1
Exhibit (2)-1
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
XXXXXX-XXXXXX CABLEVISION, INC., KRC-SNJ, INC., KRC-NJFT, INC.,
XXXXXX-XXXXXX INVESTMENT COMPANY
AND
TELE-COMMUNICATIONS, INC.
DATED AS OF
MARCH 18, 1996
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TABLE OF CONTENTS
Page
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Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Agreed Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Allocable Fixed Kentucky Property Tax Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Allocable Xxxxxx Benefit Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Buyer Series A Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Cable Industry Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.20 Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.21 Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.22 KRC/CCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.23 KRC/CCC Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.24 KR Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.25 Legal Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.26 Management Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.27 1996 Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.28 NJFT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.29 NJFT Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.30 Owned Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.31 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.32 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.33 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.34 Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.35 Seller's Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.36 Standstill, Indemnification and Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . 5
1.37 TCI TKR LP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.38 Time Warner Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.39 Time Warner/Xxxxxx Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.40 TKR Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.41 TKR Cable Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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1.42 TKR Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.43 TKR Partners Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.44 TKR II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.45 TKR III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.46 Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.47 Xxxxxx Class B Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.48 Xxxxxx Class C Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.49 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2. Sale and Purchase of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Base Purchase Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Allocation of Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3. Liabilities Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4. Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2 Authority and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 No Breach or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 KR Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.7 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.8 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.11 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.12 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.13 Finders and Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5. Buyer's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Authority and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 No Breach or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Finders and Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.7 Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.8 SEC Reports: Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9 Xxxxxx and Time Warner Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.10 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6. Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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6.1 Access to Premises and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Continuity and Maintenance of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 HSR Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5 No Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.9 Franchise Renewals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.10 Management Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.11 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.12 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.13 Amendment to Standstill, Indemnification and Contribution Agreement . . . . . . . . . . . . . . . . 21
6.14 Valuation of Xxxxxx Benefit Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.15 Use of Business Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.16 KR Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.17 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.18 Satisfaction of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.19 Confidentiality and Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Conditions to the Obligations of Buyer and Seller . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Conditions to the Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.4 Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.2 Liabilities in Event of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.3 Procedure Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 10. Survival of Representations and Warranties; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 26
10.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.5 Limitations on Indemnification - Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.6 Limitations on Indemnification - Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.7 Maximum Indemnification Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.8 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.9 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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Section 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Joint and Several Obligations; Parties Obligated and Benefited . . . . . . . . . . . . . . . . . . . 30
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.3 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.4 Right to Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.8 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.9 Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.10 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.11 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.12 Late Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.16 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.17 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.18 Waiver of Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
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A - Assignment, Assumption and Xxxx of Sale
B - Registration Rights Agreement
C - Guaranty
D - Noncompetition Agreement
E - Amendment No. 1 to Standstill, Indemnification and Contribution Agreement
SCHEDULES
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3 - Partnership Agreements
4.3 - Certain Consents
4.9.2 - Tax Claims/Investigations
4.10 - Adverse Changes - Owned Entities
4.11 - Proceedings and Judgments
4.12.2 - ERISA Information
5.5 - Certain Restrictions Relating to Xxxxxx Class C Stock
5.7 - Adverse Changes - TCI
6.10 - Management Incentive Plan Calculations
6.14 - Certain Actuarial Assumptions
8.2.4 - Basic Subscribers
8.2.5 - Mandatory Franchise Consents
8.2.6 - Other Third Party Consents
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of the
18th day of March, 1996, by and between Tele-Communications, Inc., a Delaware
corporation ("Buyer"), and Xxxxxx-Xxxxxx Cablevision, Inc., a Florida
corporation ("KRC"), KRC-SNJ, Inc., a Delaware corporation ("KRC-SNJ"),
KRC-NJFT, Inc., a Delaware corporation ("KRC-NJFT") and Xxxxxx-Xxxxxx Investment
Company, a Delaware corporation ("KRIC") (with KRC, KRC-SNJ, KRC-NJFT and KRIC
referred to collectively as "Seller").
RECITALS
Seller's assets consist primarily of ownership interests in
entities that are directly or indirectly engaged in the business of providing
cable television service to subscribers and related businesses in various areas
of the United States. Seller desires to sell its interests in such entities
(and the KR Note defined below) and Buyer desires to purchase such assets and
assume certain related liabilities, as set forth in this Agreement.
AGREEMENT
In consideration of the above recitals and the mutual
agreements stated in this Agreement, the parties agree as follows:
SECTION 1. DEFINITIONS.
In addition to terms defined elsewhere in this Agreement, the
following capitalized terms, when used in this Agreement, will have the
meanings set forth below:
1.1 Affiliate. With respect to any Person, any other
Person controlling, controlled by or under common control with such Person,
with "control" for such purpose meaning the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities or voting
interests, by contract or otherwise.
1.2 Agreed Rate. The annual rate publicly announced from
time to time by The Bank of New York as its prime rate plus 2%, adjusted as and
when changes in such prime rate are made.
1.3 Allocable Fixed Kentucky Property Tax Amount. An
amount equal to 15% of the property taxes for 1994 with respect to property in
Kentucky (a) paid after January 1, 1996 by any Owned Entities or (b) payable by
any Owned Entities to the extent such amount has been finally determined by
settlement or nonappealable court order.
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1.4 Allocable Xxxxxx Benefit Costs. An amount equal to
the aggregate present value of the payments to be made pursuant to Section
2.4(c)(ii) of the Distribution Agreement by the "TCI Indemnitors" (as such term
is defined in the Distribution Agreement), with such present value to be
determined as specified in SECTION 6.14.
1.5 Assets. The KRC/CCC Interest, the NJFT Interest, the
TKR Cable Interest, the TKR Partners Interest and the KR Note.
1.6 Business. The cable television and related businesses
conducted by the Owned Entities on the date of this Agreement.
1.7 Business Day. Any day other than Saturday, Sunday or
a day on which banking institutions in Denver, Colorado or New York, New York
are required or authorized to be closed.
1.8 Buyer Series A Common Stock. Tele-Communications,
Inc. Series A TCI Group Common Stock or, if applicable, any successor class or
series of such common stock.
1.9 Cable Industry Conditions. Cable television
industry-wide conditions, including (a) changes in, or changes required in order
to comply with, applicable legislation or regulations affecting U.S. cable
television operators generally, including any adjustment in subscriber rates
implemented pursuant to regulations promulgated by the FCC under the Cable
Television Consumer Protection and Competition Act of 1992; and (b) changes
resulting from technological changes generally applicable to the cable
television industry.
1.10 Closing. The consummation of the transactions
contemplated by this Agreement, as described in SECTION 7, the date of which is
referred to as the Closing Date.
1.11 Code. The Internal Revenue Code of 1986, as amended.
1.12 Distribution Agreement. The Distribution Agreement
dated as of December 2, 1992 among Comcast Corporation, Comcast Xxxxxx, Inc.,
Tele-Communications, Inc., TCI TKR LP, and various other parties named therein.
1.13 Encumbrance. Any mortgage, lien, security interest,
security agreement, conditional sale or other title retention agreement,
limitation, pledge, option, charge, assessment, restrictive agreement,
restriction, encumbrance, adverse interest, restriction on transfer or any
exception to or defect in title or other ownership interest (including
reservations, rights of way, possibilities of reverter, encroachments,
easements, rights of entry, restrictive covenants, leases and licenses).
1.14 Environmental Law. Any Legal Requirement relating to
pollution or protection of public health, safety or welfare or the environment,
including those relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment
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(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.
1.15 ERISA. The Employee Retirement Income Security Act
of 1974, as amended.
1.16 ERISA Affiliate. With respect to any Owned Entity,
any other Person that is a member of a controlled group with the Owned Entity
under Section 414(b) or (c) of the Code.
1.17 FCC. The Federal Communications Commission.
1.18 Financial Statements. The unaudited consolidated
balance sheets and related statements of income, partners' equity and cash
flows for and as of the year ended December 31, 1995 and all notes and
schedules for each of KRC/CCC, TKR Cable, TKR Partners, TCI TKR LP and NJFT
(the "Unaudited Financial Statements") and, after the same become available,
the audited consolidated balance sheets and related statements of income,
partners' equity and cash flows for and as of the year ended December 31, 1995
and all notes and schedules for each of KRC/CCC, TKR Cable, TKR Partners, TCI
TKR LP and NJFT.
1.19 Governmental Authority. (a) The United States of
America, (b) any state, commonwealth, territory or possession of the United
States of America and any political subdivision thereof (including counties,
municipalities and the like), or (c) any agency, authority or instrumentality
of any of the foregoing, including any court, tribunal, department, bureau,
commission or board.
1.20 Governmental Permits. All franchises, approvals,
authorizations, permits, licenses, easements, registrations, qualifications,
leases, variances and similar rights obtained from any Governmental Authority
with respect to the Business.
1.21 Hazardous Substances. Any pollutant, contaminant,
chemical, industrial, toxic, hazardous or noxious substance or waste which is
regulated by any 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 hazard
or potential hazard to the Real Property or to Persons in or about the Real
Property or cause the Real Property to be in violation of any Legal
Requirement, (b) asbestos or any asbestos-containing material of any kind or
character, (c) polychlorinated biphenyls ("PCBs"), as regulated by the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., (d) any materials or
substances designated as "hazardous substances" pursuant to the Clean Water
Act, 33 U.S.C. Section 1251 et seq., (e) "economic poison," as defined in the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 135 et
seq., (f) "chemical substance," "new chemical substance" or "hazardous chemical
substance or mixture" pursuant to the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., (g) "hazardous substances" pursuant to the Comprehensive
Environmental Response, Compensation, and Liability
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Act, 42 U.S.C. Section 9601 et seq. and (h) "hazardous waste" pursuant to the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.
1.22 KRC/CCC. KRC/CCC Investment Partnership, a Colorado
general partnership.
1.23 KRC/CCC Interest. KRC-SNJ's 50% general partnership
interest in KRC/CCC, including rights to receive profits, income, surplus,
capital, distributions and other payments, in cash or in kind, and to share in
the assets of KRC/CCC upon dissolution and liquidation, and any and all other
rights and interests comprising or appurtenant to KRC-SNJ's interest in
KRC/CCC, in each case arising after the Closing.
1.24 KR Note. The Subordinated Note dated November 14,
1995 made by TKR Cable and payable to the order of Xxxxxx-Xxxxxx Investment
Company, in the original principal amount of $71,257,892.
1.25 Legal Requirement. Any statute, ordinance, code,
law, rule, regulation, order or other requirement, standard or procedure
enacted, adopted or applied by any Governmental Authority, including judicial
decisions applying common law or interpreting any other Legal Requirement.
1.26 Management Incentive Plan. The TKR Cable/TKR
Partners Senior Management Incentive Plan applicable to Xxxx X. Xxxxx and
Xxxxxxx X. Xxxxxxxx pursuant to resolutions of such companies adopted December
7, 1994.
1.27 1996 Budgets. The operating and capital budgets
(including any amendments) for the Owned Entities as approved in accordance
with the applicable partnership agreements or other governing documents of such
Owned Entities.
1.28 NJFT. New Jersey Fiber Technologies, a New Jersey
general partnership.
