RIVERSIDE
________________________________________________________________
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AMERICAN CABLE TV INVESTORS 5, LTD.
AND
CENTURY COMMUNICATIONS CORP.
DATED AS OF
August 12, 1998
__________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I.......................................................1
1. Definitions................................................1
Accounts Receivable........................................1
Adjustment Time............................................1
Affiliate..................................................1
Alternative Transaction....................................1
Assets.....................................................2
Assumed Liabilities........................................2
Basic Services.............................................2
Basic Subscriber Rate......................................2
Best of Seller's Knowledge.................................2
Business...................................................2
Business Day...............................................2
Buyer......................................................2
Buyer Financial Statement..................................2
Buyer Interim Financial Statement..........................2
Cable Act..................................................2
Closing....................................................3
Closing Date...............................................3
Code.......................................................3
Communications Act.........................................3
Consents...................................................3
Copyright Act..............................................3
Deposit....................................................3
Employer...................................................3
Employer Plans.............................................3
Encumbrance................................................3
Environmental Law..........................................3
Equipment..................................................3
Equivalent Basic Subscribers...............................3
ERISA......................................................4
Escrow Agent...............................................4
Escrow Agreement...........................................4
Exchange Act...............................................4
Excluded Assets............................................4
Excluded Liabilities.......................................4
Exhibits...................................................4
Expanded Basic Services....................................4
FCC........................................................5
Final Adjustments Report...................................5
i
Franchise Areas............................................5
GAAP.......................................................5
General Partner............................................5
Governmental Authority.....................................5
Governmental Permits.......................................5
Hazardous Substances.......................................5
Homes Passed...............................................5
HSR Act....................................................6
Indemnity Escrow Agreement.................................6
Intangibles................................................6
IRS........................................................6
Joint Venture..............................................6
Legal Requirement..........................................6
Limited Partners...........................................6
Management Agreement.......................................6
Management Agreement Termination Date......................6
Partnership Agreement......................................6
Pay TV.....................................................7
Permitted Encumbrances.....................................7
Person.....................................................7
Preliminary Adjustments Report.............................7
Prime Rate.................................................7
Purchase Price.............................................7
Real Property..............................................7
Regulatory Requirement.....................................7
Required Consents..........................................7
Schedules..................................................7
SEC........................................................7
Securities Act.............................................7
Seller.....................................................7
Seller Contracts...........................................8
Seller Financial Statements................................8
Seller's Escrow............................................8
System.....................................................8
Taking.....................................................8
Tax Return.................................................8
Taxes......................................................8
TCI........................................................8
TCI........................................................8
Telecom Act................................................8
Termination Date...........................................8
WARN Act...................................................8
ARTICLE II......................................................8
ii
2. Purchase and Sale of Assets................................8
2.1 Purchase and Sale of Assets.................8
2.2 Time and Place of Closing...................9
ARTICLE III.....................................................9
3. Consideration..............................................9
3.1 Consideration for the Assets................9
3.2 Purchase Price Prorations...................9
3.3 Purchase Price Adjustments.................10
3.4 Preliminary and Final Settlements..........11
3.5 Disputed Liabilities.......................12
3.6 Allocation of Purchase Price...............12
ARTICLE IV.....................................................13
4. Assumed Liabilities and Excluded Assets...................13
4.1 Assignment and Assumption..................13
4.2 Excluded Assets............................13
ARTICLE V......................................................14
5. Representations and Warranties of Seller..................14
5.1 Organization and Qualification.............14
5.2 Authority and Validity.....................14
5.3 Consents and Approvals; No Violation.......15
5.4 Complete Systems...........................15
5.5 Title......................................15
5.6 Real Property..............................15
5.7 Environmental Matters......................16
5.8 Compliance with Law; Governmental Permits..16
5.9 Seller Contracts...........................17
5.10 Copyright Compliance.......................17
5.11 Financial Statements.......................18
5.12 Legal Proceedings..........................18
5.13 Employment Matters.........................18
5.14 System Information.........................20
5.15 Finders and Brokers........................20
5.16 Tax Matters................................20
ARTICLE VI.....................................................20
6. Buyer's Representations and Warranties....................20
6.1 Organization and Qualification.............20
6.2 Authority and Validity.....................20
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6.3 No Breach or Violation.....................21
6.4 Litigation.................................21
6.5 Financial Statements.......................21
6.6 Adequate Financing.........................22
6.7 Finders and Brokers........................22
6.8 Qualification of Buyer.....................22
ARTICLE VII....................................................22
7. Additional Covenants......................................22
7.1 Access to Premises and Records.............22
7.2 Continuity and Maintenance of Operations;
Financial Statements.......................22
7.3 Employee Matters...........................23
7.4 Consents...................................25
7.5 HSR Notification...........................26
7.6 Notification of Certain Matters............26
7.7 Risk of Loss; Condemnation.................26
7.8 Adverse Changes............................27
7.9 Action By Limited Partners.................27
7.10 No Solicitation............................27
7.11 Sales and Transfer Taxes and Fees..........28
7.12 Commercially Reasonable Efforts............28
7.13 Title Insurance............................29
7.14 Management of the System...................29
ARTICLE VIII...................................................29
8. Conditions Precedent to Obligations of Buyer..............29
8.1 HSR Act....................................29
8.2 Governmental or Legal Action...............29
8.3 Accuracy of Representations and Warranties.30
8.4 Performance of Agreements..................30
8.5 No Material Adverse Change.................30
8.6 Consents...................................30
8.7 Transfer Documents.........................30
8.8 Opinions of Seller's Counsel...............30
8.9 Opinions of Seller's FCC Counsel...........30
8.10 Discharge of Liens.........................30
8.11 Additional Documents and Acts..............31
8.12 Certificates...............................31
8.13 Assignment and Assumption..................31
8.14 Release of Deposit.........................31
ARTICLE IX.....................................................31
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9. Conditions Precedent to Obligations of Seller.............31
9.1 HSR Act....................................31
9.2 Governmental or Legal Actions..............31
9.3 Accuracy of Representations and Warranties.31
9.4 Performance of Agreements..................32
9.5 Consents...................................32
9.6 Opinions of Buyer's Counsel................32
9.7 Limited Partner Approval...................32
9.8 Payment of Purchase Price..................32
9.9 Assumption of Liabilities..................32
9.10 Additional Documents and Acts..............32
9.11 Certificate................................32
9.12 Fairness Opinion...........................32
9.13 Assignment and Assumption..................32
9.14 Release of Deposit.........................32
ARTICLE X......................................................33
10. Termination...............................................33
10.1 Events of Termination......................33
10.2 Manner of Exercise.........................34
10.3 Effect of Termination......................34
10.4 Liquidated Damages.........................34
ARTICLE XI.....................................................35
11. Nature and Survival of Representations, Warranties and
Agreements................................................35
11.1 Nature of Representations, Warranties and
Agreements.................................35
11.2 Survival of Representations and Warranties.35
11.3 Time Limitations...........................35
11.4 Limitations as to Amount...................35
ARTICLE XII....................................................36
12. Indemnification...........................................36
12.1 Rights to Indemnification..................36
12.2 Procedure for Indemnification..............36
ARTICLE XIII...................................................37
13. Miscellaneous.............................................37
13.1 Parties Obligated and Benefitted...........37
13.2 Press Releases.............................37
13.3 Notices....................................38
13.4 Waiver.....................................39
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13.5 Captions..................................39
13.6 CHOICE OF LAW.............................39
13.7 Nonrecourse...............................39
13.8 Terms.....................................39
13.9 Rights Cumulative.........................39
13.10 Further Actions...........................39
13.11 Time......................................39
13.12 Expenses..................................39
13.13 Specific Performance......................40
13.14 Schedules.................................40
13.15 Counterparts..............................40
13.16 Entire Agreement..........................40
13.17 Severability..............................40
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EXHIBITS
Exhibit A Geographic Areas of Seller's Business
Exhibit B Form of Escrow Agreement
Exhibit C Form of Indemnity Escrow Agreement
Exhibit D Form of Engagement Letter
Exhibit E Form for Opinion of Seller's Counsel
Exhibit F Form for Opinion of FCC Counsel
Exhibit G Form for Opinion of Buyer's Counsel
SCHEDULES
Schedule 1.1 Subscriber Rates
Schedule 1.2 Consents
Schedule 1.3 Equipment
Schedule 1.4 Franchise Areas
Schedule 1.5 Governmental Permits
Schedule 1.6 Permitted Encumbrances
Schedule 1.7 Real Property
Schedule 1.8 Seller Contracts
Schedule 1.9 System
Schedule 4.2 Excluded Assets
Schedule 5.3(b) Violations of Partnership Agreement and
Legal Requirements
Schedule 5.4 Complete Systems
Schedule 5.5 Encumbrances on Seller's Title
Schedule 5.12 Legal Proceedings
Schedule 5.13(c) Employment Matters
Schedule 5.13(d) Employees
Schedule 5.13(e) Employer Plans
Schedule 5.14 System Information
Schedule 5.16 Taxes
Schedule 6.3(a) Consents to be Obtained or Waived by
Closing Date
vii
ASSET PURCHASE AGREEMENT
________________________
This Asset Purchase Agreement ("Agreement") is made as
of the 12th day of August, 1998, by and between AMERICAN CABLE TV
INVESTORS 5, LTD., a Colorado limited partnership ("Seller"), and
CENTURY COMMUNICATIONS CORP., a Texas corporation ("Buyer").
R E C I T A L S:
_ _ _ _ _ _ _ _
A. Seller is engaged in the business of providing
cable television service to subscribers in and around the
geographic areas set forth on Exhibit A.
B. Buyer desires to purchase and Seller desires to
sell the assets of Seller designated in this Agreement used or
held for use in connection with that business, upon the terms and
subject to the conditions set forth in this Agreement.
Accordingly, the parties agree as follows:
ARTICLE I
1. Definitions.
"Accounts Receivable" shall mean all accounts
receivable of Seller representing amounts owed to Seller in
connection with its operation of the Business through the
Adjustment Time.
"Adjustment Time" shall have the meaning set forth in
Section 3.2.
"Affiliate" shall mean, 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.
"Alternative Transaction" shall mean any transaction
which could result in the transfer of control over, or ownership
of, all or substantially all the Assets, including (a) any merger
or consolidation of Seller in which another Person or group of
Persons acquires 50% or more of the partnership interests in
Seller or the equity interests of the surviving entity, as the
case may be, (b) any tender offer or exchange offer for
partnership interests in Seller which, if consummated, would
result in a Person or group of Persons (other than the existing
partners in such entities as of the date of this Agreement)
owning 50% or more of the partnership interests in
Seller or (c) any sale or other disposition of all or substantially all the
Assets.
"Assets" shall mean all properties, privileges, rights,
interests and claims, real and personal, tangible and intangible,
of every type and description that are owned, leased, used or
held for use in the Business in which Seller has any right, title
or interest or in which Seller acquires any right, title or inter
est on or before the Closing Date, including Accounts Receivable,
Governmental Permits, Intangibles, Seller Contracts, Equipment
and Real Property but excluding any Excluded Assets and any
Assets disposed of by Seller in the ordinary course of business
prior to the Closing Date.
"Assumed Liabilities" shall have the meaning set forth
in Section 4.1.
"Basic Services" shall mean the lowest tier of cable
television programming sold to subscribers of the System for
which a subscriber served by the System pays a fixed monthly fee
to Seller, excluding Expanded Basic Services, Pay TV and any
charges for additional outlets and installation fees and revenues
derived from the rental of converters, remote control devices and
other like charges for equipment.
"Basic Subscriber Rate" shall mean, for the System, the
predominant monthly fees and charges derived from the provision
of Basic Services to single family households, as of June 30,
1998, as set forth on Schedule 1.1.
"Best of Seller's Knowledge" shall mean the actual
knowledge of Xxxxxx Xxxxx, Xxxxxx Xxxxxxx and Xxxx XxXxxxxx.
"Business" shall mean the cable television business con
ducted by Seller on the date of this Agreement through the System
in and around the Franchise Areas.
"Business Day" shall mean 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.
"Buyer" shall mean the Person identified as such in the
preamble to this Agreement.
"Buyer Financial Statement" shall have the meaning set
forth in Section 6.5.
"Buyer Interim Financial Statement" shall have the
meaning set forth in Section 6.5.
"Cable Act" shall have the meaning set forth in Sec
tion 5.8.
"Closing" shall mean the consummation of the
transactions contemplated by this Agreement, as described in
Article II.
2
"Closing Date" shall mean the date on which the Closing
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Communications Act" shall have the meaning set forth
in Section 5.8(c).
"Consents" shall mean any registration with, consent or
approval of, notice to, or action by any Person or Governmental
Authority required to permit the transfer of the Assets to Buyer
or permit Seller to perform any of its other obligations under
this Agreement, as set forth on Schedule 1.2.
