
RMG Other Intangibles, and the IP-I Systems Contracts, IP-I Systems Franchises,
IP-I Systems Licenses and IP-I Other Intangibles, are being exchanged each for
the other, in each case to the maximum extent permitted by Section 1031 of the
Code and the regulations promulgated thereunder. Liabilities assumed or taken
subject to by each Party are being exchanged each for the other to the maximum
extent permitted under Section 1031 of the Code and regulations thereunder.
3. CONSIDERATION. Each Party agrees that cash consideration will be paid at
Closing by either RMG (or its designee) to the IP-I Parties or by the IP-I
Parties to RMG, and that such amount will be determined as follows:
3.1 Calculation of Values; Cash Consideration.
3.1.1 For the purposes of this Agreement, the gross value of the RMG
Assets comprising each RMG System shall be as set forth on Schedule 3.1.1-A
(each, an "RMG System Value") and the gross value of the IP-I Assets comprising
each IP-I System shall be as set forth on Schedule 3.1.1-B (each, a "IP-I System
Value"). The RMG System Value for each RMG System shall be adjusted in
accordance with the provisions of the Redemption Agreement, and the IP-I System
Value for each IP-I System shall be adjusted in accordance with the provisions
of the Common Agreement. At the Closing, the appropriate Person will pay to the
IP-I Parties or RMG, as the case may be (or their permitted assignees) an amount
of cash to be determined pursuant to the Redemption Agreement or the Common
Agreement (in each case, the "Cash Consideration"), which payments shall then be
deemed made pursuant and subject to this Agreement. Preliminary and final
determinations of the Cash Consideration will be made in accordance with the
Common Agreement.
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4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.
4.1 RMG's Assumed Obligations and Liabilities. At the Closing and
effective as of the Closing Time, RMG will assume and after the Closing Date,
RMG will pay, discharge and perform the following (collectively, "RMG's Assumed
Obligations and Liabilities"): (a) those obligations and liabilities accruing
and relating to periods after the Closing Time under or with respect to the IP-I
Assets assigned and transferred to RMG at the Closing; (b) those obligations and
liabilities of IP-I for subscriber prepayments and deposits related to the IP-I
Systems existing at the Closing Time; (c) other obligations and liabilities of
the IP-I Parties only to the extent that the Adjusted Value of the IP-I Systems
was decreased with respect thereto pursuant to Section 2.2 of the Common
Agreement; and, (d) all other obligations and liabilities accruing and relating
to periods after the Closing Time and arising out of RMG's ownership, use or
operation of the IP-I Assets (including those items listed or described on
Schedule 4.4(b)) or its operation of, or conduct of business through, the IP-I
Systems after the Closing (including with respect to late fees that may be
charged by RMG after the Closing to subscribers of the IP-I Systems) except to
the extent that such obligations or liabilities relate to any IP-I Excluded
Asset. All obligations and liabilities arising out of or relating to the IP-I
Assets, the IP-I Systems or IP-I's Cable Businesses other than RMG's Assumed
Obligations and Liabilities will remain and be the obligations and liabilities
solely of the IP-I Parties, including any obligation, liability or claims
relating to or arising pursuant to (w) Taxes (including franchise fees) with
respect to periods or portions thereof ending on or prior to the Closing Date,
(x) refunds of rates, charges or late fees with respect to periods through and
including the Closing Date, (y) Litigation commenced, or related to an event
occurring, on or prior to the Closing Date, or (z) credit, loan or other
agreements pursuant to which the IP-I Parties have created, incurred, assumed or
guaranteed indebtedness for borrowed money or under which any Lien securing such
indebtedness has been or may be imposed on any IP-I Asset.
4.2 RMG Excluded Assets. "RMG Excluded Assets" means all: (a) cash and
cash equivalents; (b) minute books, stock ledgers, organizational documents and,
to the extent not included in the RMG Books and Records, personnel files and
records; and (c) rights, assets and properties described on Schedule 4.2.
4.3 IP-I's Assumed Obligations and Liabilities. At the Closing and
effective as of the Closing Time, the IP-I Parties will assume and after the
Closing Date, the IP-I Parties will pay, discharge and perform the following
(collectively, "IP-I's Assumed Obligations and Liabilities"): (a) those
obligations and liabilities under or with respect to the RMG Assets assigned and
transferred to the IP-I Parties at the Closing; (b) those obligations and
liabilities of RMG for subscriber prepayments and deposits related to the RMG
Systems existing at the Closing Time; (c) other obligations and liabilities of
RMG to the extent that the Adjusted Value of the RMG Systems was decreased with
respect thereto pursuant to the Redemption Agreement; and (d) all other
obligations and liabilities related to or arising out of RMG's or the IP-I
Parties' ownership, use or operation of the RMG Assets or their operation of, or
the conduct of business through, the RMG Systems (including with respect to late
fees that may be charged by the IP-I Parties after
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the Closing to subscribers of the RMG Systems), except to the extent that such
obligations or liabilities relate to any RMG Excluded Asset. All obligations and
liabilities not arising out of or relating to the RMG Assets, the RMG Systems or
RMG's Cable Business will remain and be the obligations and liabilities solely
of RMG including any obligation, liability or claims relating to or arising
pursuant to (x) Taxes (other than franchise fees or Taxes with respect to the
RMG Assets) with respect to periods or portions thereof ending on or prior to
the Closing Date, or (y) credit, loan or other agreements pursuant to which RMG
has created, incurred, assumed or guaranteed indebtedness for borrowed money or
under which any Lien securing such indebtedness has been or may be imposed on
any RMG Asset.
4.4 IP-I Excluded Assets. "IP-I Excluded Assets" means all: (a)
programming Contracts (including music programming Contracts), cable guide
Contracts, and Contracts to which the IP-I Parties one or more Affiliates of the
IP-I Parties or other cable systems of the IP-I Parties or their Affiliates are
parties (including master retransmission consent agreements and master billing,
collection and related agreements), other than any such Contracts (such as local
programming agreements) listed on Schedule 4.4(b), (b) except as set forth on
Schedule 4.4(b), each employee benefit plan (as defined in Section 3(3) of
ERISA) or any multiemployer plan (as defined in Section 3(37) of ERISA) with
respect to which any IP-I Party or any of their ERISA Affiliates has any
liability or in which any employees or agents, or any former employees or
agents, of any IP-I Party or any of their ERISA Affiliates participate; (c)
except as provided in Section 12.14, insurance policies and rights and claims
thereunder; (d) bonds, letters of credit, surety instruments and other similar
items; (e) cash and cash equivalents, including cash relating to subscriber
prepayments and deposits, and notes receivable; (f) except as set forth on
Schedule 4.4(b), and subject to Section 7.11, Intellectual Property held by IP-I
or any of its Affiliates; (g) except as set forth on Schedule 4.4(b), subscriber
billing Contracts and related equipment if not owned by the IP-I Parties or any
Affiliate of the IP-I Parties; (h) assets, rights or properties of the IP-I
Parties or their Affiliates used or held for use other than principally in
connection with the IP-I Systems; (i) except for any items for which the
Adjusted Value of the IP-I Systems is increased under Section 2.2 of the Common
Agreement, claims, rights, and interest in and to any refunds of Taxes or fees
of any nature, or other claims against third parties, relating to the operation
of the IP-I Systems prior to the Closing Time; (j) account books of original
entry, general ledgers, financial records, minute books, stock ledgers,
organizational documents and, to the extent not included in the IP-I Books and
Records, personnel files and records, in each case used in connection with the
IP-I Systems; (k) except for the leases described on Schedule 4.4(b), capital
and vehicle leases; (l) advertising sales agency or representation Contracts
providing any Third Party or Affiliate of IP-I the right to sell available
advertising time for a IP-I System other than any such Contract listed on
Schedule 4.4(b); (m) to the extent licensed pursuant to a master license
agreement or otherwise not transferable, software of the IP-I Parties or any
Affiliate of the IP-I Parties and licenses relating to Third Party software; (n)
Contracts for any fiber or fiber capacity lease or use arrangements that provide
to any Third Party or Affiliate of IP-I the right to use any fiber or capacity
of a IP-I System other than any such Contract listed on Schedule 4.4(b); (o)
except as set forth on Schedule 4.4(b), Contracts for any internet access or
on-line services arrangements that provide to any Third Party or Affiliate of
IP-I the right to use
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the transmission capacity of a IP-I System to provide internet access or other
on-line services over such IP-I System; (p) except as set forth on Schedule
4.4(b), Contracts between any IP-I Party and its Affiliates; and (q) other
rights, assets and properties described on Schedule 4.4(a).
5. IP-I'S REPRESENTATIONS AND WARRANTIES. Each IP-I Party represents and
warrants to RMG, jointly and severally, as of the date of this Agreement and as
of the Closing, as follows:
5.1 Organization and Qualification of IP-I. Such IP-I Party is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of California. Such IP-I Party has all requisite power and authority
to own, lease and use the IP-I Assets owned, leased or used by it and to conduct
its Cable Business as it is currently being conducted by it. As of the date of
this Agreement, such IP-I Party is duly qualified to do business and is in good
standing under the laws of each jurisdiction in which the ownership, leasing or
use of the IP-I Assets owned, leased or used by it or the nature of its
activities in connection with its IP-I Systems makes such qualification
necessary.
5.2 Authority and Validity. Such IP-I Party has all requisite corporate
power and authority to execute and deliver, to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Transaction Documents to which it is a party. The execution and delivery by such
IP-I Party of, its performance under, and its consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which it is a
party have been duly and validly authorized by all action by or on behalf of
such IP-I Party. This Agreement has been, and when executed and delivered by
such IP-I Party the Transaction Documents to which it is a party will be, duly
and validly executed and delivered by such IP-I Party and the valid and binding
obligations of such IP-I Party, enforceable against it in accordance with their
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to the enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
5.3 No Conflict; Required Consents. Except as set forth on Schedule 5.3,
and assuming all RMG Required Consents have been obtained and the expiration or
earlier termination of the waiting period under the HSR Act has occurred, the
execution and delivery by such IP-I Party of, its performance under, and its
consummation of the transactions contemplated by, this Agreement and the
Transaction Documents to which it is a party do not and will not: (a) conflict
with or violate any provision of the organizational documents of such IP-I
Party; (b) violate any provision of any Legal Requirement; (c) require any
consent, approval or authorization of, or filing of any certificate, notice,
application, report or other document with, any Governmental Authority or other
Person; or (d) (i) conflict with, violate, result in a breach of or constitute a
default under (without regard to requirements of notice, lapse of time or
elections of other Persons or any combination thereof), (ii) permit or result in
the termination, suspension or modification of, (iii) result in the acceleration
of (or give any Person the right to accelerate)
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the performance of such IP-I Party under, or (iv) result in the creation or
imposition of any Lien under any IP-I Systems Contract, IP-I Systems Franchise,
IP-I Systems License, or other instrument evidencing any of the IP-I Assets or
by which such IP-I Party or any of its assets is bound or affected, except for
purposes of clauses (c) and (d) such consents, approvals, authorizations and
filings that, if not obtained or made, would not, and such violations,
conflicts, breaches, defaults, terminations, suspensions, modifications and
accelerations as would not, individually or in the aggregate, have an adverse
effect on any of such IP-I Party's Systems, its Cable Business or on such IP-I
Party, or on its ability to perform its obligations under this Agreement or the
Transaction Documents to which it is a party.
5.4 Assets.
5.4.1 Such IP-I Party has good and marketable title to (or, in the
case of Assets that are leased, valid leasehold interests in) its Assets. None
of the AT&T Affiliates has any right, title or interest in or to any of the IP-I
Assets. The IP-I Assets are free and clear of all Liens, except Permitted Liens
and rights of first refusal which will be waived at Closing by the Person
holding such rights. All of the Liens described on Schedule 5.4.1 (except for
those marked with an asterisk on Schedule 5.4.1) will be terminated, released
or, in the case of rights of first refusal (except for those listed on Schedule
5.4.1), waived, as appropriate, at or prior to the Closing. Except as described
on Schedule 1.34, such IP-I Party's Tangible Personal Property, as an integrated
system and in its component parts, is in good operating condition and repair
(ordinary wear and tear and routine failures excepted) and is usable and
adequate for the operation of such IP-I Party's Cable Business.
5.4.2 Except for items included in the IP-I Excluded Assets, such
IP-I Party's Assets constitute substantially all the assets necessary to (a)
conduct its Cable Business as it is being conducted on the date of this
Agreement and in compliance with all applicable Legal Requirements, (b) to
operate its Systems as they are being operated on the date of this Agreement and
in compliance with all applicable Legal Requirements and (c) to perform all of
RMG's Assumed Obligations and Liabilities.
5.4.3 Except as described on Schedule 5.4.3, and other than direct
broadcast satellite and satellite master antenna television, with respect to
each area in which such IP-I Party's Systems currently provide cable television
service: (i) no Person is operating a cable television system or other
non-satellite MVPD other than a IP-I System in such area; (ii) no local
franchising authority has awarded a cable television franchise in such area to
any Person other than a IP-I Party; and (iii) to the Knowledge of such IP-I
Party, no MVPD has applied for a cable television franchise to serve such area.
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5.5 IP-I Systems Franchises, IP-I Systems Licenses, IP-I Systems
Contracts and IP-I Other Real Property Interests.
5.5.1 Except as described on Schedules 1.26, 1.28, 1.31, 1.32 and
1.33, and except for the IP-I Excluded Assets, IP-I is not bound or affected by
any of the following that relate primarily or in whole to its Cable Business:
(a) leases of real property or capital leases of personal property; (b)
operating leases of personal property that are terminable upon more than 30 days
notice and that contemplate annual lease payments in excess of $20,000; (c)
franchises for the construction or operation of cable television systems or IP-I
Systems Contracts of substantially equivalent effect; (d) licenses,
authorizations, consents or permits of the FCC; (e) other licenses,
authorizations, consents or permits of any other Governmental Authority,
individually or in the aggregate, material to any IP-I System; (f) easements or
rights of access, individually or in the aggregate, material to any IP-I System;
(g) pole attachment agreements, underground conduit agreements, crossing
agreements, retransmission consent agreements or bulk or commercial service
agreements, individually or in the aggregate, material to any IP-I System; or
(h) IP-I Systems Contracts other than those described in any other clause of
this Section 5.5.1 which contemplate payments by or to IP-I in any 12-month
period exceeding $25,000 under any single contract or $100,000 in the aggregate.
5.5.2 Complete and correct copies of such IP-I Party's Systems
Franchises and Systems Licenses have been provided to the Charter Parties.
Except as set forth on Schedule 5.5.2, (a) such IP-I Party's Systems Franchises
contain all of the commitments and obligations of such IP-I Party to the
applicable Governmental Authority granting such Franchises with respect to the
construction, ownership and operation of its Systems, and (b) other than as set
forth in IP-I Party's Systems Franchises, such IP-I Party has not made any
commitment to any local franchising authority to make any material expenditure
or capital addition or betterment to any of its Systems or Assets that will not
be fulfilled or satisfied prior to the Closing Time. Such IP-I Party's Systems
Franchises and Systems Licenses are currently in full force and effect, are not
in default and are valid under all applicable Legal Requirements according to
their terms. No event has occurred that, with notice or lapse of time or both,
would constitute a breach, violation or default by any such IP-I Party, and to
such IP-I Party's Knowledge, no event has occurred that, with notice or lapse of
time or both, would constitute a breach, violation or default by any other
Person, of any material obligations under any of such IP-I Party's Systems
Franchises or Systems Licenses. Except for routine filings with Governmental
Authorities and as described on Schedule 5.5.2, there are no applications
relating to any of such IP-I Party's Systems Franchise or Systems License
pending before any Governmental Authority which are material to any of its
Systems or its Cable Business. Except where a request for renewal has been
timely filed under Section 626(a) of the Cable Act, since December 31, 1998, no
Systems Franchise or Systems License of such IP-I Party has been surrendered by
such IP-I Party or has expired or otherwise terminated without the issuance of a
replacement IP-I Systems Franchise or IP-I Systems License. There is no legal
action, governmental proceeding or investigation pending or, to such IP-I
Party's Knowledge, threatened to terminate, suspend or modify any Systems
Franchise or Systems License of such IP-I Party. Except as set forth on Schedule
5.5.2, such IP-I Party is, or will be as of the Closing Date, in material
compliance with the terms and conditions of all its Systems Franchises and
Systems Licenses and other applicable requirements of all Governmental
Authorities (including the FCC and the U.S. Copyright Office) relating to such
IP-I Systems
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Franchises and IP-I Systems Licenses, including all requirements for
notification, filing, reporting, posting and maintenance of logs and records.
5.5.3 Such IP-I Party has delivered to the Charter Parties true and
complete copies of all of such IP-I Party's Systems Contracts (including each
Contract relating to IP-I Leased Property and IP-I Other Real Property
Interests), including any amendments thereto (or, in the case of oral Contracts,
true and complete written summaries thereof) and each document evidencing such
IP-I Party's ownership of its Owned Property. Except as described in Schedule
5.5.3, such IP-I Party has fulfilled when due, or has taken all action necessary
to enable it to fulfill when due, all of its obligations under each of its
Contracts and, to the Knowledge of such IP-I Party, there has not occurred any
default (without regard to requirements of notice, lapse of time, elections of
other Persons, or any combination thereof) by any other Person of any material
obligations under any of its Contracts or Real Property Interests.