1.29 NJFT Interest. KRC-NJFT's 20.55% general partnership
interest in NJFT, including rights to receive profits, income, surplus,
capital, distributions and other payments, in cash or in kind, and to share in
the assets of NJFT upon dissolution and liquidation, and any and all other
rights and interests comprising or appurtenant to KRC-NJFT's interest in NJFT,
in each case arising after the Closing.
1.30 Owned Entities. (a) KRC/CCC, TKR Cable, TKR
Partners, NJFT and TCI TKR LP, and (b) all Persons in which 50% or more of the
voting or ownership interests are owned directly or indirectly by one or more
of the Persons described in the preceding clause (a).
1.31 Person. Any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
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1.32 Real Property. All assets held by any of the Owned
Entities consisting of realty, including fee interests, leasehold interests
and easements.
1.33 Registration Rights Agreement. The Registration
Rights Agreement in the form attached as EXHIBIT B to this Agreement, which is
being signed by KRC and Buyer contemporaneously with signing of this Agreement.
1.34 Required Consents. All franchises, licenses,
authorizations, approvals, waivers and consents required under Governmental
Permits, contracts or Legal Requirements in connection with the transfer by
Seller of the Assets to Buyer (including any of the foregoing triggered by a
change in direct or indirect ownership in any of the Owned Entities).
1.35 Seller's Knowledge. The actual knowledge, without
any independent investigation, of any of the following members of Seller's
management: Xx. Xxxx X. Xxxxxxxx, Mr. Xxxx Xxxxx, Xx. Xxxxxxxx X. Xxxxxxx, Xx.
Xxxxxxx X. Sheriff and Xx. Xxxx Xxxxxx.
1.36 Standstill, Indemnification and Contribution
Agreement. The Standstill, Indemnification and Contribution Agreement dated as
of November 30, 1992 among Buyer, TCI Xxxxxx, Inc., TKR Xxxxxx Limited
Partnership, Xxxxxx-Xxxxxx Cablevision, Inc., Country Cable Co. and SCI Cable
Partners.
1.37 TCI TKR LP. TCI TKR Limited Partnership, a Colorado
limited partnership.
1.38 Time Warner Stock. Common stock of Time Warner Inc.
issued in exchange for Turner Class B Stock or Turner Class C Stock in
connection with the consummation of the Time Warner/Turner Merger.
1.39 Time Warner/Turner Merger. The transactions
contemplated by the Agreement and Plan of Merger between Time Warner Inc. and
Turner, among others, dated as of September 22, 1995, as such agreement may be
amended from time to time.
1.40 TKR Cable. TKR Cable Company, a Colorado general
partnership.
1.41 TKR Cable Interest. KRC's 50% general partnership
interest in TKR Cable, including rights to receive profits, income, surplus,
capital, distributions and other payments, in cash or in kind, and to share in
the assets of TKR Cable upon dissolution and liquidation, and any and all other
rights and interests comprising or appurtenant to KRC's interest in TKR Cable,
in each case arising after the Closing.
1.42 TKR Partners. TKR Cable Partners, a Colorado general
partnership.
1.43 TKR Partners Interest. KRC's 50% general partnership
interest in TKR Partners, including rights to receive profits, income, surplus,
capital, distributions and other
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payments, in cash or in kind, and to share in the assets of TKR Partners upon
dissolution and liquidation, and any and all other rights and interests
comprising or appurtenant to KRC's interest in TKR Partners, in each case
arising after the Closing.
1.44 TKR II. TKR Cable II, Inc., a Delaware corporation.
1.45 TKR III. TKR Cable III, Inc., a Delaware
corporation.
1.46 Xxxxxx. Xxxxxx Broadcasting System, Inc., a Georgia
corporation.
1.47 Xxxxxx Class B Stock. Xxxxxx'x Class B Common Stock,
par value $.0625 per share.
1.48 Xxxxxx Class C Stock. Xxxxxx'x Class C Convertible
Preferred Stock, par value $.125 per share.
1.49 Other Definitions. The following terms are defined in
the Sections indicated:
Term Section
---- -------
Action 10.4
Aggregate Allocable Cash Flow 2.3.3
Antitrust Division 6.4
Assumed Liabilities 3
Average Trading Price 2.2.6
Base Purchase Price 2.2
Buyer Common Stock Value 2.2.6
Buyer Damages 10.5
Buyer Reports 5.8
Cash Flow Adjustment 2.3.3
Closing Date 1.10
Final Purchase Price 2.3.4
Final Report 2.3.4
Franchise 8.2.4
Franchise Area 8.2.4
FTC 6.4
HSR Act 6.4
Indemnified Party 10.4
Indemnifying Party 10.4
KRI 2.2
Maximum Value 2.2.6
Minimum Value 2.2.6
Multiemployer Plans 4.12.1
Operating Cash Flow 2.3.3
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Operating Income 2.3.3
Plan(s) 4.12.1
Preliminary Adjustments 2.3.4
Preliminary Purchase Price 2.3.4
Preliminary Report 2.3.4
Restrictions 2.1
Securities Act 4.14
Seller Damages 10.6
Survival Period 10.1
Taxes 4.9.1
TKR Cable Direct Assets 2.4
Transaction Documents 4.2
Transferable Franchise Area 8.2.4
Unaudited Financial Statements 1.18
SECTION 2. SALE AND PURCHASE OF ASSETS.
2.1 Sale. Subject to the terms and conditions set forth
in this Agreement, at the Closing, Seller will sell, assign and transfer to
Buyer, and Buyer will purchase and receive from Seller, all of the Assets, free
and clear of all Encumbrances, other than restrictions imposed (a) under the
TKR Cable, TKR Partners and KRC/CCC partnership agreements, as amended, (b)
under the NJFT partnership agreement and the KR Note other than any Encumbrance
relating to the consummation of transactions contemplated by this Agreement,
and (c) by applicable registration requirements under federal and state
securities laws (collectively, the "Restrictions").
2.2 Consideration. As consideration for all of the
Assets and the delivery of the Noncompetition Agreement described in SECTION
8.2.3(D), Buyer will deliver to Seller and Knight Ridder, Inc. ("KRI") the
consideration in the manner described in SECTION 2.2.1 or 2.2.2 below and the
last sentence of SECTION 2.4 (the aggregate value of such consideration being
referred to as the "Base Purchase Price"), with the amount of the Base Purchase
Price to be subject to adjustment as provided in SECTION 2.3. The applicable
option (under SECTION 2.2.1 or 2.2.2) will be selected by Buyer by written
notice to Seller not later than 10 days prior to the Closing Date.
2.2.1 In the first option, if selected by Buyer,
Buyer will deliver (or, in the case of stock described in SECTION 2.2.1(C), KRC
and Buyer will cause to be delivered by TKR Cable) to Seller and KRI
consideration with an aggregate value of $420 million, payable as follows:
(a) Delivery to KRC of shares of Buyer Series A
Common Stock with an aggregate Buyer Common Stock Value equal to $140 million,
meeting the requirements of SECTION 2.2.3, plus
(b) Delivery to KRC of shares of Buyer Series A
Common Stock with an aggregate Buyer Common Stock Value equal to $140 million,
meeting the requirements of SECTION 2.2.4, plus
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(c) Delivery to Seller and KRI, as applicable, of
either (i) $140 million of cash, or (ii) at Buyer's option, cash and all or a
portion of the Xxxxxx Class B Stock and Xxxxxx Class C Stock currently owned by
TKR Cable with an aggregate value of $140 million (determined as specified
below).
2.2.2 In the second option, if selected by Buyer,
Buyer will deliver (or, in the case of stock described in SECTION 2.2.2(A), KRC
and Buyer will cause to be delivered by TKR Cable) to Seller and KRI
consideration with an aggregate value of $400 million, either all in cash or
payable as follows:
(a) Delivery to Seller and KRI, as applicable, of
either (i) $280 million of cash, or (ii) at Buyer's option, cash and all or a
portion of the Xxxxxx Class B Stock and Xxxxxx Class C Stock currently owned by
TKR Cable with an aggregate value of $280 million (determined as specified
below), plus
(b) Delivery to KRC of shares of Buyer Series A
Common Stock with an aggregate Buyer Common Stock Value equal to $120 million,
meeting the requirements of SECTION 2.2.3.
2.2.3 With respect to Buyer Series A Common Stock
referred to in SECTION 2.2.1(A) or SECTION 2.2.2(B), it will be a condition to
Seller's obligation to close pursuant to this Agreement that as of the Closing
Date there will be an effective registration statement for KRC's resale of such
Buyer Series A Common Stock, as further described in the Registration Rights
Agreement.
2.2.4 With respect to the Buyer Series A Common
Stock referred to in SECTION 2.2.1(B), effective as of Closing KRC will be
granted registration rights for its resale of such Buyer Series A Common Stock,
commencing two years after the Closing Date, as further described in the
Registration Rights Agreement.
2.2.5 If the Time Warner/Xxxxxx Merger is
consummated before the Closing Date, all references in this SECTION 2.2 to
Xxxxxx Class B Stock and Xxxxxx Class C Stock will refer to Time Warner Stock
issued in exchange for such stock in the Time Warner/Xxxxxx Merger. Buyer will
be permitted to deliver Xxxxxx Class B Stock or Time Warner Stock to KRC as
consideration for the sale of the Assets only if KRC may resell such Xxxxxx
Class B Stock or Time Warner Stock upon Closing without registration or other
restriction upon immediate resale by KRC under applicable federal or state
securities laws. Buyer will be permitted to deliver Xxxxxx Class C Stock to
KRC as consideration for the sale of the Assets only if (a) all necessary third
party consents with respect to such delivery have been obtained and (b) such
Xxxxxx Class C Stock may be converted at any time after such delivery into
Xxxxxx Class B Stock which upon such conversion meets the requirements of the
preceding sentence.
2.2.6 For purposes of valuing stock delivered
pursuant to SECTION 2.2.1 or 2.2.2, the following will apply:
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(a) "Average Trading Price" of Buyer Series A
Common Stock, Xxxxxx Class B Stock or Time Warner Stock will equal the average
of the reported closing market prices of such stock for the 20 consecutive
trading days (or, if a market for such stock first comes into being during such
20-trading day period, those trading days during such period for which reported
market prices for such stock are available) ending on the tenth trading day
prior to the Closing Date (e.g., if the Closing Date were Thursday, August 1,
1996, then the last trading date to be counted in the 20-trading day period
would be Thursday, July 18, 1996). The closing market price for each day in
question will be the last sale price, regular way or, if no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system of the principal national securities exchange on which such
stock is listed or admitted to trading or, if such stock is not listed or
admitted to trading on any national securities exchange, the last quoted sale
price or, if no such sale price is quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the Nasdaq National
Market System ("Nasdaq") or such other system then in use or, if on any such
trading day such capital stock is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by the professional
market maker who has been most active in making a market in such capital stock
during the preceding 12 months. The Average Trading Price of such stock will
be appropriately and equitably adjusted to reflect the effects of any stock
dividend, stock split, reclassification, recapitalization, combination or
distribution of assets, securities or other property (other than ordinary
course cash dividends) to holders of such stock by the issuer thereof affecting
such stock, the record date, ex-dividend date or similar date of which occurs
during the period in which the Average Trading Price is to be determined or
thereafter prior to the Closing Date.