"Copyright Act" shall mean Title 17 of the United
States Code, as amended, and all rules and regulations
thereunder.
"Deposit" shall have the meaning set forth in Sec
tion 3.1.
"Employer" shall have the meaning set forth in Sec
tion 5.13(a).
"Employer Plans" shall have the meaning set forth in
Section 5.13(e).
"Encumbrance" shall mean 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, encroach
ments, easements, rights of entry, restrictive covenants, leases
and licenses).
"Environmental Law" shall mean 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 (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.
"Equipment" shall mean all electronic devices, trunk
and distribution coaxial and optical fiber cable, amplifiers,
power supplies, conduit, vaults and pedestals, grounding and pole
hardware, subscriber's devices (including converters, encoders,
transformers behind television sets and fittings), headend
hardware (including origination, earth stations, transmission and
distribution system), test equipment, vehicles and other tangible
personal property owned, leased, used or held for use by Seller
in connection with the Business, including the items described on
Schedule 1.3, but specifically excluding any equipment owned by
TCI or its Affiliates (other than Seller) and used by Seller as
identified by an asterisk on Schedule 1.3.
"Equivalent Basic Subscribers" shall mean, with respect
to each Franchise Area, as of any date, the number of active
customers for Basic Services either in a single household, a
3
commercial establishment or a multi-unit dwelling (including a
hotel unit); provided, however, that the number of customers in a
commercial establishment or multi-unit dwelling that obtain
service on a "bulk-rate" basis shall be determined for each
Franchise Area by dividing the gross bulk-rate xxxxxxxx for Basic
Services and Expanded Basic Services (but excluding xxxxxxxx from
a la carte tiers or premium services, installation or other non-
recurring charges, converter rental or any outlet or connection
other than the first outlet or connection, pass-through charges
for sales taxes, line-itemized franchise fees, fees charged by
the FCC and the like) attributable to such commercial
establishment or multi-unit dwelling during the most recent
billing period ended prior to the date of calculation (but
excluding xxxxxxxx in excess of a single month's charge) by the
rate charged at the date of determination to individual
households for the highest level of Basic Services and Expanded
Basic Services offered in the Franchise Area, such rate not to be
less than the rate for such Franchise Area set forth on Schedule
1.1 (excluding xxxxxxxx from a la carte tiers or premium
services, installation or other non-recurring charges, converter
rental, pass-through charges for sales taxes, line-itemized
franchise fees, fees charged by the FCC and the like). For
purposes of this definition, (i) an "active customer" shall mean,
as of any date, any person, commercial establishment or multi-
unit dwelling that is paying for and receiving Basic Services
from the System in that Franchise Area who has an account that is
not more than 60 days past due (except for past due amounts of
$10.00 or less, provided such account is otherwise current) but
excluding any person, commercial establishment or multi-unit
dwelling that as of the date of calculation has not paid in full
the charges for at least one month of the services ordered and
(ii) the number of days a customer account is past due shall be
calculated from the first day of the period for which the
applicable billing relates.
"ERISA" shall have the meaning set forth in Sec
tion 5.13(b).
"Escrow Agent" shall have the meaning set forth in Sec
tion 3.1.
"Escrow Agreement" shall have the meaning set forth in
Section 3.1.
"Exchange Act" shall mean the Securities and Exchange
Act of 1934, as amended.
"Excluded Assets" shall have the meaning set forth in
Section 4.2.
"Excluded Liabilities" shall have the meaning set forth
in Section 4.1(b).
"Exhibits" shall mean the exhibits prepared and
delivered pursuant to this Agreement.
"Expanded Basic Services" shall mean any video
programming provided over the System, regardless of service tier,
other than Basic Services, any new product tier and video
programming offered on a per channel or per program basis, for
which a subscriber served by the System pays a fixed monthly fee
to Seller, excluding Pay TV and any charges for additional
outlets and installation fees and revenues derived from the
rental of converters, remote control devices and other like
charges for equipment.
4
"FCC" shall have the meaning set forth in Sec
tion 5.8(c).
"Final Adjustments Report" shall have the meaning set
forth in Section 3.4(b).
"Franchise Areas" shall mean those areas in which
Seller is authorized under one or more Governmental Permits
issued by the applicable franchising authorities to provide cable
television service to subscribers located in such areas through
the ownership and operation of the System, as set forth on
Schedule 1.4.
"GAAP" shall mean generally accepted accounting
principles as in effect in the United States of America on the
date of this Agreement.
"General Partner" shall mean IR-TCI Partners V, L.P.,
the general partner of Seller.
"Governmental Authority" shall mean any of the
following: (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.
"Governmental Permits" shall mean all franchises,
authorizations, permits, licenses, easements, registrations,
leases, variances and similar rights obtained from any
Governmental Authority which authorize or are required in
connection with the operation of the Business, including those
described on Schedule 1.5.
"Hazardous Substances" shall mean 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 laws, regulations or ordinances of federal,
state or applicable local governments, (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. 2601 et seq.,
(d) any materials or substances designated as "hazardous
substances" pursuant to the Clean Water Act, 33 U.S.C. 1251
et seq., (e) "economic poison," as defined in the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. 135
et seq., (f) "chemical substance," "new chemical substance" or
"hazardous chemical substance or mixture" pursuant to the Toxic
Substances Control Act, referred to above, (g) "hazardous
substances" pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. 9601 et seq. and
(h) "hazardous waste" pursuant to the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq.
"Homes Passed" shall mean, with respect to the System
and as of June 30, 1998,
5
the total of (a) the number of single family residences capable of being
serviced without further line construction, (b) the number of units in
multi-family residential buildings capable of being serviced without further
line construction and not then governed by bulk-service agreements and
(c) the number of bulk service agreements regardless of the number of units
serviced or the equivalent billing units.
"HSR Act" shall have the meaning set forth in Sec
tion 7.6.
"Indemnity Escrow Agent" shall mean The Chase Manhattan
Bank.
"Indemnity Escrow Agreement" shall mean the Indemnity
Escrow Agreement, to be entered into pursuant to Section 3.1,
among Seller, Buyer and the Indemnity Escrow Agent, in the form
set forth as Exhibit C.
"Intangibles" shall mean all general intangibles,
including subscriber lists, claims (excluding any claims relating
to Excluded Assets), patents, copyrights and goodwill, if any,
owned, used or held for use by Seller in connection with the
Business.
"IRS" shall mean the Internal Revenue Service.
"Joint Venture" shall mean a joint venture to be formed
by TCI and Buyer (or their respective affiliates) that will
combine multiple cable television systems in Southern California.
"Legal Requirement" shall mean 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.
"Limited Partners" shall mean the Persons who own or
hold units of limited partnership interests in Seller.
"Management Agreement" shall mean the agreement between
Seller and TCICA related to the operation of the System and the
other cable systems owned by Seller.
"Management Agreement Termination Date" shall mean the
date on which the Management Agreement is terminated; provided,
that if TCI and Buyer enter into a management agreement pursuant
to Section 7.14(b), "Management Agreement Termination Date" shall
mean the date on which such management agreement is terminated.
"Partnership Agreement" shall mean the Amended and
Restated Limited Partnership Agreement of Seller, dated as of
January 1, 1987, by and between IR-TCI Partners V, L.P. (formerly
known as IR-Xxxxxxx Partners V, L.P.), as the general partner,
and Xxxxx X. Xxxxx, as the initial limited partner.
6
"Pay TV" shall mean premium programming services
selected by and sold to subscribers of the System for monthly
fees in addition to the fee for Basic Services.
"Permitted Encumbrances" shall mean the following:
(a) liens for taxes, assessments and governmental charges not yet
due and payable; (b) zoning laws and ordinances and similar Legal
Requirements; (c) rights reserved to any Governmental Authority
to regulate the affected property; (d) as to leased Assets,
interests of lessors and Encumbrances affecting the interests of
the lessors; (e) the Encumbrances described on Schedule 1.6; and
(f) any liens, easements, rights-of-way, servitudes, permits,
leases, restrictions and imperfections or irregularities in title
that do not in any material respect, individually or in the
aggregate, affect or impair the value or use of the affected
Asset as it is currently being used by Seller.
"Person" shall mean any natural person, corporation,
partnership, trust, unincorporated organization, association,
limited liability company, Governmental Authority or other
entity.
"Preliminary Adjustments Report" shall have the meaning
set forth in Section 3.4(a).
"Prime Rate" shall mean the rate of interest quoted
from time to time in The Wall Street Journal as the prime rate.
"Purchase Price" shall have the meaning set forth in
Section 3.1.
"Real Property" shall mean all Assets consisting of
interests in real property (including, to the extent applicable,
improvements, fixtures and appurtenances), including the fee and
leasehold interests described on Schedule 1.7, but specifically
excluding any fee or leasehold interest identified by an asterisk
on Schedule 1.7.
"Regulatory Requirement" shall mean any filing required
pursuant to the Securities Act, the Exchange Act, the HSR Act,
state securities laws (including, but not limited to, state "blue
sky" laws) and state corporate laws (including, but not limited
to, takeover statutes).
"Required Consents" shall mean the Consents designated
as such on Schedule 1.2 by an asterisk.
"Schedules" shall mean the schedules prepared and
delivered pursuant to this Agreement.
"SEC" shall mean the Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Seller" shall mean the Person indicated as such in the
preamble to this Agreement.
7
"Seller Contracts" shall mean all contracts, agreements
and leases, other than those that are Governmental Permits, to
which Seller is a party and pertain to the ownership, operation
or maintenance of the Assets or the Business, including those
described on Schedule 1.8.
"Seller Financial Statements" shall have the meaning
set forth in Section 5.11.
"Seller's Escrow" shall have the meaning set forth in
Section 3.1.
"System" shall mean a cable television distribution
system operated in the conduct of the Business, consisting of
subscriber drops and associated electronic and other equipment as
set forth on Schedule 1.9, but which is not capable of being
operated as an independent system without connection to one or
more headends or interconnections to other systems.
"Taking" shall have the meaning set forth in Sec
tion 7.7(b).
"Tax Return" shall mean any return, report, information
return or other document (including any related or supporting
information) filed or required to be filed with any taxing
authority in connection with the determination, assessment,
collection, administration or imposition of any Taxes.
"Taxes" shall mean all taxes, charges, fees, liens,
imposts, duties or other assessments including, but not limited
to, income, withholding, excise, employment, property, sales,
franchise, use and gross receipt taxes, imposed by the United
States or any state, county, local or foreign government or any
subdivision thereof. Such term shall also include any interest,
penalties or additions attributable to such assessments.
"TCI" shall mean TCI Communications, Inc., a Delaware
corporation.
"TCICA" shall mean TCI Cablevision Associates, Inc., a
Delaware corporation, an indirect wholly-owned subsidiary of TCI.
"Telecom Act" shall have the meaning set forth in
Section 5.8(e).
"Termination Date" shall mean the last Business Day of
the calendar month in which the date that is 210 days from the
date of this Agreement occurs.
"WARN Act" shall mean the Worker Adjustment and
Retraining Notification Act.
ARTICLE II
2. Purchase and Sale of Assets.
2.1 Purchase and Sale of Assets. Subject to the
satisfaction of the conditions
8
to each party's obligations set forth in Articles VIII and IX (or, with
respect to any condition not satisfied, the waiver thereof by the party or
parties for whose benefit the condition exists), Seller shall sell, assign,
transfer and deliver to Buyer all of Seller's right, title and interest in,
and Buyer shall purchase, acquire, accept and pay for, the Assets.
2.2 Time and Place of Closing. Subject to the terms
and conditions of this Agreement, the Closing shall take place at
10:00 a.m. New York City time on the last Business Day of the
calendar month in which the conditions to Closing as set forth in
Sections 8.1, 8.6, 9.1, 9.5 and 9.7 have been satisfied or
waived, in New York, New York at the offices of Xxxx, Scholer,
Fierman, Xxxx & Handler, LLP, or at such other time or place as
the parties may agree.
ARTICLE III
3. Consideration.
3.1 Consideration for the Assets. The aggregate
consideration for the Assets shall consist of (i) an amount equal
to $33,000,000, subject to proration as set forth in Section 3.2
and adjustment as set forth in Section 3.3 (the "Purchase Price")
and (ii) the assumption by Buyer of the Assumed Liabilities. The
Purchase Price shall be payable as follows: (a) $825,000 (the
"Deposit"), payable concurrently with the execution and delivery
of this Agreement in cash by means of wire or interbank transfer
in immediately available funds to the trust account of Xxxx,
Scholer, Fierman, Xxxx & Handler, LLP (the "Escrow Agent"), to be
held, administered and distributed for the respective benefits of
the parties hereto in accordance with the terms of this Agreement
and the Escrow Agreement among Seller, Buyer and the Escrow Agent
dated the date of this Agreement (the "Escrow Agreement") in the
form set forth as Exhibit B attached hereto, (b) $30,675,000
payable by Buyer to Seller, or Seller's designee, at Closing in
cash by means of wire or interbank transfer in immediately
available funds at Closing and (c) $1,500,000 (the "Seller's
Escrow") payable by Buyer to the Indemnity Escrow Agent at
Closing in cash by means of wire or interbank transfer in
immediately available funds, to be held, administered and
distributed for the respective benefits of the parties hereto in
accordance with the terms of the Indemnity Escrow Agreement. At
Closing, Seller and Buyer shall direct the Escrow Agent to
release the Deposit to Seller, or Seller's designee, in
accordance with the terms of the Escrow Agreement.