5.6 Real Property. All the Assets of such IP-I Party consisting of IP-I
Owned Property, IP-I Leased Property and material IP-I Other Real Property
Interests are described on Schedules 1.26, 1.28 and 1.29. Except for ordinary
wear and tear and routine repairs and as set forth on Schedule 5.6, all of the
improvements, leasehold improvements and the premises of such IP-I Party's Owned
Property and the premises demised under the leases and other documents
evidencing such IP-I Party's Leased Property and are in good condition and
repair and are suitable for the purposes used. Each parcel of such IP-I Party's
Owned Property and each parcel of such IP-I Party's Leased Property and any
improvements thereon (a) has access to and over public streets or private
streets for which such IP-I Party has a valid right of ingress and egress, (b)
except as set forth on Schedule 1.26 or 1.28, conforms in its current use and
occupancy to all material zoning requirements without reliance upon a variance
issued by a Governmental Authority or a classification of the parcel in question
as a nonconforming use, (c) conforms in all material respects in its current use
to all restrictive covenants, if any, or other Liens affecting all or part of
such parcel (of record, with respect to IP-I Owned Property, or of record or as
set forth in an agreement listed on Schedule 1.26 or 1.28 with respect to IP-I
Leased Property or IP-I Other Real Property Interests), and (d) is available for
immediate use in the conduct of the business or operations of such IP-I Party's
Systems. There are no pending condemnation, expropriation, eminent domain or
similar proceedings of which such IP-I Party has received notice or has
Knowledge affecting, in any material respect, all or any portion of such IP-I
Party's Owned Property, Leased Property, or Other Real Property Interests. Such
IP-I Party has good and marketable title to each such parcel of real property
included in its Owned Property and in all buildings, structures and improvements
thereon, in each case free and clear of all Liens except for Permitted Liens.
5.7 Environmental.
5.7.1 Except as described on Schedule 5.7, such IP-I Party is in
material compliance with all Environmental Laws, insofar as they relate to its
Owned Property or Leased Property. Except as described on Schedule 5.7, such
IP-I Party has not received any notice of,
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and has no Knowledge of, any alleged, actual, or potential responsibility for,
or any inquiry regarding, (i) any release or threatened release of any Hazardous
Substances from or on its Owned Property or Leased Property, or (ii) any
material violation of any Environmental Laws associated with its Owned Property
or Leased Property. Except as described on Schedule 5.7, to such IP-I Party's
Knowledge, its own operations on its Other Real Property Interests do not
violate any Environmental Laws in any material respect, and such IP-I Party has
received no notice of any such violation. Except as described on Schedule 5.7,
such IP-I Party has not received any notice of, and has no Knowledge of
circumstances relating to, any past, present or future events, conditions,
circumstances, activities, practices or incidents (including the presence, use,
generation, manufacture, disposal, release or threatened release of any
Hazardous Substances from or on its Owned Property or Leased Property), which
could interfere with or prevent continued compliance, or which are reasonably
likely to give rise to any liability, based upon or related to the processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
Hazardous Substance from or attributable to its Owned Property or Leased
Property.
5.7.2 Except as described on Schedule 5.7, to such IP-I Party's
Knowledge, (a) no aboveground or underground storage tanks are currently or have
been located on any IP-I Owned Property or IP-I Leased Property of such IP-I
Party and (b) no IP-I Owned Property or IP-I Leased Property of such IP-I Party
has been used at any time as a gasoline service station or any other facility
for storing, pumping, dispensing or producing gasoline or any other petroleum
products or wastes.
5.7.3 Complete and correct copies of (a) all studies, reports,
surveys or other similar written materials in IP-I's possession or to which
IP-I, to its Knowledge, has access relating to the presence or alleged presence
of Hazardous Substances at, on, under or affecting the IP-I Owned Property or
IP-I Leased Property of such IP-I Party, (b) all notices (other than general
notices made by general publication) in IP-I's possession or to which IP-I, to
its Knowledge, has access that were received from any Governmental Authority
having the power to administer or enforce any Environmental Laws relating to
current or past ownership, use or operation of such Xxxxxx Party's Owned
Property or Leased Property or activities at its Owned Property or IP-I Leased
Property and (c) all notices and related materials in IP-I's possession or to
which IP-I, to its Knowledge, has access relating to any Litigation concerning
any Environmental Law to which such IP-I Party is a party or written allegation
by any private Third Party concerning any Environmental Law and such IP-I Party,
have been provided to RMG (other than those materials constituting
attorney-client privileged communications).
5.8 Compliance with Legal Requirements.
5.8.1 Except as set forth on Schedule 5.8, the operation of such
IP-I Party's Systems as currently conducted does not violate or infringe any
Legal Requirement currently in effect in any material respect (other than Legal
Requirements described in Sections 5.7, 5.8.3 and 5.8.4, as to which the
representations and warranties set forth in those subsections will
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apply) or the grounding requirements of the National Electrical Safety Code.
Except as set forth on Schedule 5.8, such IP-I Party has not received any notice
and has no Knowledge of any material violation by such IP-I Party or any of its
Systems of any Legal Requirement applicable to the installation, ownership and
operation of its Systems as currently conducted, and knows of no basis for the
allegation of any such violation.
5.8.2 Except as set forth on Schedule 5.8, without limiting the
generality of the foregoing, since such IP-I Party's acquisition of its Systems:
it has submitted to the FCC all filings, including cable television registration
statements, annual reports and aeronautical frequency usage notices and paid all
regulatory fees, that are required under the rules and regulations of the FCC;
the operation of its Systems has been and is in material compliance with the
rules and regulations of the FCC, and it has not received any notice from the
FCC of any violation of its rules and regulations; such IP-I Party is and since
1986 (or since its acquisition, if later) has been certified as in compliance
with the FCC's equal employment opportunity rules; its Systems are in material
compliance with all signal leakage criteria prescribed by the FCC; and for each
relevant semi-annual reporting period since its acquisition of a IP-I System,
such IP-I Party has timely filed with the United States Copyright Office all
required Statements of Account in true and correct form, has paid when due all
required copyright royalty fee payments in correct amount, relating to its
Systems' carriage of television broadcast signals and is otherwise in material
compliance with all applicable rules and regulations of the Copyright Office.
Except as set forth on Schedule 5.8, such IP-I Party has no Knowledge, with
respect to any IP-I System acquired by such IP-I Party since January 1, 1996, of
any previous owner's failure to comply with the copyright licensing requirements
with respect to such System or any written claim or inquiry from any Person
which questions such System's failure to comply. IP-I has delivered to the
Charter Parties copies of all reports, filings and correspondence made or filed
by such IP-I Party with the FCC or pursuant to the FCC rules and regulations for
the past year and all reports, filings and correspondence made or filed by such
IP-I Party with the Copyright Office or pursuant to Copyright Office rules and
regulations for the past three years. Except as set forth on Schedule 5.8, (i) a
request for renewal has been timely filed under Section 626(a) of the Cable Act
with the proper Governmental Authority with respect to each Systems Franchise of
such IP-I Party expiring within 36 months after the date of this Agreement; and
(ii) such IP-I Party has received no written notice from any Governmental
Authority that it has determined or intends to deny renewal of any IP-I Systems
Franchise to which it is a party.
5.8.3 Except as set forth on Schedule 5.8 and as otherwise provided
in this Section, such IP-I Party has used commercially reasonable efforts to
comply in all material respects with the provisions of the Cable Act and the
1992 Cable Act pertaining to the carriage of television broadcast signals, as
such Legal Requirements relate to the operation of its Systems. Such IP-I Party
has complied in all material respects with the must carry and retransmission
consent provisions of the 1992 Cable Act, including (i) duly and timely
notifying "local commercial television stations" of inadequate signal strength
or increased copyright liability, if applicable, (ii) duly and timely notifying
non-commercial educational stations of the location of its System's principal
headend, (iii) duly and timely notifying subscribers of changes in the
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channel alignment on its Systems, (iv) duly and timely notifying "local
commercial and non-commercial television stations" of the broadcast signals
carried on its Systems and their channel positions, (v) maintaining the
requisite public file identifying broadcast signal carriage, (vi) carrying the
broadcast signals after June 1, 1993, on its Systems for all "local commercial
television stations" which elected must carry status and, if required, up to two
"qualified low power stations" and (vii) obtaining retransmission consents for
all broadcast signals carried on its Systems after October 5, 1993, except for
the non-exempt signals carried pursuant to a must carry election. No must carry
complaint is pending against any of System such IP-I Party at the FCC, nor, to
such IP-I Party's Knowledge, is any threatened except as set forth in Schedule
5.8. IP-I has delivered to the Charter Parties copies of any pending petitions
such IP-I Party has on file with the FCC, including requests for market
modifications or petitions for special relief or any market modification
requests or special relief petitions affecting any IP-I System that have been
served on such IP-I Party. The FCC has not issued any decision with respect to a
must carry complaint finding any System of such IP-I Party in violation of the
must carry rules except as set forth on Schedule 5.8.
5.8.4 Such IP-I Party has used commercially reasonable efforts to
establish rates charged and a la carte packages provided to subscribers,
effective as of September 1, 1993, that would be allowable under rules and
regulations promulgated by the FCC under the 1992 Cable Act, and any
authoritative interpretation thereof, whether or not such rates or packages were
subject to regulation at that date by any Governmental Authority, including any
state regulatory agency, local franchising authority and/or the FCC.
Notwithstanding the foregoing, such IP-I Party makes no representation or
warranty that either the rates charged to subscribers or the a la carte packages
provided would be allowable under any rules and regulations of the FCC, or any
authoritative interpretation thereof, promulgated after the date of the Closing.
IP-I has delivered to the Charter Parties complete and correct copies of (i) the
most recent FCC Forms 328, 329, 393, 1200, 1205, 1210, 1215, 1220, 1235 and 1240
and other FCC rate forms (collectively, "FCC Rate Forms") filed by such IP-I
Party with the local franchising authority and/or the FCC and will deliver as
soon as available all FCC Rate Forms that are prepared with respect to such IP-I
Party's Systems, (ii) all historical FCC Rate Forms with respect to any IP-I
System in which there is currently a rate issue pending, including any
accounting order or any rate order on appeal, (iii) copies of all complaints,
petitions, answers, responses and other filings made with or by any Governmental
Authority in connection with any rate orders issued by such Governmental
Authority or any appeal therefrom, and (iv) any documentation supporting an
exemption from the rate regulation provisions of the 1992 Cable Act claimed by
such IP-I Party with respect to its Systems. Except as set forth on Schedule
5.8, such IP-I Party has not made any election with respect to any cost of
service proceeding conducted in accordance with Part 76.922 of Title 47 of the
Code of Federal Regulations or any similar proceeding (a "Cost of Service
Election") with respect to any of such IP-I Party's Systems.
5.8.5 Except as set forth on Schedule 5.8, all necessary FAA
approvals have been obtained and all necessary FCC tower registrations have been
filed with respect to the height and location of towers used in connection with
the operation of such IP-I Party's Systems,
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and such towers are being operated in compliance in all material respects with
applicable FCC and FAA rules. The ownership, height (with and without
appurtenances), location (address, latitude, longitude and ground elevation),
structure type and FCC call signs of each tower used in connection with the
operation of such IP-I Party's Systems are correctly described on Schedule 5.8.
To the extent applicable, IP-I has delivered to the Charter Parties true and
correct copies of the FAA final determinations that are available and FCC
registrations for all such towers.
5.9 Intellectual Property. Except for Intellectual Property which
constitutes IP-I Excluded Assets and the Intellectual Property described on
Schedule 4.4(b), such IP-I Party does not possess any Intellectual Property
related to or material to the operation of its Systems, and such IP-I Party is
not a party to any license or royalty agreement with respect to any such
Intellectual Property, except for licenses respecting program material or
incidental to any Systems Contract and obligations under the Copyright Act. To
the Knowledge of such IP-I Party, its Systems and Cable Business have been
operated in such a manner so as not to violate or infringe upon the rights, or
give rise to any rightful claim of any Person for copyright, trademark, service
xxxx, patent or license infringement or the like.
5.10 Financial Statements. IP-I's statements of income for the years ended
December 31, 1997 and 1998, attached hereto as Schedule 5.10, are in accordance
with the books and records of the IP-I Systems, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby and, except as may be described therein,
present fairly the operating results of the IP-I Systems for the periods
indicated, subject only to standard year-end adjustments and the omission of
footnotes thereto.
5.11 Absence of Certain Changes or Events. Except as set forth on Schedule
5.11, since December 31, 1998, there has been no (i) material adverse change in,
nor has any event or events (other than any affecting the cable television
industry generally) occurred that, individually or in the aggregate, are
reasonably likely to result in a material adverse change in such IP-I Party's
Assets, Cable Business, operations, condition (financial or otherwise) or
results of operations of its Systems, taken as a whole and (ii) material change
in accounting principles or practices with respect to such IP-I Party's Cable
Business or revaluation by such IP-I Party of its Assets for financial
reporting, property tax or other purposes. From December 31, 1998 to the date of
this Agreement, such IP-I Party's Cable Business has been conducted only in the
usual, regular and ordinary course, except as disclosed on Schedule 5.11 and
except where the failure to conduct business in such manner would not have a
material adverse effect on such IP-I Party's Assets, Cable Business, operations,
condition (financial or otherwise) or results of operations of its obligations
under this Agreement.
5.12 Litigation. Except as set forth on Schedule 5.12: (a) there is no
Litigation pending or, to the Knowledge of such IP-I Party, threatened against
such IP-I Party or any of its Affiliates which, if adversely determined, would
(i) materially and adversely affect the financial
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condition or operations of such IP-I Party's Cable Business, any of its Systems
or Assets or the ability of such IP-I Party to perform its obligations under
this Agreement or (ii) result in the modification, revocation, termination,
suspension or other limitation of any of such IP-I Party's Systems Franchises,
Systems Licenses, or Systems Contracts; and (b) there is not in existence any
Judgment requiring such IP-I Party or any of its Affiliates to take any action
of any kind with respect to its Assets or the operation of any of its Systems,
or to which such IP-I Party (with respect to its Systems), any of its Systems or
Assets are subject or by which they are bound or affected, that has not been
fully complied with by such IP-I Party.
5.13 Tax Returns; Other Reports. Such IP-I Party has duly and timely filed
in correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by it, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or report,
the failure of which to be filed or paid could affect or result in the
imposition of a Lien upon its Assets or create any transferee or other liability
upon RMG, except such amounts as are being contested diligently and in good
faith and are not in the aggregate material. Except as set forth on Schedule
5.13, such IP-I Party has not received any notice of, nor does such IP-I Party
have any Knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect, or result in the imposition of a Lien upon, any of its Assets or
transferee or other liability upon RMG.
5.14 Employment Matters.
5.14.1 Such IP-I Party has complied in all material respects with
all applicable Legal Requirements relating to the employment of labor, including
the Worker Adjustment and Retraining Notification Act, 29 U.S.C. ss. 2101, et
seq. ("WARN"), continuation coverage requirements with respect to group health
plans and those relating to wages, hours, collective bargaining, unemployment
insurance, workers' compensation, equal employment opportunity, age, sex, race
and disability discrimination, immigration control and the payment and
withholding of Taxes.
5.14.2 There are no Liens against such IP-I Party's Assets under
Section 412(n) of the Code or Sections 302(f) or 4068 of ERISA. At the Closing,
RMG and its ERISA Affiliates will have no obligation to contribute to, or any
liability in respect of, (i) any employee benefit plan within the meaning of
Section 3(3) of ERISA, or (ii) any similar employment, severance or other
arrangement or policy (whether written or oral) providing for insurance coverage
(including self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, fringe benefits
or retirement benefits, or for profit sharing, deferred compensation, bonuses,
stock options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits, sponsored or maintained by
any IP-I Party or any of their ERISA Affiliates, or to which any IP-I Party or
any of their ERISA Affiliates was obligated to contribute. The IP-I Parties will
not, in connection with the transactions contemplated by this Agreement, cease
to provide any group
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health plan coverage to their employees in a manner which would cause RMG or any
of its ERISA Affiliates to be deemed a successor employer of such IP-I Party
within the meaning of Proposed Treasury Regulations Section 54.4980B-9 Q&A8(c).
With respect to any multi-employer plan within the meaning of Section 3(37) of
ERISA, or any plan subject to Title IV of ERISA, to which any IP-I Party or any
of their ERISA Affiliates is or ever was obligated to contribute, (a) there has
been no material "reportable event" described in Sections 4043(c)(1), (2), (3),
(5), (6), (7), (10), or (13) of ERISA, (b) no "accumulated funding deficiency"
(as defined in Section 302 of ERISA) or "withdrawal liability" (as determined
under Section 4201 et seq. of ERISA) has occurred, exists or is continuing with
respect to any such plan other than a multi-employer plan (as defined in Section
3(37) of ERISA), or, to the Knowledge of IP-I or any of its ERISA Affiliates,
with respect to any such plan which is a multi-employer plan (as defined in
Section 3(37) of ERISA), (c) no such plan has been terminated other than in
accordance with ERISA or at a time when such plan was not sufficiently funded,
and (d) there has been no (i) withdrawal by any IP-I Party or any of their ERISA
Affiliates that is a substantial employer from a single-employer plan and that
has two or more contributing sponsors at least two of whom are not under common
control, as referred to in Section 4063(b) of ERISA, or (ii) cessation by any
IP-I Party or any of their ERISA Affiliates of operations at a facility causing
more than 20% of plan participants to be separated from employment, as referred
to in Section 4062(e) of ERISA. With respect to any plan maintained, sponsored
by, or contributed to by any IP-I Party, which is intended to comply with the
provisions of Section 401(k) of the Code, and from which any similar plan
maintained or sponsored by RMG or any of its ERISA Affiliates accepts a
plan-to-plan transfer under Section 7.3.3, (I) such plan has received a
favorable determination letter from Internal Revenue Service, and no IP-I Party
or any of their ERISA Affiliates has any Knowledge of any fact which could
adversely affect the qualified status of such plan, and (II) such plan has been
administered and maintained in material compliance with ERISA, the Code and all
other applicable laws.
5.14.3 Except as set forth on Schedule 5.14, there are no collective
bargaining agreements applicable to any Person employed by such IP-I Party that
renders services in connection with its Systems and such IP-I Party has no duty
to bargain with any labor organization with respect to any such Person. Except
as set forth on Schedule 5.14, there are not pending any unfair labor practice
charges against such IP-I Party, any demand for recognition or any other request
or demand from a labor organization for representative status with respect to
any Person employed by it that renders services in connection with its Systems.
Except as described on Schedule 5.14, such IP-I Party has no employment
agreements, either written or oral, with any employee of its Systems and none of
the employment agreements listed on Schedule 5.14 requires such IP-I Party, or
will require RMG or any Affiliate of RMG, to employ any Person after the
Closing.
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5.15 IP-I Systems Information.