(b) "Buyer Common Stock Value" will equal the
Average Trading Price of Buyer Series A Common Stock. Notwithstanding the
foregoing, if the Buyer Common Stock Value as calculated pursuant to the
preceding sentence and without regard to this sentence (i) is less than the
Minimum Value, then the Buyer Common Stock Value will be equal to the Minimum
Value, or (ii) is greater than the Maximum Value, then the Buyer Common Stock
Value will be equal to the Maximum Value. "Minimum Value" will be $18.50 and
"Maximum Value" will be $22.50, subject, in each case, to adjustment as
provided in SECTION 2.2.7.
(c) The Xxxxxx Class B Stock value will equal the
Average Trading Price of such Xxxxxx Class B Stock. If Xxxxxx Class C Stock is
delivered by Buyer to KRC pursuant to SECTION 2.2.1 or 2.2.2, such shares will
be deemed to have the same value as the shares of Xxxxxx Class B Stock into
which such Xxxxxx Class C Stock shares are convertible, but adjusted to take
into account the premium attached to such Xxxxxx Class C Stock in the exchange
formula applicable under the Time Warner/Xxxxxx Merger if it is then pending;
provided that if after Closing the Time Warner/Xxxxxx Merger is abandoned or
modified in a way that affects such premium adversely to Seller, Buyer will pay
Seller, by wire transfer of immediately available funds to an account
designated by Seller within two Business Days after such abandonment or
modification, the amount, if any, of such premium previously credited to Buyer
to the extent no longer applicable to Seller's Xxxxxx Class C Stock, plus
interest on such amount at the Agreed Rate from the Closing Date to the date of
payment.
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2.2.7 The Minimum Value and Maximum Value will be
subject to the following adjustments:
(a) If from the date of this Agreement to the
Closing Date, Buyer (i) pays a dividend or makes a distribution on any
outstanding shares of Buyer's capital stock in shares of Buyer Series A Common
Stock, (ii) subdivides the then outstanding shares of Buyer Series A Common
Stock into a greater number of shares of Buyer Series A Common Stock or (iii)
combines the then outstanding shares of Buyer Series A Common Stock into a
smaller number of shares of Buyer Series A Common Stock, then the Minimum Value
and the Maximum Value then in effect will be adjusted by multiplying each by a
fraction, the numerator of which is the number of shares of Buyer Series A
Common Stock outstanding immediately before the event giving rise to such
adjustment, and the denominator of which is the number of shares of Buyer
Series A Common Stock outstanding immediately after such event.
(b) If from the date of this Agreement to the
Closing Date, Buyer pays a dividend or makes a distribution on all outstanding
shares of Buyer Series A Common Stock in the form of cash, securities
(including warrants or other rights) or other assets (other than any cash
dividend payable out of earnings or any dividend or distribution in the form of
Buyer Series A Common Stock), then the Minimum Value and the Maximum Value then
in effect will be adjusted by multiplying each by a fraction, the numerator of
which is the Average Trading Price of Buyer Series A Common Stock on the record
date of such dividend or distribution less the amount of cash or the fair
market value on such record date (as reasonably determined by Buyer's Board of
Directors) of the portion of the securities or other assets so to be
distributed that is applicable to one share of Buyer Series A Common Stock, and
the denominator of which is the Average Trading Price of Buyer Series A Common
Stock on such record date.
2.3 Base Purchase Price Adjustments. The following
adjustments to the Base Purchase Price will be applicable:
2.3.1 The Base Purchase Price will be decreased by
an amount equal to 50% of (a) the payments made or to be made to Xxxx X. Xxxxx
and Xxxxxxx X. Xxxxxxxx pursuant to the Management Incentive Plan (including
termination thereof as contemplated by SECTION 6.10) and (b) deferred
compensation payable to Xxxx X. Xxxxx by any of the Owned Entities.
2.3.2 The Base Purchase Price will be decreased by
an amount equal to the sum of (i) the Allocable Fixed Kentucky Property Tax
Amount (to the extent determined prior to the Closing Date) and (ii) the lesser
of (A) $850,000 and (B) the Allocable Xxxxxx Benefit Costs.
2.3.3 The Base Purchase Price will be decreased by
an amount equal to the Cash Flow Adjustment, if the Aggregate Allocable Cash
Flow is less than $21,953,400. For purposes of determining this adjustment to
the Base Purchase Price, the following definitions will apply:
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(a) "Aggregate Allocable Cash Flow," means the
sum of (a) 50% of the sum of TKR Cable's Operating Cash Flow and KRC/CCC's
Operating Cash Flow plus (b) 15% of TKR II's Operating Cash Flow and TKR III's
Operating Cash Flow, with such Operating Cash Flow in each case to be for the
six-month period ending June 30, 1996.
(b) "Cash Flow Adjustment" means an amount equal
to (i) $350 million minus (ii) the product of (A) $350 million times (B) a
fraction, the numerator of which is equal to Aggregate Allocable Cash Flow, and
the denominator of which is equal to $21,953,400.
(c) "Operating Cash Flow," for the applicable
period, means the amount equal to (i) the consolidated Operating Income of TKR
Cable, KRC/CCC, TKR II or TKR III, as applicable, plus (ii) depreciation,
amortization and other non-cash charges for such period, to the extent deducted
in determining such Operating Income. However, Operating Cash Flow and
Operating Income for any period will be calculated (A) without giving effect
(either on the revenue or expense calculations) to acquisitions of assets after
January 1, 1996 and (B) after elimination of any management fees or overhead
allocations collected or paid by any Owned Entity from or to any other Owned
Entity. If it is determined prior to the determination of the Final Purchase
Price that any rates charged to subscribers of the Business, at any time in the
period for which Operating Cash Flow and Operating Income is calculated, were
not allowable under rules and regulations promulgated by the FCC under the
Communications Act, or any authoritative interpretation thereof, then Operating
Cash Flow and Operating Income for such period will be adjusted to reflect the
allowable rate for such time period. The following example illustrates the
application of the immediately preceding sentence: in the event the FCC
determines that $1,000,000 of rates charged during the one-year period from
July 1, 1995 to June 30, 1996 to subscribers of TKR Cable, TKR II and/or TKR
III were not permitted under the Communications Act, of which $450,000 was
charged in 1995 and $550,000 was charged in 1996, then Operating Income and
Operating Cash Flow for the 1996 period would be reduced by $550,000.
(d) "Operating Income" for the applicable
period, means consolidated operating income as determined in accordance with
GAAP and in a manner consistent with the calculation of operating income as set
forth in the Financial Statements of TKR Cable, KRC/CCC, TKR II or TKR III, as
applicable (except as otherwise indicated in SECTION 2.3.3(C)).
2.3.4 Preliminary and final determinations of the
adjustments to the Base Purchase Price will be made as follows:
(a) Not later than 10 days prior to the Closing,
Seller will cause to be delivered to Buyer a report (the "Preliminary Report"),
prepared in good faith and on a reasonable basis, setting forth in reasonable
detail the preliminary determination of the adjustments called for by SECTIONS
2.3.1, 2.3.2 AND 2.3.3 (the "Preliminary Adjustments"), estimated as of the
Closing Date (or as of any other date agreed by Seller and Buyer), accompanied
by appropriate documentation supporting such determination. The Base Purchase
Price, as adjusted by the Preliminary Adjustments, will be referred to as the
"Preliminary Purchase Price" and will be the basis for calculation of the Base
Purchase Price to be paid to Seller and KRI at Closing. If Buyer
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has elected the option under SECTION 2.2.1, then one-third of the Preliminary
Adjustments amount will be subtracted from each of: (i) the cash
consideration, (ii) the Buyer Series A Common Stock to be delivered under
SECTION 2.2.1(A) and (iii) the Buyer Series A Common Stock to be delivered
under SECTION 2.2.1(B). If Buyer has elected the option under SECTION 2.2.2,
then 70% of the Preliminary Adjustments amount will be subtracted from the cash
consideration, and 30% of the Preliminary Adjustments amount will be subtracted
from the Buyer Series A Common Stock to be delivered under SECTION 2.2.2(B).
(b) Within 90 days after the Closing, Buyer will
deliver to Seller a report (the "Final Report"), prepared in good faith and on
a reasonable basis, setting forth in reasonable detail the final determination
of the adjustments called for by SECTIONS 2.3.1, 2.3.2 and 2.3.3, accompanied
by appropriate documentation supporting such determination including any
document that was included with the Preliminary Report to the extent any change
to the information included in such document has occurred or been determined.
(c) Within 30 days after receipt of the Final
Report, Seller will give Buyer written notice of Seller's objections, if any,
to the Final Report (except that the parties in any event will be bound by the
determination of the Allocable Xxxxxx Benefit Costs pursuant to SECTION 6.14
for purposes of determining the adjustment under SECTION 2.3.2). If Seller
does not give any such notice within that 30-day period, the determination of
the adjustments set forth in the Final Report will be conclusive and binding on
the parties. If Seller gives notice of any objection, Seller and Buyer will
negotiate in good faith to resolve all issues in dispute for a period of 15
days following receipt of such notice of objection. If the parties resolve all
disputed issues within such 15-day period, Buyer will promptly thereafter
prepare and deliver to Seller a statement reflecting the final agreed upon
determination of adjustments called for by SECTIONS 2.3.1, 2.3.2 AND 2.3.3. If
at the end of such 15-day period, all disputed issues are not resolved, all
issues remaining in dispute will be submitted for determination by a nationally
recognized accounting firm selected by Buyer and Seller, which firm is not the
principal independent accountant for Buyer, Seller or any Affiliate of Buyer or
Seller, who will be directed to resolve the disputed issues regarding such
adjustments within 30 days after submission to it and whose determination will
be conclusive and binding on the parties. Seller and Buyer will bear equally
the fees and expenses payable to such firm in connection with its determination.
The Base Purchase Price, adjusted by the final adjustments determined pursuant
to this Section, will be referred to as the "Final Purchase Price."
(d) After the determination of the Final Purchase
Price, Seller will pay to Buyer the amount by which the Preliminary Purchase
Price exceeds the Final Purchase Price, or Buyer will pay to Seller the amount
by which the Final Purchase Price exceeds the Preliminary Purchase Price. Any
payment required to be made by either party to the other pursuant to this
paragraph will be paid in cash within three Business Days after the
determination of the Final Purchase Price, by wire transfer, to the account
designated by the receiving party.