3.2 Purchase Price Prorations. (a) All revenues
(other than Accounts Receivable being purchased by Buyer
hereunder) and all expenses arising from the operations of the
Business up until 11:59 p.m. on the Closing Date (the "Adjustment
Time"), including, but not limited to, pole rental fees, rental
or other charges payable in respect of the Seller Contracts,
sales and use taxes payable with respect to cable television
service and equipment, which shall not include sales or use taxes
arising out of the consummation of the transaction contemplated
hereunder, power and utility charges, real and personal property
taxes and assessments levied against the Assets, applicable
franchise, copyright or other fees, sales and service charges,
wages, payroll taxes and payroll expenses (excluding accrued
vacation pay) of employees of Employer who primarily perform
services in connection with the operation of the Business as of
the Closing
9
Date who are designated by Buyer as Desired Employees pursuant to
Section 7.3, and other prepaid and deferred items shall be prorated between
Buyer and Seller as of the Adjustment Time in accordance with GAAP and the
principle that Seller shall receive all revenues (other than Accounts
Receivable being purchased by Buyer hereunder) and shall be responsible for
all expenses, costs and liabilities allocable to the period prior to
the Adjustment Time and Buyer shall receive all revenues and
shall be responsible for all expenses, costs and liabilities
allocable to the period after the Adjustment Time.
(2) The amount of each item of revenue prorated
under subsection (a) above, to a party which has not received,
and under the terms of this Agreement will not receive, such
revenue shall be deemed a charge against the other party. The
amount of any item of cost or expense prorated under subsection
(a) above to a party which has not paid, and under the terms of
this Agreement will not pay, such cost or expense shall be deemed
a charge against such party. If the aggregate charges allocated
to Seller as set forth in this Section 3.2(b) exceed the
aggregate charges allocated to Buyer as set forth in this Sec
tion 3.2(b), the Purchase Price shall be decreased by an amount
equal to the difference between the aggregate charges allocated
to Seller and the aggregate charges allocated to Buyer. If the
aggregate charges allocated to Buyer as set forth in this Sec
tion 3.2(b) exceed the aggregate charges allocated to Seller as
set forth in this Section 3.2(b), the Purchase Price shall be
increased by an amount equal to the difference between the
aggregate charges allocated to Buyer and the aggregate charges
allocated to Seller.
3.3 Purchase Price Adjustments. (a) The Purchase
Price shall be increased by an amount equal to the aggregate of
the following:
(1) the face amount of all Accounts
Receivable which, as of the Closing Date, are outstanding for a
period of not more than 60 days after their respective invoice
dates; and
(2) to the extent not included in the
prorations to the Purchase Price as set forth in Section 3.2, the
dollar amount of all advance payments to, or deposits with, third
parties relating to the Business which, as of the Closing Date,
are for the account of Seller or are security for Seller's
performance of its obligations under any agreement relating to
the Business or any Assets, including, but not limited to,
deposits made with lessors and deposits for utilities.
(2) The Purchase Price shall be decreased by an
amount equal to the sum of (i) the dollar amount of the remaining
balance, as of the Closing Date, of all advance payments to, or
monies of third parties on deposit with, Seller relating to the
Business, including advance payments and deposits by customers
served by the Business for converters, encoders, decoders, cable
service and related sales, and (ii) if, as of the first day of
the month in which the Closing occurs, the aggregate number of
Equivalent Basic Subscribers served by the System is less than
18,853, an amount equal to (1) the difference between 18,853 and
the aggregate number of Equivalent Basic Subscribers served by
the System as of the first day of the month during which the
Closing occurs times (2) $1,750.
10
3.4 Preliminary and Final Settlements. Preliminary
and final adjustments to the Purchase Price will be determined as
follows:
(1) At least five Business Days prior to the
Closing Date, Seller will deliver to Buyer a report (the
"Preliminary Adjustments Report"), prepared in good faith and on
a reasonable basis, setting forth in reasonable detail a pro
forma determination as of the Closing Date of the prorations set
forth in Section 3.2 and the adjustments set forth in Sec
tion 3.3. The Preliminary Adjustments Report shall be certified
by an authorized officer of the general partner of the General
Partner to have been prepared in good faith and on a reasonable
basis.
(2) Within 60 days after the Closing Date, Seller
will deliver to Buyer a report (the "Final Adjustments Report"),
prepared in good faith and on a reasonable basis, setting forth
in reasonable detail the final determination of the prorations
set forth in Section 3.2 and the adjustments set forth in Sec
tion 3.3. The Final Adjustments Report shall make such changes
to the Preliminary Adjustments Report as are necessary to cover
those prorations or adjustments which (i) were estimated or were
not calculated as of the Closing Date in the Preliminary
Adjustments Report and (ii) were adjusted in the Preliminary
Adjustments Report and which require subsequent adjustment. The
Final Adjustments Report shall be certified by an authorized
officer of the general partner of the General Partner to be true,
complete and correct as of the date it is delivered.
Buyer shall provide Seller with reasonable access to
all records which Buyer has in its possession and which are
necessary for Seller to prepare the Final Adjustments Report.
(3) Within 30 days after receipt of the Final
Adjustments Report, Buyer shall review the Final Adjustments
Report and notify Seller whether or not Buyer accepts all or any
of the prorations and adjustments set forth on the Final
Adjustments Report. If Buyer accepts the Final Adjustments
Report with respect to all prorations and adjustments contained
therein, Buyer or Seller, as appropriate, shall, within five
Business Days of such acceptance, make the following payments:
(i) if the Purchase Price calculated based on the Final
Adjustments Report is greater than the Purchase Price calculated
based on the Preliminary Adjustments Report, Buyer shall pay such
difference to Seller in cash by wire or interbank transfer in
immediately available funds, or (ii) if the Purchase Price
calculated based on the Final Adjustments Report is less than the
Purchase Price calculated based on the Preliminary Adjustments
Report, Seller shall pay such difference to Buyer in cash by wire
or interbank transfer in immediately available funds. In the
event any payment required by this Section 3.4(c) is not made
when due, Seller or Buyer, as appropriate, shall make the payment
required by this Section 3.4(c) with interest accruing from the
date such payment was due at the Prime Rate plus 5%.
(4) If Buyer in good faith objects to any
prorations and/or adjustments set forth on the Final Adjustments
Report, Buyer shall give notice thereof to Seller within 30 days
after receipt of the Final Adjustments Report, specifying in
reasonable detail the nature and extent of such disagreement and
Buyer and Seller shall have a period of 30 days from Seller's
receipt of such notice in which to resolve such disagreement. If
such notice of objection is not received by Seller within 30 days
after receipt of the Final Adjustments Report, it shall be deemed
that Buyer
11
has accepted the Final Adjustments Report with respect to all items set
forth therein and within three Business Days after the expiration of such
30-day period Buyer or Seller, as appropriate, shall make the payments
described in Section 3.4(c). Any disputed amounts which cannot be agreed
to by the parties within 30 days from Seller's receipt of Buyer's notice of
objection to any of the adjustments set forth in the Final Adjustments
Report shall be determined by the accounting firm of KPMG Peat Marwick in
accordance with the engagement letter set forth on Exhibit D attached hereto.
The engagement of and the determination by KPMG Peat Marwick (or any other
accounting firm designated by KPMG Peat Marwick as set forth below) shall be
binding on and shall be nonappealable by Seller and Buyer. If
for any reason KPMG Peat Marwick is unable to act in such
capacity, such determination will be made by any other nationally
recognized accounting firm selected by KPMG Peat Marwick. Seller
and Buyer will bear equally the fees and expenses payable to KPMG
Peat Marwick (or any other accounting firm designated by KPMG
Peat Marwick) in connection with such determination, unless (a)
the determination of KPMG Peat Marwick (or any other accounting
firm designated by KPMG Peat Marwick) results in a payment by
Seller to Buyer of an amount which exceeds 10 percent of the cash
amount paid by Buyer to Seller on the Closing Date, in which case
the fees and expenses payable to KPMG Peat Marwick (or any other
accounting firm designated by KPMG Peat Marwick) shall be paid by
Seller or (b) the determination of KPMG Peat Marwick (or any
other accounting firm designated by KPMG Peat Marwick) results in
no payment from Seller to Buyer or results in an additional
payment from Buyer to Seller, in which case the fees and expenses
payable to KPMG Peat Marwick (or any other accounting firm
designated by KPMG Peat Marwick) shall be paid by Buyer. Within
five Business Days after the determination by KPMG Peat Marwick
(or any other accounting firm designated by KPMG Peat Marwick) of
all disputed prorations and/or adjustments, Buyer or Seller, as
appropriate, shall make the payments described in Section 3.4(c)
as if the determinations of KPMG Peat Marwick (or any other
accounting firm designated by KPMG Peat Marwick) were included in
the Final Adjustments Report. In the event any payment required
by this Section 3.4(d) is not made when due, Seller or Buyer, as
appropriate, shall make the payment required by this Sec
tion 3.4(d) with interest accruing from the date such payment was
due at the Prime Rate plus 5%.
3.5 Disputed Liabilities. If a proration or
adjustment to the Purchase Price is made in Buyer's favor for any
liability assumed by Buyer but is in good faith being contested
by Seller as of the Closing Date, and if Buyer is relieved of
this liability, Buyer shall pay to Seller or its designee in cash
(by means of wire or interbank transfer in immediately available
funds) an amount equal to the unpaid portion of this liability
within five Business Days after the date Buyer is relieved of
this liability. In the event any payment required by this Sec
tion 3.5 is not made by Buyer when due, Buyer shall make the
payment required by this Section 3.5 with interest accruing from
the date such payment was due at the Prime Rate plus 5%.
3.6 Allocation of Purchase Price. The Purchase Price
shall be allocated among the classes of assets set forth in Sec
tion 1060 of the Code and the regulations thereunder in the
manner agreed to by the parties prior to the Closing. After the
Closing, Seller shall cooperate with Buyer in the preparation,
execution and filing with the IRS of all information returns and
supplements thereto required to be filed by the parties under Sec
tion 1060 of the Code relating to the allocation of such
consideration, and Seller and Buyer agree to file Form 8594 (or any
12
substitute therefor) when required by applicable law.
ARTICLE IV
4. Assumed Liabilities and Excluded Assets.
4.1 Assignment and Assumption. (a) Seller will
assign, and Buyer will assume and perform the following
liabilities and obligations of Seller arising out of the conduct
of the Business, but excluding the Excluded Liabilities
(collectively, the "Assumed Liabilities"): (A) Seller's
obligations to subscribers of the Business for (i) refunds of
subscriber deposits held by Seller as of the Closing Date in
respect of which a Purchase Price adjustment is made in Buyer's
favor under Section 3.3(b), (ii) refunds of subscriber advance
payments held by Seller as of the Closing Date for services to be
rendered by the System after the Closing Date, in respect of
which a Purchase Price adjustment is made in Buyer's favor under
Section 3.3(b) and (iii) the delivery of cable television service
to customers of the System after the Closing Date in accordance
with applicable Legal Requirements and Governmental Permits; (B)
obligations and liabilities in respect of which a Purchase Price
adjustment in Buyer's favor is made under Section 3.3 including,
but not limited to, accrued but unpaid real and personal property
taxes related to the Assets which correspond to a period of time
prior to the Adjustment Time, expenses accrued under Governmental
Permits and Seller Contracts which correspond to a period of time
prior to the Adjustment Time and certain accrued vacation pay;
(C) obligations accruing and relating to periods on or after the
Adjustment Time under Governmental Permits and Seller Contracts;
and (D) any taxes accrued on or after the Adjustment Time in
connection with the ownership of the Assets and the ownership of
the Assets and the operation of the Business.
(2) Buyer will not assume or have any
responsibility for any liabilities or obligations of Seller other
than the Assumed Liabilities (the "Excluded Liabilities").