5.15.1 Schedule 5.15.1 sets forth a materially true and accurate
description, on a System-by-System basis, of the following information relating
to such IP-I Party's Systems as of December 31, 1998:
(a) the approximate number of aerial and underground miles of
plant included in the IP-I Assets and served by each headend;
(b) the approximate number of single family homes and
residential multiple dwelling units passed by each such IP-I System;
(c) the MHZ capacity and channel capacity of each headend; and
(d) the number of subscribers served by each such IP-I System
and a description of the calculation methodology used by IP-I to calculate such
subscribers.
5.15.2 Schedule 5.15.2 sets forth a materially true and accurate
description of the following information relating to such IP-I Party's Systems
as of the date of this Agreement:
(a) a description of the Basic Services, the Expanded Basic
Services, Pay TV and a la carte services available from each such IP-I System,
and the rates charged by such IP-I Party therefor, including all rates, tariffs
and other charges for cable television or other services provided by each such
IP-I System;
(b) the stations and signals carried by each such IP-I System
and the channel position of each such signal and station; and
(c) the cities, towns, villages, boroughs and counties served
by each such IP-I System.
5.15.3 Each of such IP-I Party's Systems is capable of providing all
channels, stations and signals reflected as being carried on such IP-I System on
Schedule 5.15.2.
5.16 Taxpayer Identification Number. The U.S. Taxpayer Identification
Number for the IP-I Parties are as follows:
InterMedia Partners, a California Limited Partnership 00-0000000
Brenmor Cable Partners, L.P. 94-3102690
5.17 Finder and Brokers. Such IP-I Party has not entered into any Contract
with any person which will result in the obligation of RMG to pay any finder's
fees, brokerage or agent's commissions or other like payments (collectively,
"Agent's Fees") in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby.
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5.18 Related Party Transactions. Set forth on Schedule 5.18 hereto, are
the Contracts, agreements, arrangements or understandings between such IP-I
Party and any of its Affiliates and between such IP-I Party and any AT&T
Affiliate included in or related to the IP-I Assets.
6. RMG'S REPRESENTATIONS AND WARRANTIES.
RMG represents and warrants to the IP-I Parties as of the date of this
Agreement and as of the Closing, as follows:
6.1 Organization and Qualification of RMG. RMG is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Nevada. RMG has all requisite power and authority to own, lease and use the RMG
Assets owned, leased or used by it and to conduct its Cable Business as it is
currently being conducted by it. As of the date of this Agreement, RMG is duly
qualified to do business and is in good standing under the laws of each
jurisdiction in which the ownership, leasing or use of the RMG Assets owned,
leased or used by it or the nature of its activities in connection with its RMG
Systems makes such qualification necessary.
6.2 Authority and Validity. RMG has all requisite power and authority to
execute and deliver, and to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Transaction Documents to
which it is a party. The execution and delivery by RMG of, the performance of
RMG under, and the consummation by RMG of the transactions contemplated by, this
Agreement and the Transaction Documents to which RMG is a party have been duly
and validly authorized by all action by or on behalf of RMG. This Agreement has
been, and when executed and delivered by RMG the Transaction Documents to which
it is a party will be, duly and validly executed and delivered by RMG and the
valid and binding obligations of RMG, enforceable against RMG in accordance with
their terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to the enforcement of creditors' rights generally or by
principles governing the availability of equitable remedies.
6.3 No Conflict; Required Consents. Except as set forth on Schedule 6.3,
and assuming all IP-I Required Consents have been obtained and the expiration or
earlier termination of the waiting period under the HSR Act has occurred, the
execution and delivery by RMG, the performance of RMG under, and the
consummation by RMG of the transactions contemplated by, this Agreement and the
Transaction Documents to which RMG is a party do not and will not: (a) conflict
with or violate any provision of the organizational documents of RMG; (b)
violate any provision of any Legal Requirement; (c) require any consent,
approval or authorization of, or filing of any certificate, notice, application,
report or other document with, any Governmental Authority or other Person; or
(d) (i) conflict with, violate, result in a breach of or constitute a default
under (without regard to requirements of notice, lapse of time or elections of
other Persons or any combination thereof), (ii) permit or result in the
termination, suspension or modification of, (iii) result in the acceleration of
(or give any Person the right to accelerate) the
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performance of RMG under, or (iv) result in the creation or imposition of any
Lien under any RMG Systems Contract, RMG Systems Franchise, RMG Systems License,
or other instrument evidencing any of the RMG Assets or by which RMG or any of
its assets is bound or affected, except for purposes of clauses (c) and (d) such
consents, approvals, authorizations and filings that, if not obtained or made,
would not, and such violations, conflicts, breaches, defaults, terminations,
suspensions, modifications and accelerations as would not, individually or in
the aggregate, have an adverse effect on any RMG System, RMG's Cable Business or
RMG, or on the ability of RMG to perform its obligations under this Agreement or
the Transaction Documents to which it is a party.
6.4 Assets.
6.4.1 RMG has good and marketable title to (or, in the case of RMG
Assets that are leased, valid leasehold interests in) the RMG Assets. The RMG
Assets are free and clear of all Liens, except Permitted Liens and rights of
first refusal which will be waived at Closing by the Person holding such rights.
All of the Liens described on Schedule 6.4.1 (except for those marked with an
asterisk on Schedule 6.4.1) will be terminated, released or, in the case of
rights of first refusal (except for those listed on Schedule 6.4.1), waived, as
appropriate at or prior to Closing. Except as described on Schedule 1.61, the
RMG Tangible Personal Property, as an integrated system and in its component
parts, is in good operating condition and repair (ordinary wear and tear and
routine failures excepted) and is usable and adequate for the operation of RMG's
Cable Business.
6.4.2 Except for items included in the RMG Excluded Assets, the RMG
Assets constitute substantially all the assets necessary (a) to conduct RMG's
Cable Business as it is being conducted on the date of this Agreement and in
compliance with all applicable Legal Requirements, (b) to operate the RMG
Systems as they are being operated on the date of this Agreement and in
compliance with all applicable Legal Requirements and (c) to perform all of
IP-I's Assumed Obligations and Liabilities.
6.4.3 Except as described on Schedule 6.4.3, and other than direct
broadcast satellite and satellite master antenna television, with respect to
each area in which the RMG Systems currently provide cable television service,
(i) no Person is operating a cable television system or other non-satellite MVPD
other than an RMG System in such area; (ii) no local franchising authority has
awarded a cable television franchise in such area to any Person other than RMG;
and (iii) to the Knowledge of RMG, no MVPD has applied for a cable television
franchise to serve such area.
6.5 RMG Systems Franchises, RMG Systems Licenses, RMG Systems Contracts
and RMG Other Real Property Interests.
6.5.1 Except as described on Schedules 1.53, 1.55, 1.58, 1.59 and
1.60, and except for the RMG Excluded Assets, RMG is not bound or affected by
any of the following that
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relate primarily or in whole to RMG's Cable Business: (a) leases of real
property or capital leases of personal property; (b) operating leases of
personal property that are terminable upon more than 30 days notice and that
contemplate annual lease payments in excess of $20,000; (c) franchises for the
construction or operation of cable television systems or System Contracts of
substantially equivalent effect; (d) licenses, authorizations, consents or
permits of the FCC; (e) other licenses, authorizations, consents or permits of
any other Governmental Authority, individually or in the aggregate, material to
the RMG Systems; (f) easements or rights of access, individually or in the
aggregate, material to the RMG Systems; (g) pole attachment agreements,
underground conduit agreements, crossing agreements, retransmission consent
agreements, or bulk or commercial service agreements, individually or in the
aggregate, material to the RMG Systems; or (h) RMG Systems Contracts other than
those described in any other clause of this Section 6.5.1 which contemplate
payments by or to RMG in any 12-month period exceeding $25,000 under any single
contract or $100,000 in the aggregate.
6.5.2 Complete and correct copies of the RMG Systems Franchises and
RMG Systems Licenses have been provided to IP-I. Except as set forth on Schedule
6.5.2, (a) the RMG Systems Franchises contain all of the commitments and
obligations of RMG to the applicable Governmental Authority granting such
Franchises with respect to the construction, ownership and operation of the RMG
Systems, and (b) other than as set forth in the RMG Systems Franchises, RMG has
not made any commitment to any local franchising authority to make any material
expenditure or capital addition or betterment to any RMG System or the RMG
Assets that will not be fulfilled or satisfied prior to the Closing Time. The
RMG Systems Franchises and RMG Systems Licenses are currently in full force and
effect, are not in default and are valid under all applicable Legal Requirements
according to their terms. No event has occurred that, with notice or lapse of
time or both, would constitute a breach, violation or default by RMG, and to
RMG's Knowledge, no event has occurred that, with notice or lapse of time or
both, would constitute a breach, violation or default by any other Person, of
any material obligations under any such RMG Systems Franchises or RMG Systems
Licenses. Except for routine filings with Governmental Authorities and as
described on Schedule 6.5.2, there are no applications relating to any RMG
Systems Franchise or RMG Systems License pending before any Governmental
Authority which are material to any RMG System or RMG's Cable Business. Except
where a request for renewal has been timely filed under Section 626(a) of the
Cable Act, since December 31, 1998, no RMG Systems Franchise or RMG Systems
License has been surrendered by RMG or has expired or otherwise terminated
without the issuance of a replacement RMG Systems Franchise or RMG Systems
License. There is no legal action, governmental proceeding or investigation
pending or, to RMG's Knowledge, threatened to terminate, suspend or modify any
RMG Systems Franchise or RMG Systems License. Except as set forth on Schedule
6.5.2, RMG is, or will be as of the Closing Date, in material compliance with
the terms and conditions of all the RMG Systems Franchises and RMG Systems
Licenses and other applicable requirements of all Governmental Authorities
(including the FCC and the U.S. Copyright Office) relating to the RMG Systems
Franchises and RMG Systems Licenses, including all requirements for
notification, filing, reporting, posting and maintenance of logs and records.
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6.5.3 RMG has delivered to IP-I true and complete copies of all RMG
Systems Contracts (including each Contract relating to RMG Leased Property and
RMG Other Real Property Interests), including any amendments thereto (or, in the
case of oral Contracts, true and complete written summaries thereof) and each
document evidencing RMG's ownership of the RMG Owned Property. Except as
described in Schedule 6.5.3, RMG has fulfilled when due, or has taken all action
necessary to enable it to fulfill when due, all of its obligations under each of
its Contracts and, to the Knowledge of RMG, there has not occurred any default
(without regard to requirements of notice, lapse of time, elections of other
Persons, or any combination thereof) by any other Person of any material
obligations under any of its Contracts or Real Property Interests.
6.6 Real Property. All the Assets consisting of RMG Owned Property, RMG
Leased Property and material RMG Other Real Property Interests are described on
Schedules 1.53, 1.55 and 1.56. Except for ordinary wear and tear and routine
repairs and as set forth on Schedule 6.6, all of the improvements, leasehold
improvements and the premises of the RMG Owned Property and the premises demised
under the leases and other documents evidencing the RMG Leased Property are in
good condition and repair and are suitable for the purposes used. Each parcel of
RMG Owned Property and each parcel of RMG Leased Property and any improvements
thereon (a) has access to and over public streets or private streets for which
RMG has a valid right of ingress and egress, (b) except as set forth on Schedule
1.53 or 1.55, conforms in its current use and occupancy to all material zoning
requirements without reliance upon a variance issued by a Governmental Authority
or a classification of the parcel in question as a nonconforming use, (c)
conforms in all material respects in its current use to all restrictive
covenants, if any, or other Liens affecting all or part of such parcel (of
record, with respect to RMG Owned Property, or of record or as set forth in an
agreement listed on Schedule 1.53 or 1.55, with respect to RMG Leased Property
or RMG Other Real Property Interests), and (d) is available for immediate use in
the conduct of the business or operations of the RMG Systems. There are no
pending condemnation, expropriation, eminent domain or similar proceedings of
which RMG has received notice or RMG has Knowledge affecting, in any material
respect, all or any portion of the RMG Owned Property, RMG Leased Property, or
RMG Other Real Property Interests. RMG has good and marketable title to each
such parcel of real property included in the RMG Owned Property and in all
buildings, structures and improvements thereon, in each case free and clear of
all Liens except for Permitted Liens.
6.7 Environmental.
6.7.1 Except as described on Schedule 6.7, RMG is in material
compliance with all Environmental Laws, insofar as they relate to its Owned
Property or Leased Property. Except as described on Schedule 6.7, RMG has not
received any notice of, and has no Knowledge of, any alleged, actual, or
potential responsibility for, or any inquiry regarding, (i) any release or
threatened release of any Hazardous Substances from or on its Owned Property or
Leased Property, or (ii) any material violation of any Environmental Laws
associated with its Owned Property or Leased Property. Except as described on
Schedule 6.7, to RMG's Knowledge, its
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own operations on its Other Real Property Interests do not violate any
Environmental Laws in any material respect, and RMG has received no notice of
any such violation. Except as described on Schedule 6.7, RMG has not received
any notice of, and has no Knowledge of circumstances relating to, any past,
present or future events, conditions, circumstances, activities, practices or
incidents (including the presence, use, generation, manufacture, disposal,
release or threatened release of any Hazardous Substances from or on its Owned
Property or Leased Property), which could interfere with or prevent continued
compliance, or which are reasonably likely to give rise to any liability, based
upon or related to the processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Substance from or
attributable to its Owned Property or Leased Property.
6.7.2 Except as described on Schedule 6.7, to RMG's Knowledge, (a)
no aboveground or underground storage tanks are currently or have been located
on any RMG Owned Property or RMG Leased Property and (b) no RMG Owned Property
or RMG Leased Property has been used at any time as a gasoline service station
or any other facility for storing, pumping, dispensing or producing gasoline or
any other petroleum products or wastes.
6.7.3 Complete and correct copies of (a) all studies, reports,
surveys or other similar written materials in RMG's possession or to which RMG,
to its Knowledge, has access relating to the presence or alleged presence of
Hazardous Substances at, on, under or affecting the RMG Owned Property or RMG
Leased Property, (b) all notices (other than general notices made by general
publication) in RMG's possession or to which RMG, to its Knowledge, has access
that were received from any Governmental Authority having the power to
administer or enforce any Environmental Laws relating to current or past
ownership, use or operation of the RMG Owned Property or RMG Leased Property or
activities at the RMG Owned Property or RMG Leased Property and (c) all notices
and related materials in RMG's possession or to which RMG, to its Knowledge, has
access relating to any Litigation concerning any Environmental Law to which RMG
is a party or written allegation by any private Third Party concerning any
Environmental Law and RMG, have been provided to IP-I (other than those
materials constituting attorney-client privileged communications).
6.8 Compliance with Legal Requirements.
6.8.1 Except as set forth on Schedule 6.8, the operation of each RMG
System as currently conducted does not violate or infringe any Legal Requirement
currently in effect in any material respect (other than Legal Requirements
described in Sections 6.7, 6.8.3 and 6.8.4, as to which the representations and
warranties set forth in those subsections will apply) or the grounding
requirements of the National Electrical Safety Code. Except as set forth on
Schedule 6.8, RMG has not received any notice and RMG has no Knowledge of any
material violation by it or any RMG System of any Legal Requirement applicable
to the installation, ownership and operation of its Systems as currently
conducted, and knows of no basis for the allegation of any such violation.
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6.8.2 Except as set forth on Schedule 6.8, without limiting the
generality of the foregoing, since RMG's acquisition of its Systems: RMG has
submitted to the FCC all filings, including cable television registration
statements, annual reports and aeronautical frequency usage notices and paid all
regulatory fees, that are required under the rules and regulations of the FCC;
the operation of its Systems has been and is in material compliance with the
rules and regulations of the FCC, and RMG has not received any notice from the
FCC of any violation of its rules and regulations; RMG is and since 1986 (or
since its acquisition, if later) has been certified as in compliance with the
FCC's equal employment opportunity rules; its Systems are in material compliance
with all signal leakage criteria prescribed by the FCC; and for each relevant
semi-annual reporting period since its acquisition of an RMG System, RMG has
timely filed with the United States Copyright Office all required Statements of
Account in true and correct form, has paid when due all required copyright
royalty fee payments in correct amount, relating to its Systems' carriage of
television broadcast signals and is otherwise in material compliance with all
applicable rules and regulations of the Copyright Office. Except as set forth on
Schedule 6.8, RMG has no Knowledge, with respect to any RMG System acquired
since January 1, 1996, of any previous owner's failure to comply with the
copyright licensing requirements with respect to such System or any written
claim or inquiry from any Person which questions such System's failure to
comply. RMG has delivered to IP-I copies of: (i) all reports, filings and
correspondence made or filed by RMG with the FCC or pursuant to the FCC rules
and regulations for the past year; and (ii) all reports, filings and
correspondence made or filed by RMG with the Copyright Office or pursuant to
Copyright Office rules and regulations for the past three years. Except as set
forth on Schedule 6.8, (i) a request for renewal has been timely filed under
Section 626(a) of the Cable Act with the proper Governmental Authority with
respect to each Franchise expiring within 36 months after the date of this
Agreement; and (ii) RMG has received no written notice from any Governmental
Authority that it has determined or intends to deny renewal of any RMG Systems
Franchise.
6.8.3 Except as set forth on Schedule 6.8 and as otherwise provided
in this Section, RMG has used commercially reasonable efforts to comply in all
material respects with the provisions of the 1984 Cable Act and the 1992 Cable
Act pertaining to the carriage of television broadcast signals, as such Legal
Requirements relate to the operation of its Systems. RMG has complied in all
material respects with the must carry and retransmission consent provisions of
the 1992 Cable Act, including (i) duly and timely notifying "local commercial
television stations" of inadequate signal strength or increased copyright
liability, if applicable, (ii) duly and timely notifying non-commercial
educational stations of the location of its System's principal headend, (iii)
duly and timely notifying subscribers of changes in the channel alignment on its
Systems, (iv) duly and timely notifying "local commercial and non-commercial
television stations" of the broadcast signals carried on its Systems and their
channel positions, (v) maintaining the requisite public file identifying
broadcast signal carriage, (vi) carrying the broadcast signals after June 1,
1993, on its Systems for all "local commercial television stations" which
elected must carry status and, if required, up to two "qualified low power
stations" and (vii) obtaining retransmission consents for all broadcast signals
carried on its Systems after October 5, 1993, except for the non-exempt signals
carried pursuant to a must carry election. No
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must carry complaint is pending against any RMG System at the FCC, nor, to RMG's
Knowledge, is any threatened except as set forth in Schedule 6.8. RMG has
delivered to IP-I copies of any pending petitions it has on file with the FCC,
including requests for market modifications or petitions for special relief or
any market modification requests or special relief petitions affecting any RMG
System that have been served on RMG. The FCC has not issued any decision with
respect to a must carry complaint finding any RMG System in violation of the
must carry rules except as set forth on Schedule 6.8.
