EXHIBIT 2.2
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
By and Between
AVALON CABLE HOLDINGS LLC
and
AVALON INVESTORS, L.L.C.
and
AVALON CABLE OF MICHIGAN HOLDINGS, INC.
and
AVALON CABLE LLC
and
CHARTER COMMUNICATIONS HOLDINGS LLC
and
CHARTER COMMUNICATIONS, INC.
May 13, 1999
SECURITIES PURCHASE AGREEMENT
-----------------------------
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of May 13,
1999, by and among Avalon Cable Holdings, LLC, a Delaware limited liability
company (the "Parent"), Avalon Investors, L.L.C., a Delaware limited liability
company ("Avalon Investors" and together with Parent, the "Sellers"), Avalon
Cable of Michigan Holdings, Inc., a Delaware corporation ("Michigan Holdings"),
Avalon Cable LLC, a Delaware limited liability company (the "Company" and
together with the Sellers and Michigan Holdings, the "Avalon Parties"), Charter
Communications Holdings LLC, a Delaware limited liability company (the
"Purchaser"), and Charter Communications, Inc., a Delaware corporation (the
"Guarantor"). The Sellers, Michigan Holdings, the Company, the Purchaser and the
Guarantor are sometimes referred to collectively herein as the "Parties" and
each individually as a "Party".
WHEREAS, Parent owns all of the issued and outstanding shares of common
stock of Michigan Holdings, par value $.01 per share (the "Stock"), and an
option (the "Option") to purchase all of the issued and outstanding Class B-1
Units of the Company (the"Class B-1 Units") from Avalon Cable of New England
Holdings, Inc., a Delaware corporation ("New England Holdings"), at a price (the
"Option Price") equal to $6,615,000;
WHEREAS, Michigan Holdings, through its ownership of all of the issued and
outstanding stock of Avalon Cable of Michigan, Inc. ("Cable Michigan"),
indirectly owns all of the issued and outstanding Class B-2 Units of the Company
(the "Class B-2 Units" and together with the Class B-1 Units, the "Class B
Units");
WHEREAS, Avalon Investors owns all of the issued and outstanding Class A
Units of the Company (the "Class A Units" and together with the Class B Units,
the "Units");
WHEREAS, the Units which are owned directly or indirectly by the Sellers,
represent all of the issued and outstanding equity interests of the Company;
WHEREAS, the Purchaser wishes to purchase from the Sellers, and the Sellers
wish to sell to the Purchaser, all of the outstanding equity interests of the
Company;
WHEREAS, in order to give effect to the purchase and sale described in the
immediately preceding recital, the Sellers wish to sell to the Purchaser, and
the Purchaser wishes to purchase from the Sellers (such purchase and sale being
the "Purchase and Sale"), the Stock, the Option and the Class A Units (together
the "Purchased Securities"), all subject to the terms and conditions set forth
herein; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Parent and Purchaser have executed and delivered an escrow agreement,
in the form of the attached Exhibit A, among them and the escrow agent named
therein (as in effect from time to time, including any successor agreement, the
"Pre-Closing Escrow Agreement"), and Purchaser has agreed to deliver by May 18,
1999 to such escrow agent, as agent (together with any successor thereto under
the Pre-Closing Escrow Agreement, the "Pre-Closing Escrow Agent"), cash in the
amount of $50,000,000, which cash amount Purchaser may replace with a letter of
credit in the face amount of $50,000,000 (the "Letter of Credit") as provided in
the
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Pre-Closing Escrow Agreement, as security for the performance of Purchaser's
obligations under this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS, INTERPRETATION
---------------------------
Section 1.1 Certain Defined Terms. Capitalized terms used herein and not
otherwise defined, shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries. controls, is
controlled by, or is under common control with such Person. The term "control"
means 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, by contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"Affiliated Group" means an affiliated group as defined in Section 1504
of the Code (or any analogous combined, consolidated or unitary group defined
under state, local or foreign income Tax law) of which any Avalon Company or any
Avalon Subsidiary is or has been a member.
"Agreement" has the meaning so forth in the first paragraph hereof.
"Applicable Percentage" has the meaning set forth in Section 7.1(vi).
"Avalon Companies" means, collectively, Michigan Holdings and the Company.
"Avalon Investors" has the meaning set forth in the first paragraph hereof.
"Avalon Parties" has the meaning set forth in the first paragraph hereof.
"Avalon Percentage" means 98.462%.
"Avalon Subsidiaries" means the Subsidiaries of the Company and Cable
Michigan.
"Balance Sheet" means the consolidated balance sheet as of the Balance
Sheet Date of the Company and the consolidated Avalon Subsidiaries set forth in
the Form S-4.
"Balance Sheet Date" means December 31, 1998.
"Bank Facility" means the Senior Credit Agreement dated as of November 5,
1998 by and among certain of the Avalon Subsidiaries, Xxxxxx Brothers Inc.,
Fleet Bank, N.A.,
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Union Bank of California, N.A. and Xxxxxx Commercial Paper Inc., as in effect
from time to time.
"Base Purchase Price" means $832,000,000.
"Basic Service" has the meaning set forth in Section 4.17(a).
"Basic Subscriber" has the meaning set forth in Section 4.17(a).
"Benefit Arrangement" means any employment, severance or similar contract
or arrangement (whether or not written and whether applicable to one or more
individuals) or any plan, policy, fund, program or contract or arrangement
(whether or not written and whether applicable to one or more individuals)
providing for compensation, bonus, profit-sharing, stock option, or other stock
related rights or other forms of incentive or deferred compensation, vacation
benefits, fringe benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and post-
employment or retirement benefits (including compensation, pension, health,
medical or life insurance or other benefits) that (i) is not an Employee Plan,
(ii) is entered into, maintained, administered or contributed to by the Avalon
Companies or the Avalon Subsidiaries, and (iii) covers any employee or former
employee of the Avalon Companies or any ERISA Affiliate.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks in New York City are open for the general transaction of
business.
"Capital Plan" means the capital expenditure plan that is attached to
Schedule 4.8.
"Cable Act" means the Cable Television Consumer Protection and Competition
Act of 1992, as amended and the FCC rules and regulations promulgated
thereunder.
"Cable Michigan" means Avalon Cable of Michigan, Inc., a Pennsylvania
corporation.
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation. and Liability Act.
"Class A Units" has the meaning set forth in the recitals.
"Class B Unit" has the meaning set forth in the recitals.
"Class B-1 Units" has the meaning set forth in the recitals.
"Class B-2 Units" has the meaning set forth in the recitals.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Communications Act" means the Communications Act of 1934, as amended.
"Company" has the meaning set forth in the first paragraph hereof.
"Company's LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement of the Company dated as of March 26, 1999 (as in effect from
time to time).
"Confidential Information" means any information concerning the businesses
and affairs of the Avalon Companies and the Avalon Subsidiaries that is not
already generally available to the public.
"Confidentiality Agreement" means that certain confidentiality agreement
dated as of April 26, 1999, by and between Parent and Purchaser, as in effect
from time to time.
"Copyright Act" means the 1976 Copyright Act, as amended.
"Copyright Office" means the United States Copyright Office.
"Disclosure Schedule" means the disclosure schedules delivered by the
Sellers to the Purchaser on the date hereof and attached hereto. Any exceptions
to the representations and warranties described in the Disclosure Schedule shall
apply to each section of the representations and warranties identified and any
other sections to which it is reasonably apparent, based on the nature and
language of the relevant description, that such exceptions relate.
"Employee Plan" means any "employee benefit plan", as defined in Section
3(3) of ERISA that (i) is subject to any provision of ERISA, (ii) is maintained,
administered or contributed to by the Avalon Companies or the Avalon
Subsidiaries, and (iii) covers any employee or former employee of the Avalon
Companies or the Avalon Subsidiaries.
"Enforceability Exception" means applicable bankruptcy, insolvency,
moratorium or similar laws of general application relating to or affecting
creditors' rights, and general principles of equity.
"Environmental Laws" means any federal, state, and local laws, judicial
decisions. regulations, rules, judgments, orders, decrees, permits, licenses,
agreements and governmental restrictions (including, without limitation, CERCLA
and RCRA) relating to human health, the environment or to emissions, discharges
or releases of pollutants, contaminants or other hazardous substances or wastes
into the environment, including without limitation ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or other hazardous substances or wastes or the clean-up
or other remediation thereof.
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"Environmental Liabilities" means any and all liabilities of the named
entity, which arise under or relate to matters covered by Environmental Laws and
relate to actions occurring or conditions existing on or prior to the Closing
Date, and includes fines, penalties, and costs of correcting any compliance
deficiencies, and obligations for site cleanup or investigation or cleanup
resulting from the disposal, release or threatened release of hazardous
substances, pollutants, contaminants, or wastes.
"Equity Securities" of any Person means (i) any capital stock, partnership,
membership, joint venture or other ownership or equity interest, participation
or securities (whether voting or non-voting, whether preferred. common or
otherwise, and including any stock appreciation, contingent interest or similar
right) and (ii) any option, warrant, security or other right (including debt
securities) directly or indirectly convertible into or exercisable or
exchangeable for, or otherwise to acquire directly or indirectly any stock
interest, participation or security described in clause (i) above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any entity which, together with any Avalon Company
or Avalon Subsidiary, would be treated as a single employer under Section 414(b)
or (c) of the Code.
"Escrow Adjustment Amount" has the meaning set forth in Section 2.8(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exercise Notice" has the meaning set forth in Section 2.4.
"FCC" means the Federal Communications Commission.
"FCC Licenses" has the meaning set forth in Section 4.17(l).
"FCC Rules and Regulations" means the rules and regulations of the FCC
under the Communications Act.
"Financial Statements" has the meaning set forth in Section 4.7.
"Form S-4" has the meaning set forth in Section 4.6.
"Franchise" means a written "franchise" within the meaning of Section
602(9)of the Cable Communications Policy Act of 1984 (47 U.S.C. Section 522(9)).
"Franchising Authorities" has the meaning that term is given by Section
602(10) of the Cable Communications Policy Act of 1984 (47 U.S.C. Section
522(10)).
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"Funded Debt" means, without duplication, all obligations under
indebtedness for borrowed money, all obligations under capital leases, notes
payable, guaranties and drafts accepted representing extensions of credit.
"GAAP" means generally accepted accounting principles as in effect in the
United States on the date of this Agreement applied on a basis consistent with
the Financial Statements.
"Hazardous substance" means waste, material, substance, pollutant,
contaminant, or other matter regulated by or pursuant to any Environmental Law,
including without limitation any substance that is a "hazardous substance" under
CERCLA, any substance that is a "hazardous waste" under RCRA or any pesticide,
toxic chemical, petroleum product or byproduct, asbestos or polychlorinated
biphenyl.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as
amended, and the rules and regulations thereunder.
"ICE Agreement" means the Asset Purchase Agreement dated as of the date
hereof among the Purchaser, the Guarantor and Interlake Cablevision Enterprises
Holdings, LLC, as amended from time to time.
"IRS" means the United States Internal Revenue Service.
"Knowledge" means (i) with respect to the Avalon Parties, the actual
knowledge of the Persons listed on Schedule 1.1(a) after reasonable inquiry and
not any constructive or imputed knowledge of any such Person or any of such
Person's affiliates, stockholders, members, officers or any other employee of
any of such Persons, and (ii) with respect to the Purchaser, means actual
knowledge of the Persons listed on Schedule 1.1(b) and not any constructive or
imputed knowledge of any such Person or any of such Person's affiliates,
officers or other employees.
"Lien" means, with respect to any asset, any lien, claim, charge,
restriction, pledge, mortgage, conditional sale, option, security interest,
encumbrance or other condition adversely affecting title or other ownership
interest in respect of such asset.
"Material Adverse Effect" means a material adverse effect on the business,
assets, operations or financial condition of the Avalon Companies and Avalon
Subsidiaries, taken as a whole (other than those arising from general economic
or industry-wide events or occurrences), or on the ability of the Avalon Parties
or the Purchaser to perform their material obligations under this Agreement.
"Material Breach" means a breach of any provision of this Agreement that
prevents the satisfaction of any Closing condition that has not been waived (or
causes such a condition not to be satisfied).
"Members Agreement" has the meaning set forth in Section 10.12.
"Michigan Holdings" has the meaning set forth in the first paragraph
hereof.
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"MVPD" means a distributor of cable television services, multichannel
multi-point distribution service, direct broadcast satellite service or
television receive-only satellite programming, who makes available for purchase,
by subscribers or customers, multiple channels of video programming, other than
persons distributing such services only to multiple dwelling unit or other
commercial customers (including hotels, motels, resorts, hospitals, dormitories,
prisons, restaurants, bars and similar establishments).
"Multiemployer Plan" means any "multiemployer plan," as defined in Section
4001(a)(3) of ERISA, (A) which the Avalon Companies or any Avalon Subsidiary
maintains or contributes to, or with respect to which the Avalon Companies or
any Avalon Subsidiary has any liability or potential liability and (B) which
covers any current or former employee of any Avalon Company or Avalon
Subsidiary.
"New England Holdings" has the meaning set forth in the recitals.
"Option" has the meaning set forth in the recitals.
"Option Price" has the meaning set forth in the recitals.
"Ordinary Course" means the ordinary course of business consistent with
past custom and practice (including with respect to quantity, frequency and
amount).
"Parent" has the meaning set forth in the first paragraph of this
Agreement.
"Parent Account" has the meaning set forth in Section 2.3.
"Party" or "Parties" has the meaning set forth in the first paragraph
hereof.
"Permitted Liens" means (i) materialmen's, mechanics', carriers',
workmen's, warehousemen's, repairmen's, and other like Liens arising in the
Ordinary Course for payments which are not material in amount, and deposits to
obtain the release of such Liens; (ii) Liens for current Taxes not yet due and
payable or which are being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established; (iii) Liens securing
the payment of Funded Debt and related obligations, and (iv) other Liens or
minor imperfections of title that do not materially impair the conduct of the
Avalon Companies or Avalon Subsidiaries' business or the use or value of any
material assets.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Plans" shall mean all Benefit Arrangements, Multiemployer Plans, Employee
Pension Benefit Plans and Employee Welfare Benefit Plans.
"Post-Closing Escrow Agent" means the escrow agent named in the Post-
Closing Escrow Agreement, including any successor thereto.