4.2 Excluded Assets. (a) Excluded from the assets
which will be transferred from Seller to Buyer pursuant to this
Agreement (collectively, the "Excluded Assets") are all Seller's
right, title and interest in, to and under the following:
(i) all programming agreements relating to the Business; (ii) all
insurance policies and rights and claims thereunder (except as
otherwise provided in Section 7.7(a)); (iii) all bonds, letters
of credit, surety instruments and other similar items and any
cash surrender value thereunder; (iv) all cash, cash equivalents
and securities; (v) all trademarks, trade names, service marks,
service names, logos and similar proprietary rights used in the
Business; (vi) any contracts, licenses, authorizations,
agreements or commitments which are not assumed by Buyer pursuant
to this Agreement; (vii) personnel files; (viii) any asset or
properties owned by Seller that are not used in the Business;
(ix) all subscriber deposits and advance payments held by Seller
as of the Closing Date in connection with the operation of the
Business for which a Purchase Price adjustment is made in Buyer's
favor under Section 3.3(b); (x) all claims, rights and interests
in and to any refund for federal, state or local franchise,
income or other taxes or fees (including, but not limited to,
copyright fees) of any nature relating to the operation of the
Business prior to the Closing Date; (xi) the account books of
original entry, general ledgers and financial records used in
connection with the Business,
13
provided that for a period of three years after the Closing Date, Buyer
shall have access to and the right to copy, at its expense, during usual
business hours upon reasonable prior notice to Seller, portions of such
books and records that are relevant to Buyer's ownership and operation of
the System; (xii) all retransmission consent agreements relating
to the Business other than those set forth on Schedule 1.8;
(xiii) any assets owned or leased from a third party by TCI or
its Affiliates (other than Seller); and (xiv) those properties,
rights and interests set forth on Schedule 4.2, including,
without limitation, any right of Seller to the use of assets,
including the services of employees, of TCI or its Affiliates
(other than Seller).
(2) Notwithstanding Section 4.2(a)(v), until the
date which is 90 days after the Closing Date, to the extent
transferrable by TCI without the consent of any party, TCI shall,
on a non-exclusive basis and at no charge to Buyer, license to,
or grant to Buyer the use of, all trademarks, trade names,
service marks, service names, logos and similar proprietary
rights used in the Business.
ARTICLE V
5. Representations and Warranties of Seller.
Seller represents and warrants to Buyer as follows:
5.1 Organization and Qualification. Seller is a
limited partnership duly organized, validly existing and in good
standing under the laws of the state of Colorado and has all
requisite partnership power and authority to own, lease and use
the Assets as they are currently owned, leased and used and to
conduct the Business as it is currently conducted. Seller is
duly qualified or licensed to do business and is in good standing
under the laws of each jurisdiction where the Assets are located
and the Business is conducted, except any such jurisdiction where
the failure to be so qualified or licensed and in good standing
would not have a material adverse effect on the validity, binding
effect or enforceability of this Agreement, or on the ability of
Seller to perform its obligations under this Agreement.
5.2 Authority and Validity. Seller has full
partnership power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby by Seller have been duly
and validly authorized by all necessary action on the part of
Seller (other than, with respect to the sale of the Assets, the
approval of such transaction contemplated by this Agreement by
the Limited Partners). The General Partner has taken all
necessary action so that it may recommend that the Limited
Partners approve the transactions contemplated by this Agreement.
This Agreement has been duly and validly executed and delivered
by Seller and constitutes a valid and binding obligation of
Seller enforceable in accordance with its terms. Except for the
approval by the Limited Partners, no further partnership action
on the part of Seller is required in connection with the
consummation of the transactions contemplated by this Agreement.
14
5.3 Consents and Approvals; No Violation. (a) Except
for (i) the Consents, (ii) filings and consents which, if not
made or obtained, would not have a material adverse effect on the
System, the Business, Seller's ability to perform its obligations
under this Agreement or Buyer's ability to conduct the Business
after the Closing in substantially the same manner in which it is
currently conducted by Seller, (iii) the consent of the Limited
Partners with respect to the transactions contemplated by this
Agreement and (iv) the Regulatory Requirements, no consent,
waiver, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority is required to be
made or obtained by Seller in connection with the execution,
delivery and performance of this Agreement by Seller.
(2) Except as set forth on Schedule 5.3(b), the
execution, delivery and performance of this Agreement by Seller
do not and will not: (a) violate or conflict with any provision
of the Partnership Agreement; (b) violate any Legal Requirement;
or (c) (i) violate, conflict with or constitute a breach of or
default under (without regard to requirements of notice, passage
of time or elections of any Person), (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 Seller under, or (iv) result in the creation or
imposition of any Encumbrance under, any Seller Contract or any
other instrument evidencing any of the Assets or any instrument
or other agreement to which Seller is a party or by which Seller
or any of its assets is bound or affected, except such xxxxx
tions, conflicts, breaches, defaults, terminations, suspensions,
modifications, and accelerations which would not, individually or
in the aggregate, have a material adverse effect on the System,
the Business, or Seller's ability to perform its obligations
under this Agreement or Buyer's ability to conduct the Business
after the Closing in substantially the same manner in which it is
currently conducted by Seller.
5.4 Complete Systems. Except as otherwise set forth
on Schedule 5.4 and except for the Excluded Assets, the Assets
represent all other assets, properties, franchises, licenses,
permits, consents, certificates, authorities, operating rights,
leases, contracts, (with the exception of programming contracts
and retransmission consents which Buyer acknowledges may need to
be replaced in order for Buyer to continue to operate the
Business), agreements, commitments and arrangements reasonably
necessary for the conduct of the Business in the ordinary course
in the same manner as that in which such business is currently
conducted by Seller.
5.5 Title. Except as set forth on Schedule 5.5 and
for the Permitted Encumbrances, Seller has, and on the Closing
Date will have, good and marketable title to the Assets. The
Assets on the Closing Date will be free and clear of all
Encumbrances of any kind or nature, other than Permitted
Encumbrances.
5.6 Real Property. (a) All the Assets consisting of
interests in Real Property that are material to the conduct of
the Business are described on Schedule 1.7. Seller has valid
leasehold interests in Real Property leased by Seller under
written leases or subleases, correct and complete copies of which
have been made available to Buyer.
(2) All material easements, rights-of-way and
other rights which are
15
necessary in any material respect for Seller's current use of any Real
Property are valid and in full force and effect, and, to the Best of
Seller's Knowledge, Seller has not received any notice with respect to
the termination or breach of any of those rights.
5.7 Environmental Matters. (1) To the Best of
Seller's Knowledge, the Real Property complies in all material
respects with, and has previously been operated by Seller in
compliance in all material respects with, all Environmental Laws.
Seller has not, either directly or indirectly, (i) generated,
stored, used, treated, handled, discharged, released or disposed
of any Hazardous Substances at, on, under, in or about, to or
from or in any other manner affecting, any Real Property, (ii)
transported any Hazardous Substances to or from any Real
Property, or (iii) undertaken or caused to be undertaken any
other activities relating to the Real Property, which could
reasonably give rise to any liability under any Environmental Law
and, to the Best of Seller's Knowledge, no other present or
previous owner, tenant, occupant or user of any Real Property or
any other Person has committed or suffered any of the foregoing.
To the Best of Seller's Knowledge, no release of Hazardous
Substances outside the Real Property has entered or threatens to
enter any Real Property, nor is there any pending or threatened
action, suit, proceeding or investigation by or before any
Governmental Authority or any arbitrator ("Litigation") based on
Environmental Laws which arises from any condition of the land
adjacent to or immediately surrounding any Real Property. No
Litigation based on Environmental Laws which relates to any Real
Property or any operations or conditions on it (y) has been
asserted or conducted against Seller in the past or is currently
pending against Seller, or, to the Best of Seller's Knowledge,
any other Person, or (z) to the Best of Seller's Knowledge, is
threatened or contemplated.
(2) To the Best of Seller's Knowledge, (i) no
aboveground or underground storage tanks are currently or have
been located on any Real Property, (ii) no Real Property has been
used at any time as a gasoline service station or any other
facility for storing, pumping, dispensing or producing gasoline
or any other petroleum products or wastes, and (iii) no building
or other structure on any Real Property contains asbestos,
asbestos-containing material or material presumed to be asbestos-
containing material under any Environmental Law.
(3) Seller has provided Buyer with complete and
correct copies of (i) all studies, reports, surveys or other
written materials in Seller's possession relating to the presence
or alleged presence of Hazardous Substances at, on, under or
affecting the Real Property, (ii) all notices (other than general
notices made by general publication) or other materials in
Seller's possession that were received from any Governmental
Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or
operation of the Real Property or activities at the Real
Property, and (iii) all materials in Seller's possession relating
to any Litigation or allegation by any private third party
concerning any Environmental Law and relating to the Real
Property.
(4) For purposes of this Section 5.7, "Real
Property" shall not include any easements or rights of way.
5.8 Compliance with Law; Governmental Permits. (a)
Except as set forth
16
on Schedule 5.8, the ownership, leasing and use of the Assets as they are
currently owned, leased and used by Seller and the conduct of the Business
as it is currently conducted by Seller, do not violate any Legal
Requirement, which violation(s), individually or in the aggregate,
reasonably could be expected to have a material adverse effect on the
Business. Seller has not received any notice claiming a material violation
by Seller or the Business of any Legal Requirement applicable to
Seller or the Business as it is currently conducted and, to the
Best of Seller's Knowledge, no basis exists for any person to
claim that such a violation exists.
(2) Schedule 1.5 lists all Governmental Permits
that are material to the conduct of the Business as it
is currently conducted by Seller. Complete and correct copies of
all such Governmental Permits as currently in effect have been,
or prior to the Closing will be, made available to Buyer. All
such Governmental Permits are currently in full force and effect
except where the failure to have an effective Governmental Permit
would not have a material adverse effect on the Business. There
is no action, proceeding or investigation pending or, to the Best
of Seller's Knowledge, threatened, relating to the termination,
suspension or modification of any such Governmental Permit and
Seller is in compliance in all material respects with the terms
and conditions of all Governmental Permits.
(3) To the Best of Seller's Knowledge, the
operation of the System has been, and is, in compliance in all
material respects with the Communications Act of 1934, as amended
(as so amended, the "Communications Act"), and the rules and
regulations of the Federal Communications Commission (the "FCC").
Seller has delivered, or prior to Closing will deliver, to Buyer
complete and correct copies of all reports and filings for the
past three years made or filed pursuant to the Communications
Act or FCC rules and regulations with respect to the Business.
(4) To the Best of Seller's Knowledge, the
operation of the System has been, and is, in compliance in all
material respects with the Cable Television Consumer Protection
and Competition Act of 1992 (the "Cable Act"), and the rules and
regulations of the FCC promulgated thereunder.
(5) To the Best of Seller's Knowledge, the
operation of the System has been, and is, in compliance in all
material respects with the Telecommunications Act of 1996 (the
"Telecom Act"), and the rules and regulations of the FCC
promulgated thereunder.
5.9 Seller Contracts. Schedule 1.8 lists all Seller
Contracts that are material to the conduct of the Business as it
is now conducted. Complete and correct copies of the Seller
Contracts as currently in effect have been, or prior to the
Closing will be, made available to Buyer. Neither Seller nor, to
the Best of Seller's Knowledge, any other party to any Seller
Contract is in any material respect in breach of the performance
of its obligations under any Seller Contract.
5.10 Copyright Compliance. Seller has deposited with
the United States Copyright Office all statements of account and
other documents and instruments, and paid all royalties,
supplemental royalties, fees and other sums to the United States
Copyright Office,
17
required under the Copyright Act with respect to the Business and
operations of the System as are required to obtain, hold and maintain
the compulsory copyright license for cable television systems
prescribed in Section 111 of the Copyright Act. To the Best of
Seller's Knowledge, Seller and the System are in material compliance
with the Copyright Act. To the Best of Seller's Knowledge, Seller
and the System are entitled to hold and do now hold the compulsory
copyright license described in Section 111 of the Copyright Act,
which compulsory copyright license is in full force and effect and
has not been revoked, canceled, encumbered or materially adversely
affected in any manner. Seller has made available to Buyer complete
and correct copies of all reports and filings, and all reports and filings
for the past three years, made or filed pursuant to the Copyright
Act with respect to the Business. Seller has not received any
notice to the effect that the conduct of the Business as
currently conducted infringes on the rights of any Person in any
copyright or other intellectual property right, except as to
potential copyright liability arising from the performance,
exhibition or carriage of any music on the System.
5.11 Financial Statements. (a) Seller has delivered
to Buyer correct and complete copies of certain financial
information for the System for the years ended December 31, 1997,
1996 and 1995 (collectively, the "Seller Financial Statements").
Except for the absence of footnote disclosures, cash flow
statements and statements of equity and except for estimated,
annualized or projected financial information, the Seller
Financial Statements fairly present, in all material respects,
the results of operations of the System for the respective
periods ended on such dates, all in conformity with GAAP
consistently applied.