6.8.4 RMG has used commercially reasonable efforts to establish
rates charged and a la carte packages provided to subscribers, effective as of
September 1, 1993, that would be allowable under rules and regulations
promulgated by the FCC under the 1992 Cable Act, and any authoritative
interpretation thereof, whether or not such rates or packages were subject to
regulation at that date by any Governmental Authority, including any state
regulatory agency, local franchising authority and/or the FCC. Notwithstanding
the foregoing, RMG makes no representation or warranty that either the rates
charged to subscribers or the a la carte packages provided would be allowable
under any rules and regulations of the FCC, or any authoritative interpretation
thereof, promulgated after the date of the Closing. RMG has delivered to IP-I
complete and correct copies of (i) the most recent FCC Rate Forms filed by RMG
with the local franchising authority and/or the FCC and will deliver as soon as
available all FCC Rate Forms that are prepared with respect to the RMG Systems,
(ii) all historical FCC Rate Forms with respect to any RMG System in which there
is currently a rate issue pending, including any accounting order or any rate
order on appeal, (iii) copies of all complaints, petitions, answers, responses
and other filings made with or by any Governmental Authority in connection with
any rate orders issued by such Governmental Authority or any appeal therefrom,
and (iv) any documentation supporting an exemption from the rate regulation
provisions of the 1992 Cable Act claimed by RMG with respect to its Systems.
Except as set forth on Schedule 6.8, RMG has not made a Cost of Service Election
with respect to any of the RMG Systems.
6.8.5 Except as set forth on Schedule 6.8, all necessary FAA
approvals have been obtained and all necessary FCC tower registrations have been
filed with respect to the height and location of towers used in connection with
the operation of the RMG Systems, and such towers are being operated in
compliance in all material respects with applicable FCC and FAA rules. The
ownership, height (with and without appurtenances), location (address, latitude,
longitude and ground elevation), structure type and FCC call signs of each tower
used in connection with the operation of the RMG Systems are correctly described
on Schedule 6.8. To the extent applicable, RMG has delivered to IP-I true and
correct copies of the FAA final determinations that are available and FCC
registrations for all such towers.
6.9 Intellectual Property. Except for Intellectual Property which
constitutes RMG Excluded Assets, RMG does not possess any Intellectual Property
related to or material to the operation of the RMG Systems and RMG is not a
party to any license or royalty agreement with respect to any such Intellectual
Property, except for licenses respecting program material or incidental to any
Systems Contract and obligations under the Copyright Act applicable to cable
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television systems generally. To the Knowledge of RMG, the RMG Systems and RMG's
Cable Business have been operated in such a manner so as not to violate or
infringe upon the rights, or give rise to any rightful claim of any Person for
copyright, trademark, service xxxx, patent or license infringement or the like.
6.10 Financial Statements. RMG's statements of income for the years ended
December 31, 1997 and 1998, attached hereto as Schedule 6.10, are in accordance
with the books and records of the RMG Systems, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby and, except as may be described therein,
present fairly the operating results of the RMG Systems for the periods
indicated, subject only to standard year-end adjustments and the omission of
footnotes thereto.
6.11 Absence of Certain Changes or Events. Except as set forth on Schedule
6.11, since December 31, 1998, there has been no (i) material adverse change in,
nor has any event or events (other than any affecting the cable television
industry generally) occurred that, individually or in the aggregate, are
reasonably likely to result in a material adverse change in the RMG Assets,
business, operations, condition (financial or otherwise) or results of
operations of the RMG Systems, taken as a whole and (ii) material change in
accounting principles or practices with respect to the RMG Systems or
revaluation by RMG of the RMG Assets for financial reporting, property tax or
other purposes. From December 31, 1998 to the date of this Agreement, RMG's
Cable Business has been conducted only in the usual, regular and ordinary
course, except as disclosed on Schedule 6.11 and except where the failure to
conduct business in such manner would not have a material adverse effect on the
RMG Assets, RMG's Cable Business, the operations, condition (financial or
otherwise) or results of operations of the RMG Systems taken as a whole or on
the ability of RMG to perform its obligations under this Agreement.
6.12 Litigation. Except as set forth on Schedule 6.12: (a) there is no
Litigation pending or, to RMG's Knowledge, threatened against RMG or any
Affiliate of RMG which, if adversely determined, would (i) materially and
adversely affect the financial condition or operations of RMG's Cable Business,
any of the RMG Systems, the RMG Assets or the ability of RMG to perform its
obligations under this Agreement or (ii) result in the modification, revocation,
termination, suspension or other limitation of any of the RMG Systems
Franchises, RMG Systems Licenses, or RMG Systems Contracts; and (b) there is not
in existence any Judgment requiring RMG or any Affiliate of RMG to take any
action of any kind with respect to the RMG Assets or the operation of any of the
RMG Systems, or to which RMG (with respect to the RMG Systems), any of the RMG
Systems or the RMG Assets are subject or by which they are bound or affected,
that has not been fully complied with by RMG.
6.13 Tax Returns; Other Reports. RMG has duly and timely filed in correct
form all federal, state, local and foreign Tax returns and other Tax reports
required to be filed by RMG, and has timely paid all Taxes which have become due
and payable, whether or not so shown on
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any such return or report, the failure of which to be filed or paid could affect
or result in the imposition of a Lien upon the RMG Assets or create any
transferee or other liability upon IP-I, except such amounts as are being
contested diligently and in good faith and are not in the aggregate material.
Except as set forth on Schedule 6.13, RMG has not received any notice of, nor
does RMG have any Knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect, or result in the imposition of a Lien upon, any of the RMG Assets
or transferee or other liability upon IP-I.
6.14 Employment Matters.
6.14.1 RMG has complied in all material respects with all applicable
Legal Requirements relating to the employment of labor, including WARN,
continuation coverage requirements with respect to group health plans and those
relating to wages, hours, collective bargaining, unemployment insurance,
workers' compensation, equal employment opportunity, age, sex, race and
disability discrimination, immigration control and the payment and withholding
of Taxes.
6.14.2 There are no Liens against the RMG Assets under Section
412(n) of the Code or Sections 302(f) or 4068 of ERISA. At the Closing, IP-I and
its ERISA Affiliates will have no obligation to contribute to, or any liability
in respect of, (i) any employee benefit plan within the meaning of Section 3(3)
of ERISA, or (ii) any similar employment, severance or other arrangement or
policy (whether written or oral) providing for insurance coverage (including
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, fringe benefits or
retirement benefits, or for profit sharing, deferred compensation, bonuses,
stock options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits, sponsored or maintained by
RMG or any of its ERISA Affiliates, or to which RMG or any of its ERISA
Affiliates was obligated to contribute. RMG will not, in connection with the
transactions contemplated by this Agreement, cease to provide any group health
plan coverage to their employees in a manner which would cause any IP-I Party or
any of their ERISA Affiliates to be deemed a successor employer of RMG within
the meaning of Proposed Treasury Regulations Section 54.4980B-9 Q&A8(c). With
respect to any multi-employer plan within the meaning of Section 3(37) of ERISA,
or any plan subject to Title IV of ERISA, to which RMG or any of its ERISA
Affiliates is or ever was obligated to contribute, (a) there has been no
material "reportable event" described in Sections 4043(c)(1), (2), (3), (5),
(6), (7), (10), or (13) of ERISA, (b) no "accumulated funding deficiency" (as
defined in Section 302 of ERISA) or "withdrawal liability" (as determined under
Section 4201 et seq. of ERISA) has occurred, exists or is continuing with
respect to any such plan other than a multi-employer plan (as defined in Section
3(37) of ERISA), or, to the Knowledge of RMG or any of its ERISA Affiliates,
with respect to any such plan which is a multi-employer plan (as defined in
Section 3(37) of ERISA), (c) no such plan has been terminated other than in
accordance with ERISA or at a time when such plan was not sufficiently funded,
and (d) there has been no (i) withdrawal by RMG or any of its ERISA Affiliates
that is a
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substantial employer from a single-employer plan and that has two or more
contributing sponsors at least two of whom are not under common control, as
referred to in Section 4063(b) of ERISA, or (ii) cessation by RMG or any of its
ERISA Affiliates of operations at a facility causing more than 20% of plan
participants to be separated from employment, as referred to in Section 4062(e)
of ERISA. With respect to any plan maintained, sponsored by, or contributed to
by RMG, which is intended to comply with the provisions of Section 401(k) of the
Code, and from which any similar plan maintained or sponsored by any IP-I Party
or any of their ERISA Affiliates accepts a plan-to-plan transfer under Section
7.3.3, (I) such plan has received a favorable determination letter from Internal
Revenue Service, and neither RMG nor any of its ERISA Affiliates has any
Knowledge of any fact which could adversely affect the qualified status of such
plan, and (II) such plan has been administered and maintained in material
compliance with ERISA, the Code and all other applicable laws.
6.14.3 Except as set forth on Schedule 6.14, there are no collective
bargaining agreements applicable to any Person employed by RMG that renders
services in connection with the RMG Systems and RMG has no duty to bargain with
any labor organization with respect to any such Person. Except as set forth on
Schedule 6.14, there are not pending any unfair labor practice charges against
RMG, any demand for recognition or any other request or demand from a labor
organization for representative status with respect to any Person employed by
RMG that renders services in connection with the RMG Systems. Except as
described on Schedule 6.14, RMG has no employment agreements, either written or
oral, with any employee of the RMG Systems and none of the employment agreements
listed on Schedule 6.14 requires RMG, or will require IP-I or any Affiliate of
IP-I, to employ any Person after the Closing.
6.15 RMG Systems Information.
6.15.1 Schedule 6.15.1 sets forth a materially true and accurate
description, on a System-by-System basis, of the following information relating
to the RMG Systems as of December 31, 1998:
(a) the approximate number of aerial and underground miles of
plant included in the RMG Assets and served by each headend;
(b) the approximate number of single family homes and
residential multiple dwelling units passed by each RMG System;
(c) the MHZ capacity and channel capacity of each headend; and
(d) the number of subscribers served by each RMG System and a
description of the calculation methodology used by RMG to calculate such
subscribers.
6.15.2 Schedule 6.15.2 sets forth a materially true and accurate
description of the following information relating to the RMG Systems as of the
date of this Agreement:
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(a) a description of the Basic Services, the Expanded Basic
Services, Pay TV and a la carte services available from each RMG System, and the
rates charged by RMG therefor, including all rates, tariffs and other charges
for cable television or other services provided by each RMG System;
(b) the stations and signals carried by each RMG System and
the channel position of each such signal and station; and
(c) the cities, towns, villages, boroughs and counties served
by each RMG System.
6.15.3 Each RMG System is capable of providing all channels,
stations and signals reflected as being carried on such RMG System on Schedule
6.15.2.
6.16 Taxpayer Identification Number. The U.S. Taxpayer Identification
Number for RMG is 00-0000000.
6.17 Finder and Brokers. RMG has not entered into any Contract with any
person which will result in the obligation of IP-I to pay any Agent's Fees in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
6.18 Related Party Transactions. Set forth on Schedule 6.18 hereto, are
the Contracts, agreements, arrangements or understandings between RMG and any of
its Affiliates included in or related to the RMG Assets.
7. ADDITIONAL COVENANTS.
7.1 Access to Premises and Records. Between the date of this Agreement and
the Closing Date, each Party (a) will give to the other and its counsel,
accountants and other representatives reasonable access during normal business
hours and upon reasonable advance notice to all the premises and books and
records of its Cable Business and to all of its Assets and the personnel engaged
in the management or operation of its Systems; and (b) will furnish to the other
and such representatives all such documents, financial information and other
information regarding its Cable Business and its Assets as the other from time
to time reasonably may request; provided that no investigation will affect or
limit the scope of any of the representations, warranties, covenants and
indemnities of the other in this Agreement or in any Transaction Document or
limit liability for any breach of any of the foregoing.
7.2 Continuity and Maintenance of Operations, Certain Deliveries and
Notice. Except as set forth on Schedule 7.2, in the 1999 operating budgets set
forth on Schedule 7.2-A, with respect to RMG, and on Schedule 7.2-B, with
respect to IP-I, or as the other Party may otherwise consent in writing, between
the date of this Agreement and the Closing, each of RMG with
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respect to RMG's Cable Business, the RMG Systems and the RMG Assets, and each
IP-I Party with respect to its Cable Business, Systems and Assets:
7.2.1 will conduct its Cable Business in good faith and operate its
Systems only in the usual, regular and ordinary course (including making routine
capital expenditures and operating substantially in accordance with the 1999
capital and operating budgets with respect to each such System (copies of which
are set forth on Schedule 7.2-A, with respect to RMG, and on Schedule 7.2-B,
with respect to IP-I), completing ongoing and planned line extensions, placing
conduit or cable in new developments, fulfilling installation requests,
completing disconnection work orders and disconnecting and discontinuing service
to customers whose accounts are delinquent) and, to the extent consistent with
such conduct and operation, use its commercially reasonable efforts to (a)
preserve its current business intact in all material respects, including
preserving existing relationships with franchising authorities, suppliers,
customers and others having business dealings with its Systems, (b) keep
available the services of its employees and agents providing services in
connection with its Cable Business, (c) continue budgeted marketing, advertising
and promotional expenditures with respect to its Cable Business, (d) enter into
written agreements with respect to all multiple dwelling unit and bulk billed
accounts having greater than 200 individual units, and (e) operate its Cable
Business in material compliance with all Legal Requirements;
7.2.2 will maintain its Assets in good operating repair, order and
condition, ordinary wear and tear excepted; will maintain equipment and
inventory for its Systems at normal historical levels consistent with its past
practices (as adjusted to account for abnormally high inventory levels related
to periodic rebuild activity); will maintain in full force and effect policies
of insurance with respect to its Cable Business in such amounts and with respect
to such risks as are currently in effect for its Systems; and will maintain its
books, records and accounts with respect to its Assets and the operation of its
Systems in the usual, regular and ordinary manner on a basis consistent with its
past practices;
7.2.3 will not, outside the ordinary course of business or to the
extent inconsistent with past practice or the 1999 operating budget included in
Schedule 7.2-A (with respect to RMG) or Schedule 7.2-B (with respect to IP-I),
as applicable, (a) modify, terminate, renew, suspend or abrogate any System
Contract (other than retransmission consent System Contracts, System Contracts
evidencing Leased Property or Other Real Property Interests and lease agreements
for Tangible Personal Property); (b) modify, terminate, renew, suspend or
abrogate any retransmission consent System Contract, System Franchise, System
Contract evidencing Leased Property or Other Real Property Interests, lease
agreements for Tangible Personal Property or System License except for renewals
(other than renewals of System Franchises) on terms that are not materially
different from those which currently exist and renewals of System Franchises as
otherwise required or permitted under this Agreement; (c) engage in any
marketing, subscriber installation, collection or disconnection practices; (d)
make any Cost of Service Election; (e) other than as set forth on Schedule 7.2,
enter into any agreement with or commitment to any competitive access provider
and/or local exchange
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company or any internet access or on-line services provider with respect to the
use or lease of any of its Assets; (f) sell, transfer or assign any portion of
its Assets other than sales in the ordinary course of business or permit the
creation of a Lien (other than Permitted Liens) on any of its Assets; (g) take
any actions that would cause the transactions contemplated hereby to fail to
qualify as a like-kind exchange under Section 1031 of the Code; (h) decrease the
rate charged for any level of Basic Services, Expanded Basic Services or any Pay
TV or, except as expressly permitted by Schedule 7.2, add, delete, retier or
repackage any analog programming services, in each case except to the extent
required under the 1992 Cable Act or any other Legal Requirement; provided,
however, that if rates are decreased in order to so comply, the Party decreasing
the rates will provide the other with copies of any FCC forms (even if not filed
with any Governmental Authority) that such Party used to determine that the new
rates were required; (i) convert any of its Systems to any billing system or
otherwise change billing arrangements for any of its Systems; (j) enter into any
Contract of any kind relating to the Cable Business to be assumed by the other
Party hereunder that individually or in the aggregate call for payments over its
terms or otherwise involving expenditures in excess of $100,000, except for the
renewal of Contracts that would, but for such renewal, terminate in accordance
with their terms prior to Closing; (k) except pursuant to or required by plans,
agreements or arrangements already in effect on the date hereof, make any
material increase in compensation or benefits payable or to become payable to
employees or make any material change in personnel policies; (l) take any action
with respect to the grant or increase of severance or termination pay payable
after the Closing Date; (m) engage in any material transaction with respect to
its Cable Business; or (n) agree to do any of the foregoing;
7.2.4 will promptly deliver to the other (i) true and complete
copies of all monthly statements of income and such other information with
respect to its Systems or the operation of its Cable Business in a format
consistent with the form of report attached hereto as Schedule 7.2.4 for the
period from January 1, 1999, through the Closing, and if the Closing occurs as
of the end of a month, as soon as practicable after Closing and (ii) such
financial information reasonably requested by such other party in connection
with the qualification, reporting and record-keeping requirements under Section
1031 of the Code (and the revenue regulations thereunder) with respect to the
Exchange;
7.2.5 will give or cause to be given to the other, as soon as
reasonably possible but in any event within five Business Days after the date of
submission to the appropriate Governmental Authority, copies of all FCC Forms
1200, 1205, 1210, 1215, 1220, 1225, 1235 and 1240 or any other FCC forms
required to be filed with any Governmental Authority under the 1992 Cable Act
with respect to rates and prepared with respect to any of its Systems;
7.2.6 will duly and timely file a valid notice of renewal under
Section 626 of the Cable Act with the appropriate Governmental Authority with
respect to any System Franchise that will expire within 36 months after any date
between the date of the Agreement and the Closing Date;
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7.2.7 will promptly notify the other of any fact, circumstance,
event or action by it or otherwise (a) which, if known at the date of this
Agreement, would have been required to be disclosed by it in or pursuant to this
Agreement or (b) the existence, occurrence or taking of which would result in
the condition of RMG in Section 8.2.1 (with respect to the representations and
warranties of the IP-I Parties) or the condition of the IP-I Parties in Section
8.1.1 (with respect to the representations and warranties of RMG) not being
satisfied at any time prior to or on the Closing, and, with respect to clause
(b), use its commercially reasonable efforts to remedy the same and to satisfy
such condition to the other Party's obligation to consummate the transactions
contemplated by this Agreement;
7.2.8 will use its commercially reasonable efforts to challenge and
contest any Litigation brought against or otherwise involving such Party that
could result in the imposition of Legal Requirements that could cause the
conditions to the Closing not to be satisfied; and
7.2.9 will cause its appropriate Affiliates to be bound by and
comply with the provisions of this Section 7.2 to the extent such Affiliates
own, operate or manage any of the RMG Assets, RMG Systems, IP-I Assets or IP-I
Systems, as the case may be.