2.4 Allocation of Consideration. The consideration
payable by Buyer to Seller and KRI under this Agreement will be allocated as
follows: (a) $71,257,892 will be allocated to the purchase of the KR Note; (b)
$40 million will be allocated to the Noncompetition Agreement; and
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(c) $8,667,000 will be allocated to the KRC/CCC Interest, $58,326,000 will be
allocated to the TKR Partners Interest, $799,000 will be allocated to the NJFT
Interest, $7,692,000 will be allocated to the subsidiaries owned by TKR Cable
and the balance will be allocated to the assets owned directly by TKR Cable
rather than any of its subsidiaries (the "TKR Cable Direct Assets"). The
consideration allocated to the TKR Cable Direct Assets will be allocated among
those assets as set forth in a schedule to be approved by Buyer and Seller not
later than 180 days after the Closing Date (or April 1 of the year following
the Closing Date if earlier) (provided that Buyer and Seller have agreed upon
such allocation). Buyer and Seller agree to be bound by the allocation and
will not take any position inconsistent with such allocation and will file all
returns and reports with respect to the transactions contemplated by this
Agreement, including all federal, state and local tax returns, on the basis of
such allocation. Unless otherwise agreed by the parties, the portions of the
Preliminary Purchase Price and Final Purchase Price payable to each Seller,
other than KRC, and KRI will be payable in cash, with all non-cash
consideration called for in this Agreement to be delivered to KRC (along with
any balance of the cash payable by Buyer).
SECTION 3. LIABILITIES ASSUMED. On the Closing Date, subject to the
terms and conditions set forth in this Agreement, Seller will assign to Buyer,
and Buyer will assume from Seller, all of the liabilities and obligations of
each Seller as general partner of KRC/CCC, TKR Cable, TKR Partners and NJFT and
under the partnership agreements listed on SCHEDULE 3, other than liabilities
and obligations of NJFT arising prior to the Closing, and liabilities or
obligations of the Owned Entities other than NJFT related to (A) Taxes (other
than property taxes for 1995 with respect to property of the Owned Entities in
Kentucky and Taxes reflected in the Financial Statements or accrued with
respect to such Owned Entities in the ordinary course of business after
December 31, 1995), (B) payments with the Register of Copyrights, (C) amounts
relating to compliance with Environmental Laws, (D) franchise fees, and (E) any
rate refund ordered by any Governmental Authority, in each case, arising prior
to the Closing (collectively, the "Assumed Liabilities"). Buyer's assumption
of the Assumed Liabilities will be evidenced by the Assignment, Assumption and
Xxxx of Sale in the form of EXHIBIT A.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER.
To induce Buyer to enter into this Agreement, Seller
represents and warrants to Buyer, as follows:
4.1 Organization and Qualification. KRC, KRC-SNJ,
KRC-NJFT and KRIC each is a corporation duly incorporated, validly existing and
in good standing under the laws of its state of incorporation and has all
requisite corporate power and authority to own and use the Assets as they are
currently owned and used.
4.2 Authority and Validity. KRC, KRC-SNJ, KRC-NJFT and
KRIC each 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 all other documents and instruments to be
executed and delivered in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents"). The execution and
delivery by KRC,
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KRC-SNJ, KRC-NJFT and KRIC of, the performance by each of its obligations
under, and the consummation by each of the transactions contemplated by, this
Agreement and the Transaction Documents have been duly and validly authorized
by all necessary action by or on behalf of KRC, KRC-SNJ, KRC-NJFT and KRIC.
This Agreement is, and when executed and delivered by KRC, KRC-SNJ, KRC-NJFT
and KRIC the Transaction Documents will be, the valid and binding obligations
of KRC, KRC-SNJ, KRC-NJFT and KRIC, as the case may be, enforceable against
each in accordance with their terms, except insofar as enforceability may be
limited or affected by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting creditors'
rights generally or by principles governing the availability of equitable
remedies.
4.3 No Breach or Violation. Except for consents required
under the partnership agreements listed on SCHEDULE 4.3 and subject to
obtaining the Required Consents referred to in SECTIONS 8.2.4, 8.2.5 and 8.2.6,
the execution, delivery and performance of this Agreement and the Transaction
Documents by Seller will not: (a) violate any provision of the charter or
bylaws of KRC, KRC-SNJ, KRC-NJFT or KRIC; (b) violate any Legal Requirement;
(c) require any consent, approval or authorization of, or any filing with or
notice to, any Person; or (d) (i) violate or result in a breach of or
constitute a default under (without regard to requirements of notice, lapse of
time, or election of other Persons, or any combination thereof), (ii) permit or
result in the termination, suspension or modification of, (iii) result in the
acceleration of (or give any Person the right to accelerate) the performance of
KRC, KRC-SNJ, KRC-NJFT or KRIC under any instrument or other agreement to
which any Seller is a party, except for purposes of clauses (b), (c) and (d),
such violations, conflicts, breaches, defaults, terminations, suspensions,
modifications, accelerations and failures to obtain consents, approvals or
authorizations as would not, individually or in the aggregate, have a material
adverse effect on the Business or on the ability of each Seller to perform its
obligations under this Agreement or the Transaction Documents, or (e) result in
the creation or imposition of any Encumbrance (other than the Restrictions) on
any of the Assets.
4.4 Title. Seller has exclusive and good title,
beneficially, legally and of record, to the Assets, free and clear of all
Encumbrances, except the Restrictions.
4.5 Governmental Permits. To Seller's Knowledge, as of
the date of this Agreement, (a) the material Governmental Permits are currently
in full force and effect and are not in default, and (b) there is no legal
action, governmental proceeding or investigation, pending or threatened, to
terminate, suspend or modify any material Governmental Permit.
4.6 KR Note. KRIC is the owner of all the legal and
beneficial right, title and interest in, to and under the KR Note, free and
clear of any Encumbrance other than applicable registration requirements under
federal and state securities laws (except that a third-party consent is
required for transfer of the KR Note pursuant to this Agreement, as described
in SCHEDULE 8.2.6). No payment of principal on the KR Note has been made to or
for the benefit of KRIC, and the outstanding principal amount of the KR Note is
$71,257,892.
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4.7 Environmental Matters.
4.7.1 To Seller's Knowledge, as of the date of this
Agreement, the Real Property currently complies with and has previously been
operated in compliance with, all Environmental Laws. To Seller's Knowledge, as
of the date of this Agreement, no claim or investigation based on Environmental
Laws which relates to any Real Property or any operations on it (a) has been
asserted or conducted in the past or is currently pending against or with
respect to Seller or, to Seller's Knowledge, any other Person, or (b) to
Seller's Knowledge, is threatened or contemplated.
4.7.2 Except as specified in the following
sentence, to Seller's Knowledge, as of the date of this Agreement, Seller has
provided Buyer with complete and correct copies of (a) all studies, reports,
surveys or other materials in Seller's possession as of the date of this
Agreement or to which Seller has access as of the date of this Agreement
relating to the presence or alleged presence of Hazardous Substances at, on or
affecting the Real Property, (b) all notices or other materials in Seller's
possession as of the date of this Agreement or to which Seller has access as of
the date of this Agreement 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 Real Property or activities
at the Real Property and (c) all materials in Seller's possession as of the
date of this Agreement or to which Seller has access as of the date of this
Agreement relating to any claim, allegation or action by any Person other than
a Governmental Authority under any Environmental Law. Seller need not provide
Buyer with any of the items described in clauses (a), (b) or (c) of the
preceding sentence that are in the possession of any of the Owned Entities.
4.8 Compliance with Law. To Seller's Knowledge, as of
the date of this Agreement, the ownership, leasing and use of the assets of the
Business as currently owned, leased and used do not violate or infringe any
Legal Requirement, which violation, individually or in the aggregate, would
have a material adverse effect on the Business. To Seller's Knowledge, as of
the date of this Agreement, Seller has received no notice (other than a notice
also received by or previously disclosed to Buyer or its Affiliates) claiming a
material violation by Seller or the Business of any Legal Requirement
applicable to the Business.
4.9 Taxes.
4.9.1 Seller and, to Seller's Knowledge, as of the
date of this Agreement, each Owned Entity has filed or will file when due all
material tax returns, information returns, reports and statements for all years
and all periods (and portions thereof) ending on or before the Closing Date,
with respect to all federal, state and local income, franchise, sales,
withholding, excise, real and personal property and other taxes, similar
assessments, and any related penalties or interest (collectively "Taxes"). To
Seller's Knowledge, as of the date of this Agreement, all such returns, reports
and statements were or will be prepared in all material respects in the manner
required by applicable Legal Requirements, and reflect or will reflect the
liability for Taxes of such
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Person in all material respects and all Taxes shown thereby to be payable and
all assessments received by such Person have been paid or will be paid when
due.
4.9.2 To Seller's Knowledge, as of the date of this
Agreement, except as disclosed in SCHEDULE 4.9.2, there are no material claims
or investigations by any taxing authority pending or threatened for any past
due Taxes payable by Seller or any Owned Entity and there has been no waiver of
any applicable statute of limitations or extension of time for the assessment
of any material Taxes payable by any Owned Entity.
4.9.3 Except for the Standstill, Indemnification
and Contribution Agreement, as amended at Closing in accordance with this
Agreement, there are no tax sharing, tax allocation or similar agreements
executed between any Owned Entity and Seller or between any Owned Entity and
any other member of Seller's consolidated group that relate to any payments or
liability therefor by or to any Owned Entity with respect to Taxes.
4.10 Financial Statements. To Seller's Knowledge, as of
the date of this Agreement, the Unaudited Financial Statements were prepared in
accordance with generally accepted accounting principles in the United States
(except as may be indicated in the notes thereto) and present fairly the
consolidated financial position, results of operations and cash flows of the
applicable Persons as of the dates and for the periods indicated. To Seller's
Knowledge, as of the date of this Agreement, except as disclosed on SCHEDULE
4.10 from the date of the Unaudited Financial Statements to the date of this
Agreement, there has been no material adverse change in the business or
financial condition of the Business taken as a whole (except for material
adverse changes due to general economic conditions or Cable Industry
Conditions).
4.11 Legal Proceedings. To Seller's Knowledge, as of the
date of this Agreement, except as set forth on SCHEDULE 4.10 or SCHEDULE 4.11,
there is no material judgment or order outstanding, or any material action,
claim, suit, proceeding, arbitration, investigation, hearing by or before any
Governmental Authority or any private arbitrator pending or threatened against
or involving or affecting any of the Owned Entities or all or any part of the
Business, except those with respect to which Buyer or the applicable Owned
Entities have received notice prior to the date of this Agreement.
4.12 Employee Benefits.
4.12.1 Each bonus plan, stock option plan, deferred
compensation plan and employee benefit plan as defined in Section 3(3) of
ERISA, maintained by or on behalf of any Owned Entity or by any ERISA Affiliate
(including any plans which are "multiemployer plans" under Section 3(37)(A) of
ERISA ("Multiemployer Plans")) and any defined benefit pension plan (as defined
in Section 3(35) of ERISA) terminated by any Owned Entity or any ERISA
Affiliate within the five plan years ending immediately before the Closing Date
which covers or covered any employee of any Owned Entity or any ERISA Affiliate
or any predecessor of any Owned Entity or any ERISA Affiliate are collectively
referred to herein as the "Plans" and individually as a "Plan".
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4.12.2 Except as set forth on SCHEDULE 4.12.2, with
respect to each Plan, to Seller's Knowledge, as of the date of this Agreement:
(a) each Plan has been administered in all material respects in compliance
with, and has been restated or amended (except for amendments not yet required
by law to be made) so as to comply in all material respects with, all
applicable requirements of law including all applicable requirements of ERISA,
the Code and regulations promulgated thereunder by the Internal Revenue Service
and the United States Department of Labor and (b) no Plan is funded through a
welfare benefit fund within the meaning of Section 419 of the Code.