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"Post-Closing Escrow Agreement" means the Post-Closing Escrow Agreement to
be entered into as of the Closing Date, substantially in the form attached
hereto as Exhibit B.
"Post-Closing Escrow Fund" means the Escrow Adjustment Amount held under
the Post-Closing Escrow Agreement.
"Pre-Closing Escrow Agent" has the meaning set forth in the recitals.
"Pre-Closing Escrow Agreement" has the meaning set forth in the recitals.
"Pre-Closing Escrow Fund" means $50,000,000 held pursuant to the Pre-
Closing Escrow Agreement, whether in cash or as a Letter of Credit.
"Pre-Closing Period" means any taxable period ending on or before the
Closing Date.
"Proprietary Rights" means all (i) patents, patent applications, patent
disclosure and inventions (whether patentable or unpatentable and whether or not
reduced to practice), (ii) trademarks, service marks, trade dress, trade names,
logos, slogans, corporate names and Internet domain names, and registrations and
applications for registration thereof, together with all of the goodwill
associated therewith, (iii) copyrights and copyrightable works, and
registrations and applications for registration thereof, (iv) computer software,
data bases and documentation, and (v) trade secrets and other information
(including ideas, formulae and compositions), know-how, processes, techniques,
research and development information, drawings, specifications, designs, plans,
proposals, data, financial, business and marketing plans and customer and
supplier lists and information.
"Purchase and Sale" has the meaning set forth in the recitals.
"Purchase Price" has the meaning set forth in Section 2.3.
"Purchased Securities" has the meaning set forth in the recitals.
"Purchaser" has the meaning set forth in the first paragraph hereof.
"RCRA" means the federal Resource Conservation and Recovery Act.
"Scheduled Agreements" has the meaning set forth in Section 4.17(b).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" has the meaning set forth in the first paragraph hereof.
"Stock" has the meaning set forth in the recitals.
"Subsidiary" as to any Person, means any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the
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board of directors or other persons performing similar functions are directly or
indirectly owned by such Person.
"Subsidiary Securities" has the meaning set forth in Section 4.5(b).
"Systems" means the cable television systems owned by the Avalon
Subsidiaries.
"Tax" means any (i) federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, social security, medicare,
unemployment, disability, payroll, license, employee or other withholding, or
other tax, of any kind whatsoever, including any interest, penalties or
additions to tax or additional amounts in respect of the foregoing; (ii)
liability for the payment of any amounts of the type described in clause (i)
arising as a result of being (or ceasing to be) a member of any Affiliated Group
(or being included (or required to be included) in any Tax Return relating
thereto); and (iii) liability for the payment of any amounts of the type
described in clause (i) as a result of any express or implied obligation to
indemnify or otherwise assume or succeed to the liability of any other Person.
"Tax Returns" means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Termination Date" has the meaning set forth in Section 8.1(ii).
"Title IV Plan" means an Employee Plan subject to Title IV of ERISA other
than any Multiemployer Plan.
"Transactions" has the meaning set forth in Section 2.5.
"Units" has the meaning set forth in the recitals.
"Year 2000 Plan" has the meaning set forth in Section 4.20.
"Year 2000 Problem" has the meaning set forth in Section 4.20.
Section 1.2 Interpretation. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words "herein," "hereto," "hereof'
and words of similar import refer to this Agreement as a whole and not to any
particular Section or paragraph hereof; (ii) the word "including" means
"including, but not limited to"; (iii) masculine gender shall also include the
feminine and neutral genders, and vice versa, and (iv) words importing the
singular shall also include the plural, and vice versa.
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ARTICLE II
PURCHASE AND SALE OF SECURITIES: CLOSING
-----------------------------------------
Section 2.1 Transfer of Purchased Securities. Upon the terms and subject
to the conditions contained herein, Sellers shall sell, convey, transfer, assign
and deliver to Purchaser, and Purchaser shall acquire at the Closing, the
Purchased Securities.
Section 2.2 Closing Date; Delayed Closing. The closing of the purchase and
sale of Purchased Securities pursuant to this Agreement (the "Closing") will
occur at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, at 10:00 a.m. on the later of (x) the fifth (5th) Business Day after all
of the conditions to closing set forth in Article VII (other than those that
will be satisfied by deliveries at the Closing) are either satisfied or duly
waived and (y) November 8, 1999. Notwithstanding the foregoing, if, on the date
for the Closing, any condition specified in Article VII has not been satisfied
(and will not be satisfied by the delivery of documents or tender of payment by
the Parties at the Closing) or waived by Purchaser or Sellers, as the case may
be, then the date for the Closing will be extended to any date specified by
Purchaser to Sellers, or by Sellers to Purchaser, with not less than five (5)
Business Days' prior notice (subject to Purchaser's and Sellers' respective
conditions to Closing being satisfied or waived on such specified date). The
date upon which the Closing actually occurs is referred to herein as the
"Closing Date".
Section 2.3 Consideration for Purchased Securities. Upon the terms and
subject to the conditions contained herein, as consideration for the purchase of
the Purchased Securities, Purchaser shall pay to Parent, as agent for the
Sellers and subject to Section 10.12, an amount (the "Purchase Price") equal to
the Base Purchase Price less an amount equal to the Option Price less the amount
of any adjustments required to be made pursuant to Section 2.7. At the Closing,
the Purchaser will pay the Purchase Price in the following manner:
(i) an amount (the "Closing Cash Payment") equal to the Base Purchase
Price less the sum of (x) the Option Price and (y) the Escrow Adjustment
Amount, will be paid by wire transfer of immediately available funds to an
account (the "Parent Account") designated by Parent not less than two (2)
Business Days prior to Closing; and
(ii) the amount of the Escrow Adjustment Amount will be paid by wire
transfer of immediately available funds to such bank account as the Post-
Closing Escrow Agent shall designate. After the Closing, the Post-Closing
Escrow Agent will hold and release such funds in accordance with the terms
and conditions of the Post-Closing Escrow Agreement and Section 2.8. For
the avoidance of doubt, the Post-Closing Escrow Fund shall be used only for
the purposes set forth in Section 2.8(d).
Section 2.4 Related Transactions. At the Closing, immediately following
the transfer described in Section 2.1, the Purchaser shall exercise the Option
by delivering to New England Holdings an exercise notice (the "Exercise Notice")
substantially in the form attached hereto as Exhibit B and paying the Option
Price to the Parent (for the account of New England Holdings) by wire transfer
of immediately available funds to the Parent Account. Effective as of the
Closing, Purchaser shall cause all amounts then due under the Bank Facility
(including
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all prepayment premiums, penalties or other like charges) to be paid in full
with the effect that the Bank Facility and related documentation shall be
terminated effective as of the Closing, or in the alternative, shall cause all
defaults and events of default under the Bank Facility and related documentation
arising from the consummation of the Transactions to be waived and the Parent
and New England Holdings to be released from all liabilities and obligations
thereunder. If the Bank Facility is not so terminated, the Liens created by the
Bank Facility and related documentation shall not result in a breach of any
representation or warranty set forth herein.
Section 2.5 Closing Deliveries by Sellers. To effect the transactions
referred to in Sections 2.1 and 2.4 (the "Transactions"), Sellers shall, on the
Closing Date, deliver to Purchaser the following:
(i) certificates evidencing the Stock, free and clear of any and all
Liens, duly endorsed in blank for transfer or accompanied by stock powers
duly executed in blank;
(ii) assignments evidencing the transfer of the Option from Parent to
Purchaser, the transfer of the Class B-1 Units by New England Holdings to
Purchaser and the transfer of the Class A Units from Avalon Investors to
Purchaser, in each case free and clear of any and all Liens;
(iii) copies of all consents, approvals, releases, and waivers from
governmental authorities and other third parties which have been obtained;
and
(iv) all other documents required to be delivered by the Seller
pursuant to Article VII hereof not specifically mentioned above in this
Section 2.5.
All instruments and documents executed and delivered to Purchaser pursuant
hereto shall be in form and substance, and shall be executed in a manner
reasonably satisfactory to Purchaser and its counsel.
Section 2.6 Closing Deliveries by Purchaser. To effect the Transactions,
Purchaser shall, on the Closing Date, deliver the following:
(i) the Closing Cash Payment and the Escrow Adjustment Amount, each
in accordance with Section 2.3; and
(ii) the Option Price and Exercise Notice, each in accordance with
Section 2.4; and
(iii) all other documents required to be delivered by the Purchaser
pursuant to Article VII hereof not specifically mentioned above in this
Section 2.6.
All instruments and documents executed and delivered to Sellers pursuant hereto
shall be in form and substance, and shall be executed in a manner, reasonably
satisfactory to Parent and its counsel.
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Section 2.7 Purchase Price Adjustments.
(a) Closing Subscribers. If the number of Closing Subscribers is less
than 258,000, the Purchase Price shall be decreased by an amount equal to
the Avalon Percentage of the product of (x) 258,000 minus the number of
Closing Subscribers multiplied by (y) $3,275.1938. For purposes of this
Agreement, "Closing Subscribers" means (i) the total number of Basic
Subscribers for all of the Systems as of the last day of the month
immediately preceding the Closing plus (ii) the total number of "Basic
Subscribers" as defined under Section 4.17 of the ICE Agreement as of the
last day of the month immediately preceding the Closing.
(b) Closing Net Liabilities. The Purchase Price shall be decreased by
the amount of the Closing Net Liabilities. For purposes of this Agreement,
"Closing Net Liabilities" means:
(i) without duplication, the principal amount and any accrued
but unpaid interest (i.e., the accreted value in the case of any notes
issued at a discount) as of the Closing Date in respect of the Funded Debt
(including the Bank Facility), if any, of the Avalon Companies or Avalon
Subsidiaries as of the Closing Date (exclusive of any prepayment or
repayment premium, penalty or other charge); minus
(ii) Working Capital if such number is greater than zero; plus
(iii) the absolute value of Working Capital if such number is
less than zero.
(c) Certain Definitions and Procedures. For the purposes of, and
subject to the other provisions of, this Section 2.7(b):
(i) "Working Capital" means Current Assets as of 12:01 a.m.
(local time) on the Closing Date minus Current Liabilities as of 12:01 a.m.
(local time) on the Closing Date.
(ii) "Current Assets" means the total current assets of the
Avalon Companies and Avalon Subsidiaries determined on a combined,
consolidated basis and without duplication in accordance with GAAP, except
as otherwise provided in this Section 2.7(c); provided, for the purposes of
determining accounts receivable under this definition, accounts receivable
that consist of subscriber receivables that as of the Closing Date are: (i)
less than sixty (60) days old shall be valued at ninety-nine percent (99%)
of the face value thereof; (ii) at least sixty (60) days but less than
ninety (90) days old shall be valued at seventy-five percent (75%) of the
face value thereof; and (iii) ninety (90) days old or older shall be valued
at zero; and provided further, that for purposes of determining accounts
receivable for advertising ("Advertising Receivables") under this
definition of Current Assets, Advertising Receivables as of the Closing
Date shall be valued at 100% of the face value thereof as reported by the
service company handling advertising for the Company and the Avalon
Subsidiaries. For purposes of the foregoing, accounts receivable for
subscriber receivables and Advertising Receivables shall be determined
without regard to any allowance for doubtful accounts or bad debt reserves.
In addition, for the purpose of determining accounts receivable
12
aging for subscriber receivables under this definition, the parties agree
to use the aging stated on the billing report generated in the ordinary
course on the date closest to the Closing Date (whether such report is
generated before or after the Closing Date) to determine the aging of any
account receivable for a subscriber and to use the actual billing date as
the beginning point for the determination of the aging of any other account
receivable. For the avoidance of doubt, Current Assets shall not include
inventory or work-in-progress.
(iii) "Current Liabilities" means the total current liabilities of the
Avalon Companies and Avalon Subsidiaries, including, without limitation,
vacation pay, determined on a combined, consolidated basis and without
duplication (including without duplication of any amount described in
Section 2.7(b)(i)) in accordance with GAAP, except as otherwise provided in
this Section 2.7(c).
(iv) For purposes of the definitions of "Current Assets" and "Current
Liabilities," (A) deferred taxes shall not be included, (B) income taxes
for any tax period that begins before the Closing Date and ends on or after
the Closing Date shall be included as a liability equal to the amount of
the liability that would be shown on a Tax Return as if each Avalon
Company's and Avalon Subsidiary's tax year ended on the Closing Date, and
(C) income taxes payable shall exclude all taxes arising from any actions
taken at the request of the Purchaser pursuant to Section 6.11.
Section 2.8 Purchase Price Adjustment Procedures.
(a) Estimate. No later than six (6) Business Days prior to the date
scheduled for the Closing, Parent shall prepare and deliver to Purchaser a
written report (the "Preliminary Closing Statement") setting forth Parent's
estimates of Closing Net Liabilities and Closing Subscribers, determined in
accordance with Section 2.7, and the Purchase Price, as adjusted pursuant
to Section 2.7. The Preliminary Closing Statement shall be prepared by
Parent in good faith and shall be certified by Parent to be its good faith
estimate of the Closing Net Liabilities, Closing Subscribers and Purchase
Price, as adjusted, as of the date thereof together with a work sheet
showing the calculation thereof. Parent shall make available to Purchaser
such information as Purchaser shall reasonably request relating to the
matters set forth in the Preliminary Closing Statement. If Purchaser does
not agree with the Closing Net Liabilities, Closing Subscribers or Purchase
Price set forth in the Preliminary Closing Statement, then on or prior to
the third (3/rd/) Business Day prior to the date scheduled for the Closing,
Purchaser may deliver to Parent a written report (the "Preliminary Dispute
Notice") setting forth in reasonable detail Purchaser's good faith
estimates of any amount set forth in the Preliminary Closing Statement with
which Purchaser disagrees. In the case of any such estimated amount set
forth in the Preliminary Dispute Notice, Parent and Purchaser shall
endeavor in good faith to agree prior to the Closing on the appropriate
amount of such estimates to be used in calculating the Closing Cash
Payment.