(2) Since the latest date of the Seller Financial
Statements (i) the Business has been operated only in the
ordinary course and (ii) there has been no material adverse
change in, and no event has occurred which, so far as reasonably
can be foreseen, is likely, individually or in the aggregate, to
result in any material adverse change in the results of
operations of the Business, other than any change arising out of
matters of a general economic nature or matters (including, but
not limited to, competition caused by or arising from direct
broadcast satellite, the Multichannel Multipoint Distribution
Service, legislation, rule making and regulation) affecting the
cable television industry (national or regional) in general.
5.12 Legal Proceedings. Except as set forth on
Schedule 5.12, and except for any judgments, orders, actions,
suits, proceedings or investigations as may affect the cable
television industry (national or regional) generally, there is no
judgment or order outstanding, or any action, suit, proceeding or
investigation by or before any Governmental Authority or any
arbitrator pending or, to the Best of Seller's Knowledge,
threatened, involving or affecting any of the Assets or the
Business which, if adversely determined, would have a material
adverse effect on the Assets or the Business or would materially
impair the ability of Seller to perform its obligations under
this Agreement.
5.13 Employment Matters. (a) Seller does not employ
any individuals in connection with the operation of the Business
and does not, and is not obligated to, maintain or contribute to
any employee benefit plan, as defined in Section 3(3) of ERISA.
All individuals managing the operations of the Business are
employees of TCI or its Affiliates (other than Seller) (the
"Employer"). The Employer is reimbursed for employee-related
expenses relating to the
18
operations of the Business by Seller under the Management Agreement
or the Partnership Agreement.
(2) To the Best of Seller's Knowledge, Employer
has complied in all material respects with all Legal Requirements
relating to the employment of labor and those relating to wages,
hours, collective bargaining, unemployment compensation, worker's
compensation, equal employment opportunity, age and disability
discrimination, immigration control and the payment and withhold
ing of taxes with respect to employees of Employer who primarily
perform services in connection with the operation of the
Business.
(3) To the Best of Seller's Knowledge, Employer
is not a party to any contract with any labor organization, and
Employer has not recognized or agreed to recognize any union or
other collective bargaining unit with respect to employees of
Employer who primarily perform services in connection with the
operation of the Business. To the Best of Seller's Knowledge,
and except as set forth on Schedule 5.13(c), no union or other
collective bargaining unit has been certified as representing any
of the employees engaged in the operation of the Business, and,
to the Best of Seller's Knowledge, Employer has not received any
request from any party for recognition as a representative of
employees engaged in the operation of the Business for collective
bargaining purposes. Neither Seller nor, to the Best of Seller's
Knowledge, Employer, is party to any agreement, oral or written,
express or implied, that would require Buyer to employ any
individual after the Closing Date.
(4) Schedule 5.13(d) sets forth a true and
complete list of all individuals employed by Employer who
primarily perform services with respect to the operation of the
Business. Except as provided on Schedule 5.13(d), neither Seller
nor Employer is a party to any written employment contract,
agreement, commitment or arrangement with any individual
identified on Schedule 5.13(d).
(5) Except for those plans described on Sched
ule 5.13(e) and in the TCI Employee Handbook dated January, 1998
(the "Employer Plans"), which are sponsored by the Employer, or
to which the Employer contributes or is obligated to contribute,
the employees of Employer who primarily perform services with
respect to the operation of the Business do not receive benefits
under any bonus, deferred compensation, pension, profit-sharing,
retirement, severance pay, insurance, stock purchase, stock
option, or other fringe benefit plan, arrangement or practice, or
any other employee benefit plan, as defined in Section 3(3) of
ERISA.
(6) Seller has not incurred or taken any action,
and to the Best of Seller's Knowledge, no action or event has
occurred, that could cause Seller to incur any material liability
(i) under Section 412 of the Code or Title IV of ERISA with
respect to any Employer Plan that is a single-employer plan,
within the meaning of Section 4001(a)(15) of ERISA, (ii) on
account of a partial or complete withdrawal from any Employer
Plan that is a multiemployer plan, within the meaning of Sec
tion 3(37) of ERISA, or on account of any unpaid contributions to
any such multiemployer plan, or (iii) for any tax or penalty
under Section 4975 of the Code or Section 502(i) of ERISA on
account of any prohibited transaction, within the meaning of Sec
tion 4975 of the Code or Section 406 of ERISA, with respect to
any Employer Plan.
19
5.14 System Information. (i) The number of Equivalent
Basic Subscribers served by the System, the number of subscribers
served by the System taking Expanded Basic Services and the
bandwidth of the System and (ii) the approximate number of Homes
Passed by the System and the approximate number of miles of plant
included in the Assets, each as of June 30, 1998, are as set
forth on Schedule 5.14.
5.15 Finders and Brokers. Except for its engagement of
Xxxxxxx & Associates, L.P. to assist Seller in the solicitation
of offers to purchase the Assets and except for a disposition fee
payable by Seller to an Affiliate pursuant to its Partnership
Agreement, 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.
5.16 Tax Matters. Except as set forth on Schedule
5.16, (a) all Tax Returns required to be filed by Seller before
the Closing with respect to the Business or the Assets have been
or will be filed on or before the Closing and (b) all Taxes shown
as due or payable before the Closing on such Tax Returns have
been or will be paid when required by law.
ARTICLE VI
6. Buyer's Representations and Warranties.
Buyer represents and warrants to Seller as follows:
6.1 Organization and Qualification. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and has all
requisite corporate power and authority to carry on its business
as currently conducted and to own, lease, use and operate its
assets. Buyer is duly qualified or licensed to do business and
is in good standing under the laws of each jurisdiction in which
the character of the properties owned, leased or operated by it
or the nature of the activities conducted by it makes such quali
fication necessary, except where the failure to be so qualified
or licensed and in good standing would not have a material
adverse effect on the validity, binding effect or enforceability
of this Agreement or the ability of Buyer to perform its
obligations under this Agreement.
6.2 Authority and Validity. Buyer has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement. 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 have been duly authorized by all requisite
corporate action of Buyer and no other corporate proceedings on
the part of Buyer, are necessary to authorize the execution and
delivery of this Agreement or the performance of Buyer's
obligations hereunder. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes a valid and
binding agreement of Buyer, enforceable in accordance with its
terms.
20
6.3 No Breach or Violation. (a) Except for (i) any
consents that will be obtained by Buyer or waived on or prior to
the Closing Date and are identified on Schedule 6.3(a),
(ii) filings and consents which, if not made or obtained, would
not have a material adverse effect on Buyer's ability to perform
its obligations under this Agreement and (iii) the Regulatory
Requirements, no consent, waiver, approval or authorization of,
or filing, registration or qualification with, any Governmental
Authority is required to be made or obtained by Buyer in
connection with the execution, delivery and performance of this
Agreement by Buyer.
(2) The execution, delivery and performance of
this Agreement by Buyer do not and will not: (a) violate or
conflict with any provision of Buyer's Certificate of
Incorporation or By-Laws, (b) violate any Legal Requirement; or
(c) (i) violate, conflict with or constitute a breach of or
default under (without regard to requirements of notice, passage
of time or elections of any Person), (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 Buyer under, or (iv) result in the creation or
imposition of any Encumbrance under, any material contract,
agreement, arrangement, commitment or plan to which Buyer is a
party or by which Buyer or any of its assets is bound or
affected, except such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications and accelerations as
would not, individually or in the aggregate, have a material
adverse effect on Buyer's ability to perform its obligations
under this Agreement.
6.4 Litigation. (a) There are no claims, actions,
suits, proceedings or investigations pending or, to the best of
Buyer's knowledge, threatened, in any court or before any
governmental agency or instrumentality, or before any arbitrator,
by or against or affecting or relating to Buyer or any of its
Affiliates which, if adversely determined, would restrain or
enjoin the consummation of the transactions contemplated by this
Agreement or declare unlawful the transactions or events
contemplated by this Agreement or cause any of such transactions
to be rescinded.
(2) There are no judgments, injunctions, orders
or other judicial or administrative mandates outstanding against
or affecting Buyer or any of its Affiliates which would
materially hinder or delay the consummation of the transactions
contemplated by this Agreement.
6.5 Financial Statements. Buyer has delivered to
Seller copies of its audited financial statements for its last
fiscal year for which statements are available ("Buyer Financial
Statement"). The Buyer Financial Statement and the notes thereto
fairly present the assets, liabilities and financial condition of
Buyer as of the date thereof and the results of operations and
cash flows or changes in financial position, as applicable, of
Buyer for the period ended on such date, all in conformity with
GAAP consistently applied, except as may be noted therein. Buyer
has delivered to Seller copies of its unaudited financial
statements for its last fiscal quarter ("Buyer Interim Financial
Statement"). Except as noted therein, the Buyer Interim
Financial Statement was prepared on a basis consistent with the
Buyer Financial Statement and fairly presents, in conformity with
GAAP consistently applied, the financial position of Buyer as of
21
such date and the results of operations and cash flows or changes
in financial position, as applicable, for such period, subject to
normal year-end adjustments (none of which are expected to be
material in amount), other adjustments noted therein and the
absence of footnotes.
6.6 Adequate Financing. Buyer currently has, or
has received binding commitments pursuant to which one or more
lenders or investors have agreed to loan or contribute to Buyer,
all funds necessary to satisfy all its obligations under this
Agreement and with respect to the transactions contemplated by
this Agreement, including its obligations to purchase the Assets
and to pay the Purchase Price to Seller.
6.7 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 will in any way have any
liability.
6.8 Qualification of Buyer. Buyer knows of no reason
why it cannot obtain the licenses and permits necessary for it to
own and operate the Business in the manner in which it is
currently conducted by Seller.
ARTICLE VII
7. Additional Covenants.
7.1 Access to Premises and Records. Between the date
of execution and delivery of this Agreement and the Closing Date,
Seller will give Buyer and its representatives, during normal
business hours and with reasonable prior notice, access to the
books and records of the Business and to the Assets (wherever
located) and will furnish to Buyer and its representatives such
information regarding the Business and the Assets as Buyer may
from time to time reasonably request.
7.2 Continuity and Maintenance of Operations;
Financial Statements. Except as to actions which Buyer has been
advised and to which it has consented in writing and except as
specifically permitted or required by this Agreement or required
by any Legal Requirement, Seller shall:
(1) Operate the Business in the ordinary course
consistent with past practices and will use commercially
reasonable efforts to cause Employer to keep available the
services of the employees of the Employer who are primarily
involved in the operation of the Business and to preserve any
beneficial business relationships with customers, suppliers and
others having business dealings with Seller relating to the
Business;
(2) Maintain the Assets in operating condition;
(3) Maintain adequate inventories of spare
Equipment consistent with
22
past practice;
(4) Maintain insurance as in effect on the date
of this Agreement;
(5) Keep all of its business books, records and
files in the ordinary course of business in accordance with past
practices;
(6) Continue to implement its procedures for
disconnection and discontinuance of service to subscribers whose
accounts are delinquent in accordance with those in effect on the
date of this Agreement;
(7) Not sell, transfer or assign any Assets other
than in the ordinary course of business;
(8) Not to permit any material amendment to, or
cancellation of, any of the Governmental Permits or Seller
Contracts other than in the ordinary course of business;
(9) Not enter into any contract or commitment for
the acquisition of goods or services relating to the System or
the Business involving an expenditure in excess of $50,000 other
than in the ordinary course of business; or
(10) Not take or omit to take any action that
would cause Seller to be in breach of any of its representations
or warranties in this Agreement in any material respect,
provided, however, that the foregoing shall not preclude Seller
from engaging a financial advisor to render an opinion as to the
fairness, from a financial point of view, of the transactions
contemplated by this Agreement.
Seller shall deliver to Buyer, promptly after such
statements and reports become available to Seller, correct and
complete copies of unaudited monthly and quarterly income
statements and operating reports for the Business that are
prepared by or for Seller at any time between the date of this
Agreement and the Closing; provided, that Seller shall not be
required to make and shall not be deemed to make any
representation or warranty concerning the accuracy of the
contents of any such information delivered to Buyer.
7.3 Employee Matters. (a) Schedule 5.13(d) lists all
employees of Employer employed in the Business, and sets forth
their position, date of hire and current salary. Buyer may offer
employment to certain of the employees of Employer identified by
an asterisk on Schedule 5.13(d) who primarily perform services
with respect to the operation of the Business as of the Closing
Date. Buyer may not offer employment to any other person
identified on Schedule 5.13(d). Not later than 90 days after the
date of this Agreement, Buyer shall deliver to Seller a notice
containing the names of employees of the Business whom Buyer
intends to hire on the Management Agreement Termination Date (the
"Desired Employees"). Buyer shall notify Seller and Employer
prior to distributing offer notices to the Desired Employees and
shall coordinate all hiring procedures relating to such Desired
Employees with Seller and Employer. Seller and Employer shall
cooperate in all reasonable respects with Buyer to allow Buyer to
evaluate and
23
interview employees of the Business to make hiring
decisions. As of 11:59 p.m. on the Management Agreement
Termination Date (the "Employee Adjustment Time"), Employer shall
terminate the employment of all its employees set forth on
Schedule 5.13(d) other than any employee who is not a Desired
Employee and whose employment the Employer desires to continue.