7.3 Employees.
7.3.1 Except as set forth in this Section 7.3.1, each Party may, but
shall have no obligation to employ or offer employment to, any employee of the
other Party's Cable Business. Within 30 days after the date of execution of this
Agreement, each Party shall provide to the other a list of all employees of its
Systems (collectively for each Party, its "System Employees") as of a recent
date, showing the original hire date, the then-current positions and rates of
compensation and whether the employee is subject to an employment agreement, a
collective bargaining agreement or represented by a labor organization. Within
60 days after the date of execution of this Agreement (but in no event less than
30 days after receipt of such list), or such other date as the Parties may
agree, the Party receiving such list will provide to the other in writing a list
of the other's System Employees such Party or its Affiliates will employ
following the Closing, subject only to the evaluations permitted by this
Section. Each Party agrees, and shall cause its appropriate Affiliates, to
cooperate in all reasonable respects with the other Party to allow the other
Party or its Affiliates to evaluate its System Employees to make hiring
decisions. In this regard, each Party shall have the opportunity to make such
appropriate prehire investigation of each of such other Party's System
Employees, as it deems necessary, including, subject to obtaining the consent of
such System Employee, the right to review personnel files and conduct background
checks and the right to interview such employees during normal working hours so
long as such interviews are conducted after notice to the other Party and do not
unreasonably interfere with the other Party's operations. Each Party will use
its good faith efforts to obtain the consent of each of its System Employees to
allow the other Party to review personnel files and to conduct background checks
in connection with the foregoing. Each Party or its Affiliates may, if it
wishes, condition any offer of employment upon the employee's passing a
pre-placement physical examination (including drug screening test) and the
completion
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of a satisfactory background check. The Party requesting such examination shall
bear the expense of such examination but the other Party shall, upon reasonable
notice, cooperate in the scheduling of such examinations so long as the
examinations do not unreasonably interfere with the other Party's operations. As
of the Closing Date, each Party shall have no obligation to the other Party, its
Affiliates or to the other Party's employees, with regard to any employee it has
determined not to hire. Notwithstanding any of the foregoing, each Party agrees
not to solicit for employment, without the written consent of the other, any
employee listed on Schedule 7.3 or any other employee of the other Party whose
position is System manager or higher.
7.3.2 Each Party, or its appropriate Affiliate, will pay to all of
its System Employees all compensation, including salaries, commissions, bonuses,
deferred compensation, severance (to the extent applicable), insurance, vacation
(except for accrued vacation time (not to exceed four weeks) and sick time (not
to exceed 10 days) included in the calculation of such Party's Adjusted Value
under the Common Agreement, with respect to the IP-I Systems, or the Redemption
Agreement, with respect to the RMG Systems), and other compensation or benefits
to which they are entitled for periods prior to the Closing, including all
amounts, if any, payable on account of the termination of their employment.
7.3.3 Each Party, or its appropriate Affiliate, will be responsible
for maintenance and distribution of benefits accrued under any employee benefit
plan (as defined in ERISA) maintained by such Party, or its appropriate
Affiliate, pursuant to the provisions of such plan and any Legal Requirements.
Neither Party will assume any obligation or liability for any such accrued
benefits or any fiduciary or administrative responsibility to account for or
dispose of any such accrued benefits under any employee benefit plans maintained
by the other Party or any Affiliate. In the event that a transferor Party
determines that the transactions contemplated by this Agreement will not permit
a distribution to be made to a Hired Employee (as defined below) from the
transferor Party's tax qualified plan in accordance with Section 401(k)(10) of
the Code then the other Party may accept a plan-to-plan transfer of Hired
Employees' plan benefits to its own tax qualified plan. If there is no
plan-to-plan transfer, in order to permit a transferor Party, or its appropriate
Affiliate, to make distributions to any former System Employee of such Party who
becomes a Hired Employee of the other Party of the balance of such employee's
401(k) account in the transferor Party's or its Affiliate's tax qualified plan,
if any, as soon as legally permitted, each transferee Party shall notify the
other Party of the date of termination of such employee's employment with the
transferee Party for any reason.
7.3.4 All claims and obligations under, pursuant to or in connection
with any welfare, medical, insurance, disability or other employee benefit plans
of a Party or any Affiliate or arising under any Legal Requirement affecting
employees of such Party or any Affiliate incurred on or before the Closing Date
or resulting from or arising from events or occurrences occurring or commencing
on or before the Closing Date will remain the responsibility of such Party, or
the appropriate Affiliate, whether or not such employees are hired by the other
Party as of or after the Closing. Neither Party will have or assume any
obligation or liability under or in connection with any such plan of the other
Party or any Affiliate of the other Party.
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7.3.5 Each Party, or its appropriate Affiliate, will remain solely
responsible for, and will indemnify and hold harmless the other from and against
all Losses arising from or with respect to, all salaries and all severance,
vacation (except for accrued vacation time and sick time included in the
calculation of such Party's Adjusted Value under the Common Agreement, with
respect to the IP-I Systems, or the Redemption Agreement, with respect to the
RMG Systems), medical, holiday, continuation coverage and other compensation or
benefits to which its employees may be entitled, whether or not such employees
may be hired by the other Party or any Affiliate of the other Party, as a result
of their employment by such Party or any Affiliate of such Party on or prior to
the Closing Date, the termination of their employment on or prior to the Closing
Date, the consummation of the transactions contemplated hereby or pursuant to
any applicable Legal Requirement or otherwise relating to their employment prior
to the Closing Date. Any liability under WARN with regard to any employee
terminated on or prior to the Closing Date, or not hired by the other Party on
or after the Closing Date, shall, as a matter of contract between the Parties,
be the responsibility of the Party or its Affiliates by which the employee was
employed prior to the Closing Date. Each Party and its Affiliates shall
cooperate with the other Party and its Affiliates, if requested, in the giving
of WARN notices on behalf of the other.
7.3.6 Notwithstanding anything to the contrary herein, each Party
shall:
(a) credit each System Employee of the other Party who is
offered on or prior to the Closing employment by such Party and becomes an
employee of such Party after the Closing Date (a "Hired Employee") the amount of
vacation time (to a maximum of four weeks) and sick time (to a maximum of 10
days) accrued by him or her as a System Employee of the transferor Party through
and including the Closing Date to the extent the transferor Party's System Value
is decreased pursuant to Section 2.2(b) of the Redemption Agreement in the case
of RMG System Employees who become employees of any IP-I Party or its Affiliates
and Section 2.2(c)(ii) of the Common Agreement in the case of IP-I System
Employees who becomes employees of RMG or its Affiliates, provided, however,
that if any Hired Employee has accrued vacation time and/or sick time in excess
of four weeks or 10 days, respectively, then the transferor Party shall, and
shall cause its appropriate Affiliate to, pay to such employee the amount of
such excess and the transferee Party shall not assume any liability or
obligation in respect of such excess;
(b) permit each Hired Employee to participate in such Party's
employee benefit plans to the same extent as similarly situated employees of
such Party and their dependents are permitted to participate;
(c) give each Hired Employee credit for such employee's past
service with the other Party and its Affiliates as of the Closing Date
(including past service with any prior owner or operator of the other Party's
Systems or Cable Business) for purposes of eligibility and vesting under such
Party's employee benefit and other plans to the same extent as other similarly
situated employees of such Party;
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(d) not subject any Hired Employee to any waiting periods or
limitations on benefits for pre-existing conditions under such Party's employee
benefit plans, including any group health and disability plans, except to the
extent such employees were subject to such limitations under the employee
benefit plans of such other Party or any Affiliate of such other Party; and
(e) credit each Hired Employee under any group health plan for
any deductible amount previously met by such Hired Employee as of the Closing
Date under any of the group health plans of the transferor Party or any of its
Affiliates.
7.3.7 If a transferee Party discharges any Hired Employee without
cause within one hundred twenty days after Closing, then such transferee Party
shall pay severance benefits to such Hired Employee in accordance with such
transferor Party's severance benefit plan. For purposes of this Section 7.3.7,
"cause" shall have the meaning set forth in the transferee Party's employment
policies, procedures or agreements applicable to such transferee Party's
employees who are situated similarly to the discharged Hired Employee.
7.3.8 If a transferor Party has, or acquires, a duty to bargain with
any labor organization, then such transferor Party will (i) give prompt written
notice of such development to the other Party, including notice of the date and
place of any negotiating sessions as they are planned or contemplated and permit
the other Party to have a representative present at all negotiating sessions
with such labor organization and at all meetings preparatory thereto (including
making the transferee Party's representative a representative of the transferor
Party's delegation if required by the labor organization) and (ii) not, without
the transferee Party's written consent, enter into any Contract with such labor
organization that purports to bind the transferee Party, including any successor
clause or other clause which would have this purpose or effect. Each Party (as a
transferor Party) acknowledges and agrees that the other Party has not agreed to
be bound, and will not be bound, without an explicit assumption of such
liability or responsibility by the transferee Party, by any provision of any
collective bargaining agreement or similar Contract with any labor organization
to which the transferor Party or any of its Affiliates is or may become bound.
7.3.9 Nothing in this Section 7.3 or elsewhere in this Agreement
shall be deemed to make any employee of either Party a third party beneficiary
of this Agreement.
7.3.10 Notwithstanding any other provision of this Agreement, in
respect of wages paid with respect to the 1999 calendar year to employees of
IP-I who after the Closing become employees of RMG, or vice versa, RMG and IP-I
agree to comply, and to cause their respective affiliates to comply, with the
alternative procedures set forth in Section 5 of Revenue Procedure 96-60 and
shall cooperate, and shall cause their respective affiliates to cooperate, with
each other in complying with such procedures.
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7.4 Leased Vehicles; Other Capital Leases. Except for leases included in
the IP-I Tangible Personal Property and described in Schedule 4.4(b), IP-I will
pay the remaining balances on any leases for vehicles or capital leases included
in its Tangible Personal Property and will deliver title to such vehicles and
other Tangible Personal Property, free and clear of all Liens, to RMG at the
Closing.
7.5 Required Consents; Franchise Renewal.
7.5.1 Each Party will use its commercially reasonable efforts to (i)
obtain in writing as promptly as possible and at its expense, all of the
Required Consents and any other consent, authorization or approval required to
be obtained by such Party in connection with the transactions contemplated by
this Agreement, and deliver to the other Party copies of such Required Consents
and such other consents, authorizations or approvals promptly after they are
obtained by such Party and (ii) give any required written notice in connection
with the transactions; provided, that each Party will afford the other Party the
opportunity to review, approve and revise the form of letter or application
proposed to request the Required Consent or form of written notice prior to
delivery to the Third Party or the Affiliate of a Party whose consent is sought
or to whom such notification is required. All documents delivered or filed with
any Governmental Authority or any Person by or on behalf of such Party pursuant
to this Section 7.5.1, when so delivered or filed, will be correct, current and
complete in all material respects. Each Party will cooperate with the other
Party to obtain all Required Consents and no Party shall intentionally take any
action or steps that would prejudice or jeopardize the obtaining of any Required
Consent. No Party will accept or agree or accede to any modifications or
amendments to, or the imposition of any condition to the transfer of, any of the
System Franchises, System Licenses or System Contracts of its Cable Business
that are not acceptable to the other Party. Notwithstanding the foregoing, as
soon as practicable after the date of this Agreement (and in no event more than
15 Business Days hereafter), each Party will cooperate with each other to
complete, execute and deliver, or cause to be completed, executed and delivered,
to the appropriate Governmental Authority, a FCC Form 394 with respect to each
System Franchise other than any such Governmental Authority that the Parties
have agreed will not initially receive FCC Form 394; provided, that if either
Party subsequently requests that FCC Form 394 be completed, executed and
delivered to any appropriate Governmental Authority that did not initially
receive a FCC Form 394 for any System Franchise, then the Parties will cooperate
to complete, execute and deliver a FCC Form 394 to such Governmental Authority
as soon as practicable but in any event within 15 Business Days after a Party
has made such request. Without the prior consent of the other Party, neither
Party shall agree with any Governmental Authority to extend or to toll the time
limits applicable to such Governmental Authority's consideration of any FCC Form
394 filed with such Governmental Authority.
7.5.2 Each Party will use commercially reasonable efforts to obtain
and cooperate with the other Party to obtain a renewal or extension of any
System Franchise (for a period expiring no earlier than three years after the
Closing Date) for which a valid notice of renewal pursuant to the formal renewal
procedures established by Section 626 of the Cable Act
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has not been timely delivered to the appropriate Governmental Authority and no
written confirmation has been received from such Governmental Authority that the
procedures established by Section 626 nonetheless will be applicable with
respect to the renewal or extension of such System Franchise.
7.5.3 Notwithstanding the provisions of Section 7.5.1, no Party will
have any further obligation to obtain Required Consents: (a) with respect to
license agreements relating to pole attachments where the licensing authority
will not consent to an assignment of such license agreement but requires that
the other Party enter into a new agreement with such licensing authority, in
which case the other Party shall use its commercially reasonable efforts to
enter into such agreement prior to Closing or as soon as practicable thereafter
and such Party will cooperate with and assist the other Party in obtaining such
agreements; (b) for any business radio license or any private operational fixed
service (POFS) microwave license which such Party reasonably expects can be
obtained within 120 days after the Closing and so long as a conditional
temporary authorization (for a business radio license) or a special temporary
authorization (for a POFS license) is obtained by the other Party under FCC
rules with respect thereto; (c) with respect to Contracts evidencing Leased
Property, if, with the consent of the other Party, such Party obtains and makes
operational prior to Closing substitute Leased Property that is reasonably
satisfactory to the other Party; (d) with respect to Contracts evidencing leased
Tangible Personal Property that is material to its Cable Business, if, with the
consent of the other Party, such Party obtains and makes operational prior to
Closing substitute Tangible Personal Property that is reasonably satisfactory to
the other Party; and (e) with respect to Contracts which are not identified with
an asterisk (*) on Schedule 5.3 or 6.3, if RMG, with respect to Contracts
relating to RMG Systems, or IP-I, with respect to Contracts relating to IP-I
Systems, uses its commercially reasonable efforts to obtain the Required Consent
of the other party to such Contract but fails to obtain such consent on or prior
to Closing.
7.5.4 If and to the extent that RMG and the IP-I Parties, or any of
them, fails to obtain all Required Consents identified with an asterisk (*) on
Schedule 5.3 (except Required Consents for the transfer of Systems Franchises
which shall be governed by Section 7.5.5) on or prior to the Closing (whether or
not IP-I or RMG shall have waived satisfaction of the condition to Closing set
forth in Section 8.1.5 or Section 8.2.5, respectively), subsequent to the
Closing, each of RMG with respect to its Systems and Assets and the IP-I Parties
with respect to their Systems and Assets will continue to use commercially
reasonable efforts to obtain in writing as promptly as possible such Required
Consents and will deliver copies of the same, reasonably satisfactory in form
and substance, to the other. The obligations set forth in this Section will
survive the Closing and will not be merged in the consummation of the
transactions contemplated hereby.
7.5.5 If less than all of the Required Consents for the transfer of
Systems Franchises are obtained as of the Closing Date, then subject to the
conditions set forth in Section 4.1(c) of the Common Agreement and Sections
9.1(c)(ii) and 9.1(c)(iii) of the Redemption Agreement the following will occur:
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(a) With respect to each RMG Systems Franchise for which an
RMG Required Consent has not been obtained as of the Closing Date (including any
RMG Assets that are located in the franchise area for such franchise or relate
exclusively to such franchise, an "RMG Retained Franchise"), the parties will
negotiate in good faith to reach agreement on a IP-I Systems Franchise
(including any IP-I Assets that are located in the franchise area for such
franchise or relate exclusively to such franchise, a "IP-I Matching Franchise")
that is to the greatest extent possible, like kind to such RMG Retained
Franchise for purposes of Section 1031 of the Code and the applicable Exchange.
A IP-I Matching Franchise may also be a IP-I Retained Franchise. For purposes of
this Section 7.5.5, a "Retained Franchise" means either an RMG Retained
Franchise or a IP-I Retained Franchise or both, as the context requires, and a
"Matching Franchise" means either an RMG Matching Franchise or a IP-I Matching
Franchise or both, as the context requires.
(b) With respect to each IP-I Systems Franchise for which a
IP-I Required Consent has not been obtained as of the Closing Date (including
any IP-I Assets that are located in the franchise area for such franchise or
relate exclusively to such franchise, a "IP-I Retained Franchise"), the parties
will negotiate in good faith to reach agreement on an RMG Systems Franchise
(including any RMG Assets that are located in the franchise area for such
franchise or relate exclusively to such franchise, a "RMG Matching Franchise")
that is to the greatest extent possible, like kind to such IP-I Retained
Franchise for purposes of Section 1031 of the Code and the applicable Exchange.
An RMG Matching Franchise may also be an RMG Retained Franchise.
(c) The parties shall negotiate in good faith to reach
agreement on one or more operating agreements pursuant to which the intended
transferee of each Retained Franchise and Matching Franchise will operate such
Retained Franchise and Matching Franchise to the extent not prohibited under the
terms thereof, and for compensation as may be agreed upon, which operating
agreements shall also contain any required signal sharing arrangements that the
parties, each acting in good faith, may determine to be necessary (the
"Operating Agreements").