(b) Escrow Adjustment Amount. If Parent and Purchaser agree on the
estimates described in Section 2.8(a) or if Purchaser does not deliver a
Preliminary Dispute Notice, the "Escrow Adjustment Amount" shall equal
$10,000,000. If Parent and Purchaser
13
do not agree on the amounts set forth in the Preliminary Dispute Notice, if
any, by the Business Day immediately prior to the date scheduled for the
Closing, then the "Escrow Adjustment Amount" shall equal $10,000,000 plus
the amount, if any, by which (x) the Purchase Price as adjusted in
accordance with Section 2.7 giving effect to the estimates set forth in the
Preliminary Closing Statement (with any changes thereto mutually agreed to
by Purchaser and Parent) exceeds (y) the Purchase Price as adjusted in
accordance with Section 2.7 giving effect to the estimates set forth in the
Preliminary Dispute Notice (with any changes agreed to by Purchaser and
Parent).
(c) Final Closing Statement. Within ninety (90) days after the
Closing Date, Purchaser shall prepare and deliver to Parent a written
report (the "Final Closing Statement") setting forth Purchaser's final
determination of Closing Net Liabilities, Closing Subscribers and Purchase
Price to the extent not previously agreed upon pursuant to Section 2.8(a),
determined in accordance with Section 2.7 and in accordance with the
methodologies and the accounting policies and practices described in
Section 2.7. The Final Closing Statement shall be prepared by Purchaser in
good faith and shall be certified by Purchaser to be, as of the date
prepared, its good faith determination of the Closing Net Liabilities,
Closing Subscribers and Purchase Price, as so adjusted as applicable.
Purchaser shall allow Parent and its agents access at all reasonable times
after the Closing Date to copies of the books, records and accounts of the
Avalon Companies and Avalon Subsidiaries and make available to Parent such
information as Parent reasonably requests to allow Parent to examine the
accuracy of the Final Closing Statement. Within thirty (30) days after the
date that the Final Closing Statement is delivered by Purchaser to Parent,
Parent shall complete its examination thereof and may deliver to Purchaser
a written report setting forth any proposed adjustments to any amounts set
forth in the Final Closing Statement; provided, however, that if Purchaser
does not comply with its obligations pursuant to the preceding sentence,
such thirty (30) day period shall run from the day after the date on which
Purchaser complies with such obligations. After submission of the Final
Closing Statement, Purchaser shall have no right to raise further
adjustments in its favor and after submission of Parent's report of any
proposed adjustments, Parent shall have no right to raise further
adjustments in its favor. If Parent notifies Purchaser of its acceptance of
the amounts set forth in the Final Closing Statement, or if Parent fails to
deliver its report of any proposed adjustments within the period specified
in the second preceding sentence, the amounts set forth in the Final
Closing Statement shall be conclusive, final and binding on the parties as
of the last day of such period. Purchaser and Parent shall use good faith
efforts to resolve any dispute involving the amounts set forth in the Final
Closing Statement. If Parent and Purchaser fail to agree on any amount set
forth in the Final Closing Statement within fifteen (15) days after
Purchaser receives Parent's report pursuant to this Section 2.8(c), then
Parent and Purchaser shall retain the firm of Ernst & Young LLP (or its
successor)(the "Referee") to make the final determination, under the terms
of this Agreement, of any amounts under dispute. The Referee shall endeavor
to resolve the dispute as promptly as practicable and the Referee's
resolution of the dispute shall be final and binding on the parties, and a
judgment may be entered thereon in any court of competent jurisdiction. The
costs and expenses of the Referee and its services rendered pursuant to
this Section 2.8(c) shall be borne one-half by Purchaser and one-half by
Parent.
(d) Payment of Purchase Price Adjustments
14
(i) Within three (3) Business Days after the amount of the Purchase
Price is finally determined pursuant to this Section 2.8 (such amount being
the "Final Purchase Price"), Purchaser and Parent shall direct the Post-
Closing Escrow Agent to pay from the Post-Closing Escrow Fund (x) if and to
the extent, if any, the Final Purchase Price exceeds the Closing Cash
Payment, the amount of such excess to Parent (as agent for the Sellers and
subject to Section 10.12) and (y) the balance thereof, if any, to
Purchaser. To the extent the Final Purchase Price exceeds the Closing Cash
Payment by more than the amount of the Post-Closing Escrow Fund, Purchaser
shall promptly (and in no event later than 3 Business Days after the
Purchase Price is finally determined) pay to Parent (as agent for the
Sellers and subject to Section 10.12) the remainder thereof, but not in
excess of $10,000,000. The Parties agree that the Post-Closing Escrow Fund
shall be Purchaser's sole and exclusive source for any adjustments to the
Purchase Price after the Closing and that neither Seller nor any other
Person shall have any liability to Purchaser to the extent the Closing Cash
Payment exceeds the Final Purchase Price.
(ii) Any interest that has accrued on the Post-Closing Escrow Fund
shall be paid to the Purchaser and the Parent pro rata based on the payment
of the Post-Closing Escrow Fund to each of them pursuant to the subsection
(i) above. Such interest payment shall be made with the payments otherwise
required under this Section 2.8(d) or an soon thereafter as practicable.
(iii) All payments to the Parent under this Section 2.8(d) shall be
made by wire transfer of immediately available funds to the Parent Account
and all payments to the Purchaser under this Section 2.8(d) shall be made
by wire transfer of immediately available funds to an account designated by
the Purchaser.
Section 2.9 Escrow Deposit. On or prior to May 18, 1999, Purchaser shall
deliver $50,000,000 in cash to the Pre-Closing Escrow Agent to be held as the
Pre-Closing Escrow Fund under the Pre-Closing Escrow Agreement.
Section 2.10 Guarantee. The Guarantor shall cause the Purchaser (and any
other Person to whom this Agreement may be assigned as permitted hereunder) to
perform all of their obligations hereunder on a timely basis.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
REGARDING SELLERS
-----------------
Parent and, as to itself and its Purchased Securities, Avalon Investors
represent and warrant to Purchaser that the statements contained in this Article
III are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date, except as set forth in the
Disclosure Schedule.
Section 3.1 Organization. Each Seller is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
15
Section 3.2 Authority. Each Seller has all the requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by each Seller of, the performance of each
Seller under, and the consummation by each Seller of the Transactions have been
duly and validly authorized by all action by or on behalf of each Seller. This
Agreement constitutes the valid and legally binding obligation of the Sellers,
enforceable against the Sellers in accordance with its terms, except as the same
may be limited by Enforceability Exceptions.
Section 3.3 Breach. The execution and delivery of this Agreement by the
Sellers does not, and the consummation of the Transactions by the Sellers will
not, (i) violate or conflict with the Certificate of Formation or limited
liability company agreement (as in effect from time to time) of each Seller,
(ii) constitute a material breach or default of, or give rise to any third-party
right of termination, cancellation, modification or acceleration under, any
agreement, understanding or undertaking to which either Seller is a party or by
which either Seller is bound, or give rise to any Lien on any of the Purchased
Securities or the Class B Units (other than in favor of Purchaser), or (iii)
subject to obtaining the approvals and making the filings described in Section
3.4 hereof, constitute a material violation of any statute, law, ordinance,
rule, regulation, judgment, decree, order or writ of any judicial, arbitral,
public, or governmental authority having jurisdiction over the Sellers or any of
the Purchased Securities.
Section 3.4 Consents and Approvals. Neither the execution and delivery of
this Agreement by the Sellers nor the consummation of the Transactions by the
Sellers will require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
(i) for filings required under the Exchange Act, (ii) for notification pursuant
to the HSR Act and expiration or termination of the waiting period thereunder,
(iii) for notices to, or consents and waivers from, the relevant Franchising
Authorities in connection with a change of control of the holders of the
Franchises of the Avalon Companies and Avalon Subsidiaries, and the FCC in
connection with a change of control of the holders of the FCC Licenses, and (iv)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not be, and would not reasonably
be expected to be, material.
Section 3.5 Purchased Securities.
(a) The Stock. Parent holds of record and owns beneficially all of
the Stock, free and clear of any restrictions on transfer, Taxes, Liens,
options, warrants, purchase rights, contracts, commitments, equities, claims,
and demands (other than restrictions under the Securities Act and state
securities laws or that will be terminated effective as of the Closing or are
described in Section 3.4). Parent is not a party to any option, warrant,
purchase right, or other contract or commitment that could require it to sell,
transfer, or otherwise dispose of the Stock (other than this Agreement). Parent
is not a party to any voting trust, proxy, or other agreement or understanding
with respect to the Stock that will not be terminated effective as of the
Closing.
(b) Class A Units. Avalon Investors holds all right, title and
interest in and to the Class A Units, free and clear of any restrictions on
transfer, Taxes, Liens, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands (other than
16
restrictions under the Securities Act and state securities laws or that will be
terminated effective as of the Closing or are described in Section 3.4). Avalon
Investors is not a party to any option, warrant, purchase right, or other
contract or commitment that could require it to sell, transfer, or otherwise
dispose of the Class A Units (other than this Agreement). Avalon Investors is
not a party to any voting trust, proxy, or other agreement or understanding
(other than the Company's LLC Agreement or the Members Agreement) with respect
to the Class A Units that will not be terminated effective as of the Closing.
(c) The Option. Parent holds all right title and interest in and to
the Option, free and clear of any restrictions on transfer, Taxes, Liens,
options, warrants, purchase rights, contracts, commitments, equities, claims,
and demands (other than restrictions under the Securities Act and state
securities laws or that will be terminated effective as of the Closing or are
described in Section 3.4). Parent is not a party to any option, warrant,
purchase right, or other contract or commitment that could require it to sell,
transfer, or otherwise dispose of the Option (other than this Agreement) that
will not be terminated effective as of the Closing. There are no Liens or
restrictions which would prohibit Parent from transferring (or impose any
liability on any Person in connection with the transfer of ) the Option to
Purchaser at the Closing.
(d) Class B-1 Units. New England Holdings holds all right, title and
interest in and to the Class B-1 Units, free and clear of any restrictions on
transfer Taxes, Liens, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands (other than the restrictions under
the Securities Act and state securities laws or that will be terminated
effective as of the Closing or are described in Section 3.4). New England
Holdings is not a party to any option, warrant, purchase right, or other
contract or commitment that could require it to sell, transfer, or otherwise
dispose of the Class B-1 Units (other than the Option). Avalon Investors is not
a party to any voting trust, proxy, or other agreement or understanding (other
than Company's LLC Agreement) with respect to the Class B-1 Units that will not
be terminated effective as of the Closing.
(e) All Equity Interests in the Company. After the consummation of
the Transactions, Purchaser will hold (directly or indirectly) all right, title
and interest in and to all equity interests in the Company, free and clear of
any restrictions on transfer, Liens, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands (other than (i)
restrictions arising under the Securities Act and/or state securities laws, or
under any Franchise or FCC License, and (ii) Liens not existing prior to the
Closing resulting from the ownership of the Purchased Securities by Purchaser).
17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
REGARDING THE AVALON COMPANIES
------------------------------
Parent represents and warrants to Purchaser that the statements contained
in this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date, except as set forth in the
Disclosure Schedule.
Section 4.1 Organization, Requisite Power, Authority and Qualification.
Each of the Avalon Companies is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all the requisite power to carry on its business as now
conducted. Each of the Avalon Companies is duly qualified to do business as a
foreign corporation or company and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, with such exception as would not
have a material and adverse effect on the Avalon Companies and Avalon
Subsidiaries taken as a whole. The Avalon Companies have heretofore delivered to
Purchaser true and complete copies of the Certificate of Incorporation and
Bylaws or Certificate of Formation and limited liability company agreement of
each of the Avalon Companies. Each of the Avalon Parties has all the requisite
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of each of the Avalon Parties, enforceable against each of the Avalon
Parties in accordance with its terms, except as the same may be limited by
Enforceability Exceptions. The execution and delivery by each of the Avalon
Parties of, the performance of each of the Avalon Parties under, and the
consummation by each of the Avalon Parties of the Transactions have been duly
and validly authorized by all action by or on behalf of each of the Avalon
Parties.
Section 4.2 No Breach. Except as set forth on Schedule 4.2, neither the
execution and delivery of this Agreement by the Avalon Companies nor the
consummation of the Transactions by the Avalon Companies will (i) violate or
conflict with the Certificate of Incorporation or Bylaws or the Certificate of
Formation or limited liability company agreement of any Avalon Company or Avalon
Subsidiary, or (ii) constitute a material breach or default of or give rise to
any third-party right of termination, suspension, cancellation, modification or
acceleration under, any material agreement, understanding or undertaking to
which any Avalon Company or Avalon Subsidiary is a party or by which it is
bound, or give rise to any Lien on any of their properties, or (iii) subject to
obtaining the approvals and making the filings described in Section 4.3 hereof,
constitute a material violation of any statute, law, ordinance, rule,
regulation, judgment, decree, order or writ of any judicial, arbitral, public,
or governmental authority having jurisdiction over the Avalon Companies or
Avalon Subsidiaries or any of their properties or assets.
Section 4.3 Consents and Approvals. Except as set forth on Schedule 4.3,
neither the execution and delivery of this Agreement by the Avalon Companies nor
the consummation of the Transactions by the Avalon Companies require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority or any other Person, except (i) for
filings required under the Exchange Act, (ii) for notification pursuant to, and
expiration or termination of the waiting period under, the XXX Xxx,
00
(xxx) for notices to, or consents or waivers from, the relevant Franchising
Authorities in connection with a change of control of the holders of the
Franchises of the Avalon Companies and Avalon Subsidiaries, and the FCC in
connection with a change of control of the holders of the FCC Licenses and (iv)
where the failure to obtain such consents, approvals, authorizations or permits
or to make such filings or notifications, would not be, or would not reasonably
be expected to be, material.
Section 4.4 Capitalization of the Avalon Companies. The authorized, issued
and outstanding Equity Securities of the Avalon Companies are set forth in
Schedule 4.4. All of the issued and outstanding Equity Securities of the Avalon
Companies are duly authorized, validly issued, fully paid and non-assessable,
and are free and clear of any preemptive rights, restrictions on transfer or
Liens (other than (i) restrictions arising under the Securities Act and/or state
securities laws or any Franchise or FCC License, (ii) those that will be
terminated effective as of the Closing Date, (iii) Liens not existing prior to
the Closing resulting from the ownership of the Purchased Securities by
Purchaser or (iv) those described in Section 4.3). There are no outstanding
options, warrants or other rights of any kind to acquire any additional Equity
Securities of the Avalon Companies (other than the Option), nor is any Avalon
Company committed to issuing any such option, warrant, right or security.