4.13 Finders and Brokers. Seller has not employed any
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement for which Buyer could be
liable.
4.14 Investment Intent. KRC represents and warrants to
Buyer that: (a) KRC is an "accredited investor" as defined in Rule 501(a) of
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act"); (b) KRC is acquiring the Buyer Series A Common Stock, if any, delivered
to it pursuant to this Agreement for its own account for investment only and
without a view to the distribution thereof except in a transaction permitted
under the following clause (c); and (c) KRC will not sell or otherwise dispose
of such Buyer Series A Common Stock, except in a transaction registered or
qualified under the Securities Act and applicable state securities laws or
unless an exemption from those requirements is available.
SECTION 5. BUYER'S REPRESENTATIONS AND WARRANTIES.
To induce Seller to enter into this Agreement, Buyer
represents and warrants to Seller as follows:
5.1 Organization and Qualification. Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware and has all requisite corporate power and authority to carry
on its business as currently conducted.
5.2 Authority and Validity. Buyer 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. The execution and delivery by Buyer
of, the performance by Buyer of its obligations under, and the consummation by
Buyer of the transactions contemplated by, this Agreement and the Transaction
Documents have been duly authorized by all necessary action by or on behalf of
Buyer. This Agreement is and when executed and delivered by Buyer, the
Transaction Documents will be, the valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms, except insofar as
enforceability may be limited or affected by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally or by principles governing the availability of
equitable remedies.
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5.3 No Breach or Violation. Subject to obtaining the
Required Consents referred to in SECTIONS 8.2.4, 8.2.5 and 8.2.6 and the
consents required under the partnership agreements listed on SCHEDULE 4.3, the
execution, delivery and performance of this Agreement and the Transaction
Documents by Buyer will not: (a) violate any provision of the charter or
bylaws of Buyer; (b) violate any Legal Requirement; (c) require any consent,
approval or authorization of, or any filing with or notice to, any Person; or
(d) (i) violate or result in a breach of or constitute a default under (without
regard to requirements of notice, lapse of time or elections of any Person or
any combination thereof), (ii) permit or result in the termination, suspension,
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of Buyer under any instrument or other
agreement to which Buyer is a party, or (iv) result in the creation or
imposition of any Encumbrance on any of Buyer's assets, except for purposes of
clauses (b), (c) and (d) such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications, accelerations, failures to obtain
consents, approvals or authorizations and imposition of Encumbrances as would
not, individually or in the aggregate, have a material adverse effect on Buyer
or on the ability of Buyer to perform its obligations under this Agreement or
the Transaction Documents.
5.4 Finders and Brokers. Buyer has not employed any
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement for which Seller could be
liable.
5.5 Capitalization. As of the date of this Agreement,
the authorized capital stock of Buyer consists of (a) 1,750,000,000 shares of
Buyer Series A Common Stock, (b) 150,000,000 shares of Tele-Communications,
Inc. Series B TCI Group Common Stock, (c) 750,000,000 shares of
Tele-Communications, Inc. Series A Liberty Media Group Common Stock, (d)
75,000,000 shares of Tele-Communications, Inc. Series B Liberty Media Group
Common Stock, (e) 700,000 shares of Class A Preferred Stock, (f) 1,675,096
shares of Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock
and (g) 50,000,000 shares of Series Preferred Stock. As of January 31, 1996,
the following number of such shares were issued and outstanding: (i)
672,217,009 shares of Buyer Series A Common Stock, (ii) 84,685,554 shares of
Tele-Communications, Inc. Series B TCI Group Common Stock, (iii) 142,896,264
shares of Tele-Communications, Inc. Series A Liberty Media Group Common Stock,
(iv) 21,196,868 shares of Tele-Communications, Inc. Series B Liberty Media
Group Common Stock, (v) 0 shares of Class A Preferred Stock, (vi) 1,675,096
shares of Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock
and (vii) 15,865,889 shares of Series Preferred Stock. The shares of Buyer
Series A Common Stock to be issued pursuant to this Agreement, when issued
pursuant to this Agreement, will be duly authorized, validly issued, fully paid
and nonassessable and not issued in violation of any preemptive rights or,
assuming the accuracy of KRC's representations and warranties in SECTION 4.14
of this Agreement, of any securities law or any exchange or NASDAQ rule or
policy. Upon consummation of the Closing, KRC will acquire good and marketable
title to the applicable number of shares delivered to KRC at Closing of Buyer
Series A Common Stock, Xxxxxx Class B Stock, Xxxxxx Class C Stock and/or Time
Warner Common Stock, free and clear of all Encumbrances, other than restrictions
imposed by applicable registration requirements under federal and state
securities laws and except, with respect to Xxxxxx Class C Stock, as described
in SCHEDULE 5.5.
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5.6 Financial Statements. The audited consolidated
financial statements of Buyer and its consolidated subsidiaries included in or
incorporated by reference into Buyer's Annual Report on Form 10-K for its
fiscal year ended December 31, 1995 (including the Exhibits thereto, the "Buyer
10-K") (including any related notes and schedules) have been prepared in
accordance with generally accepted accounting principles of the United States
(except as may be indicated in the notes thereto) and present fairly the
consolidated financial position of Buyer and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and their
cash flows for the periods then ended.
5.7 Absence of Material Adverse Change. Except as
disclosed in the Buyer Reports which have been delivered to Seller prior to the
date of this Agreement or as disclosed on SCHEDULE 5.7, since December 31,
1995, there has been no material adverse change in the business or financial
condition of Buyer and its consolidated subsidiaries, taken as a whole (except
for material adverse changes due to general economic conditions or Cable
Industry Conditions) or Buyer's ability to perform its obligations hereunder
and under the Transaction Documents.
5.8 SEC Reports: Disclosure. Buyer previously has
furnished to Sellers a true and complete copy of the following filed by Buyer
or TCI Communications, Inc. with the SEC prior to the date of this Agreement
and since December 31, 1995:
(a) each definitive proxy statement, and
(b) each Form 10-K or 10-Q and 8-K,
all of the foregoing being referred to collectively as the "Buyer Reports." As
of their respective dates, the Buyer Reports complied in all material respects
with the applicable requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder
applicable to the Buyer and, as of their respective dates, except as the same
may have been corrected, updated or superseded by means of a subsequent SEC
filing, no Buyer Report contained any untrue statement of a material fact or
omits to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.9 Xxxxxx and Time Warner Stock. With respect to any
Xxxxxx Class B Stock or Time Warner Common Stock delivered to KRC as
consideration for the sale of the Assets, KRC may resell such stock upon
Closing without registration or other restriction upon immediate resale by KRC
under applicable federal or state securities laws.
5.10 Investment Intent. Buyer represents and warrants to
KRIC that (a) Buyer is an "accredited investor" as defined in Rule 501(a) of
Regulation D under the Securities Act and (b) Buyer is acquiring the KR Note
for its own account for investment only and without a view to the distribution
thereof except in a transaction registered or qualified under the Securities
Act and applicable state securities laws or unless an exemption from those
requirements is available.
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SECTION 6. ADDITIONAL COVENANTS.
6.1 Access to Premises and Records. Between the date of
this Agreement and the Closing Date, Seller will not interfere with the
availability to Buyer and its counsel, accountants and other representatives of
full access during normal business hours to all the premises, assets, books,
records and personnel of the Business and Seller will furnish to Buyer and such
representatives all such documents, financial information and other information
regarding the Business and the Assets in Seller's possession as Buyer from time
to time reasonably may request. No such investigation will affect or create
any waiver of any of the representations, warranties, covenants and indemnities
in this Agreement and any Transaction Document.
6.2 Continuity and Maintenance of Operations. Except as
Buyer and Seller may otherwise agree in writing, until the Closing, neither
Buyer nor Seller will take or refrain from any action the effect of which would
be inconsistent with the conduct of the Business in the usual, regular and
ordinary course consistent with past practices and in accordance with the 1996
Budgets.
6.3 Required Consents. Seller will deliver copies of the
Required Consents promptly after they are obtained. Buyer will cooperate with
Seller to obtain the Required Consents, but neither Buyer, any Owned Entity nor
Seller will be required to agree to any changes or the imposition of any
condition to the transfers contemplated by this Agreement, under any contract
or Governmental Permit as a condition to obtaining any Required Consent.
6.4 HSR Notification. As soon as practicable after the
execution of this Agreement, and in any event within 15 Business Days after the
date of this Agreement, Seller and Buyer each will complete and file, or cause
to be completed and filed, any notification and report required to be filed
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"); and each such filing will request early termination of the waiting
period imposed by the HSR Act. The parties will use commercially reasonable
efforts to respond as promptly as reasonably practicable to any inquiries
received from the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") for additional
information or documentation and to respond as promptly as reasonably
practicable to all inquiries and requests received from any other Governmental
Authority in connection with antitrust matters. The parties will use 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.
6.5 No Shopping. None of Seller, its Affiliates, or any
officer, director, employee, agent or representative of any of them will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Closing or the termination of this Agreement, directly
or indirectly (a) solicit or initiate the submission of proposals or offers
from any Person for, (b) participate in any discussions pertaining to or (c)
furnish any information to any Person other than Buyer relating to, any direct
or indirect evaluation, acquisition or purchase of all or any portion of the
Assets or Seller.
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6.6 Notification of Certain Matters. Each party to this
Agreement will give notice to the others promptly upon such party becoming aware
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 any of such party's representations or warranties under
this Agreement or any Transaction Document not being true, complete and correct
in all material respects when made or at the Closing, and, with respect to
clause (b) use commercially reasonable efforts to remedy the same.
6.7 Transfer Taxes. Seller and Buyer each will pay
one-half of any state or local sales, use or transfer taxes or fees or any
other charge (including filing fees) imposed by any Governmental Authority
arising from or payable by reason of the transfer of any of the Assets pursuant
to this Agreement.
6.8 Employee Matters. Except as contemplated in the 1996
Budgets, Seller will not permit, to the extent it has the power to do so,
without the prior written consent of Buyer, any change in the compensation or
benefits of any employees of the Business.
6.9 Franchise Renewals. Prior to Closing, Seller and
Buyer will use commercially reasonable efforts to cause any renewals of the
Owned Entities' cable television franchises that are scheduled to expire prior
to the Closing Date to be renewed on terms reasonably satisfactory to Buyer.
6.10 Management Incentive Plan. Prior to Closing Seller
and Buyer will cause TKR Cable and TKR Partners to terminate the Management
Incentive Plan, with each of the management participants in the Management
Incentive Plan to be paid in full the vested amounts owed to him, the
calculation of which amounts, on a preliminary basis, is as set forth in
SCHEDULE 6.10.
6.11 Guaranty. At Closing, Seller will cause KRI to sign
and deliver to Buyer, the Guaranty in the form of EXHIBIT C.
6.12 Noncompetition Agreement. At Closing, Seller will
cause Xxxxxx-Xxxxxx, Inc. to, sign and deliver to Buyer, a Noncompetition
Agreement in the form of EXHIBIT D.