(d) At the Closing, the IP-I Parties and RMG shall transfer,
convey and assign (the "Primary Transfer") all of the RMG System Assets other
than any RMG Retained Franchises and RMG Matching Franchises and all of the IP-I
System Assets other than any IP-I Retained Franchises and IP-I Matching
Franchises.
(e) Following the Closing of the Primary Transfer, the parties
will continue to use commercially reasonable efforts to obtain on an expedited
basis the Required Consents for all RMG Retained Franchises and IP-I Retained
Franchises. The Operating Agreements will contain mutually acceptable terms
regarding the post-Closing exchange or transfer (a "Subsequent Transfer") of the
Retained Franchises and Matching Franchises after the receipt or failure to
receive the Required Consents applicable to such Retained Franchises and
Matching Franchises.
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(f) All references in this Agreement to the Closing and the
Closing Date will mean the Closing and Closing Date of the Primary Transfer
except as specifically provided otherwise in this Section 7.5.5(f). Without
limiting the foregoing, all representations and warranties (except as to those
Required Consents that have not been obtained) made in connection with the
Retained Franchises and the Matching Franchises will be made as of the Closing
Date rather than the date of the Subsequent Transfer, the other covenants in
Article 7 will not apply to the Retained Franchises or the Matching Franchises
following the Closing Date, and the Survival Period applicable under Article 11
for all such representations, warranties and covenants will accrue from the
Closing Date; provided, that the parties will negotiate in good faith to include
appropriate covenants in the Operating Agreements that will apply to the
Retained Franchises and the Matching Franchises following Closing. The closing
conditions in Article 8 will not apply to any Retained Franchise or Matching
Franchise transfer; provided, that the parties will negotiate in good faith to
include appropriate conditions to the later transfer of the Retained Franchises
and the Matching Franchises in the Operating Agreements. Notwithstanding the
foregoing, the adjustments provided for in Article 3 will be made as of the
Closing Date for both the Retained Franchises and the Matching Franchises.
(g) If the provisions of this Section 7.5.5 become operative,
the parties agree to use commercially reasonable efforts and act in good faith
in taking such actions and negotiating such additional provisions or other
agreements, including amendments to this Agreement, as may be necessary or
appropriate to carry out the intent of this Section 7.5.5, including keeping
franchise transfers effective.
7.6 Title Commitments and Surveys. Each Party will have the option to
obtain, at its own expense, (i) commitments of title insurance ("Title
Commitments") issued by a nationally recognized title insurance company selected
by the requesting party (the "Title Company") and containing policy limits and
other terms reasonably acceptable to the requesting party, and photocopies of
all recorded items described as exceptions therein committing to insure (A) fee
title in the requesting party to each parcel of RMG Owned Property or IP-I Owned
Property, as the case may be, and (B) a leasehold interest in the requesting
party in each parcel of RMG Leased Property or IP-I Leased Property, as the case
may be, that is the site of a System headend or tower, by American Land Title
Association ("ALTA") (1992) owner's or lessee's policies of title insurance, and
(ii) current ALTA as-built surveys (in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys jointly established and adopted by
ALTA and the American Congress on Surveying and Mapping in 1992) of each such
parcel of RMG or IP-I Owned Property or RMG or IP-I Leased Property with
monuments placed at all major corners of the property boundary unless already
marked and showing the location and identification by recorded instrument number
of all easements or rights-of-way burdening or benefiting the property in
question and all other documents and matters referenced as exceptions on the
Title Commitment, the location of all apparent easements and rights-of-way,
flood zone designation, setback lines, if applicable, the location of all
substantial visible improvements on such property and the location of all
adjoining streets and indication of access to a public way such as curb cuts and
driveways, in such form as is reasonably satisfactory to the requesting
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party and as is necessary to obtain the title insurance to be issued pursuant to
the Title Commitments with the standard printed exceptions relating to survey
matters deleted (the "Surveys"), certified to the parties and the Title Company
issuing a Title Commitment. If the requesting party notifies the other party
within 20 days of this Agreement or, if later, of its receipt of both the Title
Commitments and the Surveys of any Lien (other than a Permitted Lien) or other
matter affecting title to RMG or IP-I Owned Property or RMG or IP-I Leased
Property of the other which renders (or presents a material risk of rendering)
title to any parcel of RMG or IP-I Owned Property not good and marketable or
prevents or materially interferes with (or presents a material risk of
preventing or interfering with) the use of any parcel of RMG or IP-I Owned
Property or RMG or IP-I Leased Property for the purposes for which it is
currently used or intended to be used by such Party (each a "Title Defect"),
such party will exercise commercially reasonable efforts to remove or, with the
consent of the requesting party, cause the Title Company to commit to insure
over, each such Title Defect prior to the Closing.
7.7 HSR Notification. As soon as practicable after the execution of this
Agreement, but in any event no later than 30 days after such execution, the IP-I
Parties and RMG will each complete and file, or cause to be completed and filed
at its own cost and expense, any notification and report required to be filed
under the HSR Act with respect to the transactions contemplated by this
Agreement and each such filing shall request early termination of the waiting
period imposed by the HSR Act. The Parties shall use their respective
commercially reasonable efforts to respond as promptly as reasonably practicable
to any inquiries received from the Federal Trade Commission (the "FTC") and the
Antitrust Division for additional information or documentation and to respond as
promptly as reasonably practicable to all inquiries and requests received from
any other Governmental Authority in connection with antitrust matters. The
Parties shall use their respective commercially reasonable efforts to overcome
any objections which may be raised by the FTC, the Antitrust Division or any
other Governmental Authority having jurisdiction over antitrust matters. Each
Party will cooperate to prevent inconsistencies between their respective filings
and between their respective responses to all such inquiries and responses, and
will furnish to each other such necessary information and reasonable assistance
as the other may reasonably request in connection with its preparation of
necessary filings or submissions under the HSR Act. Notwithstanding the
foregoing, no Party shall be required to make any significant change in the
operations or activities of the business (or any material assets employed
therein) of such Party or any of its Affiliates, if a Party determines in good
faith that such change would be materially adverse to the operations or
activities of the business (or any material assets employed therein) of such
Party or any of its Affiliates having significant assets, net worth or revenue.
7.8 Sales and Transfer Taxes. All sales, use or excise Taxes arising from
or payable by reason of the transfer of any of the RMG Assets or any of the IP-I
Assets ("Transfer Taxes") will be shared equally by RMG and IP-I. All transfer
and similar taxes or assessments, including transfer fees and similar
assessments for or under System Franchises, System Licenses and System
Contracts, arising from or payable by reason of the conveyance of the RMG Assets
or the IP-I Assets also will be shared equally by RMG and IP-I. Tax Returns
required to be filed in
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respect of Transfer Taxes ("Transfer Tax Returns") shall be prepared and filed
by the party that has the primary responsibility under applicable law for filing
such Transfer Tax Returns. If no party has primary responsibility for filing a
Transfer Tax Return, then RMG shall be responsible for preparing and filing any
such Transfer Tax Return.
7.9 Programming. Each Party will execute and deliver such documents and
take such action as may be reasonably requested by another Party to enable such
other Party to comply with the requirements of its programming agreements with
respect to divestitures and acquisitions of cable television systems; provided,
however, RMG will not be required to provide specific programming or channels or
to assume any liability with respect to or in connection with the programming
agreements of the other Party or any Affiliate of IP-I, except to the extent
included on Schedule 4.4(b).
7.10 Updated Schedules.
(a) Schedule and exhibit references contained in this Agreement are
for convenience only and any matter disclosed pursuant to one section,
subsection or other provision of this Agreement, are deemed disclosed for all
purposes of this Agreement, as long as the disclosure with respect to such
matter provides a truthful, accurate and adequate description of all relevant
aspects of such matter.
(b) Not less than ten Business Days prior to Closing, each of RMG
and IP-I will deliver to the other revised copies of each of its Schedules,
except for Schedules 5.15 and 6.15 as they relate to matters addressed in
Sections 5.15.1 and 5.15.2, and Sections 6.15.1 and 6.15.2, respectively
(regardless of whether the original Schedule is as of a certain date) which
shall have been updated and marked to show any changes occurring between the
date of this Agreement and the date of delivery; provided, however, that such
updates are for informational purposes only, and for purposes of determining
whether such Party's representations, warranties and covenants in this Agreement
are true and correct at Closing, all references to the Schedules will mean the
version of the Schedules attached to this Agreement on the date of signing.
Notwithstanding the foregoing, if the effect of any such updates to Schedules is
to disclose any one or more additional properties, privileges, rights, interests
or claims, in each case acquired after the date of this Agreement ("New
Properties") as Assets that would have been (if owned on the date of this
Agreement) required by this Agreement to have been disclosed by such Party in
its original Schedules or that were acquired by such Party after the date of
this Agreement in breach of this Agreement, then the other Party, at or before
Closing, will have the right (to be exercised by written notice to such Party)
to cause any one or more of such New Properties to be designated as and deemed
to constitute Excluded Assets of such Party for all purposes under this
Agreement. If such right is not exercised by any Party entitled to exercise such
right and if such Party waives the applicable condition to Closing provided in
Section 8.1.1, 8.1.2, 8.2.1 or 8.2.2, such Party shall be deemed to have
accepted such new disclosure with respect to such New Properties and it shall be
deemed incorporated by reference into the Schedules. Notwithstanding anything to
the contrary contained in this Agreement, and except as set forth in the
preceding
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sentence with respect to New Properties, the waiver of any condition to Closing
by a Party who has knowledge of a breach by the other Party will not be deemed a
waiver of any rights and remedies with respect to such breach under this
Agreement or the Common Agreement.
7.11 Use of Name and Logo. For a period of 180 days after the Closing,
each of the IP-I Parties and RMG will be entitled to use the trademarks, trade
names, service marks, service names, logos and similar proprietary rights of the
transferor to the extent incorporated in or on the Assets transferred to it at
the Closing on a royalty-free basis, provided that each of the IP-I Parties and
RMG will exercise commercially reasonable efforts to remove all such names,
marks, logos and similar proprietary rights of the transferor (except to the
extent otherwise permitted by IP-I or RMG) from the Assets as soon as reasonably
practicable, and in any event within 180 days, following the Closing.
Notwithstanding the foregoing, nothing in this Section will require any Party to
remove or discontinue using any such name or xxxx that is affixed to converters
or other items in or to be used in customer homes or properties, or as are used
in a similar fashion making such removal or discontinuation impracticable.
7.12 Transitional Billing Services. IP-I and RMG will each provide to the
other, upon written request delivered a reasonable amount of time in advance and
to the extent reasonably practicable, access to and the right to use its billing
system computers, software and related fixed assets in connection with the
Systems acquired by the other for a period of up to 150 days following the
Closing to allow for conversion of existing billing arrangements, including
billing and related arrangements regarding internet access services being
provided to customers of a System on the Closing Date ("Transitional Billing
Services"). Each Party will notify the other at least thirty days prior to the
Closing as to whether it desires Transitional Billing Services from the other.
All Transitional Billing Services, if any, that are requested by a Party will be
provided on terms and conditions reasonably satisfactory to each Party;
provided, however, that the amount to be paid by the Party receiving
Transitional Billing Services will not exceed the out-of-pocket cost to the
other Party of providing such Transitional Billing Services. Each Party will
notify the other of the cost to such Party of providing such Transitional
Billing Services within ten Business Days after receiving the other Party's
notice requesting the provision of such Transitional Billing Services.
7.13 Confidentiality and Publicity.
7.13.1 Prior to the Closing, each Party will keep confidential any
non-public information that such Party may obtain from the other in connection
with this Agreement, and following the Closing, each Party will keep
confidential any non-public information that such Party may obtain from the
other in connection with this Agreement unrelated to the Cable Business and
Systems transferred by the other Party pursuant to this Agreement as well as any
non-public information in the possession of such Party related to the Cable
Business and Systems transferred by such Party to the other Party pursuant to
this Agreement (any such information that a Party is required to keep
confidential pursuant to this sentence shall be referred to as "Confidential
Information"). Each Party will not disclose, and will cause its employees,
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consultants, advisors and agents not to disclose, any Confidential Information
to any other Person (other than its directors, officers and employees and
representatives of its advisers and lenders whose knowledge thereof is necessary
in order to facilitate the consummation of the transactions contemplated hereby)
or use, and will cause its controlled Affiliates, directors, officers,
employees, consultants, advisors and agents not to use, such Confidential
Information to the detriment of the other; provided that (i) such Party may use
and disclose any such Confidential Information once it has been publicly
disclosed (other than by such Party in breach of its obligations under this
Section) or which rightfully has come into the possession of such Party (other
than from the other Party and other than from another Person in violation of any
duty or obligation of confidentiality) and (ii) to the extent that such Party
may, in the reasonable opinion of its counsel, be compelled by Legal
Requirements to disclose any of such Confidential Information, such Party may
disclose such Confidential Information if it will have used all reasonable
efforts, and will have afforded the other the opportunity, to obtain an
appropriate protective order or other satisfactory assurance of confidential
treatment, for the Confidential Information compelled to be disclosed. In the
event of termination of this Agreement, each Party will cause to be delivered to
the other, and retain no copies of, any documents, work papers and other
materials obtained by such Party or on its behalf from the other, whether so
obtained before or after the execution hereof.
7.13.2 No Party will issue any press releases or make any other
public announcement concerning this Agreement and the transactions contemplated
hereby, except as required by applicable Legal Requirements, without the prior
written consent and approval of the other Party, which consent and approval may
not be unreasonably withheld.
7.13.3 Each Party expressly agrees that, in addition to any other
right or remedy the other may have, such other Party may seek and obtain
specific performance of the covenants and agreements set forth in or made
pursuant to this Section 7.13 and temporary and permanent injunctive relief to
prevent any breach or violation thereof, and that no bond or other security may
be required from such other parties in connection therewith.
7.14 Bulk Transfer. Each Party waives compliance by each other Party with
Legal Requirements relating to bulk transfers applicable to the transactions
contemplated hereby.
7.15 Lien Searches. Each Party will obtain, at its expense, the results of
a lien search conducted by a professional search company of records in the
offices of the secretaries of state in each state and county clerks in each
county where there exist any of its Owned Property or Tangible Personal
Property, and in the state and county where such Party's principal offices are
located, including copies of all financing statements or similar notices or
filings (and any continuation statements) discovered by such search company.
7.16 Further Assurances. At or after the Closing, each Party at the
request of the other Party, will promptly execute and deliver, or cause to be
executed and delivered, to the other Party all such documents and instruments,
in addition to those otherwise required by this Agreement,
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in form and substance reasonably satisfactory to the other Party as the other
Party may reasonably request in order to carry out or evidence the terms of this
Agreement or to collect any accounts receivable or other claims included in the
Assets transferred to the other Party. Without limiting the generality of the
foregoing, the IP-I Parties and RMG will take, or cause to be taken, all actions
consistent with the terms of this Agreement, including execution and delivery of
any documents or instruments, as the other may reasonably request to effect the
qualification of the transactions contemplated hereby as a like-kind exchange
under Section 1031 of the Code.
7.17 Post-Closing Cooperation as to Rates.
7.17.1 Each of RMG and the IP-I Parties will use commercially
reasonable efforts to cooperate with and assist the other by providing, upon
reasonable request, all information in that Party's possession (and not
previously made available to the requesting Party) relating directly to the
rates set forth on Schedule 5.15.2 or 6.15.2, as applicable, or on any of FCC
Forms 1200, 1205, 1210, 1220, 1225, 1235 or 1240 or any other FCC Form, that the
requesting Party may reasonably require to justify such rates in response to any
inquiry, order or requirements of any Governmental Authority.
7.17.2 Prior to Closing, neither Party shall settle or permit to be
settled any rate proceeding with respect to its Systems without the consent of
the other Party, which consent will not be unreasonably withheld or delayed,
unless the proposed settlement includes injunctive or other relief that
adversely affects its Assets or its ability of such other Party to operate such
Systems substantially in the manner in which they are operated on the date of
this Agreement (other than changing the rates in question), in which case
consent may be withheld or delayed in such other Party's sole discretion.
7.17.3 After the Closing, each Party, as a transferor (the
"Transferor Party") will be responsible for and follow to conclusion any rate
order of any Governmental Authority or proceeding with respect to rates of any
of its Systems charged by it immediately prior to the Closing; provided,
however, that the Transferor Party shall not: (i) agree to any forward-looking
rate adjustment; (ii) submit any refund plan to a Governmental Authority that
would impact any rates charged or impose financial liability on the Transferee
Party after the Closing; or (iii) appeal or take any other action with regard to
such proceeding that would impact any rates charged or impose financial
liability on the Transferee Party after the Closing, in any case without
obtaining the prior written consent of the System's current owner (the
"Transferee Party"), which consent shall not be unreasonably withheld. Each
Party will cooperate with and assist the other by providing, upon reasonable
request, all information in its possession (and not previously made available to
the requesting Party) that the requesting Party may reasonably require to
justify rates in response to any inquiry, order or requirements of any
Governmental Authority.
7.17.4 If, following Closing any System is required pursuant to any
Legal Requirement, settlement or otherwise to refund to subscribers any
payments, in whole or in part,
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made by such subscribers prior to Closing, including fees for cable television
service, equipment charges, late fees and similar payments, then at the election
of the Transferee Party and upon the Transferor Party's prior written consent,
which consent shall not be unreasonably withheld: (i) the Transferor Party must
fulfill such refund obligation through a one-time cash payment to subscribers,
in which case the Transferor Party shall provide funds for such payment to the
Transferee Party, the Transferee Party shall cooperate with the Transferor Party
or implement and administer such refund payment through the Transferee Party's
billing system, and the Transferor Party shall reimburse the Transferee Party
for all reasonable expenses incurred by the Transferee Party in connection
therewith; (ii) the Transferee Party may fulfill such refund obligation through
a cash payment, credit or in-kind or other form of consideration, at its
discretion and subject to any required approval by a Governmental Authority, and
the Transferor Party shall reimburse the Transferee Party in the amount of any
payment or in the amount of the cost to the Transferee Party of any credit or
in-kind or other form of consideration and all reasonable expenses incurred by
the Transferee Party in connection therewith. Without limiting the foregoing,
the Transferee Party will provide the Transferor Party with all information in
the Transferee Party's possession that is reasonably required by the Transferor
Party in connection with such reimbursement.