Section 4.5 Avalon Subsidiaries.
(a) Each of the Avalon Subsidiaries is a corporation or limited
liability company duly organized, validly existing and in good standing
under the laws of Delaware (other than Cable Michigan which is duly
organized, validly existing and in good standing under the laws of
Pennsylvania). Each of the Avalon Subsidiaries has all requisite power to
carry on its business as now being conducted. Each Avalon Subsidiary is
duly qualified to do business as a foreign organization and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification
necessary. All Avalon Subsidiaries and their respective jurisdictions of
organization are as set forth in Schedule 4.5(a). Other than marketable
securities and the Subsidiary Securities, the Avalon Companies and Avalon
Subsidiaries do not have any investments in any other Person.
(b) All of the outstanding Equity Securities of each Avalon
Subsidiary (collectively, the "Subsidiary Securities") are duly authorized,
validly issued and (in the case of any corporate Avalon Subsidiary) fully
paid and non-assessable, are owned by the Company, directly or indirectly,
and are free and clear of any preemptive rights, restrictions on transfer,
Liens, options, warrants, voting agreements, trusts, purchase rights,
contracts, commitments, equities, claims, demands, or other arrangements or
understandings, except for (i) restrictions arising under the Securities
Act and/or state securities laws or any Franchise or FCC License, (ii)
Liens not existing prior to the Closing resulting from the ownership of the
Purchased Securities by the Purchaser, or (iii) restrictions that will be
terminated at the Closing. There are no outstanding obligations of any
Avalon Company or any Avalon Subsidiary to repurchase, redeem or otherwise
acquire any outstanding Subsidiary Securities.
19
Section 4.6 SEC Filings.
(a) The Sellers have delivered to Purchaser (i) the Form S-4 (the
"Form S-4") which the Company filed with the SEC dated March 31, 1999, and
(ii) all of the other reports, statements, schedules and registration
statements of any of the Avalon Companies or the Avalon Subsidiaries filed
with the SEC thereafter.
(b) As of its filing date each such report or statement filed
pursuant to the Exchange Act complied in all material respects with the
applicable requirements of the Exchange Act and did not contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act as of the date such
statement or amendment became effective complied in all material respects
with the applicable requirements of the Securities Act and did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
Section 4.7 Financial Statements. The audited financial statements of the
Avalon Companies included in the Form S-4 (the "Financial Statements") are in
all material respects in accordance with the books and records of the Avalon
Companies and Avalon Subsidiaries and were prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto), and fairly present in all material respects the
consolidated financial position of the Avalon Companies and Avalon Subsidiaries
as of the date thereof and their consolidated results of operations and cash
flows for the period then ended (subject to normal year-end adjustments in the
case of any unaudited interim financial statements). Except as set forth in the
Financial Statements or on Schedule 4.7, none of the Avalon Companies or Avalon
Subsidiaries have any Funded Debt other than that which, pursuant to its terms,
can be repaid at Closing without the incurrence of any premium, penalty or other
charge.
Section 4.8 Absence of Certain Changes. Except as set forth on Schedule
4.8, as reflected in the pro forma financial statements included in the Form S-4
or as otherwise permitted by this Agreement, since the Balance Sheet Date, the
Avalon Companies and the Avalon Subsidiaries have conducted their business in
the Ordinary Course in all material respects and there has not been (except as
contemplated by this Agreement) without the consent of Purchaser:
(i) any event or occurrence which has had a Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of Equity Securities of any
Avalon Company, or any repurchase, redemption or other acquisition by any
Avalon Company of any outstanding Equity Securities of the Avalon
Companies:
20
(iii) any termination or failure to renew, or any written threat (that
was not subsequently withdrawn) to terminate or fail to renew any Franchise
or Scheduled Agreement;
(iv) any merger with or consolidation with any other Person;
(v) any amendment of any material term of any outstanding security
of the Avalon Companies;
(vi) any creation or assumption by the Avalon Companies or Avalon
Subsidiaries of any Lien (other than Permitted Liens) on any material
asset;
(vii) any making of any loan, advance or capital contributions to or
investment in any Person other than advances to employees in the Ordinary
Course and loans, advances or capital contributions to or investments in
the Avalon Subsidiaries made in the Ordinary Course;
(viii) any damage, destruction or other casualty loss (to the extent
not covered by insurance) affecting the business or assets of the Avalon
Companies or Avalon Subsidiaries in excess of $1,000,000 in the aggregate;
(ix) any transaction or commitment made, or any contract or agreement
entered into, by the Avalon Companies or Avalon Subsidiaries relating to
its assets or business (including the acquisition or disposition of any
assets) or any relinquishment by the Avalon Companies or Avalon
Subsidiaries of any contact or other right, in any case, involving more
than $1,000,000 in the aggregate, other than those contemplated by this
Agreement and additions of subscribers to existing programming agreements;
(x) any material change in any method of accounting or accounting
practice by the Avalon Companies or Avalon Subsidiaries, except for any
such change required by reason of a change in GAAP, or
(xi) any (A) grant of any severance or termination pay to any
director, officer or employee of the Avalon Companies or Avalon
Subsidiaries in excess of $250,000 in the aggregate, (B) entering into of
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or
employee of the Avalon Companies or Avalon Subsidiaries, (C) increase in
benefits payable under any existing severance or termination pay policies
or (D) other than the procurement of D&O Insurance for the directors and
officers of the Avalon Companies and the Avalon Subsidiaries. increase in
compensation, bonus or other benefits payable to directors or officers (who
are not employees) of the Avalon Companies or Avalon Subsidiaries, or,
other than in the Ordinary Course, to employees (including officers who are
employees) of the Avalon Companies or Avalon Subsidiaries.
Section 4.9 No Undisclosed Material Liabilities. Neither the Avalon
Companies nor the Avalon Subsidiaries have any indebtedness, liability or
obligation of any
21
type required by GAAP to be reflected on a balance sheet, except (i) liabilities
reflected or reserved against in the Balance Sheet, or otherwise disclosed in
the Form S-4, (ii) for Funded Debt, (iii) for liabilities incurred in the
Ordinary Course since the Balance Sheet Date, (iv) for other liabilities which
are not material, (v) as set forth on the Disclosure Schedule or any contract or
agreement set forth thereon or not required to be set forth thereon (other than
for breach thereof) and (vi) liabilities which would be taken into account in
the calculation of Closing Net Liabilities for purposes of Section 2.7 or are
otherwise specifically referred to in Section 2.7.
Section 4.10 Litigation. There is no charge, complaint, suit, action,
proceeding, arbitration, claim or investigation pending against or, to the
Knowledge of the Avalon Companies, threatened against the Avalon Companies or
Avalon Subsidiaries that would, nor is there any judgment, decree, inquiry, rule
or order outstanding against the Avalon Companies or Avalon Subsidiaries which
would, (i) reasonably be expected to be material or (ii) result in a revocation,
termination, suspension or material modification or other limitation of any
Franchises or FCC Licenses.
Section 4.11 Taxes.
(a) The Avalon Companies and Avalon Subsidiaries have (i) timely
filed or obtained extensions for all material Tax Returns required to be filed
by them, all such filed returns have been completed in all material respects in
accordance with applicable law and all such filed returns are true and accurate
in all material respects, (ii) paid all Taxes that are shown on such Tax Returns
as due and payable, (iii) paid all material Taxes otherwise required to be paid
other than Taxes that are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established, and (iv) used
commercially reasonable efforts to maintain in all material respects all
required records with respect to any liability for Taxes for taxable years with
respect to which the statute of limitations has not yet expired, regardless of
whether such liability has been previously assessed in whole or in part or is
assessed in whole or in part after the date of this Agreement.
(b) There are no Liens for Taxes (other than for Taxes not yet due
and payable or for Taxes that are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established) on the assets
of the Avalon Companies and Avalon Subsidiaries.
(c) Neither of the Avalon Companies nor any Avalon Subsidiary has
requested or been granted an extension of the time for filing any Tax Return
which has not yet been filed with respect to an amount of Taxes which is
material.
(d) Neither of the Avalon Companies nor any Avalon Subsidiary has
consented to extend to a date later than the date hereof the time in which any
Tax which is material may be assessed or collected by any taxing authority.
(e) No deficiency or proposed adjustment which has not been settled
or otherwise resolved for any amount of Tax which is material has been proposed,
asserted or assessed by any taxing authority against the Avalon Companies or
Avalon Subsidiaries. Neither
22
of the Avalon Companies nor any Avalon Subsidiary has any Knowledge of an intent
by any taxing authority to assert a deficiency or proposed adjustment against
the Avalon Companies or Avalon Subsidiaries for any amount of Tax which is
material.
(f) There is no action, suit, taxing authority proceeding or audit
now in progress, pending or, to the Knowledge of the Sellers, threatened against
or with respect to the Avalon Companies or Avalon Subsidiaries with respect to
an amount of Taxes which is material.
(g) No claim has ever been made by a taxing authority in a
jurisdiction where the Avalon Companies or Avalon Subsidiaries does not file Tax
Returns that the Avalon Companies or Avalon Subsidiaries is or may be subject to
Taxes assessed by such jurisdiction which are material in amount.
(h) All Tax allocation agreements, Tax sharing agreements, or similar
arrangements to which either of the Avalon Companies or any of the Avalon
Subsidiaries is a party to or bound by are listed in Section 4.11(h) of the
Disclosure Schedule. Neither of the Avalon Companies nor any Avalon Subsidiary
is a party to or bound by any Tax allocation agreement, Tax sharing agreement,
or similar arrangement with respect to an amount of Taxes which is material or
has a current or potential contractual obligation to indemnify any other Person
with respect to Taxes which are material in amount, except as listed in Section
4.11(h) of the Disclosure Schedule.
(i) Neither of the Avalon Companies nor any Avalon Subsidiary has
made any payments, or will become obligated (under any contract entered into on
or before the Closing Date) to make any payments which are material in amount,
that will be non-deductible under Section 280G of the Code or that would result
in an excise Tax to the recipient of such payment pursuant to Section 4999 of
the Code (or any corresponding provision of state, local or foreign income Tax
law).
(j) Schedule 4.11 contains a list of states, territories and
jurisdictions (whether foreign or domestic) in which any Avalon Company or
Avalon Subsidiary is required to file Tax Returns relating to income Taxes of
any Avalon Company or Avalon Subsidiary which are material in amount.
(k) Neither of the Avalon Companies nor any Avalon Subsidiary has any
(i) income reportable for a period ending after the Closing Date but
attributable to a transaction (e.g., an installment sale) occurring in a period
ending on or prior to the Closing Date which resulted in a deferred reporting of
income from such transaction (other than a deferred intercompany transaction),
or (ii) deferred gain or loss arising out of any deferred intercompany
transaction.
(l) Each of the Avalon Companies and Avalon Subsidiaries has had
since its inception and will continue to have through the Closing Date the
federal tax status (i.e., partnership, C corporation, S corporation, or
disregarded entity) as set forth in Schedule 4.11, except as results from any
actions taken pursuant to this Agreement.
23
(m) Neither of the Avalon Companies nor any of the Avalon
Subsidiaries has been at any time a member of any partnership, joint venture or
other arrangement or contract which is treated as a partnership for federal,
state, local or foreign tax purposes (a "Tax Partnership") or the holder of a
beneficial interest in any trust for any period for which the statute of
limitations for any Tax has not expired, except for a Tax Partnership which is
the Company or an Avalon Subsidiary.
(n) All material elections with respect to Taxes affecting any of the
Avalon Companies or Avalon Subsidiaries as of the date hereof are set forth in
Schedule 4.11. No consent to the application of Section 341(f)(2) of the Code
has been filed with respect to any property or assets held, acquired, or to be
acquired by any of the Avalon Companies or Avalon Subsidiaries which are treated
as corporations for federal income tax purposes.
(o) Neither of the Avalon Companies nor any Avalon Subsidiary has
agreed to or is required to make any material adjustment under Section 481(a) of
the Code.
(p) Neither of the Avalon Companies nor any Avalon Subsidiary is or
has been a member of any Affiliated Group.
Section 4.12 Employee Benefit Matters.
(a) Schedule 4.12 identifies each Employee Plan and Benefit
Arrangement. The Sellers have furnished or made available to Purchaser (i)
copies of such Employee Plans and Benefit Arrangements (and, if applicable,
related trust agreements) and all amendments thereto, (ii) the currently-
effective summary plan description pertaining to each Employee Plan, (iii) the
most recent annual report for each Employee Plan (including all related
schedules), (iv) the most recent IRS determination letter for each Employee Plan
which is intended to constitute a qualified plan under Section 401 of the Code,
and (v) for each unfunded Employee Plan or Benefit Arrangement, financial
statements which fairly present the financial condition and results of
operations of such Plan. No Employee Plan or Benefit Arrangement is, and neither
of the Avalon Companies nor any Avalon Subsidiary maintains or is obligated to
contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA)
that is (i) a Multiemployer Plan, (ii) a Title IV Plan, (iii) maintained in
connection with any trust described in Section 501(c)(9) of the Code, or (iv)
subject to the minimum funding requirements of Part 3 of Title I of ERISA. None
of the Avalon Companies nor any Avalon Subsidiary has any liabilities with
respect to an employee benefit plan described in (i) or (ii) above with respect
to any ERISA Affiliate.
(b) No "prohibited transaction" (within the meaning of Section
4975(c) of the Code) has occurred with respect to any employee benefit plan or
arrangement which is covered by Title I of ERISA, which transaction has caused
or will cause the Avalon Companies or Avalon Subsidiaries to incur any material
liability under ERISA, the Code or otherwise, excluding transactions effected
pursuant to and in compliance with a statutory or administrative exemption.
(c) Each Employee Plan identified on the Schedule 4.12 that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from
24
the IRS that it is so qualified and that its trust is exempt from Tax under
Section 501(a) of the Code, (ii) each Employee Plan has been maintained and
operated in substantial compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations
including ERISA and the Code, and (iii) no Employee Plan or Benefit Arrangement
provides for post-employment or post-retirement health or medical or life
insurance benefits for retired, former or current employees of the Avalon
Companies and Avalon Subsidiaries, except as required to avoid excise tax under
Section 4980B of the Code or as required by state law.