(b) Employer will pay all employees employed in the
Business all compensation, including salaries, commissions,
bonuses, deferred compensation, severance, insurance, pensions,
profit sharing, vacation, sick pay and other compensation or
benefits to which they are entitled for periods prior to the
Employee Adjustment Time.
(c) Employer will maintain and distribute benefits
accrued under any employee benefit plan (as defined in ERISA)
maintained by Employer pursuant to the provisions of such plans.
Buyer will not assume any obligation or liability for any such
accrued benefits nor any fiduciary or administrative
responsibility to account for or dispose of any such accrued
benefits under any employee benefit plans maintained by Employer.
(d) All claims and obligations under, pursuant to or
in connection with any welfare, medical, insurance, disability or
other employee benefit plans of Employer or arising under any
Legal Requirement affecting employees of Employer incurred on or
before the Adjustment Time or resulting from or arising from
events or occurrences occurring or commencing on or before the
Adjustment Time will remain the responsibility of Employer,
whether or not such employees are hired by Buyer after the
Management Agreement Termination Date. Buyer will not have and
assume any obligation or liability under or in connection with
any such plan.
(e) Employer will remain solely responsible for, and
will indemnify and hold harmless Buyer from and against all
losses arising from or with respect to, all salaries and all
severance, vacation, medical, sick, holiday, continuation
coverage and other compensation or benefits to which its
employees may be entitled, whether or not such employees may be
hired by Buyer, as a result of their employment by it prior to
the Adjustment Time, the termination of their employment as of
the Employee Adjustment Time, the obligation, if any, to notify
and/or bargain with any labor organization, the consummation of
the transactions contemplated hereby or pursuant to any
applicable Legal Requirement (including, without limitation,
under the WARN Act) or otherwise relating to their employment
prior to the Adjustment Time.
(f) Notwithstanding anything to the contrary herein,
as of the Management Agreement Termination Date, Buyer will (i)
credit each employee of Employer who is offered employment by
Buyer prior to the Management Agreement Termination Date and
becomes an employee of Buyer after the Management Agreement
Termination Date (a "Hired Employee") the lesser of the amount of
vacation accrued by him or her as an employee of Employer through
and including the Employee Adjustment Time or the vacation
permitted to be accrued by employees of Buyer in accordance with
Buyer's standard practices (the economic value of which shall be
credited to Buyer's account in accordance with Section 7.3(h)
hereof); (ii) permit each Hired Employee to participate in
Buyer's employee benefit plans to the same extent as similarly
situated employees of Buyer and their dependents; (iii) give each
Hired Employee credit for his or
24
her past service with Employer as of the Employee Adjustment Time
(including past service with any prior owner or operator of Employer)
for purposes of eligibility and vesting under Buyer's employee
benefit and other plans to the same extent as other similarly
situated employees of Buyer; (iv) not subject any Hired Employee
to any waiting periods or limitations on benefits for
pre-existing conditions under Buyer's employee benefit plans,
including any group health plans, except to the extent such
employees were subject to such limitations under Employer's employee
benefit plans and (v) credit each Hired Employee under any group
health plan for any deductible amount previously met by such Hired
Employee as of the Management Agreement Termination Date under any of
Employer's group health plans.
(g) If Buyer discharges without cause within 180 days
after the Management Agreement Termination Date any Hired
Employees, and such employees would have been entitled to
severance payments pursuant to Employer's severance benefits plan
if such employees had been discharged without cause by Employer
in accordance with Section 7.3(a) and not hired by Buyer as of
the Management Agreement Termination Date, then Buyer shall pay
severance benefits to such employees in accordance with
Employer's severance benefit plan to the extent such plan would
have paid severance to any such employees.
(h) No later than five business days after the
Closing, Seller shall pay Employer accrued vacation pay of
Desired Employees allocable to the period prior to the Adjustment
Time. On the Management Agreement Termination Date, Employer
shall pay Buyer the lesser of the amount of accrued vacation pay
of Hired Employees as employees of employer through the Employee
Adjustment Time or, for each Hired Employee, the vacation
permitted to be accrued by employees of Buyer in accordance with
Buyer's standard practices.
(i) Nothing in this Section 7.3 or elsewhere in this
Agreement is intended to confer upon any employee of Employer or
his or her legal representative or heirs any rights as a third
party beneficiary or otherwise or any remedies of any nature or
kind whatsoever under or by reason of this Agreement, or the
transactions contemplated hereby, including, but not limited to,
any rights of employment or continued employment. All rights and
obligations created by this Agreement are solely between the
parties hereto.
7.4 Consents. Seller will use commercially reasonable
efforts to obtain, as soon as practicable and at its expense, all
the Required Consents, in form and substance reasonably
satisfactory to Buyer; provided, however, that Buyer will not be
required to agree to any change in any Seller Contract, as a
condition to obtaining such consent, if such change will make
such Seller Contract materially more burdensome on Buyer. Buyer
will use commercially reasonable efforts to assist Seller in its
efforts to obtain all the Required Consents, and in connection
therewith will consent to such modifications to any Governmental
Permit that a Governmental Authority may request as a condition
to the transfer of such permit to Buyer, provided, however, that
Buyer will not be required to agree to any modifications to a
Governmental Permit unless they are customarily imposed by
Governmental Authorities issuing cable television franchises as a
condition to obtaining the consent to the transfer of such
franchises and do not impose upon Buyer any conditions or
obligations which are materially more burdensome than are
contained in any such Governmental Permit. For purposes of this
paragraph,
25
"commercially reasonable efforts" shall not require
Seller or Buyer to undertake extraordinary or unreasonable
measures to obtain such approvals and consents, including, but
not limited to, the initiation or prosecution of legal
proceedings or the payment of fees in excess of normal and usual
filing and processing fees.
7.5 HSR Notification. As soon as practicable after
the execution of this Agreement and if required by applicable
Legal Requirements, Seller and Buyer will each 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"). Each of
the parties will take any additional action that may be
necessary, proper or advisable, will cooperate to prevent
inconsistencies between their respective filings and will furnish
to each other such necessary information and reasonable
assistance as the other may reasonably request in connection with
its preparation of necessary filings or submissions under the HSR
Act. Buyer and Seller shall use commercially reasonable efforts
(including the filing of a request for early termination) to
obtain the early termination of the waiting period under the HSR
Act.
7.6 Notification of Certain Matters. Each party will
promptly notify the other of any fact, event, circumstance or
action the existence or occurrence of which would cause any of
such party's representations or warranties under this Agreement
not to be true in any material respect.
7.7 Risk of Loss; Condemnation. (a) Seller will bear
the risk of any loss or damage to the Assets resulting from fire,
theft or other casualty (except reasonable wear and tear) at all
times prior to the Closing. If any such loss or damage is so
substantial as to prevent normal operation of any material
portion of the System, Seller shall promptly notify Buyer of that
fact and Buyer, at any time within 10 days after receipt of such
notice, may elect by written notice to Seller either (i) to waive
such defect and proceed toward consummation of the acquisition of
the Assets in accordance with this Agreement or (ii) to terminate
this Agreement pursuant to Section 10.1(c)(v). If Buyer elects
to consummate the acquisition of the Assets notwithstanding such
loss or damage and does so, there will be no adjustment in the
Purchase Price on account of such loss or damage but all
insurance proceeds payable as a result of the occurrence of the
event resulting in such loss or damage (to the extent not
previously applied by Seller with respect to such loss or damage)
will be delivered by Seller to Buyer or the rights to such
proceeds will be assigned by Seller to Buyer if not yet paid over
to Seller.
(2) If, prior to the Closing, any part of a
material Asset or an interest in a material Asset is taken or
condemned as a result of the exercise of the power of eminent
domain, or if a Governmental Authority having such power informs
Seller or Buyer that it intends to condemn all or any part of a
material Asset (such event being referred to, in either case, as
a "Taking"), then Buyer may terminate this Agreement pursuant to
Section 10.1(c)(vi). If Buyer does not elect to terminate this
Agreement then (a) if the Closing occurs, Buyer shall have the
sole right, in the name of Seller, if Buyer so elects, to
negotiate for, claim, contest and receive all damages with
respect to the Taking, (b) Seller shall be relieved of its
obligation to convey to Buyer the Asset or interests that are the
subject of the Taking and (c) at the Closing Seller shall
26
assign to Buyer all of Seller's rights (including the right to receive
payment of damage) with respect to such Taking and shall pay to
Buyer all damages previously paid to Seller with respect to the
Taking.
7.8 Adverse Changes. Seller shall promptly notify
Buyer in writing of any materially adverse developments affecting
the Assets, the System or the Business which become known to
Seller, including, but not limited to, (i) any damage,
destruction or loss (whether or not covered by insurance)
materially and adversely affecting any of the Assets, the System
or the Business, (ii) any material notice of violation,
forfeiture or complaint under any material Governmental Permits
or (iii) anything which, if not corrected prior to the Closing
Date, will prevent Seller from fulfilling any condition to
Closing described in Article VIII.
7.9 Action By Limited Partners. (a) If required by
applicable Legal Requirements or the Partnership Agreement to
consummate the transactions contemplated by this Agreement, the
Seller, acting through the General Partner, shall in accordance
with the applicable Legal Requirements and the Partnership
Agreement: (i) within a reasonable period of time (as determined
by the General Partner) after the execution and delivery of this
Agreement, duly call, give notice of, convene and hold a special
meeting (the "Special Meeting") of the Limited Partners for the
purpose of approving the transactions contemplated by this
Agreement; (ii) subject to its fiduciary duties (as determined by
the General Partner after consultation with independent counsel),
include in any proxy statement the determination and
recommendation of the General Partner to the effect that the
General Partner, having determined that this Agreement and the
transactions contemplated hereby are in the best interests of
Seller and the Limited Partners, has approved this Agreement and
such transactions and recommends that the Limited Partners vote
in favor of the sale of the Assets to Buyer pursuant to this
Agreement; and (iii) use commercially reasonable efforts, subject
to its fiduciary duties on the basis of advice of independent
counsel, to obtain the necessary approval of the transactions
contemplated by this Agreement by the Limited Partners.
(2) As soon as practicable after the execution
and delivery of this Agreement, Seller shall file with the SEC
under the Exchange Act, and shall use commercially reasonable
efforts to clear with the SEC, a proxy statement with respect to
the Special Meeting (the "Proxy Statement"). Seller and Buyer
shall cooperate in the preparation of any Proxy Statement;
without limiting the generality of the foregoing, Buyer shall
furnish to Seller the information relating to Buyer required by
the Exchange Act to be set forth in the Proxy Statement. Seller
agrees that the Proxy Statement shall comply in all material
respects with the Exchange Act and the rules and regulations
thereunder; provided, however, that no agreement is made by
Seller with respect to information supplied by Buyer expressly
for inclusion in the Proxy Statement. Buyer and its counsel
shall be given a reasonable opportunity to review the Proxy
Statement prior to the filing thereof with the SEC.
7.10 No Solicitation. (a) Seller shall not, and shall
cause the General Partner, employees, agents and representatives
(including, but not limited to, any investment banker, attorney
or accountant retained by Seller) not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making of
any proposal with respect to any Alternative
27
Transaction, engage in any negotiations concerning, or provide to any
other Person any information or data relating to, the Business, the System,
the Assets or Seller for the purposes of, or have any discussions
with any Person relating to, or otherwise cooperate in any way
with or assist or participate in, facilitate or encourage, any
inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any effort or attempt by any
other Person to seek or to effect an Alternative Transaction, or
agree to or endorse any Alternative Transaction; provided,
however, that nothing contained in this Section 7.10 shall
prohibit Seller or the General Partner from making any disclosure
to the Limited Partners that, in the judgment of the General
Partner based upon the advice of independent counsel, is required
under applicable Legal Requirements; and provided, further, that
(i) Seller or the General Partner may, upon the unsolicited
request of a third party, furnish information or data (including,
but not limited to, confidential information or data) relating to
the Business, the System, the Assets or Seller for the purposes
of facilitating an Alternative Transaction and participate in
negotiations with a Person making (or who may reasonably be
expected to make) an unsolicited proposal regarding an
Alternative Transaction and (ii) following receipt of a proposal
for an Alternative Transaction, Seller or the General Partner may
terminate this Agreement pursuant to Section 10.1(b)(ii).