7.17.5 If a Transferee Party is permitted following Closing to pass
through to subscribers of Systems acquired by it at Closing, the amount of any
"franchise fees on franchise fees" paid by a Transferor Party to the appropriate
local franchising authority with respect to the period prior to Closing, the
Transferee Party agrees that it will collect for the benefit of the Transferor
Party such amounts specified no later than the Six-Month Date as paid by the
Transferor Party and, except as specified below, will promptly remit such
amounts to the Transferor Party; provided, however, that if a local franchising
authority challenges such collection or orders the Transferee Party to refund
such fees to subscribers, then the Transferee Party shall not remit the fees to
the Transferor Party but shall hold such fees in escrow and the parties will
cooperate reasonably and in good faith to challenge such local franchising
authority action. Upon the final resolution of such local franchising authority
action, the escrowed fees shall be released from escrow and, to the extent not
refunded to subscribers, paid over to the Transferor Party. The Transferor Party
agrees to provide the Transferee Party with such documentation as necessary to
demonstrate its payment of the "franchise fees on franchise fees" and to enable
the Transferee Party to collect the pass through amounts from subscribers.
7.18 Distant Broadcast Signals. Unless otherwise restricted or prohibited
by any Governmental Authority, applicable Legal Requirements or Contract, each
Party will, if requested by the other Party, delete prior to the Closing any
distant broadcast signals which such other Party determines will result in
unacceptable liability on the part of the transferee for copyright payments with
respect to continued carriage of such signals after the Closing; provided,
however, that any Party may refuse to honor such a request if such deletion
could reasonably be expected to delay or otherwise jeopardize the Parties'
ability to complete the transactions contemplated herein.
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7.19 Environmental Assessment.
7.19.1 Each Party acknowledges and agrees, subject to any
enforceable restrictions placed thereon by a Third Party owner or lessor of any
real property involved, that the other Party may commission, at such other
Party's cost and expense, a so-called "Phase I" environmental site assessment of
such Party's Assets (a "Phase I Assessment"). If the Phase I Assessment or any
other information known to such Party (including information disclosed in
connection with the negotiation of this Agreement or described in the Schedules
hereto) indicates that a so-called "Phase II" assessment or other additional
testing or analysis of such Party's Assets as the investigating Party may deem
appropriate (a "Phase II Assessment") is advisable, then, subject to any
enforceable restrictions placed thereon by a Third Party owner or lessor of any
real property involved, the other Party may elect to cause its agents or
representatives to conduct such testing and analysis. Each Party will use its
commercially reasonable efforts to comply with any reasonable request for
information made by the other Party or its agents in connection with any such
investigation, but in no event will either Party be required under this Section
7.19.1 to disclose any materials constituting attorney-client privileged
communications. Each Party covenants that any response to any such request for
information will be complete and correct in all material respects. Each Party
will afford the other Party and its agents or representatives access to all
operations of such Party at all reasonable times and in a reasonable manner in
connection with any such investigation subject to any reasonably required
approval of such Party's landlords, which approval such Party will use its
commercially reasonable efforts to obtain. Should the other Party commission
such an investigation, such investigation will have no effect upon the
representations and warranties made by one Party to the other Party under this
Agreement except that if any Phase I Assessment or Phase II Assessment uncovers
an environmental condition which then comprises a breach of a Party's
representations or warranties herein and such breach is capable of being cured,
such Party shall be deemed not to have breached such representation or warranty
if such Party cures such breach in accordance with the provisions of this
Agreement. In the event this Agreement is terminated or fails to close in
accordance with its terms, each Party agrees to repair any damage or disturbance
it causes to the other Party's Owned Property or Leased Property in the course
of such investigative activities by returning such Owned Property or Leased
Property to approximately the same condition as existed prior to such
investigative activities. Each Party shall indemnify, protect, defend, and hold
the other Party and the other Party's Assets free and harmless from and against
any and all claims, actions, causes of action, suits, proceedings, costs,
expenses (including reasonable attorneys' and consultants' fees and costs),
liabilities, damages, and liens of any type arising directly out of any act or
omission of that Party or any of that Party's representatives on or about the
other Party's Owned Property or Leased Property in the course of such
investigative activities. However, neither of the two preceding sentences shall
be interpreted to impose any obligation upon either Party with respect to
Hazardous Substances present at, on, in, under or about, or any conditions
existing on, the other Party's Owner Property or Leased Property at the time of
such investigative activities, except to the extent of a Party's negligence or
willful misconduct causes a release of such Hazardous Substances or otherwise
exacerbates any such condition in a manner that leads to liability under any
Environmental Law.
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7.19.2 All information collected and generated as a result of the
environmental due diligence authorized by Section 7.19.1 will be subject to the
terms and conditions of Section 7.13 of this Agreement. Each Party shall provide
to the other Party copies of all draft and final reports, assessments and other
information composed or compiled by such Party's environmental consultants
within five Business Days after such Party's receipt of copies thereof
7.20 Year 2000 Matters.
7.20.1 Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Computer and Other Systems" means any level of hardware
or software, equipment and cable plant, or environmental and security systems
and other facilities used in connection with RMG's Cable Business or IP-I's
Cable Business, as the case may be, which are date dependent or which process
date data, including any firmware, embedded systems, application programs, user
interfaces, files and databases, and which might be adversely affected by any
date-related issue or calculation prior to, during or after January 1, 2000,
including any problem related to leap year.
(b) "Year 2000 High-Level Inventory, Assessment and
Remediation Decisions" means the subject entity's documentation of its Year 2000
inventory, assessment and remediation decisions performed in accordance with its
Year 2000 Plan, consisting of (i) database reports identifying each category of
items inventoried at the subject entity's cable Systems and specifying as
appropriate the manufacturer or vendor and release, version or model number of
each item listed, (ii) risk or critically assessments, (iii) determination and
execution of evaluation approaches with respect to Year 2000 Readiness, (iv)
determination of Year 2000 Readiness based on evaluation approaches employed,
and (v) decisions regarding disposition alternatives (i.e., do nothing, repair,
replace or retire). All such reports have been reviewed at appropriate levels
within the subject entity's organization in accordance with the entity's Year
2000 Plan. RMG's and IP-I's Year 2000 High-Level Inventory, Assessment and
Remediation Decisions are attached hereto as Schedules 7.20.1(b)-A and
7.20.1(b)-B, respectively.
(c) "Year 2000 Plan" means the plans adopted in accordance
with a Party's Year 2000 Remediation Program to make Year 2000 Ready by a date
no later than August 31, 1999, all of such Party's Computer and Other Systems
having a significant impact on the Party's business. Such Year 2000 Plan will
include scope of methodologies and timelines (including objective milestones)
for inventory, assessment, remediation and/or replacement, and testing or
evaluation of Third Party Testing, as applicable, of its Computer and Other
Systems having a significant impact on the Party's business. RMG's and IP-I's
Year 2000 Plans are attached hereto as Schedules 7.20.1(c)-A and 7.20.1(c)-B,
respectively.
(d) "Year 2000 Ready" or "Year 2000 Readiness" means that the
referenced component, system, software, equipment or other item is designed or
has been
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modified to be used prior to, during and after the calendar year 2000 A.D., and
that such item will operate at all levels, including microcode, firmware,
application programs, user interfaces, files and databases, during each such
time period without error or interruption relating to, or the product of,
date-related issues or calculations, including date data which represents or
references different centuries or more than one century or leap year.
(e) "Year 2000 Remediation Program" means an enterprise wide
program to make Year 2000 Ready all Computer and Other Systems having a
significant impact on the Party's business. Such Year 2000 Remediation Program
must be conducted by Persons with experience in issues related to Year 2000
Readiness and such Persons must have organized an enterprise wide program
management office which reports to, or an enterprise wide program management
structure with oversight by, executive level management and the board of
directors (or committee thereof or other governing body of such entity).
7.20.2 Acknowledgments. The Parties acknowledge the following:
(a) Each of IP-I and certain of its Affiliates, and RMG and
certain of its Affiliates, have established a Year 2000 Remediation Program.
(b) Each of IP-I and RMG has reviewed and approved the other's
Year 2000 Plan and Year 2000 High-Level Inventory, Assessment and Remediation
Decisions.
(c) Each Party acknowledges and agrees with the other Party's
preliminary decision to rely on testing of cable plant and related equipment to
be performed by certain cable industry technical and trade associations, certain
critical vendors or other cable operators ("Third Party Testing"). Each Party
will continue to review the progress of such Third Party Testing plans and
results as they become available. Each Party has developed test methodologies as
part of its Year 2000 Plan to address implementation of additional testing
should RMG and IP-I mutually consider such additional testing to be necessary or
prudent.
(d) Neither party makes any representation, warranty or
guarantee that its Computer and Other Systems will be Year 2000 Ready at the
Closing Date or thereafter.
7.20.3 Covenants. Notwithstanding any other provision set forth in
this Agreement, the Parties agree as follows:
(a) Through the Closing Date, each Party will exercise prudent
and reasonable care and diligence to take such actions with respect to its Cable
Business when and as required by its approved Year 2000 Plan.
(b) Through the Closing Date, each of RMG and IP-I will
cooperate with the other with respect to the nature and results of its
activities relating to its Year 2000 Plan. Such cooperation shall include
providing the appropriate Party with any non-confidential
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information possessed by a Party or one of its Affiliates and reasonably
requested by the other Party regarding the Year 2000 Readiness of any material
component of the Computer and Other Systems having a significant impact on such
Party's business.
(c) Each Party shall deliver to the other Party on or before
July 31, 1999, and again on August 31, 1999 (if Closing has not occurred prior
to such date), a statement, certified by an authorized officer of such Party who
is responsible for implementation of its Year 2000 Plan, setting forth in
reasonable detail that as of such date all of the milestones contained in its
Year 2000 Plan to be completed as of such date have been fully completed (or if
not, indicating which such milestones have not been completed and describing the
efforts required to complete the same).
(d) From the date hereof through the Closing Date, each Party
shall have the opportunity to conduct due diligence regarding the Year 2000
Readiness of the other Party's Computer and Other Systems having a significant
impact on the other Party's business in accordance with this Section 7.20.3(d).
Each Party may conduct a review of the Year 2000 Ready assessment activities
with respect to the Computer and Other Systems having a significant impact on
the other Party's business, including inspecting individual headend and office
sites and reviewing existing reports, correspondence and related material
regarding the Year 2000 Readiness of the Computer and Other Systems having a
significant impact on the other Party's business. Each Party shall conduct no
more than three visits to any site of the other Party, and no single site visit
shall exceed three Business Days. Each Party shall give the other Party at least
five Business Days written notice prior to any visit to any System facilities of
the other Party and, if a Party intends during such visit to perform testing at
a headend, office or other site of the other Party, such Party also must provide
a description of the scope of work regarding such testing. If the other Party
does not notify such Party in writing of the other Party's objection to such
proposed site visit and/or testing within three Business Days after receipt of
such notice, the other Party shall be deemed to have consented to the proposed
site visit and any described testing. A Party shall not unreasonably object to
the other Party's request to perform testing. A representative of the other
Party shall be present at all times during any such visit and testing. All
activities of a Party regarding its Year 2000 due diligence shall be conducted
to minimize any inconvenience or interruption of the normal use and enjoyment of
the other Party's Cable Business and Computer and Other Systems.
7.21 Satisfaction of Conditions. Each Party will use its commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other Party to consummate the transactions contemplated
by this Agreement, as set forth in Article 8.
7.22 Offers. Each Party (and its directors, officers, employees,
representatives and agents) shall not directly or indirectly, (i) offer its
Assets or Cable Business for sale, (ii) solicit, encourage or entertain offers
for such Assets or Cable Business, (iii) initiate negotiations or discussions
for the sale of such Assets or Cable Business or (iv) make information about
such Assets or Cable Business available to any Third Party in connection with
the possible sale of
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such Assets or Cable Business prior to the Closing Date or the date this
Agreement is terminated in accordance with its terms.
7.23 Retention of Books and Records. At or prior to the Closing, each
Party shall make arrangements reasonably satisfactory to the other Party to
deliver all such Party's Books and Records not located at any of the offices
included in its Owned Property or Leased Property. Following the Closing, each
Party shall give access to the other Party, its counsel, accountants and other
authorized representatives during normal business hours to such Party's
materials, books, records and documents which relate to the operations of such
Party's Cable Business prior to the Closing Date or which relate to the
operations of the other Party's Cable Business after the Closing Date, in each
case as may be reasonably necessary in connection with any legitimate purpose
(including the preparation of tax reports and returns and the preparation of
financial statements). Such access will be subject to reasonable advance written
notice, will be conducted in a manner that is not disruptive of such Party's
business, and will be subject to any other reasonable limitations imposed by
such Party. The requesting Party shall have the right to make copies of such
materials at its own expense. If either Party proposes to destroy or otherwise
dispose of any of its materials, books, records or documents that related to the
operations of its Cable Business prior to the Closing Date, it will give no less
than 30 days advance written notice to the other Party so as to permit such
other Party to exercise its rights under this Section 7.23.
7.24 Cooperation. RMG and IP-I shall reasonably cooperate in connection
with the preparation and filing of any Tax Return for which the other is
responsible for preparing and filing with respect to the Systems.
7.25 Post-Closing Holding Period. Each of the Parties agrees to hold the
Assets acquired by it under this Agreement for a period of no less than two
years following the Closing Date; provided, however, that the foregoing shall
not prevent a Party from transferring Assets in a transfer that qualifies under
Section 332 and 337 of the Code.
8. CONDITIONS PRECEDENT.
8.1 Conditions to IP-I's Obligations. The obligations of IP-I to
consummate the transactions contemplated by this Agreement will be subject to
the satisfaction, at or before the Closing, of the following conditions, one or
more of which may be waived by IP-I:
8.1.1 Accuracy of Representations and Warranties. The
representations and warranties of RMG in this Agreement and in the Transaction
Documents, without giving effect to any materiality qualifications contained
therein, are true, complete and accurate on and as of the date hereof and at and
as of the Closing with the same effect as if made at and as of the Closing,
except to the extent that all misstatements, omissions and inaccuracies, in the
aggregate, do not have a material adverse effect on the RMG Assets, RMG's Cable
Business, the operations, condition (financial or otherwise) or results of
operations of the RMG Systems taken as a whole, or on the ability of RMG to
perform its obligations under this Agreement.
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8.1.2 Performance of Agreements. RMG shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and in any Transaction Document to
be performed and complied with by it at or before the Closing.
8.1.3 Deliveries. RMG shall have delivered the items and documents
required to be delivered by it pursuant to this Agreement, including those
required to be delivered to IP-I under Section 9.2.
8.1.4 Legal Proceedings. No Legal Requirement of any Governmental
Authority (including any temporary Legal Requirement) shall be in effect which
would prevent or make illegal the consummation of any of the transactions
contemplated by this Agreement or any Transaction Document.
8.1.5 Consents.
(a) Except as otherwise provided in Section 7.5.5, Required
Consents relating to all RMG System Franchises shall have been obtained in form
and substance reasonably satisfactory to IP-I, or the consent of the appropriate
Governmental Authority shall be deemed to have been received in accordance with
Section 617 of the Communications Act (47 U.S.C. ss.537).
(b) Except as otherwise provided in Section 7.5.3, IP-I shall
have received evidence, in form and substance reasonably satisfactory to it,
that the RMG Required Consents relating to the RMG Systems Licenses and the RMG
Systems Contracts identified with an asterisk (*) on Schedule 6.3 have been
obtained.
8.1.6 No Material Adverse Changes. There shall not have been any
material adverse change in the RMG Assets or the condition (financial or
otherwise) or operations of RMG's Cable Business or the RMG Systems, taken as a
whole, since December 31, 1998.
8.1.7 Franchise Renewals. Each RMG Systems Franchise for which (a) a
valid notice of renewal pursuant to the formal renewal procedures established by
Section 626 of the Cable Act has not been timely delivered to the appropriate
Governmental Authority, and (b) with respect to which the appropriate
Governmental Authority has not confirmed in writing that the procedures
established by Section 626 nonetheless shall apply to the renewal or extension
of such RMG Systems Franchise, shall have been renewed or extended for a period
expiring no earlier than three years after the Closing Date.
8.1.8 Common Agreement and Related Closings.
(a) The conditions set forth in Section 4.3 of the Common
Agreement shall have been satisfied or waived.
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(b) The transactions contemplated by the IP Agreements (as
defined in the Common Agreement) and the Redemption Agreement shall have been,
or will be, consummated as set forth in Section 4.4 of the Common Agreement,
except to the extent such Agreements are not consummated as a result of a breach
by any IP-I Party or their Affiliates of their obligation to consummate such
transactions.
8.2 Conditions to RMG's Obligations. The obligations of RMG to consummate
the transactions contemplated by this Agreement will be subject to the
satisfaction, at or before the Closing, of the following conditions, one or more
of which may be waived by RMG:
8.2.1 Accuracy of Representations and Warranties. The
representations and warranties of IP-I in this Agreement and in the Transaction
Documents, without giving effect to any materiality qualification contained
therein, are true, complete and accurate on and as of the date hereof and at and
as of the Closing with the same effect as if made at and as of the Closing,
except to the extent that all misstatements, omissions and inaccuracies, in the
aggregate, do not have a material adverse effect on the IP-I Assets, IP-I's
Cable Businesses, the operations, condition (financial or otherwise) or results
of operations of the IP-I Systems taken as a whole, or on the ability of any
IP-I Party to perform its obligations under this Agreement.
8.2.2 Performance of Agreements. IP-I shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and in any Transaction Document to
be performed and complied with by it at or before the Closing.
8.2.3 Deliveries. IP-I shall have delivered the items and documents
required to be delivered by it pursuant to this Agreement, including those
required to be delivered to RMG under Section 9.3.
8.2.4 Legal Proceedings. No Legal Requirement of any Governmental
Authority (including any temporary Legal Requirement) shall be in effect which
would prevent or make illegal the consummation of any of the transactions
contemplated by this Agreement or any Transaction Document.