(d) Each Benefit Arrangement has been maintained and operated in
substantial compliance with its terms and with the requirements prescribed by
any and all applicable statutes, orders, rules and regulations and has been
maintained in good standing with applicable regulatory authorities.
(e) There is not and there has not been at any time since November 6,
1998 any pending or, to the Knowledge of the Avalon Companies, threatened
investigations, audits, or material litigation or arbitration concerning or
involving any Employee Plan or Benefit Arrangement and (ii) no material claims
are pending or threatened with respect to any bond or any fiduciary liability or
other similar insurance with regard to the actions of any Person in connection
with any Employee Plan, nor is there expected to be any notice to any insurer
under any such bond or policy with regard to any Employee Plan.
(f) The Avalon Companies and Avalon Subsidiaries have complied in all
material respects with all requirements of Section 4980B of the Code.
Section 4.13 Labor Matters. Except as set forth in Schedule 4.13,
(a) Neither of the Avalon Companies nor any Avalon Subsidiary is
party to any labor union or collective bargaining agreement.
(b) No employees of any Avalon Company or Avalon Subsidiary are
represented by any labor organization.
(c) As of the date hereof, no labor organization or group of
employees of the Avalon Companies or Avalon Subsidiaries has made a pending
demand for recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or threatened to be brought or filed, with the National Labor
Relations Board or any other labor relations tribunal or authority.
(d) To the Knowledge of the Avalon Companies, as of the date hereof,
there are no formal organizing activities involving a material number of
employees of the Avalon Companies or Avalon Subsidiaries pending with. or
threatened by, any labor organization.
(e) There are no strikes, or material work stoppages, slowdowns,
lockouts, arbitrations or grievances or other labor disputes pending or, to the
Knowledge of the Avalon Companies, threatened against the Avalon Companies or
Avalon Subsidiaries.
25
(f) The Avalon Companies and Avalon Subsidiaries have no employment
agreements, either written or oral, with any employee of the Systems, except as
set forth in Schedule 4.13. The employment under each such agreement may be
terminated at any time.
Section 4.14 Compliance with Laws. The Avalon Companies and Avalon
Subsidiaries hold all licenses, franchises, certificates, consents, permits,
qualifications and authorizations from all governmental authorities necessary
for the lawful conduct of their businesses, except where the failure to hold any
of the foregoing would not be material. Neither of the Avalon Companies nor any
Avalon Subsidiaries (or any prior operator of the Systems) has materially
violated, or is in material violation of any such licenses, franchises,
certificates, consents, permits, qualifications or authorizations or any
applicable statutes, laws, ordinances, rules and regulations (including any of
the foregoing related to occupational safety, storage, disposal, discharge into
the environment of hazardous wastes, environmental protection, conservation,
unfair competition, labor practices or corrupt practices) of any governmental
authorities. The Avalon Companies and Avalon Subsidiaries (and any prior
operator of the Systems) have made all material submissions (including
registration statements) required under, and the operation of the Systems has
been in compliance in all material respects with, the Communications Act and the
applicable FCC Rules and Regulations, the Cable Act, the Copyright Act and all
Franchises.
Section 4.15 Title to Properties, Encumbrances. Each of the Avalon
Companies and Avalon Subsidiaries has good and marketable title to (or in the
case of leased or licensed assets, valid and existing leasehold or licensee
interests in) the material assets set forth on the Balance Sheet (other than
those disposed of in the Ordinary Course since the Balance Sheet Date), free and
clear of all Liens other than Permitted Liens. Each of the Avalon Companies and
Avalon Subsidiaries owns or has the lawful right to use all assets, properties,
operating rights, easements, contracts, leases and other instruments necessary
to operate its business as presently conducted in all material respects.
Schedule 4.15 sets forth a list of all material real property which is owned or
leased by Avalon Companies or any Avalon Subsidiary. Other than such exceptions
as would not be material to the operation of the Systems, all buildings,
improvements, central receiving apparatus, distribution equipment, cables,
converters, origination equipment and other operating assets of the Avalon
Companies and Avalon Subsidiaries are in good working order and condition,
normal wear and tear excepted, in each case sufficient for use in the Ordinary
Course.
Section 4.16 Environmental Matters. There are no material Environmental
Liabilities of the Avalon Companies or any Avalon Subsidiaries. The Avalon
Companies and Avalon Subsidiaries (and any prior operator of the Systems) are in
compliance and have been in compliance, in all material respects, with all
Environmental Laws. There are no pending or, to the Knowledge of the Avalon
Companies and Avalon Subsidiaries, threatened, claims relating to the current or
prior business of the Avalon Companies or Avalon Subsidiaries arising under any
Environmental Law. No material amount of any Hazardous substance is present at
any property or facility now or previously owned, leased or used (including any
off-site disposal facility) by the Avalon Companies or any Avalon Subsidiary in
a way which violates or could reasonably be expected to violate in any material
respect any Environmental Law. There has been no environmental assessment,
investigation, study, audit, test, review or other analysis conducted of which
the Avalon Companies have Knowledge in relation to the current or prior
26
business of the Avalon Companies or Avalon Subsidiaries or any property or
facility now or previously owned leased or used (including any off-site disposal
facility) by the Avalon Companies or Avalon Subsidiaries which has not been made
available or delivered to Purchaser.
Section 4.17 Systems, Franchises and Material Agreements.
(a) As of the Balance Sheet Date, the Systems (i) had approximately
232,141 Basic Subscribers (as defined below), (ii) passed approximately 377,512
residential dwelling units, and (iii) included approximately 9,405 plant miles
(including underground and aerial plant miles). For purposes hereof, "Basic
Subscriber" means a customer of the Avalon Companies or any Avalon Subsidiary
who as of the relevant date satisfies all of the following requirements:
(i) such customer is connected to and receiving Basic Service (as
defined below) from an Avalon Company or an Avalon Subsidiary;
(ii) such customer is being charged for the services received at a
rate that is not less than the rate that the Avalon Companies or any Avalon
Subsidiary generally charges to its customers in that location;
(iii) such customer has paid to the applicable provider the applicable
rate for all services received for one month (or more) of service prior to the
relevant date; and
(iv) such customer does not have any amount payable to the Avalon
Subsidiaries that is unpaid more than sixty (60) days after the later of the due
date of the related invoice and the last day of the period to which such amount
relates, in each case in excess of $10.00;
provided that a hotel, motel or other multiple dwelling unit customer shall be
considered to be that number of Basic Subscribers which is equal to revenues
from Basic Service generated by such hotel. motel or other customer for the
month ending on the relevant date (or if such date is not the end of a month,
the month ending immediately prior to such date) (without regard to non-
recurring revenues from ancillary services such as installation fees) divided by
the comparable rate charged to detached single family homes for such service in
the relevant area by the applicable provider. For purposes hereof, "Basic
Service" means, for any given Franchise area, the cable television service tier
or tiers provided by an Avalon Company or Avalon Subsidiary in such Franchise
area which include the retransmission of domestic off air-television broadcast
signals.
(b) Except for (i) contracts, commitments and agreements entered into
in accordance with the terms of this Agreement, (ii) those contracts listed on
Schedule 4.17(b) (the "Scheduled Agreements"), and (iii) the Franchises of the
Avalon Companies and the Avalon Subsidiaries, neither of the Avalon Companies
nor any Avalon Subsidiary is a party to or is bound by a contract, commitment or
agreement which is material to the Avalon Companies and Avalon Subsidiaries
taken as a whole or which involves payments of more than $500,000 in the
aggregate or which restricts the Avalon Companies or any Avalon Subsidiary from
engaging in any business or from operating in any jurisdiction or which involves
the purchase of
27
programming by an Avalon Company or any Avalon Subsidiary or which involves the
lease of real property or capital lease of personal property. Schedule 4.17(b)
sets forth a list, complete in all material respects, of the Franchises of the
Avalon Companies and the Avalon Subsidiaries. Each such Franchise is the validly
existing, legally enforceable obligation of an Avalon Company or one of the
Avalon Subsidiaries, as the case may be, and of the other parties thereto,
subject to the Enforceability Exceptions. Each such Scheduled Agreement is, in
all material respects, the validly existing, legally enforceable obligation of
an Avalon Company or one of the Avalon Subsidiaries, as the case may be, and, to
the Knowledge of the Avalon Companies, of the other parties thereto, subject to
the Enforceability Exceptions. The Avalon Companies and the Avalon Subsidiaries
are validly and lawfully operating in all material respects under their
respective Franchises and the Scheduled Agreements to which they are a party.
The Avalon Companies and the Avalon Subsidiaries have duly complied in all
material respects with all of the terms and conditions of each of their
respective Franchises to which they are a party, and, to the Parent's Knowledge,
each other party to any such Franchise has complied in all material respects
with each such Franchise. The Avalon Companies and the Avalon Subsidiaries have
duly complied in all material respects with all of the terms and conditions of
each of their respective Scheduled Agreements or other material agreements to
which they are a party, and to the Knowledge of Parent, each other party to any
such agreement has complied in all material respects with each such agreement to
which they are a party. Each System operates pursuant to a Franchise. Parent has
delivered or made available to Purchaser true and complete copies of all of the
Franchises and Scheduled Agreements of the Avalon Companies and the Avalon
Subsidiaries. None of the Avalon Companies or Avalon Subsidiaries has an
agreement with At Home, Road Runner or the ISP Channel.
(c) No Person (including any governmental authority) has any right to
acquire any interest in any System or any assets of an Avalon Company or any
Avalon Subsidiary (including any right of first or similar right) upon an
assignment or transfer of control of a Franchise or an Avalon Company or an
Avalon Subsidiary, other than rights of condemnation or eminent domain afforded
by law.
(d) Neither of the Avalon Companies nor any Avalon Subsidiary has
made or is bound by any material written commitments to any state, municipal,
local or other governmental commission, agency or body with respect to the
operation and construction of the Systems which are not fully reflected in its
Franchises and the Scheduled Agreements.
(e) No Franchising Authority has advised an Avalon Company or an
Avalon Subsidiary in writing, or otherwise formally notified an Avalon Company
or an Avalon Subsidiary in accordance with the terms of the applicable
Franchise, of its intention to deny renewal of an existing Franchise held by an
Avalon Company or an Avalon Subsidiary. Neither of the Avalon Companies nor any
Avalon Subsidiary has received, nor has notice that it will receive, from any
Franchising Authority a preliminary assessment that a Franchise held by an
Avalon Company or an Avalon Subsidiary should not be renewed as provided in
Section 626(c)(1) of the Communications Act, nor has an Avalon Company, an
Avalon Subsidiary, or a Franchising Authority commenced or requested the
commencement of an administrative proceeding concerning the renewal of a
Franchise held by an Avalon Company or Avalon Subsidiary as provided in Section
626(c)(l) of the Communications Act. With such exceptions as would not be
material, the Avalon Companies and Avalon Subsidiaries have timely filed
28
pursuant to the formal renewal procedures established by Section 626(a) of the
Communications Act notices of renewal in accordance with the Communications Act
with all Franchising Authorities with respect to each Franchise held by an
Avalon Company or Avalon Subsidiary expiring within 36 months after the date of
this Agreement. As of the date hereof, no Franchising Authority has commenced,
nor is there pending, nor to Parent's Knowledge is there threatened, any
proceeding to suspend, modify, terminate or revoke a Franchise held by an Avalon
Company or Avalon Subsidiary.
(f) The Avalon Companies and Avalon Subsidiaries are operating the
Systems in compliance in all material respects with the provisions of the
applicable Franchises, FCC Licenses, the Copyright Act, the Cable Act, the
Communications Act and the FCC Rules and Regulations, including those relating
to carriage of signals, syndicated exclusivity, network non-duplication, and
retransmission consent. Without limiting the foregoing, and with such exceptions
as would be material, (i) each of the communities served by the Systems has been
registered with the FCC, (ii) all of the semi-annual and annual performance
tests on the Systems required to have been performed by the Avalon Companies and
Avalon Subsidiaries under Section 76.601 of the FCC Rules and Regulations since
June 1, 1997 have been performed, (iii) the Systems currently meet the technical
standards set forth in the FCC Rules and Regulations, including the leakage
limits contained in Section 76.605(a)(11) thereof, (iv) the Avalon Companies
have delivered or made available to Purchaser a copy of the most recent FCC
Forms 320 filed with the FCC (Basic Signal Leakage Performance Report) for the
Avalon Companies and Avalon Subsidiaries, (v) copies of the most recent signal
leakage tests conducted under Section 76.611 of the FCC Rules and Regulations
and copies of the most recent "proof of performance" tests on the Systems have
been delivered or made available to Purchaser by the Avalon Companies, and (vi)
the most recent signal leakage tests and the proof of performance tests for the
Systems were conducted in accordance with the testing procedures set forth in
Sections 76.601 and 76.609 of the FCC Rules and Regulations and such tests
evidence that the Systems meet or exceed the technical standards set forth in
Section 76.605 of the FCC Rules and Regulations.
(g) (i) All commercial broadcast television stations (except
superstations) carried by the Systems are carried either pursuant to
retransmission consent agreements or must-carry elections (or must-carry
defaults), (ii) the Avalon Companies have delivered or made available to
Purchaser full and complete copies of all retransmission consent agreements with
respect to such television stations, and (iii) Schedule 4.17(g) sets forth each
commercial television station that has elected must-carry status with respect to
any System but that is not being carried and the reason for non-carriage. There
are no requests by any television station which asserts that it is entitled to
must-carry status seeking carriage on any System which an Avalon Company or
Avalon Subsidiary has denied or refused to honor or which is the subject of a
complaint filed with the FCC.