6.13 Amendment to Standstill, Indemnification and
Contribution Agreement. At Closing, KRC and Buyer will and Buyer will cause
TCI TKR, Inc. and TCI TKR Limited Partnership to sign and deliver the Amendment
No. 1 to Standstill, Indemnification and Contribution Agreement in the form
attached as EXHIBIT E.
6.14 Valuation of Xxxxxx Benefit Costs. As soon as
practicable, the parties will direct Towers, Perrin, Forester & Xxxxxx to
prepare a written valuation of the Allocable Xxxxxx Benefit Costs, based on the
actuarial and other assumptions to be mutually agreed to by the parties and set
forth on SCHEDULE 6.14 to be attached hereto within 15 Business Days after the
date of this Agreement, with costs of such valuation to be borne equally by
Seller and Buyer. The written
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valuation will be conclusive and binding on the parties for purposes of
determining the adjustments provided in SECTION 2.3.2 for purposes of the
Preliminary Purchase Price and the Final Purchase Price.
6.15 Use of Business Name. Buyer and its Affiliates will
be entitled to continue to use the initials "TKR" and all names under which the
Business is operated and all derivations and abbreviations of such names and
related marks, and Seller will not have any rights with respect to such names
or marks from and after Closing. Notwithstanding the preceding, Buyer and its
Affiliates will not be entitled to use Seller's names or the initials "KRC" or
"KR," and any use of the initials "KRC" or "KR" will cease within 90 days after
Closing, provided that this sentence will in no way limit the use of the name
or initials "TKR" by Buyer and its Affiliates after Closing.
6.16 KR Note. Seller and Buyer will not permit any
prepayment of principal to be made on the KR Note prior to Closing.
6.17 Schedules. Any information disclosed in any Schedule
to this Agreement will be deemed fully disclosed for the purposes of all
applicable sections of this Agreement. Neither the specification (directly or
indirectly by reference to a defined term) of any dollar amount in the
representations and warranties set forth in SECTION 4 or 5 or the
indemnification provisions of SECTION 10 nor the inclusion of any items in any
Schedule will be deemed to constitute an admission by Seller or Buyer, or
otherwise imply, that any such amount or such items so included are material for
the purposes of this Agreement. The inclusion of, or reference to, any item
within any Schedule does not constitute an admission by either Seller or Buyer
that such item meets any or all of the criteria set forth in this Agreement for
inclusion in any such Schedule.
6.18 Satisfaction of Conditions. Each party will use
commercially reasonable efforts to satisfy, or to cause to be satisfied, the
conditions to the obligations of the other party to consummate the transactions
contemplated by this Agreement, as set forth in SECTION 8, provided that Buyer
will not be required to agree to any increase in the amount payable with
respect to, or any modification that makes more burdensome, the conduct of the
Business.
6.19 Confidentiality and Press Releases. Except as
required by any Legal Requirement, neither party will issue any press release or
make any other public announcement regarding this Agreement or the transactions
contemplated hereby without the consent of the other party. Each party will
hold, and will cause its employees, consultants, advisors and agents to hold, in
confidence, the terms of this Agreement and any non-public information
concerning the other party obtained pursuant to this Agreement. Notwithstanding
the preceding provisions, a party may disclose such information to the extent it
has become publicly disclosed or has rightfully come into the possession of such
party (other than from the other party) or to the extent such party may be
compelled by Legal Requirements or stock exchanges, rules or policies to
disclose any of such information, but the party proposing to disclose such
information will first notify and consult with the other party concerning the
proposed disclosure, to the extent reasonably feasible. Each party also may
disclose such information to employees, consultants, advisors, agents and actual
or potential lenders whose knowledge is necessary to facilitate the consummation
of the transactions contemplated by this Agreement, and such disclosing party
will be liable to the other for any breach
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by such Persons to whom the disclosing party provided confidential information,
of the confidentiality provisions in this Section. Each party's obligation to
hold information in confidence will be satisfied if it exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information.
SECTION 7. CLOSING.
The Closing will be held on a date specified by Buyer (upon
five Business Days' prior notice to Seller) that is within 15 days after all
conditions to the Closing contained in this Agreement (other than those based
on acts to be performed at the Closing) have been satisfied or waived. The
Closing will be held at 10:00 a.m. local time at Buyer's office located at 0000
XXX Xxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or at such place and time as Buyer and
Seller may agree.
SECTION 8. CONDITIONS TO CLOSING.
8.1 Conditions to the Obligations of Buyer and Seller.
The obligations of each party to consummate the transactions contemplated by
this Agreement to take place at the Closing are subject to the satisfaction or
waiver, to the extent permitted by applicable Legal Requirements, at or prior
to the Closing Date, of each of the following conditions:
8.1.1 All filings required under the HSR Act have
been made and the applicable waiting period has expired or been earlier
terminated without the commencement or threat of any litigation by a
Governmental Authority of competent jurisdiction to restrain the consummation
of the transactions contemplated by this Agreement (except any such litigation
or threat of litigation subsequently withdrawn by the Governmental Authority).
8.1.2 No Legal Requirement has been enacted,
promulgated or issued or become or deemed applicable to any of the transactions
contemplated by this Agreement by any Governmental Authority and no order,
stay, judgment or decree has been issued by any court and remains in effect,
which would (a) prohibit Buyer's direct or indirect ownership or operation of
all or a material portion of the Assets, (b) compel Buyer to dispose of or hold
separate all or a material portion of the Assets as a result of any of the
transactions contemplated by this Agreement, (c) materially impair the ability
of Buyer to realize the benefits of the transactions contemplated by this
Agreement or have a material adverse effect on the right of Buyer to exercise
full rights of ownership of the Business or the Assets or (d) prohibit or
restrain the consummation of the transactions contemplated by this Agreement in
any material respect.
8.2 Conditions to the Obligations of Buyer. The
obligations of Buyer to consummate the transactions contemplated by this
Agreement to take place at the Closing are subject to the satisfaction or
waiver, to the extent permitted by applicable Legal Requirements, at or prior
to the Closing Date, of each of the following conditions:
8.2.1 All representations and warranties of Seller
contained in this Agreement are, if specifically qualified by materiality, true
in all respects and, if not so qualified, are true in all material respects, in
each case on and as of the Closing Date with the same effect as
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if made on and as of the Closing Date (except to the extent a different date is
specified therein, in which case such representation and warranty will be true
as of such date).
8.2.2 Seller in all material respects has performed
and complied with each obligation, agreement and covenant required by this
Agreement to be performed or complied with by Seller at or prior to the
Closing.
8.2.3 Seller has executed (or caused to be
executed) and delivered to Buyer each of the following items:
(a) an Assignment, Assumption and Xxxx of
Sale in the form attached as EXHIBIT A;
(b) the original KR Note, endorsed in a
manner sufficient to make it payable to the order of Buyer or its designee;
(c) a Guaranty signed by KRI in the form
attached as EXHIBIT C;
(d) a Noncompetition Agreement signed by
KRI in the form attached as EXHIBIT D;
(e) Amendment No. 1 to Standstill,
Indemnification and Contribution Agreement in the form of EXHIBIT E; and
(f) such other transfer instruments as
Buyer may reasonably deem necessary or advisable to transfer the Assets to
Buyer and to perfect Buyer's rights in the Assets.
8.2.4 The aggregate number of Basic Subscribers in
those Franchise Areas that are Transferable Franchise Areas are at least 90% of
the aggregate number of Basic Subscribers in all Franchise Areas. For purposes
of this SECTION 8.2.4 and SECTION 8.2.5:
(a) The number of Basic Subscribers in a
Franchise Area will be the number of Basic Subscribers set forth under the
heading "Basic Subscribers" next to the name of such Franchise Area on SCHEDULE
8.2.4 (regardless of any change in the number of subscribers in such Franchise
Area between the date of this Agreement and the Closing Date) and the aggregate
number of Basic Subscribers in all Franchise Areas will be the total number of
Basic Subscribers for all Franchise Areas as set forth on SCHEDULE 8.2.4
(regardless of any change in the aggregate number of subscribers between the
date of this Agreement and the Closing Date);
(b) "Franchise" means any governmental
franchise or similar authorization (other than any license issued by the FCC or
any municipal business licenses) pursuant to which an Owned Entity is
authorized to provide cable television service.
(c) "Franchise Area" means any of the
geographic areas in which an Owned Entity is authorized to provide cable
television service pursuant to a Franchise or any
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geographic area in which an Owned Entity provides cable television service in
which a Franchise is not required pursuant to applicable law.
(d) A "Transferable Franchise Area"
means any Franchise Area with respect to which (i) any authorization, consent,
order, or approval of any governmental authority necessary with respect to the
Franchise for such Franchise Area in connection with the consummation of the
transactions contemplated by this Agreement, in form and substance reasonably
satisfactory to Buyer, has been obtained and is in full force and effect as of
the Closing Date, and the right of any governmental authority to acquire the
system serving any Franchise Area has been waived; or (ii) no authorization,
consent, order, approval or waiver of any governmental authority is necessary
with respect to the Franchise for such Franchise Area in connection with the
consummation of the transactions contemplated by this Agreement; or (iii) no
Franchise is required for the provision of cable television service in the
Franchise Area;
8.2.5 Each of the Franchise Areas designated on
SCHEDULE 8.2.5 is a Transferable Franchise Area (as defined in SECTION 8.2.5);
8.2.6 Those Required Consents described on SCHEDULE
8.2.6 have been obtained in form and substance reasonably satisfactory to Buyer
and are in full force and effect.
8.2.7 Except as disclosed on SCHEDULE 4.10, since
December 31, 1995, there has occurred no material adverse change in the
business or financial condition of the Business taken as a whole (except for
material adverse changes due to general economic conditions or Cable Industry
Conditions), and there has occurred no material adverse change in Seller's
ability to perform its obligations hereunder and under the Transaction
Documents.
8.2.8 Seller has delivered releases, in form
satisfactory to Buyer, of all Encumbrances (other than the Restrictions), if
any, affecting any of the Assets.
8.2.9 Seller has delivered to Buyer: (a) a
certificate, dated the Closing Date, signed by a vice president of each Seller,
stating that to his/her knowledge, the conditions set forth in SECTIONS 8.2.1
and 8.2.2 are satisfied; and (b) such other documents as Buyer may reasonably
request in connection with the transactions contemplated by this Agreement.
8.3 Conditions to Obligations of Seller. The obligations
of Seller to consummate the transactions contemplated by this Agreement to take
place at the Closing are subject to the satisfaction or waiver by Seller, to
the extent permitted by applicable law, at or prior to the Closing Date, of
each of the following conditions:
8.3.1 Buyer has delivered the consideration
required to be delivered in accordance with SECTION 2.2.
8.3.2 All representations and warranties of Buyer
contained in this Agreement are, if specifically qualified by materiality, true
and correct in all respects and, if not so qualified, are true and correct in
all material respects, in each case on and as of the Closing Date
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with the same effect as if made on and as of the Closing Date (except to the
extent a different date is specified therein, in which case such representation
and warranty will be true as of such date).
8.3.3 Buyer in all material respects has performed
and complied with each obligation, agreement and covenant required by this
Agreement and the Registration Rights Agreement to be performed or complied
with by Buyer at or prior to the Closing.