8.2.5 Consents.
(a) Except as otherwise provided in Section 7.5.5, Required
Consents relating to all IP-I System Franchises shall have been obtained in form
and substance reasonably satisfactory to RMG, or the consent of the appropriate
Governmental Authority shall be deemed to have been received in accordance with
Section 617 of the Communications Act (47 U.S.C. ss.537).
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(b) Except as otherwise provided in Section 7.5.3, RMG shall
have received evidence, in form and substance reasonably satisfactory to it,
that the IP-I Required Consents relating to the IP-I Systems Licenses and the
IP-I Systems Contracts identified with an asterisk (*) on Schedule 5.3 have been
obtained.
8.2.6 No Material Adverse Changes. There shall not have been any
material adverse change in the IP-I Assets or the condition (financial or
otherwise) or operations of IP-I's Cable Business or the IP-I Systems, taken as
a whole, since December 31, 1998.
8.2.7 Franchise Renewals. Each IP-I Systems Franchise for which (a)
a valid notice of renewal pursuant to the formal renewal procedures established
by Section 626 of the Cable Act has not been timely delivered to the appropriate
Governmental Authority, and (b) with respect to which the appropriate
Governmental Authority has not confirmed in writing that the procedures
established by Section 626 nonetheless shall apply to the renewal or extension
of such IP-I Systems Franchise, shall have been renewed or extended for a period
expiring no earlier than three years after the Closing Date.
8.2.8 Common Agreement and Related Closings.
(a) The conditions set forth in Section 4.1 of the Common
Agreement shall have been satisfied or waived.
(b) The transactions contemplated by the IP Agreements (as
defined in the Common Agreement) and the Redemption Agreement shall have been,
or will be, consummated as set forth in Section 4.4 of the Common Agreement,
except to the extent such Agreements are not consummated as a result of a breach
by RMG or its Affiliates of its or their obligation to consummate such
transactions.
9. THE CLOSING.
9.1 The Closing; Time and Place. Subject to the terms and conditions of
this Agreement, the Closing shall be held in San Francisco, California, or as
otherwise agreed, at a place mutually agreed upon by the Parties at 10:00 a.m.,
local time, on the last calendar day of the calendar month in which the
conditions set forth in Article 8 (other than Sections 8.1.3 and 8.2.3) shall
have been satisfied or waived (provided that each Party shall have at least 10
days' prior notice of the scheduled Closing Date in order to prepare for the
Closing) or at such other place, date and time as may be mutually agreed upon by
the Parties (the "Closing Date"). The transactions to be consummated at Closing
shall be deemed to have been consummated as of the Closing Time. If the Closing
Date is not a Business Day, then the Closing Date shall be the immediately
preceding Business Day.
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9.2 RMG's Delivery Obligations. At the Closing, RMG will deliver or cause
to be delivered to IP-I the following:
9.2.1 Cash Consideration. If applicable, the Cash Consideration will
be paid (without duplication) by RMG (or its designee) to the IP-I Parties in
accordance with the Common Agreement.
9.2.2 Xxxx of Sale and Assignment and Assumption Agreement. The Xxxx
of Sale and Assignment and Assumption Agreement in the form of Exhibit 9.2.2.
9.2.3 Deeds. Special warranty deeds in recordable form conveying to
the applicable IP-I Parties each parcel of RMG Owned Property, and assignments
of leases and easements in recordable form, with respect to RMG Leased Property
and RMG Other Real Property Interests as to which prior assignments into RMG
were recorded in the applicable real estate records.
9.2.4 Lien Releases. Evidence reasonably satisfactory to IP-I that
all Liens (other than Permitted Liens) affecting or encumbering the RMG Assets
have been terminated, released or waived, as appropriate, or original, executed
instruments in form reasonably satisfactory to IP-I effecting such terminations,
releases or waivers.
9.2.5 Vehicle Titles. Title certificates to all vehicles included
among the RMG Assets, endorsed for transfer of title to the applicable IP-I
Parties, and separate bills of sale therefor or other transfer documentation, if
required by the laws of the States in which such vehicles are titled.
9.2.6 Evidence of Authorization Actions. Certified resolutions or
other evidence reasonably satisfactory to IP-I that RMG has taken all action
necessary to authorize the execution of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby.
9.2.7 FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that RMG is not a foreign person within the meaning of Section 1445
of the Code reasonably satisfactory in form and substance to IP-I.
9.2.8 Officer's Certificate. The IP-I Parties will have received a
certificate executed by an executive officer of RMG dated the date of the
Closing, reasonably satisfactory in form and substance to IP-I certifying that
the conditions specified in Sections 8.1.1. and 8.1.2 have been satisfied.
9.2.9 Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
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9.3 IP-I's Delivery Obligations. At the Closing, each IP-I Party will
deliver or cause to be delivered to RMG the following:
9.3.1 Cash Consideration. If applicable, the Cash Consideration will
be paid by such IP-I Party to RMG in accordance with the Common Agreement.
9.3.2 Xxxx of Sale and Assignment and Assumption Agreement. The Xxxx
of Sale and Assignment and Assumption Agreement in the form of Exhibit 9.2.2.
9.3.3 Deeds. Special warranty deeds in recordable form conveying to
RMG each parcel of such IP-I Party's Owned Property, and assignments of leases
and easements in recordable form, with respect to such IP-I Party's Leased
Property and Other Real Property Interests as to which prior assignments into
such IP-I Party were recorded in the applicable real estate records.
9.3.4 Lien Releases. Evidence reasonably satisfactory to RMG that
all Liens (other than Permitted Liens) affecting or encumbering such IP-I
Party's Assets have been terminated, released or waived, as appropriate, or
original, executed instruments in form reasonably satisfactory to RMG effecting
such terminations, releases or waivers.
9.3.5 Vehicle Titles. Title certificates to all vehicles included
among such IP-I Party's Assets, endorsed for transfer of title to RMG, and
separate bills of sale therefor or other transfer documentation, if required by
the laws of the States in which such vehicles are titled.
9.3.6 Evidence of Authorization Actions. Certified resolutions of
such IP-I Party or other evidence reasonably satisfactory to RMG that such IP-I
Party has taken all action necessary to authorize the execution of this
Agreement and the Transaction Documents and the consummation of the transactions
contemplated hereby.
9.3.7 FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that such IP-I Party is not a foreign person within the meaning of
Section 1445 of the Code reasonably satisfactory in form and substance to RMG.
9.3.8 Officer's Certificate. RMG will have received a certificate
executed by an executive officer of IP-I dated the date of the Closing,
reasonably satisfactory in form and substance to RMG certifying that the
conditions specified in Sections 8.2.1 and 8.2.2 have been satisfied.
9.3.9 Opinions of Counsel. Opinions of Pillsbury Madison & Sutro LLP
and Dow, Xxxxxx & Xxxxxxxxx, PLLC, substantially in the forms of Exhibit C.1 and
C.3, respectively to the Common Agreement.
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9.3.10 Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
10. TERMINATION AND DEFAULT.
10.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
10.1.1 At any time, by the mutual agreement of IP-I and RMG;
10.1.2 By either IP-I or RMG at any time, if the other is in
material breach or default of any of the other's covenants, agreements or other
obligations herein or in any Transaction Document;
10.1.3 By either IP-I or RMG upon written notice to the other, if
any of the conditions to its obligations set forth in Sections 8.1 and 8.2,
respectively, are not satisfied on or before the later of January 15, 2000, or
nine months after the date of this Agreement, for any reason other than an
intentional and material breach or default by such Party of its respective
covenants, agreements or other obligations under this Agreement, or any of its
representations herein not being true and accurate in all material respects when
made or when otherwise required by this Agreement to be true and accurate in all
material respects;
10.1.4 By either IP-I or RMG if an injunction, restraining order or
decree of any nature of any Governmental Authority of competent jurisdiction is
issued that prohibits the consummation of any of the transactions contemplated
hereby and such injunction, restraining order or decree is final and
nonappealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this clause has used commercially reasonable efforts to
have such injunction, order or decree vacated or denied; or
10.1.5 As otherwise provided in the Common Agreement.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, all obligations of the Parties under this Agreement will
terminate, except for the obligations set forth in Sections 7.13, 7.19 and
12.13. Termination of this Agreement pursuant to Sections 10.1.2, 10.1.3, 10.1.4
or 10.1.5 will not limit or impair any remedies that any of RMG or the IP-I
Parties may have pursuant to the terms of this Agreement with respect to a
breach or default by the other of its covenants, agreements or obligations under
this Agreement.
11. SURVIVAL; REMEDIES.
11.1 Survival of Representations, Warranties Covenants and Agreements.
Subject to Section 11.2, the representations, warranties, covenants and
agreements of RMG and IP-I in this Agreement and in the Transaction Documents
will survive Closing for a period of twelve months
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after the Closing Date. The period of survival of the representations,
warranties, covenants and agreements prescribed by this Section 11.1 are
referred to as the "Survival Period." The liabilities of each Party under its
respective representations, warranties, covenants and agreements will expire as
of the expiration of the Survival Period; provided, however, that such
expiration will not include, extend or apply to (a) any representation,
warranty, covenant or agreement the breach of which has been asserted by a Party
in a written notice to the other Party before such expiration or about which a
Party has given the other Party written notice before such expiration indicating
that facts or conditions exist that, with the passage of time or otherwise, can
reasonably be expected to result in a breach (and describing such potential
breach in reasonable detail), (b) the Party's obligations under Sections 7.13
and 7.23, or (c) the Party's obligations under Sections 7.16, 7.17.1, 7.17.3 and
7.17.4, but only to the extent reasonably practicable.
11.2 Exclusive Remedy. The Parties hereby agree that the respective rights
set forth in the Common Agreement and the Redemption Agreement shall be each
Party's sole and exclusive remedies against any party for any claims arising
after the Closing Time and relating to any breaches of the representations,
warranties or covenants contained in this Agreement other than based on fraud.
Notwithstanding anything to the contrary herein or in any Transaction Document,
each of the IP-I Parties acknowledges and agrees that neither RMG nor any of the
Charter Parties (or any Affiliates thereof) will have any liability arising
after the Closing Time with respect to any of the representations and warranties
made by RMG in Article 5 (which representations and warranties shall merge into
and expire upon the Closing) or with respect to any obligations of RMG under
Article 7 (other than the "Specified RMG Obligations," which shall mean
obligations set forth under Sections 7.3.6, 7.3.7, 7.5.5 (except subsection (e)
thereof), 7.11 (but only to the extent the assets described in Section 7.11 are
owned by RMG), 7.13, 7.14, 7.16, 7.17.5, 7.23 (except the first sentence
thereof), 7.24 and 7.25).
11.3 Nonrecourse. The Parties agree that, notwithstanding any other
provision in this Agreement or in any Transaction Document, and any rule of law
or equity to the contrary, to the fullest extent permitted by law, each Party's
obligations and liabilities under this Agreement will be nonrecourse to all
direct and indirect equity holders or other owners of such Party, except to the
extent of distributions to such Persons, directly or indirectly, from such Party
that are required to be returned, directly or indirectly, to such Party pursuant
to applicable provisions of law; provided, however, that the foregoing shall not
limit or abridge any Party's indemnification rights or obligations pursuant to
the Common Agreement or the Redemption Agreement. "Nonrecourse" means that the
obligations and liabilities are limited in recourse solely to the assets of the
Parties (for those purposes, any capital contribution obligations of the equity
holders or other owners of such Party, or any negative capital account balances
of such Persons will not be deemed be assets of such Party) and are not
guaranteed, directly or indirectly by, or the primary obligations of, any owner
of such Party in such capacity, and no partner, member or other owner in such
capacity of any successor entity (including any limited liability company or
partnership), either directly or indirectly, will be personally liable in any
respect (except to the extent of (i) such Person's interests in the assets of
such Party and (ii) any distribution which has
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been received by such Person and is required by applicable law to be returned,
directly or indirectly, to such Party) for any obligation or liability of such
Party under this Agreement.
12. MISCELLANEOUS PROVISIONS.
12.1 Parties Obligated and Benefitted. Subject to the limitations set
forth below, this Agreement will be binding upon each of the Parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the Parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement. Without the prior written consent of the other Parties, no Party will
assign any of its rights under this Agreement or delegate any of its duties
under this Agreement, provided that the appropriate Party may assign any or all
of its rights under this Agreement (a) to a "qualified intermediary" engaged by
such Party to effectuate a deferred like-kind exchange under Section 1031 of the
Code, and the other Party agrees in connection with such an assignment to take
such actions and execute such documents as may be reasonably requested by the
assigning Party in order to facilitate such Party's intent to effectuate a
deferred like-kind exchange; provided, however, that no such assignment will
affect the assigning Party's liabilities or obligations pursuant to this
Agreement or (b) to an Affiliate, provided that such assignment will not result
in any adverse tax consequences to the other Party, will not give rise to any
material requirements for additional Required Consents, and will not, in the
reasonable judgment of the other Party, delay the Closing. Each of the IP-I
Parties consents to the consummation of the transactions contemplated by the
IPWT Purchase Agreement (as defined in the Common Agreement).
12.2 Notices. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement to either Party will be
given as set forth in the Common Agreement.
12.3 Right to Specific Performance. Each Party acknowledges that the
unique nature of the Assets to be exchanged hereunder pursuant to this Agreement
renders money damages an inadequate remedy and the Parties agree that either
Party shall be entitled to pursue specific performance as a remedy without the
requirement of posting a bond or other security therefor.
12.4 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any Party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
12.5 Captions. The section and other captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
12.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (other than its rules of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby).
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12.7 Time. Time is of the essence under this Agreement. If the last day
permitted for the giving of any notice or the performance of any act required or
permitted under this Agreement falls on a day which is not a Business Day, the
time for the giving of such notice or the performance of such act will be
extended to the next succeeding Business Day.
12.8 Late Payments. If either Party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the rate per annum publicly announced from time
to time by The Bank of New York as its prime rate (the "Prime Rate") plus 2%,
adjusted as and when changes in the Prime Rate are made.
12.9 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed an original.
12.10 Entire Agreement. This Agreement (including the Transaction
Documents and the Schedules and Exhibits referred to in this Agreement, which
are incorporated in and constitute a part of this Agreement) contains the entire
agreement of the Parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings with respect
to such subject matter. This Agreement may not be amended or modified except by
a writing signed by all of the parties hereto.
12.11 Severability. Any term or provision of this Agreement which is
invalid or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefitted by such provision or any other
provisions of this Agreement.
12.12 Construction. This Agreement has been negotiated by the Parties and
their respective legal counsel, and legal or other equitable principles that
might require the construction of this Agreement or any provision of this
Agreement against the Party drafting this Agreement will not apply in any
construction or interpretation of this Agreement.
12.13 Expenses. Except as otherwise expressly provided in this Agreement,
each Party will pay all of its expenses, including attorneys' and accountants'
fees, in connection with the negotiation of this Agreement, the performance of
its obligations and the consummation of the transactions contemplated by this
Agreement.
12.14 Risk of Loss. The risk of any loss or damage to the IP-I Assets or
RMG Assets resulting from fire, theft or other casualty (except reasonable wear
and tear) will be borne by IP-I or RMG respectively, at all times prior to the
Closing Time. In the event of any such loss or damage after December 31, 1998,
IP-I or RMG as appropriate, will immediately notify the other in writing of that
fact. All insurance proceeds paid or payable as a result of the occurrence of
the event resulting in such loss or damage will be delivered by the Party
transferring such Assets to the other Party, or the rights thereto will be
assigned if not yet paid over by the insurer to the Party transferring such
Assets. The obligations under this Section 12.14 to pay or assign
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insurance proceeds will not apply to the extent that any insurance proceeds are
applied to replace or restore such loss or damage prior to Closing.
If, on or prior to the Closing Date, all or any part of or interest in the
IP-I Assets or the RMG Assets, as appropriate, is taken or condemned as a result
of a Governmental Authority's exercise of its powers of eminent domain, or if a
Governmental Authority having such power informs a Party that it intends to
condemn all or any part of such Party's Assets (such event being called, in
either case, a "Taking"), then (i) RMG, in the case of a Taking of IP-I Assets,
or IP-I, in the case of a Taking of RMG Assets, may elect, in the name of the
other Party, to negotiate for, claim, contest and receive all damages with
respect to the Taking, (ii) the Party whose Assets were the subject of the
Taking will be relieved of its obligation to convey to the other Party those of
its Assets that were the subject of the Taking, (iii) at Closing, the Party
whose Assets were the subject of the Taking will assign to the other Party all
of its rights to damages payable as a result of the Taking, and will pay to the
other Party all damages previously paid to it in connection with the Taking, and
(iv) following the Closing, the Party whose Assets were the subject of the
Taking will give to the other Party any further assurances of such rights and
assignment with respect to the Taking as the other Party reasonably may request
from time to time.
12.15 Tax Consequences. No Party makes any representation or warranty,
express or implied, with respect to the Tax implications of any aspect of this
Agreement on any other Party, and each Party expressly disclaims any such
representation or warranty with respect to any Tax consequences arising under
this Agreement. Each Party has relied solely on its own Tax advisors with
respect to the Tax implications of this Agreement.
12.16 Commercially Reasonable Efforts. For purposes of this Agreement,
"commercially reasonable efforts" will not be deemed to require a Party to
undertake extraordinary or unreasonable measures, including the payment of
amounts in excess of normal and usual filing fees and processing fees, if any or
other payments with respect to any Contract that are significant in the context
of such Contract (or significant on the aggregate basis as to all Contracts).
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The parties have executed this Agreement as of the day and year first above
written.
XXXXX MEDIA GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx
___________________________________________________
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
INTERMEDIA PARTNERS, A CALIFORNIA
LIMITED PARTNERSHIP
By: InterMedia Capital Management, LLC, its managing
general partner
By: InterMedia Management, Inc., its managing member
By: /s/ Xxxxxx X. Xxxxx
___________________________________________________
Xxxxxx X. Xxxxx, President
and Chief Executive Officer
BRENMOR CABLE PARTNERS, L.P.
By: InterMedia Partners, a California Limited
Partnership, its managing general partner
By: InterMedia Capital Management, LLC, its managing
general partner
By: InterMedia Management, Inc., its managing member
By: /s/ Xxxxxx X. Xxxxx
___________________________________________________
Xxxxxx X. Xxxxx, President
and Chief Executive Officer
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