(h) The Avalon Companies have delivered or made available to
Purchaser true, correct, and complete specimen copies of (i) all FCC Forms 328,
329, 393, 1200, 1205, 1210, 1215, 1220, 1225, 1230, 1235 and 1240 that have been
filed with governmental authorities with respect to the Systems, and all
material correspondence with governmental authorities related thereto, (ii) all
material correspondence with any governmental body that
29
relates to rate regulation generally or to specific rates charged to subscribers
of the Systems and that is with respect to rate complaints that are pending at
the FCC or basic rates that are currently under review by a local governmental
entity (including any Franchising Authority) or the FCC, including any
complaints relating to any system filed with the FCC with respect to any rates
charged to subscribers of the Systems and that involve rate complaints that have
not been finally resolved, and any material documentation relating to an
exemption from the rate regulation provisions of the Communications Act claimed
by an Avalon Company or Avalon Subsidiary with respect to the Systems. Schedule
4.17(h) sets forth (x) a list of all rate complaints filed with the FCC relating
to the Systems of which an Avalon Company or Avalon Subsidiary has any Knowledge
and which have not been finally resolved by the FCC, and further sets forth
those Franchising Authorities that have been certified or filed for
certification under the Communications Act with respect to rate regulation
relating to any system and that have not been finally denied certification or
decertified, and (y) a list of all letters of inquiry from the FCC received by
an Avalon Company or Avalon Subsidiary since 1992 with regard to rate
restructuring that have not been finally resolved. For purposes of this
subsection the term "finally" means that there is no pending FCC or court
consideration or request for FCC or court review, reconsideration or appeal, and
the time for seeking any such review, reconsideration or appeal has expired.
(i) The Avalon Companies and Avalon Subsidiaries have filed with the
Franchising Authorities, the FCC and the Copyright Office all material forms,
reports, statements of accounts and other material information required to be
filed under the Franchises, the Communications Act, Section 111 of the Copyright
Act, the FCC Rules and Regulations and the rules and regulations of the
Copyright Office relating to Section 111, and all such forms, reports,
statements of account, and other information were correct in all material
respects at the time of filing. Parent has delivered or made available to
Purchaser true and correct copies of: (i) all reports, filings and
correspondence made or filed by the Avalon Companies, the Avalon Subsidiaries or
the predecessor operators of the Systems with the FCC or pursuant to FCC rules
and regulations for the past year, and (ii) all reports, filings and
correspondence made or filed by the Avalon Companies, the Avalon Subsidiaries or
the predecessor operators of the Systems with the Copyright Office or pursuant
to the Copyright Office rules and regulations for the past three years.
(j) (i) The Avalon Companies and Avalon Subsidiaries (and, to the
Knowledge of Sellers, the prior operators of the Systems) have paid in all
material respects all compulsory copyright and any other fees required under the
Copyright Act for the Systems, and (ii) neither of the Avalon Companies nor any
Avalon Subsidiary has any Knowledge of any material deficiency in the amount of
any compulsory copyright fee or other fee payments made and has not received
from the Copyright Office or any other Person any statement or claim respecting
an underpayment or nonpayment of any compulsory copyright fee or other fee
payment for the Systems.
(k) (i) The Avalon Companies and Avalon Subsidiaries (and, to the
Knowledge of Sellers, the prior operators of the Systems) have paid all
franchise and any other fees owed to all relevant Franchising Authorities
required for the Systems, and (ii) there is no deficiency in the amount of any
franchise payment made or to be made by the Avalon Companies and no Avalon
Company has received from any Franchising Authority any
30
statement or claim respecting an underpayment or nonpayment of any franchise fee
for the Systems.
(l) (i) The Avalon Companies and Avalon Subsidiaries currently hold
all licenses, authorizations, consents or permits of the FCC (the "FCC
Licenses") necessary for the operation in all material respects of the Systems
as currently operated, (ii) all such FCC Licenses are in full force and effect,
(iii) there are not pending before the FCC any requests or applications to
modify, extend or renew any of the FCC Licenses and (iv) there are not pending
nor threatened, any proceedings that might result in the revocation, termination
or cancellation of any of the FCC Licenses. Sellers have delivered or made
available to Purchaser true and complete copies of all of the FCC Licenses of
the Avalon Companies and the Avalon Subsidiaries.
Section 4.18 Transactions with Affiliates. Schedule 4.18 sets forth all
arrangements between the Avalon Companies and Avalon Subsidiaries, on the one
hand, and any Seller, any affiliate of Seller, or any affiliate of the Avalon
Companies (other than the Avalon Subsidiaries), on the other hand, that will not
be terminated effective as of the Closing Date.
Section 4.19 Proprietary Rights. The Avalon Companies and the Avalon
Subsidiaries have been operated in such a manner so as not to violate or
infringe in any material respect upon any Proprietary Rights of others.
Section 4.20 Year 2000. The Avalon Companies and Avalon Subsidiaries have
initiated a review and assessment of all areas within its business that would
reasonably be expected to be adversely affected in a material way by the Year
2000 Problem (that is, the risk that computer applications used by them may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii) developed a
plan (the "Year 2000 Plan") for addressing the Year 2000 Problem on a timely
basis, and (iii) to date, implemented that plan in all material respects.
Section 4.21 Systems Information.
(a) Schedule 4.21(a) sets forth a materially true and accurate description,
on a System-by-System basis, of the following information relating to the
Systems as of the dates indicated and, in the case of clauses (i), (ii) and
(iii) below, as of the Closing Date:
(i) the approximate number of aerial and underground miles of plant
included in the assets of the Avalon Companies and Avalon Subsidiaries and
served by each headend;
(ii) the approximate number of single family homes and residential
multiple dwelling units passed by the Systems;
(iii) the MHZ capacity and channel capacity of each headend; and
31
(iv) the number of subscribers served by the Systems and a description
of the calculation methodology used by the Avalon Companies and Avalon
Subsidiaries to calculate such subscribers.
(b) Schedule 4.21(e) sets forth a materially true and accurate
description of the following information relating to the Systems as of the date
of this Agreement:
(i) a description of the Basic Services and other services, e.g.,
expanded basic services, pay TV and a la carte services available from the
Systems, and the rates charged by the Avalon Companies and Avalon
Subsidiaries therefor, including all rates, tariffs and other charges for
cable television or other services provided by each System;
(ii) the stations and signals carried by the Systems and the channel
position of each such signal and station; and
(iii) the cities, towns, villages, boroughs and counties served by the
Systems.
(c) Each System is capable in all material respects of providing all
channels, stations and signals reflected as being carried on such System on
Schedule 4.21(e).
(d) Except as described on Schedule 4.21, and other than direct
broadcast satellite and satellite master antenna television, with respect to
each area in which the Systems currently provide cable television service: (i)
no Person is operating a cable television system or other non-satellite MVPD
other than a System in such area; (ii) no local franchising authority has
awarded a cable television franchise in such area to any Person other than the
Avalon Companies and Avalon Subsidiaries; and (iii) to the Knowledge of the
Avalon Companies or Avalon Subsidiaries, no MVPD has applied for a cable
television franchise to serve such area.
Section 4.22 Finders and Brokers. The Avalon Parties, the Avalon Companies,
the Avalon Subsidiaries and any affiliates thereof have not entered into any
contract with any Person which will result in the obligation of Purchaser, the
Avalon Companies or the Avalon Subsidiaries to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
Section 4.23 Additional Real Property Matters. Neither the Avalon Companies
nor any Avalon Subsidiaries has received any notice from any governmental body
(i) requiring it to make any material repairs or changes to its material real
property or the improvements located on such real property or (ii) giving notice
of any material governmental actions pending. There is no action, proceeding or
litigation pending (or, to the Knowledge of the Avalon Companies, contemplated
or threatened): (x) to take all or any portion of its material real property, or
any interest therein, by eminent domain; or (y) to modify the zoning of, or
other governmental rules or restrictions applicable to, such real property or
the use or development thereof.
32
Section 4.24 Insurance, Surety Bonds, Damages. Set forth on Schedule 4.24
hereto is a correct list of all insurance policies and surety bonds of the
Avalon Companies and Avalon Subsidiaries now in effect, including the names of
the insureds and their addresses. The premiums on such insurance policies and
bonds have been currently paid, and such policies and bonds are valid,
outstanding and enforceable, in full force and effect and insure against risks
and liabilities and provide for coverage to the extent and in a manner required
of or deemed reasonably appropriate and sufficient by the Avalon Companies.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Each of the Purchaser and Guarantor hereby jointly and severally represents
and warrants to the Sellers that the statements contained in this Article V are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date.
Section 5.1 Organization. Purchaser is a limited liability company, and
Guarantor is a corporation, each duly organized, validly existing and in good
standing under the laws of the State of Delaware.
Section 5.2 Authority. Each of Purchaser and Guarantor has all the
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery by Purchaser and
Guarantor of, the performance of Purchaser and Guarantor under, and the
consummation by Purchaser and Guarantor of the Transactions have been duly and
validly authorized by all action by or on behalf of each of Purchaser and
Guarantor. This Agreement constitutes the valid and legally binding obligation
of each of Purchaser and Guarantor, enforceable against each of them in
accordance with its terms, except as the same may be limited by Enforceability
Exceptions.
Section 5.3 Breach. The execution and delivery of this Agreement by
Purchaser and Guarantor does not, and the consummation of the Transactions by
Purchaser and Guarantor will not, (i) violate or conflict with the governing
documents of Purchaser or Guarantor, (ii) constitute a material breach or
default of, or give rise to any third-party right of termination, cancellation,
modification or acceleration under, any material agreement, understanding or
undertaking to which Purchaser or Guarantor is a party or by which it is bound,
or (iii) constitute a material violation of any material statute, law,
ordinance, rule, regulation, judgment, decree, order or writ of any judicial,
arbitral, public, or governmental authority having jurisdiction over Purchaser.
Section 5.4 Consents and Approvals. Neither the execution and delivery of
this Agreement by Purchaser or Guarantor nor the consummation of the
transactions contemplated hereby by Purchaser or Guarantor will require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, except (i) for filings required
under the Exchange Act, (ii) for notification pursuant to the HSR Act and
expiration or termination of the waiting period thereunder, and (iii) for
notices to, or consents and waivers from, the relevant Franchising Authorities
in connection with a change of control of the holders of the Franchises of the
Avalon Companies and Avalon
33
Subsidiaries, and the FCC in connection with a change of control of the holders
of the FCC licenses of the Avalon Companies and Avalon Subsidiaries.
Section 5.5 Financing. Purchaser has, and will have on the Closing Date,
sufficient funds available to pay the amounts contemplated under Sections 2.3
and 2.4 and to pay all related fees and expenses payable by Purchaser arising in
connection with this Agreement and the Transactions. The payment of all such
amounts by Purchaser is not contingent upon the consummation of an initial
public offering of any class of equity securities or an offering of any debt
securities, in each case of the Purchaser or any of its Affiliates.
Section 5.6 No Violation to FCC Cross-Ownership Rules. Assuming Purchaser
or Guarantor were now in control of the Avalon Companies and Avalon
Subsidiaries, neither Purchaser nor Guarantor would be in violation of the
Communications Act, any FCC or other restrictions regarding the ownership of
media and related businesses that would materially adversely affect the ability
of Purchaser or Guarantor to own the Avalon Companies and Avalon Subsidiaries or
any material part of their business (in each case, assuming that Purchaser,
Guarantor and their affiliates have consummated all acquisitions of media and
related businesses which any of them has executed an agreement or letter of
intent to purchase that has not been terminated or expired), including without
limitation, such restrictions governing cross-ownership or national size
standards.
Section 5.7 Finders and Brokers. Neither Purchaser nor Guarantor, nor any
of their affiliates have entered into any contract with any Person which will
result in the obligation of Sellers to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
Section 5.8 Purchase for Own Account. The Purchaser is acquiring the
Purchased Securities for its own account, for the purposes of investment only,
and not with a view to the resale or distribution thereof within the meaning of
the Securities Act.
ARTICLE VI
PRE-CLOSING COVENANTS
---------------------
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
Section 6.1 General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the Transactions. The Sellers and the
Avalon Companies will use reasonable efforts to satisfy, or to cause to be
satisfied, the conditions to the obligations of Purchaser to consummate the
Transactions, as set forth in Article VII. Purchaser will use its reasonable
efforts to satisfy, or to cause to be satisfied, the conditions to the
obligations of Sellers to consummate the Transactions, as set forth in Article
VII. Each Party will use its commercially reasonable efforts to challenge and
contest any litigation or claim brought against or otherwise involving such
Party (or its affiliates) that reasonably could result in the imposition of
orders or requirements that could cause the conditions to the Closing not to be
satisfied.
34
Section 6.2 Notice and Consents. As soon as practicable, but in no event
later than the thirtieth (30th) day after the date of this Agreement, (i) Parent
will cause each of the Avalon Companies and Avalon Subsidiaries to give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Sections 3.4, 4.2 and 4.3
above and (ii) Purchaser will give any notices to, make any filings with, and
use its reasonable best efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies in connection with the
matters referred to in Section 5.4 above; provided, that each Party will afford
the other Party the opportunity to review, approve and revise the form of letter
or application proposed to request consent or form of written notice prior to
delivery to the third party whose consent is sought or to whom such notification
is required. The Parties shall cooperate to obtain all required consents and no
Party shall intentionally take any action or steps that would prejudice or
jeopardize the obtaining of any required consent. Parent shall not (and shall
cause the Avalon Companies and Avalon Subsidiaries not to) accept or agree or
accede to any modifications or amendments to, or the imposition of any condition
to the transfer of, any of their Franchises that are not acceptable to the
Purchaser; provided, that Purchaser's consent shall not be required to any such
modification, amendment or condition that is consistent with the capital
expenditures included in the Capital Plan or which would require, in the
aggregate, payments after the Closing not in excess of $1,000,000. Without
limiting the generality of the foregoing, each of the Parties will file (and
Parent will cause each of the Avalon Companies and Avalon Subsidiaries to file)
any Notification and Report Forms and related material that it may be required
to file with the Federal Trade Commission and the Antitrust Division of the
United States Department of Justice under the HSR Act, will use its reasonable
best efforts to obtain (and Parent will cause each of the Avalon Companies and
Avalon Subsidiaries to use its reasonable best efforts to obtain) a waiver from
the applicable waiting period, and will make (and Parent will cause each of the
Avalon Companies and Avalon Subsidiaries to make) any further filings pursuant
thereto that may be necessary, proper, or advisable in connection therewith.