(2) TCI shall not, and shall cause its Affiliates
which it controls not to, make a proposal to Seller regarding an
Alternative Transaction. The restriction set forth in this Sec
tion 7.10(b) shall terminate on the earlier of (i) the Closing or
(ii) termination of this Agreement.
7.11 Sales and Transfer Taxes and Fees. Buyer and
Seller shall each pay one-half of any state or local sales, use,
transfer, excise, documentary or license taxes or fees or any
other charge (including filing fees) imposed by any Governmental
Authority as a consequence of the transfer of any Assets pursuant
to this Agreement. Seller shall timely file any sales tax
returns required to be filed with any Governmental Authority as a
consequence of the transfer of any Assets pursuant to this
Agreement. Buyer shall cooperate in the preparation and filing
of any submission or application necessary to obtain any
clearance relating to, or, if available, exemption from, any
Taxes or fees described in this Section 7.11.
7.12 Commercially Reasonable Efforts. (a) Seller
shall use commercially reasonable efforts to take all steps
within its power, and will cooperate with Buyer, to cause to be
fulfilled those of the conditions to Buyer's obligations to
consummate the transactions contemplated by this Agreement that
are dependent upon its actions, and to execute and deliver such
instruments and take such other reasonable actions as may be
necessary or appropriate in order to carry out the intent of this
Agreement and consummate the transactions contemplated hereby.
(2) Buyer shall use commercially reasonable
efforts to take all steps within its power, and will cooperate
with Seller, to cause to be fulfilled those of the conditions to
Seller's obligations to consummate the transactions contemplated
by this Agreement that are dependent upon its actions and to
execute and deliver such instruments and take such other
reasonable actions as may be necessary or appropriate in order to
carry out the intent of this Agreement and consummate the
transactions contemplated hereby.
28
7.13 Title Insurance. Seller shall cooperate with
Buyer if Buyer elects to obtain title insurance policies on any
Real Property owned in fee or leased. Buyer shall have the sole
responsibility for obtaining and paying for such policies. The
parties agree that the obtaining of title insurance on any Real
Property shall not be a condition to the obligation of Buyer to
consummate the transactions contemplated hereby.
7.14 Management of the System. (a) Seller acknowledges
and agrees that in the event the Joint Venture is consummated
prior to the Closing, TCICA shall continue to manage the System
but may engage the Joint Venture to perform all or any portion of
TCICA's day-to-day management responsibilities under the
Management Agreement; provided, that from and after the Closing
Date, the management fee to be charged thereunder shall be equal
to the lesser of (x) the fee charged by Buyer (or its affiliate)
to manage the Joint Venture's systems in Southern California and
(y) the fee in effect immediately prior to the Closing.
(b) In the event the Closing occurs prior to the
consummation of the Joint Venture, then (i) Seller will assign to
Buyer, and Buyer will assume, all obligations of Seller under the
Management Agreement on the same terms and conditions as in
effect immediately prior to the Closing or (ii) at the election
of TCICA and Buyer, TCICA and Buyer may enter into a new
management agreement on such terms as may be mutually agreed upon
by the parties; in either case, the term of the applicable
management agreement shall be for a period of twelve months from
the Closing Date unless otherwise agreed to by TCICA and Buyer,
provided, that if the Management Agreement is assigned pursuant
to clause (i) above, then on or prior to the Closing Date TCICA
and Seller shall execute an amendment to the Management
Agreement, in form reasonably satisfactory to Buyer, to amend the
Management Agreement effective on the Closing Date to (x) reflect
the assignment in this paragraph (b) and (y) reflect that the
Management Agreement is applicable only to the System.
ARTICLE VIII
8. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer under this Agreement are
subject to the satisfaction at or prior to the Closing of each of
the following conditions, any one or more of which may be waived
by Buyer, in its sole discretion.
8.1 HSR Act. If required under applicable Legal
Requirements, all filings required under the HSR Act shall have
been made and the applicable waiting period shall have expired or
been earlier terminated without the receipt of any objection or
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.
8.2 Governmental or Legal Action. No action, suit or
proceeding shall be pending or threatened by any Governmental
Authority or other Person and no Legal Requirement shall have
been enacted, promulgated or issued or deemed applicable to any
of the transactions
29
contemplated by this Agreement by any Governmental Authority that
would (a) prohibit Buyer's ownership or operation of all or a material
portion of the System, the Business or the Assets or (b) prevent or
make illegal the consummation of the transactions contemplated by this
Agreement.
8.3 Accuracy of Representations and Warranties. The
representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date, with
the same effect as though made on and as of the Closing Date,
except for such changes permitted or contemplated by the terms of
this Agreement and except insofar as any of such representations
and warranties relate solely to a particular date or period, in
which case they shall be true and correct in all material
respects on such Closing Date with respect to such date and
period.
8.4 Performance of Agreements. Seller shall have
performed in all material respects all obligations and agreements
and complied, or caused to be complied with, all covenants and
conditions required by this Agreement to be performed or complied
with by Seller at or prior to the Closing Date.
8.5 No Material Adverse Change. During the period
from the date of this Agreement through and including the Closing
Date, there shall not have occurred any material adverse change
in the business, financial condition or operations of the
Business, taken as a whole, other than any change arising out of
matters of a general economic nature or matters (including, but
not limited to, competition caused by or arising from the
Multichannel Multipoint Distribution Service, direct broadcast
satellite, legislation, rule making and regulation) affecting the
cable television industry (national or regional) generally, and
Seller shall not have sustained any material loss or damage to
the Assets or the System, whether or not insured, that materially
affects the ability of Seller to conduct the Business in a manner
consistent with past practice.
8.6 Consents. Seller shall have delivered to Buyer
evidence, in form and substance reasonably satisfactory to Buyer,
that all the Required Consents have been obtained or given.
8.7 Transfer Documents. Seller shall have delivered
to Buyer customary bills of sale, deeds, assignments and other
instruments of transfer sufficient to convey good and marketable
title to the Assets in accordance with the terms of this
Agreement.
8.8 Opinions of Seller's Counsel. Buyer shall have
received the opinion or opinions of Xxxx, Scholer, Fierman, Xxxx
& Handler, LLP, counsel for Seller, dated the Closing Date,
substantially in the form of Exhibit E.
8.9 Opinions of Seller's FCC Counsel. Buyer shall
have received the opinion or opinions of Xxxx, Raywid &
Xxxxxxxxx, FCC counsel for the Seller, dated the Closing Date,
substantially in the form of Exhibit F.
8.10 Discharge of Liens. Seller shall have secured the
termination of all material Encumbrances of any nature on the
Assets, other than Permitted Encumbrances.
30
8.11 Additional Documents and Acts. Seller shall have
delivered or caused to be delivered to Buyer all other documents
required to be delivered pursuant to this Agreement and done or
caused to be done all other acts or things reasonably requested by
Buyer to evidence compliance with the conditions set forth in this
Article VIII.
8.12 Certificates. Seller shall have furnished Buyer
with such other certificates of Seller and others, dated as of the
Closing Date, to evidence compliance with the conditions set forth
in this Article VIII, as may be reasonably requested by Buyer.
8.13 Assignment and Assumption. The assignment and
assumption referred to in Section 7.14(b), if applicable, shall
have been effected.
8.14 Release of Deposit. Seller and Buyer shall have
executed and delivered a joint notice to the Escrow Agent to
release the Deposit to Seller.
ARTICLE IX
9. Conditions Precedent to Obligations of Seller.
The obligations of Seller under the Agreement are
subject to the satisfaction, at or prior to the Closing Date, of
each of the following conditions, any one or more of which may be
waived by Seller in its sole discretion.
9.1 HSR Act. If required under applicable Legal
Requirements, all filings required under the HSR Act shall have
been made and the applicable waiting period shall have expired or
been earlier terminated without the receipt of any objection or
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.
9.2 Governmental or Legal Actions. No action, suit or
proceeding shall be pending or threatened by any Governmental
Authority or other Person and no Legal Requirement shall have been
enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental
Authority that would (a) prohibit Buyer's ownership or operation
of all or any material portion of the System, the Business or the
Assets or (b) prevent or make illegal the consummation of the
transactions contemplated by this Agreement.
9.3 Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date, with the
same effect as though made on and as of the Closing Date, except
for such changes permitted or contemplated by the terms of this
Agreement and except insofar as any of such representations and
warranties relate solely to a particular date or period, in which
case they shall be true and correct in all material respects on
such Closing Date with respect to such date and period.
31
9.4 Performance of Agreements. Buyer shall have
performed in all material respects all obligations and agreements
and complied, or caused to be complied with, all covenants and
conditions required by this Agreement to be performed or complied
with by Buyer at or prior to the Closing Date.
9.5 Consents. All Required Consents shall have been
obtained or given.
9.6 Opinions of Buyer's Counsel. Seller shall have
received the opinion or opinions of Xxxxx Xxxxxxxxxx & Xxxxx,
outside counsel for Buyer, dated the Closing Date, substantially
in the form of Exhibit G.
9.7 Limited Partner Approval. The transactions
contemplated by this Agreement shall have been approved by the
affirmative vote of or consent by the Limited Partners to the
extent required by the Partnership Agreement.
9.8 Payment of Purchase Price. Buyer shall have paid
to Seller the Purchase Price as set forth in Section 3.1.
9.9 Assumption of Liabilities. Buyer shall have
delivered to Seller a customary assumption of liabilities
agreement which is sufficient to cover Buyer's obligations as set
forth in Section 4.1.
9.10 Additional Documents and Acts. Buyer shall have
delivered or caused to be delivered to Seller all other documents
required to be delivered pursuant to this Agreement and done all
other acts or things reasonably requested by Seller to evidence
compliance with the conditions set forth in this Article IX.
9.11 Certificate. Buyer shall have furnished Seller
with such other certificates of Buyer and others, dated as of the
Closing Date, to evidence compliance with the conditions set forth
in this Article IX, as may be reasonably requested by Seller.
9.12 Fairness Opinion. Seller shall have received an
opinion, in form and substance reasonably satisfactory to Seller,
from its financial advisors as to the fairness, from a financial
point of view, of the transactions contemplated by this Agreement;
provided, however, that if Seller does not receive such opinion on
or before September 2, 1998 and, as a result of the failure to
receive such opinion, does not terminate this Agreement pursuant
to Section 10.1(b)(vi), this condition shall be deemed waived by
Seller.
9.13 Assignment and Assumption. The assignment and
assumption referred to in Section 7.14(b), if applicable, shall
have been effected.
9.14 Release of Deposit. Seller and Buyer shall have
executed and delivered a joint notice to the Escrow Agent to
release the Deposit to Seller.
32
ARTICLE X
10. Termination.
10.1 Events of Termination. This Agreement and the
transactions contemplated by this Agreement may be terminated at
any time prior to the Closing:
(1) by the mutual written consent of Buyer and
Seller;
(2) by Seller:
(1) if the consummation of the transactions
contemplated by this Agreement by Seller would
violate any nonappealable final order, decree or
judgment of any Governmental Authority having
competent jurisdiction;
(2) following receipt by Seller or the
General Partner of an unsolicited proposal for an
Alternative Transaction to the extent that the
General Partner determines in good faith on the
basis of advice of independent counsel that such
action is necessary or appropriate in order for the
General Partner to act in a manner that is
consistent with its fiduciary obligations under
applicable law;
(3) if any representation or warranty of
Buyer made herein is untrue in any material respect
(other than a change permitted or contemplated by
this Agreement) and such breach is not cured within
10 days of Buyer's receipt of a notice from Seller
that such breach exists or has occurred;
(4) if Buyer shall have defaulted in any
material respect in the performance of any material
obligation under this Agreement and such breach is
not cured within 30 days of Buyer's receipt of a
notice from Seller that such default exists or has
occurred; or
(5) if the conditions to Seller's obligations
to consummate the Closing as set forth in Article
IX cannot reasonably be satisfied on or before the
Termination Date.
(6) within five Business Days after September
2, 1998 if Seller shall not have received an
opinion on or before such date from Seller's
financial advisors as to the fairness, from a
financial point of view, of the transactions
contemplated by this Agreement.
(3) by Buyer:
33
(1) if the consummation of the transactions
contemplated by this Agreement by Buyer would
violate any nonappealable final order, decree or
judgment of any Governmental Authority having
competent jurisdiction;
(2) if any representation or warranty of
Seller made herein is untrue in any material
respect (other than due to a change permitted or
contemplated by this Agreement) and such breach is
not cured within 10 days of Seller's receipt of a
notice from Buyer that such breach exists or has
occurred;
(3) if Seller shall have defaulted in any
material respect in the performance of any material
obligation under this Agreement and such breach is
not cured within 30 days of Seller's receipt of a
notice from Buyer that such default exists or has
occurred;
(4) if the conditions to Buyer's obligations
to consummate the Closing as set forth in Article
VIII cannot reasonably be satisfied on or before
the Termination Date;
(5) within 10 days after receipt by Buyer of
a notice from Seller that the loss or damage to the
Assets resulting from fire, theft or other casualty
is so substantial as to prevent normal operation of
any material portion of the System, as contemplated
by Section 7.7(a);
(6) following a Taking, as contemplated by
the first sentence of Section 7.7(b);
(4) Unless the Closing shall have theretofore
taken place, by either party after the Termination Date, provided
that the terminating party is not otherwise in default or breach
of this Agreement.