8.3.4 Buyer has executed and delivered to Seller an
Assignment, Assumption and Xxxx of Sale in the form attached as EXHIBIT A.
8.3.5 The registration statement contemplated by
the Registration Rights Agreement with respect to KRC's resale of any Buyer
Series A Common Stock delivered pursuant to SECTION 2.2.1(A) or 2.2.2(B), as
applicable, has become effective under the Securities Act, and is not the
subject of any stop order or proceedings seeking a stop order and no such
proceedings or order have been threatened (except any such threat subsequently
withdrawn).
8.3.6 Any Buyer Series A Common Stock delivered
pursuant to SECTION 2.2.1(A) or 2.2.2(B), as applicable, or Xxxxxx Class B
Stock or Time Warner Common Stock delivered pursuant to SECTION 2.2.1 or 2.2.2,
as applicable, has been listed on the principal exchange or exchanges or
qualified for trading in the principal over-the- counter market on which the
Buyer Series A Common Stock, Xxxxxx Class B Stock or Time Warner Common Stock,
as applicable, is then listed or traded.
8.3.7 Buyer has delivered to Seller the following:
(a) a certificate, dated the Closing Date, signed by a vice president of Buyer,
stating that to his or her knowledge, the conditions set forth in SECTIONS
8.3.2 and 8.3.3, are satisfied; and (b) such other documents as Seller may
reasonably request in connection with the transactions contemplated by this
Agreement.
8.4 Waiver of Conditions. Any party may waive in writing
any or all of the conditions to its obligations under this Agreement.
SECTION 9. TERMINATION.
9.1 Termination Events. This Agreement may be terminated
and the transactions contemplated by this Agreement may be abandoned at any
time prior to the Closing:
(a) by the mutual written consent of Buyer and Seller;
or
(b) by either Buyer or Seller, so long as the
terminating party is not in default under this Agreement in any material
respect, if the transactions contemplated by this Agreement to take place at the
Closing have not been consummated by December 31, 1996, for any reason.
9.2 Liabilities in Event of Termination. Upon
termination of this Agreement pursuant to SECTION 9.1, except as provided in
the following sentence: (a) this Agreement will
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automatically become null and void, except the provisions of SECTION 6.19 which
will continue in effect (unless this Agreement has previously been filed with
the SEC) until such time as this Agreement is filed with the SEC, and (b) such
termination will be the sole remedy with respect to any breach of this
Agreement. Notwithstanding the preceding sentence, neither the Buyer nor
Seller will be relieved of liability for any willful breach of any material
covenant or agreement in this Agreement.
9.3 Procedure Upon Termination. In the event of the
termination of this Agreement by Buyer or Seller pursuant to this SECTION 9,
notice of such termination will promptly be given by the terminating party to
the other.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
10.1 Survival of Representations and Warranties. The
representations and warranties of Seller in this Agreement and in the documents
and instruments to be delivered by Seller pursuant to this Agreement will
survive until the second anniversary of the Closing Date, except that the
representations and warranties contained in SECTIONS 4.4 and 4.6 will survive
the Closing and the delivery of conveyance documents and will continue in full
force and effect without limitation. The representations and warranties of
Buyer in this Agreement and in the documents and instruments to be delivered by
Buyer pursuant to this Agreement will survive until the second anniversary of
the Closing Date, except that representations and warranties contained in
SECTION 5.9 will survive until the earlier of the third anniversary of the
Closing Date or the end of the holding period set forth in Section (k) of Rule
144 promulgated under the Securities Act then in effect and the representations
and warranties contained in the third and fourth sentences of SECTION 5.5 will
survive the Closing and the delivery of conveyance documents and will continue
in full force and effect without limitation. The periods of survival of the
representations and warranties prescribed by this SECTION 10.1 are referred to
as the "Survival Period." The liabilities of the parties under their
respective representations and warranties will expire as of the expiration of
the applicable Survival Period; provided, however, that such expiration will
not include, extend or apply to any representation or warranty, the breach of
which has been asserted, in good faith, either by Buyer in a written notice to
Seller, or by Seller in a written notice to Buyer, in each case before such
expiration indicating that facts or conditions exist that, with the passage of
time or otherwise, can reasonably be expected to result in a breach (and
describing such potential breach in reasonable detail). The covenants and
agreements of the parties in this Agreement and in the other documents and
instruments to be delivered by Seller or Buyer pursuant to this Agreement will
survive the Closing and will continue in full force and effect without
limitation.
10.2 Indemnification by Seller. Seller will indemnify,
defend and hold harmless Buyer and its shareholders and its and their
respective Affiliates, and the shareholders, directors, officers, employees,
agents, successors and assigns of any of such Persons, from and against:
(a) all losses, damages, liabilities,
deficiencies or obligations of or to Buyer or any such other indemnified Person
resulting from or arising out of (i) any breach of any representation or
warranty made by Seller in this Agreement (provided that with respect to a
breach
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of representation or warranty concerning any Owned Entity, such indemnification
will be for that percentage of the aggregate losses, damages, liabilities,
deficiencies or obligations (as determined with respect to the Owned Entity as
a whole) equal to Seller's direct or indirect ownership share in the applicable
Owned Entity prior to Closing, (ii) any breach of any covenant, agreement or
obligation of Seller contained in this Agreement or the Transaction Documents,
(iii) any of the following obligations payable by or on behalf of any Owned
Entity other than NJFT to the extent arising with respect to any period prior
to the Closing (with such indemnification to be for that percentage of the
total obligation payable by or on behalf of such Owned Entity equal to Seller's
direct or indirect ownership share in the applicable Owned Entity prior to
Closing): (A) Taxes (other than property taxes for 1995 with respect to
property in Kentucky and Taxes reflected in the Financial Statements or accrued
with respect to the Owned Entities in the ordinary course of business after
December 31, 1995), (B) payments with the Register of Copyrights, (C) amounts
relating to compliance with Environmental Laws, (D) franchise fees, and (E) any
rate refund ordered by any Governmental Authority or (iv) any obligations
payable by or on behalf of NJFT to the extent arising with respect to any
period prior to Closing (other than obligations and liabilities reflected in
the Financial Statements or accrued with respect to NJFT in the ordinary course
of business after December 31, 1995) (with such indemnification to be for that
percentage of the total obligation payable by or on behalf of NJFT equal to
Seller's direct or indirect ownership share in NJFT prior to Closing); and
(b) all claims, actions, suits, proceedings,
demands, judgments, assessments, fines, interest, penalties, costs and expenses
(including settlement costs and reasonable legal, accounting, experts' and
other fees, costs and expenses) incident or relating to or resulting from any
of the foregoing.
In the event that an indemnified item arises under both clause (a)(i) and under
one or more of clauses (a)(ii) through (a)(iv) of this SECTION 10.2, Buyer's
rights to pursue its claim under clauses (a)(ii) through (a)(iv), as
applicable, will exist notwithstanding the expiration of the Survival Period
applicable to such claim under clause (a)(i).
10.3 Indemnification by Buyer. Buyer will indemnify,
defend and hold harmless Seller and its shareholders and their respective
Affiliates, and the shareholders, directors, officers, employees, agents,
successors and assigns of any such Persons, from and against:
(a) all losses, damages, liabilities,
deficiencies or obligations of or to Seller or any such other indemnified
Person resulting from or arising out of (i) any breach of any representation or
warranty made by Buyer in this Agreement, (ii) the breach of any covenant,
agreement or obligation of Buyer contained in this Agreement or the Transaction
Documents, (iii) the failure of Buyer to perform any of its obligations with
respect to the Assumed Liabilities, (iv) any of the following obligations
payable by or on behalf of any Owned Entity other than NJFT to the extent
arising with respect to any period prior to the Closing (with such
indemnification to be for that percentage of the total obligation payable by or
on behalf of such Owned Entity equal to Buyer's direct or indirect ownership
share in the applicable Owned Entity prior to Closing): (A) Taxes (other than
the Allocable Fixed Kentucky Property Tax Amount and Taxes in excess of the
amounts reflected in the Financial Statements or accrued with respect to the
Owned Entities in
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the ordinary course of business after December 31, 1995), (B) payments with the
Register of Copyrights, (C) amounts relating to compliance with Environmental
Laws, (D) franchise fees, and (E) any rate refund ordered by any Governmental
Authority or (v) any obligations and liabilities payable by or on behalf of
NJFT to the extent arising with respect to any period prior to Closing (with
such indemnification to be for that percentage of the total obligation payable
by or on behalf of such Owned Entity equal to Buyer's direct or indirect
ownership share in the applicable Owned Entity prior to Closing); and
(b) all claims, actions, suits, proceedings,
demands, judgments, assessments, fines, interest, penalties, costs and expenses
(including settlement costs and reasonable legal, accounting, experts' and
other fees, costs and expenses) incident or relating to or resulting from any
of the foregoing.
In the event that an indemnified item arises under both clause (a)(i) and under
one or more of clauses (a)(ii) through (a)(v) of this SECTION 10.3, Seller's
rights to pursue its claim under clauses (a)(ii) through (a)(v), as applicable,
will exist notwithstanding the expiration of the Survival Period applicable to
such claim under clause (a)(i).
10.4 Third Party Claims. The party seeking indemnification
pursuant to this SECTION 10 is referred to as the "Indemnified Party" and the
party from whom indemnification is sought under this SECTION 10 is referred to
as the "Indemnifying Party." The Indemnified Party will give prompt written
notice to the Indemnifying Party of any claim for indemnification under SECTION
10.2 and 10.3 relating to a claim or demand of a third party (an "Action") with
respect to which it is seeking indemnification hereunder. The failure to give
such prompt notice will not relieve the Indemnifying Party of its indemnity
obligations hereunder with respect thereto, except to the extent that the
Indemnifying Party is materially prejudiced by such failure. The Indemnifying
Party will have the right to defend and to direct the defense against such
Action, in its name or in the name of the Indemnified Party, as the case may
be, at the expense of the Indemnifying Party, and with the counsel selected by
the Indemnifying Party and reasonably satisfactory to the Indemnified Party,
provided that (i) the Indemnifying Party, within a reasonable period of time
after the giving of notice of such indemnification claim by the Indemnified
Party, notifies the Indemnified Party of its intention to assume that defense,
which notice acknowledges the Indemnifying Party's obligation to initially pay
any loss, cost or expense of the Indemnified Party incurred in connection
therewith, as provided hereunder (but which shall not be deemed an admission of
liability to indemnify the Indemnified Party under SECTION 10.2 or 10.3 hereof,
as applicable), and (ii) the Indemnifying Party may not settle or compromise
any such Action without the consent of the Indemnified Party (which consent may
not be unreasonably withheld) if (A) such settlement or compromise does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to the Indemnified Party of a release from all liability with respect
to such Action, (B) injunctive or other equitable relief would be imposed
against the Indemnified Party as a result thereof or (C) in the case of any
Action relating to the Indemnified Party's liability for Taxes, the effect of
such settlement or compromise would be to increase the liability of the
Indemnified Party for the payment of any Tax for any period. If the
Indemnifying Party so assumes the defense of any such Action (i) the
Indemnifying Party will pay all costs associated with, any damages awarded in,
and expenses arising from the settlement of such Action but, to the extent the
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Indemnifying Party believes that the Indemnified Party was not entitled to
indemnification of such costs, expenses and damages pursuant to SECTION 10.2 or
10.3, as applicable, notwithstanding its having assumed the defense of such
Action, the Indemnifying Party will be entitled to bring suit against the
Indemnified Party to recover such costs and damages after final determination
thereof, and (ii) the Indemnified Party will have the right to employ separate
counsel and to participate in (but not control) the defense, compromise or
settlement of the Action, but the fees and expenses of such counsel will be at
the expense of the Indemnified Party unless (A) the Indemnifying Party has
agreed to pay such fees and expenses or (B) the Indemnified Party has been
advised by its counsel that there are likely to be one or more defenses
available to it which are different from or additional to those available to
the Indemnifying Party, and in any such case that portion of the reasonable
fees and expenses of such separate counsel that are reasonably related to
matters covered by the indemnity provided in this SECTION 10 will be paid by
the Indemnifying Party. If the Indemnifying Party does not so assume the
defense of any Action, the Indemnified Party will be entitled to exercise
control of the defense, compromise or settlement of the Action. No Indemnified
Party will settle or compromise any such Action for which it is entitled to
indemnification under this Agreement without the prior written consent of the
Indemnifying Party (which consent may not be unreasonably withheld). The other
party will cooperate with the party assuming the defense, compromise or
settlement of any Action in accordance with this Agreement in any manner that
such party reasonably may request and the party assuming the defense,
compromise or settlement of any Action will keep the other party fully informed
in the defense of such Action.