Section 6.3 Operation of Business. Except as set forth on Schedule 6.3 or
as otherwise contemplated herein, from the date hereof until the Closing, each
of the Avalon Companies and the Subsidiaries shall conduct their business in the
Ordinary Course in all material respects (including making routine capital
expenditures and operating substantially in accordance with the Capital Plan,
pursuing ongoing and planned line extensions, placing conduit or cable in new
developments, fulfilling installation requests, completing disconnection work
orders and disconnecting and discontinuing service to customers whose accounts
are delinquent) and shall use their commercially reasonable efforts to preserve
intact their business organizations and relationships with third parties and
Franchises, and to keep available the services of their present officers and
employees in all material respects, continue marketing, advertising and
promotional expenditures with respect to their business in the Ordinary Course
in all material respects, and operate their business in material compliance with
all applicable legal requirements. Without limiting the generality of the
foregoing, Parent shall cause the Avalon Companies and Avalon Subsidiaries to:
(i) maintain their assets in good operating repair, order and condition,
ordinary wear and tear excepted; (ii) maintain equipment and inventory for their
Systems at normal historical levels consistent with its past practices (as
35
adjusted to account for abnormally high inventory levels related to periodic
rebuild activity); (iii) maintain in full force and effect policies of insurance
with respect to their business in such amounts and with respect to such risks as
are currently in effect for their Systems; and (iv) maintain their books,
records and accounts with respect to the operation of their Systems in the
usual, regular and ordinary manner on a basis consistent with its past
practices. In addition, Parent shall deliver to Purchaser (x) true and complete
copies of all monthly statements of income and other financial information with
respect to the Avalon Companies and the Avalon Subsidiaries as is provided to
the lenders under the Bank Facility; and (y) as soon as reasonably possible but
in any event within five Business Days after the date of submission to the
appropriate governmental authority, copies of all FCC forms required to be filed
with any governmental authority with respect to rates and prepared with respect
to any of the Systems.
Section 6.4 Negative Covenants. Without limiting the covenants set forth in
Section 6.3, and except as reflected in the pro forma financial statements
included in the Form S-4 or as otherwise permitted by this Agreement, from the
date hereof until the Closing without the consent of Purchaser none of the
Avalon Companies or the Avalon Subsidiaries:
(i) will adopt or propose any material change in its Articles of
Incorporation or Bylaws or similar governing documents (including limited
liability company agreements);
(ii) will merge or consolidate with any other Person or acquire assets
from any other Person in excess of $5,000,000 in the aggregate;
(iii) will incur any Funded Debt other than (a) borrowings in the
Ordinary Course, (b) borrowings to enable the Avalon Companies and the
Avalon Subsidiaries to consummate transactions described in the Form S-4,
(c) other borrowings under the Bank Facility and (d) borrowings which can
be repaid at any time without incurring any penalties, premiums or other
like charges which would be payable by the Avalon Companies or the Avalon
Subsidiaries after the Closing;
(iv) will sell, license or otherwise dispose of any material assets or
property except (A) pursuant to existing contracts or commitments disclosed
herein or (B) in excess of $1,000,000 in the aggregate;
(v) will enter into, terminate, renew or amend in any material and
adverse respect any agreement or Franchise that would be required to be
disclosed on Schedule 4.17(b) or Schedule 4.18;
(vi) with such exceptions as do not, in the aggregate, have a Material
Adverse Effect, will take or agree or commit to take any action that would
knowingly make any representation and warranty set forth in Article III or
IV inaccurate at, or as of any time prior to, the Closing;
(vii) will make any Cost of Service Election;
36
(viii) will enter into any agreement with or commitment to any
competitive access provider and/or local exchange company or any internet
access or on-line services provider with respect to the use or lease of any
of its assets;
(ix) will decrease the rate charged for any level of basic services,
expanded basic services or any pay TV or add, delete, retier or repackage
any analog programming services, in each case except to the extent required
under the 1992 Cable Act or law; provided, however, that if rates are
decreased in order to so comply, Parent will provide Purchaser with copies
of any FCC forms (even if not filed with any governmental authority) that
Parent used to determine that the new rates were required; or
(x) will agree or commit to do any of the foregoing.
Section 6.5 Full Access.
(a) Parent will permit, and will cause each of the Avalon Companies
and Avalon Subsidiaries to permit, representatives of Purchaser to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Avalon Companies and Avalon Subsidiaries, to
all premises, properties (including for purposes of obtaining Phase I
environmental assessments), personnel, books, records (including tax records),
contracts, and documents of or pertaining to each of the Avalon Companies and
Avalon Subsidiaries; provided that any such access to personnel will be (i)
solely with the prior consent of the Parent (which consent the Parent will not
unreasonably withhold) and (ii) in the presence of a representative of the
Parent, if the Parent so requires.
(b) Purchaser will treat and hold as such any Confidential Information
it receives from any of the Sellers, the Avalon Companies and Avalon
Subsidiaries or any of their representatives in the course of the reviews
contemplated by this Section 6.4, will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, will return to the Parent all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession.
Section 6.6 Notice of Developments. Each Seller shall promptly notify
Purchaser of any development causing a breach (or which could reasonably be
expected to cause a breach) of any of its representations and warranties in
Article III or IV above.
Section 6.7 Additional Filings. Parent will use commercially reasonably
efforts to cause the Avalon Companies and Avalon Subsidiaries to make any
submissions or filings reasonably requested by the Purchaser to insure
compliance of all their Systems with requirements of the FCC or Copyright Office
regulations, including submission of any past due or corrective filings,
requests for reinstatement or relicensing of lapsed licenses, and any notices,
requests for authorization or similar filings.
Section 6.8 Year 2000 Remediation Program. Parent shall cause the Avalon
Companies and the Avalon Subsidiaries to: (i) until the Closing Date, use
commercially reasonably efforts to continue to implement the Year 2000 Plan,
(ii) assist and cooperate with
37
Purchaser in the refinement and implementation of the Year 2000 Plan, (iii)
assist and cooperate with Purchaser in developing and implementing plans for
Purchaser to continue the Year 2000 Plan after the Closing Date, and (iv)
implement on a reasonable basis all solutions identified as reasonably necessary
by vendors, distributors and manufacturers of the computers systems used by them
to address the Year 2000 Problem.
Section 6.9 Offers. The Sellers (and their directors, officers, employees,
representatives and agents) shall not directly or indirectly, (i) offer the
Units, the Option, the Stock or substantially all of the assets of the Avalon
Companies or the Avalon Subsidiaries for sale; (ii) solicit, encourage or
entertain offers for the Units, the Option, the Stock or the assets of the
Avalon Companies or the Avalon Subsidiaries; (iii) initiate negotiations or
discussions for the sale of the Units, the Option, the Stock or substantially
all of the assets of the Avalon Companies or the Avalon Subsidiaries; or (iv)
make information about the Units, the Option, the Stock or the assets of the
Avalon Companies or the Avalon Subsidiaries available to any third party in
connection with the possible sale of the Units, the Option, the Stock or the
assets of the Avalon Companies or the Avalon Subsidiaries prior to the Closing
Date.
Section 6.10 Tax Covenants.
(a) Section 754 Elections; Allocation of Purchase Price.
(i) To the extent not already in effect, each Avalon Company and
Avalon Subsidiary that is treated as a partnership for federal income tax
purposes shall timely file an election under Section 754 of the Code so
that such entities shall be able to adjust the tax basis of their assets
(collectively, the "Partnership Assets") under Section 743(b) of the Code
as a result of the transactions contemplated herein.
(ii) The total Purchase Price plus the Option Price shall be
allocated among the Stock and the Units and the amount thereof allocated to
the Units plus the liabilities of the Company allocable to the Units(the
"Unit Purchase Price") shall be allocated among the proportionate amount of
the Partnership Assets attributable to the Units, all in an allocation
agreement (the "Allocation Agreement") to be prepared in accordance with
the rules under Sections 743(b), 751, 755 and 1060 of the Code. Purchaser
shall deliver a draft of the Allocation Agreement to Sellers at least
thirty (30) days prior to the Closing Date for approval and consent, and
Purchaser and Sellers shall mutually agree upon the Allocation Agreement
prior to the Closing Date. In this regard, Purchaser and Sellers agree that
for purposes of such Allocation Agreement, the Unit Purchase Price shall be
allocated between the tangible assets and Franchises by allocating an
amount to the tangible assets of the Company and its Subsidiaries equal to
the portion of the book value of such tangible assets attributable to the
Units, and the remainder to the Franchises of the Company and its
Subsidiaries. Neither Purchaser nor Sellers shall unreasonably withhold
their approval and consent with respect to the Allocation Agreement.
Purchaser and Sellers agree that the Allocation Agreement shall be amended
to reflect any post-Closing adjustments determined under Section 2.7 of
this Agreement. Unless otherwise required by applicable law, Purchaser,
Sellers and each Avalon Company and Avalon Subsidiary agree to act, and
cause their respective affiliates to act, in accordance with the
computations and allocations contained in the
38
Allocation Agreement in any relevant Tax Returns or similar filings
(including any forms or reports required to be filed pursuant to Section
1060 of the Code ("1060 Forms")), to cooperate in the preparation of any
1060 Forms, to file such 1060 Forms in the manner required by applicable
law and to not take any position inconsistent with such Allocation
Agreement upon examination of any tax refund or refund claim, in any
litigation or otherwise.
(b) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other similar Taxes and fees (including any penalties and
interest but excluding any income tax) incurred in connection with the
transactions consummated pursuant to this Agreement shall be borne equally by
Purchaser and Sellers (i.e., 50% by Purchaser on the one hand, and the Seller on
the other hand). Purchaser and Sellers will cooperate in all reasonable respects
to prepare and file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp, registration and
other Taxes and fees.
(c) Tax Elections. Except as set forth on Schedule 6.10(c), from and
after the date of this Agreement, no Avalon Company or Avalon Subsidiary shall,
without the prior written consent of the Purchaser (which consent shall not be
unreasonably withheld), make, or cause or permit to be made, any Tax election
that would bind either Avalon Company, any Avalon Subsidiary, or Purchaser in
any material respect.
(d) Tax Return Positions. The Parent shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for the Avalon Companies
and the Avalon Subsidiaries that are due on or before the Closing Date. Such Tax
Returns shall be prepared in accordance with each of the Avalon Company's or
Avalon Subsidiary's past custom and practice, and the Parent shall permit
Purchaser to review and comment on each such Tax Return prior to filing. Neither
of the Avalon Companies nor any Avalon Subsidiary shall take a position on any
Tax Return with respect to such entity's federal tax status (i.e., partnership,
S corporation, C corporation, or disregarded entity) different than that set
forth on Schedule 4.11.
(e) Purchaser shall cause the Company to prepare its Income Tax
returns for periods ending before the Closing Date, on the Closing Date, or
including the Closing Date (with respect to the portion of the taxable period
ending on the Closing Date) which are due after the Closing Date in accordance
with the allocation provision in the Company's LLC Agreement at the time of the
Closing. For purposes of Section 6.4, any changes to such allocation provisions
shall be deemed material. The Purchaser will permit the Sellers to review and
comment on each such Tax Return prior to filing. As required, Code Regulation
Section 1.706-1(C)(2) shall govern the partnership allocations of the Company
based on an interim closing of its books .
(f) The Purchaser, Parent and Avalon Investors agree to be governed by
Section 9.5 of the Company's LLC Agreement regarding Tax Controversies for any
taxable period or year for which either New England Holdings or Avalon Investors
were members of the Company (including, for this purpose, any taxable period or
year for which either such party was a member for any portion thereof). In
addition, Purchaser agrees to extend the provisions
39
regarding the Class A Units contained in Section 9.5 of the Company's LLC
Agreement to the holders of the Class B-1 Units held by New England Holdings.
Section 6.11 Restructuring. Parent agrees to cooperate, and to cause each
of the Avalon Companies and Avalon Subsidiaries to cooperate, with Purchaser
prior to the Closing in restructuring the legal form or ownership of any of the
Avalon Companies or Avalon Subsidiaries, changing the form of equity ownership
in either of the Avalon Companies, permitting the Purchaser to purchase
interests in the Avalon Subsidiaries from either an Avalon Company or an Avalon
Subsidiary, or effecting other restructurings of the transactions contemplated
herein; provided, however, that such cooperation may be withheld if and to the
extent either Seller determines, in its sole discretion, that such cooperation:
(i) would, or could reasonably be expected to, have any adverse effect on any
Seller or any direct or indirect equity holder of any Seller (including the
partners of any direct or indirect equity holder which is a partnership for
federal Tax purposes), including, without limitation, with respect to (A) Taxes
or (B) liabilities to be assumed or retained, directly or indirectly, by the
Sellers or any such holders, but excluding in the case of (A) and (B) any effect
for which Purchaser agrees to provide compensation (including indemnification)
which each Seller determines in its sole discretion to be satisfactory; (ii)
would, or could reasonably be expected to, delay the Closing; or (iii) would
result in a breach of the Company's LLC Agreement or Members Agreement.
ARTICLE VII
CONDITIONS TO THE CLOSING
-------------------------
Section 7.1 Conditions to the Obligations of the Purchaser. The obligations
of Purchaser to consummate the Transactions are subject to the satisfaction of
the following further conditions:
(i) the applicable waiting period under the HSR Act relating to the
Purchase and Sale shall have expired or been terminated;
(ii) the governmental and third party notices, authorizations,
consents, orders or approvals set forth on Schedule 7.1 shall have been
obtained and be in effect;
(iii) (A) no federal, state or foreign court, arbitrator or
governmental body, agency or official shall have issued any order, and
there shall not have been adopted or promulgated any statute, rule or
regulation, prohibiting the consummation of the Purchase and Sale, or,
except for orders, statutes, rules and regulations of general effect,
limiting or restricting Purchaser's conduct or operation of the business of
the Company after the Purchase and Sale in a manner that would not have a
Material Adverse Effect, and (B) no proceeding seeking to prohibit, alter
or prevent the Purchase and Sale shall have been instituted by any
governmental agency or authority before any court, arbitrator or
governmental body, agency or official and be pending;
(iv) (A) each of the Avalon Parties shall have performed in all
material respects all of its obligations hereunder required to be performed
by it at or prior to the Closing and the representations and warranties set
forth in Articles III and
40
IV of this Agreement shall be true (disregarding all exceptions therein for
materiality and Material Adverse Effect) at and as of the Closing Date as
if remade at and as of such date (disregarding all exceptions therein for
materiality and Material Adverse Effect) at and as of such date with such
exceptions as would not, individually or in the aggregate, have a Material
Adverse Effect and (B) Purchaser shall have received a certificate signed
by the Parent on behalf of the Avalon Parties to the foregoing effect;
(v) Purchaser shall have received (A) the documents to be delivered by
Parent pursuant to Section 2.5 of the Agreement and (B) all customary
documents that the Purchaser may reasonably request relating to the
existence of the Avalon Companies and the Avalon Subsidiaries and the
authority of each of the Avalon Parties to enter into this Agreement, all
in form and reasonably satisfactory to the Purchaser;
(vi) all notices to and authorizations, consents, orders and approvals
from applicable Franchise Authorities necessary to transfer control of
Franchises in which in the aggregate the Applicable Percentage of the Basic
Subscribers of the Company and its Subsidiaries are located shall have been
obtained and be in effect. For purposes of this Section 7.1(vi), the term
"Applicable Percentage" means (x) in the event that the Closing occurs on
or prior to November 30, 1999, ninety-percent (90%), or (y) in the event
the Closing occurs on or after December 1, 1999, eighty-five percent (85%);
and
(vii) Purchaser shall have received a certification by each of the
Sellers pursuant to Treasury Regulation Section 1.1445-2(b)(2) that it is
not a foreign person.