10.2 Manner of Exercise. In the event of the
termination of this Agreement by either Buyer or Seller, pursuant
to Section 10.1, notice thereof shall forthwith be given to the
other party and this Agreement shall terminate and the
transactions contemplated hereunder shall be abandoned without
further action by Buyer or Seller.
10.3 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 10.1 and prior
to the Closing, all obligations of the parties hereunder shall
terminate, except for the respective obligations of the parties
under Section 14.12; provided, however, that no termination of
this Agreement shall (a) except as set forth in Section 10.4,
relieve a defaulting or breaching party from any liability to the
other party or parties hereto for or in respect of such default or
(b) result in the rescission of any transaction theretofore
consummated hereunder.
10.4 Liquidated Damages. In the event of the
termination of this Agreement by
34
Seller pursuant to either Section 10.1(b)(iii) or 10.1(b)(iv)
prior to the Closing, Seller shall have the option, upon notice from
Seller to Buyer given as provided in the Escrow Agreement, to receive
as liquidated damages, and not as a penalty, the Deposit (together with all
interest earned thereon). In the event Seller elects to receive
the Deposit as liquidated damages as set forth in this Sec
tion 10.4, Buyer shall promptly (but in no event more than five
Business Days after receipt of such notice) take all action
required under the Escrow Agreement to cause the Deposit (together
with all interest earned thereon) to be released to Seller. If
Seller elects to receive the Deposit as liquidated damages as set
forth in this Section 10.4, Seller shall, upon receipt of the
Deposit (together with all interest earned thereon), be precluded
from exercising any other right or remedy available under this
Agreement or applicable law.
ARTICLE XI
11. Nature and Survival of Representations, Warranties and
Agreements.
11.1 Nature of Representations, Warranties and
Agreements. Neither party will be deemed to have made any
representation, warranty, covenant or agreement except as set
forth in this Agreement. Without limiting the generality of the
foregoing, neither party will be liable or bound in any manner by
any express or implied representation, warranty, covenant or
agreement that is made by any employee, agent or other Person
representing or purporting to represent such party.
11.2 Survival of Representations and Warranties. The
representations and warranties of Seller and Buyer in this
Agreement and in the documents and instruments to be delivered by
Seller and Buyer pursuant to this Agreement will survive the
Closing.
11.3 Time Limitations. If the Closing occurs, neither
party shall have any liability to the other with respect to any
representation or warranty or any covenant, agreement or
obligation to the extent required to be performed or complied with
prior to the Closing Date, unless on or before the date which is
180 days after the Closing Date such party is given notice
asserting a claim with respect thereto and specifying the factual
basis of that claim in reasonable detail to the extent then known
by the other.
11.4 Limitations as to Amount. (a) If the Closing
occurs, Seller shall have no liability (for indemnification or
otherwise) with respect to any failure or breach of any
representation or warranty or any covenant, agreement or
obligation to the extent required to be performed on or prior to
the Closing Date until the total of all damages with respect to
such failure or breach exceeds $37,500 but then for the entire
amount of such damages, including those not in excess of $37,500.
(b) If the Closing occurs, Buyer shall have no
liability (for indemnification or otherwise) with respect to any
failure or breach of any representation or warranty or any
covenant, agreement or obligation to the extent required to be
performed on or before the Closing Date until the total of all
damages with respect to such failure or breach exceeds
35
$37,500 but then for the entire amount of such damages, including those
not in excess of $37,500.
(c) If the Closing occurs, Seller's aggregate
liability (for indemnification or otherwise) with respect to any
failure or breach of any representation or warranty or any
covenant, agreement or obligation to the extent required to be
performed on or prior to the Closing Date shall be limited to
Buyer's right to make a claim against the Seller's Escrow in
accordance with procedures set forth in the Indemnity Escrow
Agreement; provided, however, that this Section 11.4(c) shall not
apply in the event of Seller's fraud.
ARTICLE XII
12. Indemnification.
12.1 Rights to Indemnification. Subject to the
limitations set forth in Sections 11.3 and 11.4, Seller agrees to
indemnify and hold harmless Buyer against any loss, liability,
claim, damage or expense (including, but not limited to,
reasonable attorney's fees and disbursements) arising from (a) any
claim for brokerage or agent's or finder's commissions or
compensation in respect of the transactions contemplated by this
Agreement by any Person purporting to act on behalf of Seller,
(b) any claim that Buyer is liable for the Excluded Liabilities or
(c) Seller's failure or breach of any representation, warranty,
covenant, agreement or obligation made or required to be performed
by Seller under this Agreement. Subject to the limitations set
forth in Sections 11.3 and 11.4, Buyer agrees to indemnify and
hold harmless Seller against any loss, liability, claim, damage or
expense (including, but not limited, to, reasonable attorney's
fees and disbursements) arising from (a) any claim for brokerage
or agent's or finder's commissions or compensation in respect of
the transactions contemplated by this Agreement by any Person
purporting to act on behalf of Buyer, (b) the failure to perform
the obligations of the Assumed Liabilities or (c) Buyer's failure
or breach of any representation, warranty, covenant, agreement or
obligation made or required to be performed by Buyer under this
Agreement.
12.2 Procedure for Indemnification. Promptly after
receipt by an indemnified party under Section 12.1 of notice of
the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying
party under such section, give notice to the indemnifying party of
the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it
may have to any indemnified party except to the extent the
indemnifying party demonstrates that the defense of such action is
prejudiced thereby. In case any such action shall be brought
against an indemnified party and it shall give notice to the
indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent
that it shall wish, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party and, after
notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such
section for any fees of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs
of investigation. If an indemnifying party assumes the defense of
such action, (a) no compromise or settlement thereof
36
may be effected by the indemnifying party without the indemnified party's
consent unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any Person and
no effect on any other claims that may be made against the
indemnified party and (ii) the sole relief provided is monetary
damages that are paid in full by the indemnifying party and
(b) the indemnifying party shall have no liability with respect to
any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld). If notice is given to
an indemnifying party of the commencement of any action and it
does not, within ten days after the indemnified party's notice is
given, give notice to the indemnified party of its election to
assume the defense thereof, the indemnifying party shall be bound
by any determination made in such action or any compromise or
settlement thereof effected by the indemnified party.
Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that an
action may adversely affect it or its Affiliates other than as a
result of monetary damages, such indemnified party may, by notice
to the indemnifying party, assume the exclusive right to defend,
compromise or settle such action, but the indemnifying party shall
not be bound by any determination of an action so defended or any
compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld).
ARTICLE XIII
13. Miscellaneous.
13.1 Parties Obligated and Benefitted. (1) Subject to
the limitations set forth in clauses (b) and (c) below, this
Agreement will be binding upon the parties and their respective
assigns and successors in interest and will inure solely to the
benefit of the parties and their respective assigns and successors
in interest, and no other Person will be entitled to any of the
benefits conferred by this Agreement.
(2) Employer shall be deemed a third party
beneficiary of Buyer's obligations as set forth in Section 7.3(h).
(3) Except as otherwise permitted in the following
sentence, without the prior written consent of the other parties,
no party will assign any of its rights under this Agreement or
delegate any of its duties under this Agreement. Buyer, upon
written notice to Seller, shall have the right to assign its
rights under this Agreement to any of its Affiliates at any time
without Seller's consent; provided, however, that notwithstanding
such assignment Buyer shall remain obligated to Seller pursuant to
the terms and conditions of this Agreement; and provided, further,
that, without TCI's consent and Seller's consent, Buyer may not
assign its rights under this Agreement to any Affiliate of TCI,
any Affiliate of Seller or any Affiliate of Buyer of which TCI
owns greater than ten percent of such Person's equity securities.
Notwithstanding the foregoing, Buyer may assign its rights under
this Agreement to the Joint Venture.
13.2 Press Releases. Except as required by applicable
law based on the advice of counsel, neither party shall make any
public announcement, press release or Form 8-K filing under the
Exchange Act with the SEC or any other filing with any other
regulatory agency with respect to
37
the transactions contemplated by this Agreement, without the
prior written approval of the other party.
13.3 Notices. All notices, consents, approvals,
demands, requests and other communications required or desired to
be given hereunder must be given in writing, shall refer to this
Agreement, and shall be sent by registered or certified mail,
return receipt requested, by hand delivery, by facsimile or by
overnight courier service, addressed to the parties hereto at
their addresses set forth below, or such other addresses as they
may designate by like notice:
To Seller:
American Cable TV Investors 5, Ltd.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile No.: (000) 000-0000
With copies to:
Xxxx, Scholer, Fierman,
Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
To Buyer at:
c/o Century Communications Corp.
00 Xxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
With copies to:
Xxxxx Xxxxxxxxxx & Xxxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
Any notice from a party hereto may be given by such
party's respective attorneys. Any notice or other communications
made hereunder shall be deemed to have been given (i) if
38
delivered personally, by overnight courier service or by facsimile, on the
date received, or (ii) if by registered or certified mail, return
receipt requested, five business days after mailing.
13.4 Waiver. This Agreement or any of its provisions
may not be waived except in writing. The failure of any party to
enforce any right arising under this Agreement on one or more
occasions will not operate as a waiver of that or any other right
on that or any other occasion.
13.5 Captions. The article and section captions of this
Agreement are for convenience only and do not constitute a part of
this Agreement.
13.6 CHOICE OF LAW. THIS AGREEMENT AND THE LEGAL
RELATIONS BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO THE PERFORMED IN THAT STATE,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
13.7 Nonrecourse. Notwithstanding anything in this
Agreement to the contrary, in any action brought by reason of this
Agreement or the transactions contemplated hereby, no judgment
shall be sought or obtained against any of the general or limited
partners of Seller or enforced against any of such partners or any
of their assets.
13.8 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 a limiting sense.
13.9 Rights Cumulative. Except as set forth in Sec
tion 10.4, 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.
13.10 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.
13.11 Time. 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.
13.12 Expenses. (1) Except as otherwise expressly
provided in this Agreement, each party will pay all of its
expenses, including attorneys' and accountants' fees, in
connection
39
with the negotiation of this Agreement, the performance
of its obligations and the consummation of the transactions
contemplated by this Agreement.
(2) If Seller terminates this Agreement pursuant
to Section 10.1(b)(ii), Seller shall pay to Buyer all of its
Expenses (as defined below) in immediately available funds within
10 Business Days after requested by Buyer (accompanied by
reasonably detailed documentation). The term "Expenses" means all
reasonable out-of-pocket fees and expenses incurred or paid by or
on behalf of Buyer in connection with the consummation of any of
the transactions contemplated by this Agreement, including all
fees and expenses of counsel, accountants, experts and consultants
to Buyer but excluding all fees and expenses of investment banking
firms, if any, and excluding any commitment or similar fees or
expenses relating to any financings.
13.13 Specific Performance. The parties agree that
irreparable damages would occur if any of the provisions of this
Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the
terms and provisions hereof in any court of the United States or
any state having jurisdiction, in addition to any other remedy to
which they are entitled at law or in equity.
13.14 Schedules. Any disclosure made on a Schedule
to this Agreement will be deemed included on any other Schedule to
which such disclosure may be pertinent.
13.15 Counterparts. This Agreement may be executed
in one or more counterparts, each of which will be deemed an
original.
13.16 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)
contains the entire agreement of the parties and supersedes all
prior oral or written agreements and understandings with respect
to the subject matter. This Agreement may not be amended or
modified except by a writing signed by the parties.
13.17 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.
40
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.
SELLER: AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI Partners V, L.P.,
its general partner
By: TCI Ventures Five, Inc.,
its general partner
By:
___________________________
Xxxxxx Xxxxx
President
BUYER:
CENTURY COMMUNICATIONS CORP.
By:
_ _______________________________
Name: Xxxxx X. Xxxxxxxxx
Title:
TCI hereby agrees with respect to Sections 4.2 (b), 7.3,
7.10(b) and 13.1(c) (including the
consent to the assignment referred to therein) only:
TCI COMMUNICATIONS, INC.
By:
________________________________
Name:
Title:
TCICA hereby agrees with respect to Section
7.14 (including the consent to the assignment
referred to therein) only:
TCI CABLEVISION ASSOCIATES, INC.
41
By:
_______________________________
Name:
Title:
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