10.5 Limitations on Indemnification - Seller. Seller will
not be liable for indemnification arising solely under SECTION 10.2(A)(I) for
(a) any losses, damages, liabilities, deficiencies or obligations of or to
Buyer or any other Indemnified Party or (b) any claims, actions, suits,
proceedings, demands, judgments, assessments, fines, interest, penalties, costs
and expenses (including settlement costs and reasonable legal, accounting,
experts' and other fees, costs and expenses) incident or relating to or
resulting from any of the foregoing (the items described in clauses (a) and (b)
collectively being referred to for purposes of this SECTION 10.5 as "Buyer
Damages") unless the amount of Buyer Damages for which Seller would, but for
the provisions of this SECTION 10.5, be liable exceeds, on an aggregate basis,
$3,000,000, in which case Seller will be liable for all such Buyer Damages,
which will be due and payable within 15 days after Seller's receipt of a
statement therefor.
10.6 Limitations on Indemnification - Buyer. Buyer will
not be liable for indemnification arising solely under SECTION 10.3(A)(I) for
(a) any losses, damages, liabilities, deficiencies or obligations of or to
Seller or any other Indemnified Party or (b) any claims, actions, suits,
proceedings, demands, judgments, assessments, fines, interest, penalties, costs
and expenses (including settlement costs and reasonable legal, accounting,
experts' and other fees, costs and expenses) incident or relating to or
resulting from any of the foregoing (the items described in clauses (a) and (b)
collectively being referred to for purposes of this SECTION 10.6 as "Seller
Damages") unless the amount of Seller Damages for which Buyer would, but for
the provisions of this SECTION 10.6, be liable exceeds, on an aggregate basis,
$3,000,000, in which case Buyer will be liable for all such Seller Damages,
which will be due and payable within 15 days after Buyer's receipt of a
statement therefor.
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10.7 Maximum Indemnification Liability. Notwithstanding
anything to the contrary in this Agreement except the following sentence: (a)
the aggregate liability of Seller in respect of all its indemnification
obligations pursuant to this SECTION 10, or of Buyer in respect of all its
indemnification obligations pursuant to this SECTION 10, will not exceed 50% of
the Final Purchase Price, and (b) no party will be entitled to recover
consequential damages pursuant to this SECTION 10 or otherwise in respect of
any breach of this Agreement. However, in no event will this Agreement
(including this Section) limit any liability of Seller or Buyer pursuant to the
Standstill, Indemnification and Contribution Agreement (including any amendment
thereto) nor will any liability thereunder be taken into account in applying
such 50% of Final Purchase Price limitation under this Section.
10.8 Exclusive Remedy. The rights of the parties under
SECTIONS 10.2 and 10.3 will be the exclusive remedy of the parties with respect
to breaches of representations, warranties, covenants and agreements contained
in or made pursuant to this Agreement or any Transaction Document (including
any xxxx of sale, instrument of assignment, instrument of assumption or other
document or certificate delivered pursuant to SECTION 8), except that the
preceding will in no event limit (a) the availability of specific performance
as specifically provided in this Agreement or any Transaction Document, (b) any
remedies available under the Standstill, Indemnification and Contribution
Agreement, as it may be amended or (c) any other remedies available under the
partnership agreements for TKR Cable, TKR Partners, KRC/CCC or NJFT with
respect to claims a party has a right to assert against the other pursuant to
this Agreement.
10.9 Subrogation. In the event that an Indemnifying Party
is obligated to indemnify an Indemnified Party pursuant to SECTIONS 10.2 and
10.3, the Indemnifying Party will, upon payment of such indemnity, be
subrogated to the specific rights of the Indemnified Party with respect to
those specific claims to which such paid indemnification relates.
SECTION 11. MISCELLANEOUS.
11.1 Joint and Several Obligations; Parties Obligated and
Benefited. All representations, warranties, covenants, agreements and
obligations of Seller under this Agreement are the joint and several
representations, warranties, covenants, agreements and obligations of KRC and
KRC-SNJ, KRC-NJFT and KRIC. Subject to the limitations set forth below, this
Agreement will be binding upon the parties and their respective assigns and
successors in interest and will inure solely to the benefit of the parties and
their respective assigns and successors in interest. Without the prior written
consent of Buyer, Seller will not assign any of its rights under this Agreement
or delegate any of its duties under this Agreement, provided, however, that
after Closing, Seller may assign all of the Seller's rights and obligations
hereunder to Xxxxxx-Xxxxxx, Inc.("KRI") upon notice to (but without the consent
of Buyer), and upon such assignment to and assumption by, KRI, of all such
Seller rights and obligations, Seller will be automatically released from any
further obligations hereunder.
11.2 Notices. Any notice, request, demand, waiver or
other communication required or permitted to be given under this Agreement will
be in writing and will be deemed to have been duly given only if delivered in
person or by first class, prepaid, registered or certified mail, or sent by
courier or, if receipt is confirmed, by telecopier:
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To Buyer at:
Tele-Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X'Xxxxxx
Telecopy: (000) 000-0000
With a copy similarly addressed to the attention of
Legal Department.
And a copy to:
Xxxxxxx & Xxxxxx L.L.C.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
To Seller at:
c/o Xxxxxx-Xxxxxx Cablevision, Inc.
Xxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Mr. Xxxx Xxxxx
Telecopy: (000) 000-0000
With a copy similarly addressed to the attention of:
General Counsel and a copy to:
Xxxxxx Xxxxxxx & Xxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this SECTION 11.2. All
notices will be deemed to have been received on the date of delivery or on the
third Business Day after mailing in accordance with this Section, except that
any notice of a change of address will be effective only upon actual receipt.
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11.3 Attorneys' Fees. Without duplication of any amounts
payable under SECTION 10.2, 10.3, or 10.4 in the event of any action or suit
based upon or arising out of any alleged breach by any party of any
representation, warranty, covenant or agreement contained in this Agreement,
the prevailing party will be entitled to recover reasonable attorneys' fees and
other costs of such action or suit from the other party.
11.4 Right to Specific Performance. Each party
acknowledges that the unique nature of the transactions contemplated by this
Agreement renders money damages an inadequate remedy for the breach by either
party of its obligations under this Agreement, and each party agrees that in
the event of such breach, the nonbreaching party will upon proper action
instituted by it, be entitled to a decree of specific performance of this
Agreement.
11.5 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.
11.6 Captions. The captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
11.7 CHOICE OF LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES UNDER IT WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
CONFLICTS OF LAWS RULES OF DELAWARE.
11.8 Terms. Terms used with initial capital letters will
have the meanings specified, applicable to both singular and plural forms, for
all purposes of this Agreement. The word "include" and derivatives of that
word are used in this Agreement in an illustrative sense rather than limiting
sense.
11.9 Rights Cumulative. All rights and remedies of each
of the parties under this Agreement will be cumulative, and the exercise of one
or more rights or remedies will not preclude the exercise of any other right or
remedy available under this Agreement or applicable law.
11.10 Further Actions. Seller and Buyer will execute and
deliver to the other, from time to time at or after the Closing, for no
additional consideration and at no additional cost to the requesting party,
such further assignments, certificates, instruments, records, or other
documents, assurances or things as may be reasonably necessary to give full
effect to this Agreement and to allow each party fully to enjoy and exercise
the rights accorded and acquired by it under this Agreement.
11.11 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.
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11.12 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 Agreed Rate.
11.13 Counterparts. This Agreement may be executed in
counterparts, each of which will be deemed an original.
11.14 Entire Agreement. This Agreement (including the
Schedules and Exhibits referred to in this Agreement, which are incorporated in
and constitute a part of this Agreement) and the Transaction Documents and the
Standstill, Indemnification and Contribution Agreement, as amended, contain the
entire agreement of the parties and supersede all prior oral or written
agreements and understandings with respect to the subject matter (including the
letter of intent dated January 3, 1996 between TCI Communications, Inc. and
KRC). This Agreement may not be amended or modified except by a writing signed
by the parties.
11.15 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.
11.16 Construction. This Agreement has been negotiated by
Buyer and Seller and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement will not
apply in any construction or interpretation of this Agreement.
11.17 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.
11.18 Waiver of Bulk Sales Law. Buyer waives compliance by
Seller with any bulk sales laws or similar laws in connection with the
transactions contemplated by this Agreement.
11.19 Third Party Beneficiaries. This Agreement is not
intended and will not be construed to confer upon any persons, other than the
parties to this Agreement, the Indemnified Parties and KRI (solely with respect
to receipt of the $40 million to be paid to it by Buyer at Closing in
accordance with the terms of this Agreement), any rights or remedies hereunder
(it being understood that this SECTION 11.19 shall not prejudice any
subrogation rights that KRI may have under the Guaranty).
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The parties have executed this Asset Purchase Agreement as of
the day and year first above written.
SELLER:
Xxxxxx-Xxxxxx Cablevision, Inc. KRC-NJFT, Inc.
By: /s/ Xxxx Xxxxx By: /s/ Xxxx Xxxxx
------------------------------ ---------------------------
Name: Xxxx Xxxxx Name: Xxxx Xxxxx
------------------------------ ---------------------------
Title: President Title: President
------------------------------ ---------------------------
KRC-SNJ, Inc. Xxxxxx-Xxxxxx Investment Company
By: /s/ Xxxx Xxxxx By: /s/ Xxxx Xxxxx
------------------------------ ---------------------------
Name: Xxxx Xxxxx Name: Xxxx Xxxxx
------------------------------ ---------------------------
Title: President Title: President
------------------------------ ---------------------------
BUYER:
Tele-Communications, Inc.
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
---------------------------------------
Title: Chief Executive Officer and President
---------------------------------------
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