Section 7.2 Conditions to the Obligations of the Avalon Parties. The
obligations of the Avalon Parties to consummate the Transactions are subject to
the satisfaction of the following further conditions:
(i) the applicable waiting period under the HSR Act relating to the
Purchase and Sale shall have expired or been terminated;
(ii) the governmental and third party notices, authorizations,
consents, orders or approvals set forth on Schedule 7.1 shall have been
obtained and be in effect;
(iii) (A) Purchaser shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Closing and the representations and warranties of the Purchaser
contained in this Agreement shall be true (disregarding all exceptions
therein for materiality and Material Adverse Effect) at and as of the
Closing as if made at and as of such time (except for representations and
warranties made as of a specific date, which shall be true (disregarding all
exceptions therein for materiality and Material Adverse Effect) at and as of
such date) with such exceptions as would not, individually or in the
aggregate, have a Materially Adverse Effect, and (B) the Parent shall have
received a certificate signed by Purchaser to the foregoing effect;
41
(iv) Parent shall have received (A) the documents to be delivered by
Purchaser pursuant to Section 2.6 of this Agreement, and (B) all customary
documents that Parent may reasonably request relating, to the existence of
Purchaser and Guarantor and the authority of Purchaser and Guarantor to
enter into this Agreement, all in form and substance reasonably satisfactory
to Parent; and
(v) (A) no federal, state or foreign court, arbitrator or governmental
body, agency or official shall have issued any order, and there shall not
have been adopted or promulgated any statute, rule or regulation,
prohibiting the consummation of the Purchase and Sale, and (B) no proceeding
seeking to prohibit, alter or prevent the Purchase and Sale shall have been
instituted by any governmental agency or authority before any court,
arbitrator or governmental body, agency or official and be pending.
ARTICLE VIII
TERMINATION
-----------
Section 8.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) at any time, by written agreement of Parent and Purchaser;
(b) on or after the Termination Date, if the Closing has not occurred,
(i) by Purchaser, by written notice to the Parent:
(A) at any time when a Seller, but not Purchaser, is in Material
Breach;
(B) at any time when neither Purchaser nor any Seller is in
Material Breach; or
(C) at any time when both Purchaser and a Seller are in Material
Breach; or
(ii) by Parent, by written notice to Purchaser:
(A) at any time when Purchaser, but neither Seller, is in
Material Breach;
(B) at any time when neither Purchaser nor any Seller is in
Material Breach; or
(C) at any time when both Purchaser and a Seller are in Material
Breach; and
(c) at any time on or after May 19, 1999, by Parent, if Purchaser has
failed to deliver $50,000,000 to the Pre-Closing Escrow Agent to be held as the
Pre-Closing Escrow Funds.
42
The "Termination Date" will be the earlier of March 31, 2000, or any date after
the day on which the Closing was to have occurred under Section 2.2 on which all
of the conditions to the Closing are satisfied or waived or will be satisfied by
the delivery of documents or tender of payment at the Closing.
Section 8.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 8.1, this Agreement shall become void and of no effect with no
liability on the part of any Party hereto (including for any breach hereof),
except that (i) the agreements contained in this Section 8.2, Section 6.5(b) and
Section 10.8 shall survive the termination hereof, and (ii) the Pre-Closing
Escrow Agreement and the Confidentiality Agreement shall survive the termination
hereof. Without limiting the foregoing, the Parties agree that the payment of
the Pre-Closing Escrow Fund to the Company as contemplated in the Pre-Closing
Escrow Agreement shall serve as liquidated damages for a Material Breach by
Purchaser in the event of a termination under Section 8.1(b)(ii)(A). Any
disbursements from the Pre-Closing Escrow Fund for the benefit of Sellers or
Parent shall be made to the Company.
ARTICLE IX
POST-CLOSING COVENANTS
----------------------
Section 9.1 Further Assurances. On and after the Closing Date, the Avalon
Parties and Purchaser will take all appropriate action and execute (or cause to
be executed) all documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the provisions hereof,
including amending and restating the Company's LLC Agreement to reflect the
Transactions and the transfers of the Units contemplated hereunder.
Section 9.2 Survival of Representations and Warranties. Except for the
representations and warranties set forth in Sections 3.2, 3.5, 4.4, 4.5(b),
4.22, 5.2, 5.7 and 5.8 which shall survive indefinitely, the representations and
warranties provided for in this Agreement shall not survive beyond the Closing
Date. The provisions of this Section 9.2 shall not limit any covenant or
agreement of the parties hereto which, by its terms, contemplates performance
after the Closing Date.
Section 9.3 Cooperation. None of the Avalon Parties or the Avalon
Subsidiaries will take any action that is designed or intended to have the
effect of discouraging any lessor, licensor, customer, supplier, or other
business associate of any of the Avalon Companies or Avalon Parties from
maintaining the same business relationships with such Persons after the Closing
as it maintained with such Persons prior to the Closing. The Avalon Parties will
refer all customer inquiries relating to the businesses of the Company to the
Company from and after the Closing.
Section 9.4 Confidentiality. From and after the Closing, the Sellers will
treat and hold as such all of the Confidential Information, refrain from using
any of the Confidential Information except in connection with this Agreement,
and deliver promptly to the Purchaser or destroy, at the request and option of
Purchaser, all tangible embodiments (and all copies) of the Confidential
Information which are in its possession. In the event that any Avalon Party is
43
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, such Avalon Party
will notify Purchaser promptly of the request or requirement so that Purchaser
may seek an appropriate protective order or waive compliance with the provisions
of this Section 9.4. If, in the absence of a protective order or the receipt of
a waiver hereunder, any Avalon Party is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, such Avalon Party may disclose the Confidential Information to the
tribunal; provided, that such Avalon Party shall use its best efforts to obtain,
at the reasonable request of Purchaser, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Purchaser shall designate.
Section 9.5 Name Change. Promptly after the Closing, Purchaser shall
change, or cause the Avalon Companies to change, the names of each of the Avalon
Companies and the Avalon Subsidiaries to names which shall not include the word
"Avalon" or any derivative thereof or name similar thereto. Purchaser
acknowledges and agrees after the Closing, as among Parent, Purchaser, the
Avalon Companies and the Avalon Subsidiaries, Parent shall retain all interests
in and rights to, and neither Purchaser nor any Avalon Company or Avalon
Subsidiary will use, the name "Avalon" or any derivative thereof or name similar
thereto; provided, however, Purchaser shall be entitled to use the phrase
"previously operated by Avalon" or similar phrases in connection with its
correspondence with customers, regulators and other parties in connection with
the Systems; provided, further, Purchaser shall not be required to remove an
name or xxxx incorporating the name "Avalon" or similar names to the extent that
such names or marks are affixed to equipment in customer homes or properties or
to the extent that such removal would be impracticable.
Section 9.6 Public Announcements. The timing and content of all
announcements regarding any aspect of this Agreement or the transactions
contemplated hereto to the financial community, government agencies, employees
or the general public shall be mutually agreed upon in advance by each of the
Parties hereto: provided, that each Party hereto may make any such announcement
which it in good faith believes, based on advice of counsel, is necessary or
advisable in connection with any requirement of law or regulation, it being
understood and agreed that each Party shall promptly provide the other Parties
hereto with copies of any such announcement and, if practicable, such copies
shall be provided prior to the making of any such announcement.
Section 9.7 Cooperation on Tax Matters.
(i) Purchaser and Sellers shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of
Tax Returns pursuant to this Section 9.7 and any audit, litigation, or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation, or
other proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. Purchaser and Sellers agree (A) to retain all books and
records with respect to Tax matters pertinent to any Avalon Company or
Avalon
44
Subsidiary relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent
notified by Purchaser or Sellers any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered
into with any taxing authority, and (B) to give the other party reasonable
written notice prior to transferring, destroying or discarding any such
books and records and, if the other party so requests, Purchaser or Sellers
as the case may be, shall allow the other party to take possession of such
books and records to the extent they would otherwise be destroyed or
discarded.
(ii) Purchaser and the Sellers further agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other document
from any Governmental Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including
Taxes with respect to the transactions contemplated hereby).
(iii) Purchaser, on one hand, and Sellers, on the other hand, agree
that if any of them receives any notice of an audit or examination from any
Governmental Authority with respect to Taxes of either of the Avalon
Companies or any of the Avalon Subsidiaries for any taxable period or
portion thereof ending on or prior to the Closing Date, then the recipient
of such notice shall, within three (3) business days of the receipt
thereof, notify and provide copies of such notice to the other party, as
the case may be, in accordance with the notice provisions of Section 10.2.
ARTICLE X
MISCELLANEOUS
-------------
Section 10.1 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by the Party hereto without the prior
written consent of each other Party, except that Purchaser may assign its rights
and obligations under this Agreement to an Affiliate of Purchaser or an entity
in which Xxxx X. Xxxxx has a direct or indirect equity interest of at least
$100,000,000; provided, however, that no such assignment shall be permitted if
it could reasonably be expected to delay the Closing; provided, further, that no
such assignment shall relieve Purchaser or Guarantor of their obligations
hereunder. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective heirs, legal
representatives, successors and permitted assigns. This Agreement shall be for
the sole benefit of the Parties hereto and their respective heirs, successors,
permitted assigns and legal representatives and is not intended, nor shall be
construed, to give any Person, other than the Parties hereto and their
respective heirs, successors, assigns and legal representatives, any legal or
equitable right, remedy or claim hereunder.
Section 10.2 Notices. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing. All such notices shall be delivered personally, by certified
mail, return receipt requested by reputable overnight courier (costs prepaid,
recipient's signature required), and shall be deemed given or
45
made upon receipt thereof. All such notices are to be given or made to the
parties at the following addresses (or to such other address as any party may
designate by a notice given in accordance with the provisions of this Section):
If to Purchaser or Guarantor to:
-------------------------------
Charter Communications, Inc.
00000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, President
Telecopy: (000) 000-0000
With copies (which shall not constitute notice to Purchaser
-----------------------------------------------------------
or Guarantor) to:
----------------
Xxxxxx X. Xxxx, Esq.
Senior Vice President & General Counsel
Charter Communications, Inc.
00000 Xxxxxxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
and to:
------
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
If to any Avalon Party, to:
--------------------------
Avalon Cable, L.L.C.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX
Attention: Xxxx X. Xxxxx
and to:
------
46
Avalon Cable, L.L.C.
c/o ABRY Partners, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
47
With copies (which shall not constitute notice to such
------------------------------------------------------
Persons) to:
-----------
Xxxxxxxx & Xxxxx
000 Xxxx 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
and to:
------
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Section 10.3 Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York,
without reference to the choice of law or conflicts of law principles thereof.
Section 10.4 Entire Agreement; Amendments and Waivers. This Agreement,
together with all Exhibits and Schedules hereto, constitutes the entire
agreement among the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties; provided, that the Confidentiality
Agreement shall survive the execution and delivery of this Agreement. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the Party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
Section 10.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 10.6 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
Section 10.7 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
Section 10.8 Expenses. The Sellers will be liable for the costs and
expenses of the Sellers, the Avalon Companies, and the Avalon Subsidiaries
incurred in connection with the negotiation, preparation, execution and
performance of this Agreement and the consummation of the transactions
contemplated hereby; provided, however, that the expenses incurred by the Avalon
Parties in connection with the preparation and filing of any application under
the HSR
48
Act or with the FCC, any Franchising Authorities or any other governmental
authority shall be paid by the Purchaser. Purchaser will be liable for the costs
and expenses of Purchaser incurred in connection with the negotiation,
preparation, execution and performance of this Agreement and the consummation of
the transactions contemplated hereby.
Section 10.9 Specific Performance. Each of the Parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each party agrees that the other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the parties and the
matter (subject to Section 10.3) without the requirement of posting a bond or
other security therefor, in addition to any other remedy to which they may be
entitled, at law or in equity.
Section 10.10 Waiver of Jury Trial. Each of the parties hereto waives to
the fullest extent permitted by law any right it may have to trial by jury in
respect of any claim, demand, action or cause of action based on, or arising out
of, under or in connection with this Agreement, or any course of conduct, course
of dealing. verbal or written statement or action of any party hereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise. The parties to this Agreement each hereby agrees that any
such claim, demand, action or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart of a copy of this Agreement with any court as evidence of the
consent of the parties hereto to the waiver of their right to trial by jury.
Section 10.11 No Strict Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.
Section 10.12 Certain Concerns of the Sellers. Each of the Sellers
acknowledges and agrees that, as between the Sellers, any allocation of (i)
payments of the Purchase Price, (ii) expenses of the Sellers in connection with
the Transactions, and (iii) liabilities for breaches of representations or
warranties under this Agreement shall be governed exclusively by the terms and
conditions of the Members Agreement dated as of November 6, 1998 (as in effect
from time to time, the "Members Agreement") by and among the Avalon Parties and
certain other Persons party thereto.
* * * * *
49
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
AVALON CABLE HOLDINGS LLC
By: -----------------------------------------
Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
AVALON INVESTORS, L.L.C.
By: ------------------------------------------
Name: Xxxxx Xxxxx
Title: President
AVALON CABLE OF MICHIGAN HOLDINGS, INC.
By: ------------------------------------------
Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
AVALON CABLE LLC
By: ------------------------------------------
Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
50
CHARTER COMMUNICATIONS, INC.
By: ------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
CHARTER COMMUNICATIONS HOLDINGS, LLC
By: ------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
51
