EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
AMONG
MEDIACOM COMMUNICATIONS CORPORATION
on the one hand
AND
THE AT&T BROADBAND PARTIES
on the other hand
DATED AS OF
FEBRUARY 26, 2001
(Iowa/Illinois)
TABLE OF CONTENTS
Page
1. Definitions.................................................................1
1.1. Affiliate........................................................1
1.2. Assets ..........................................................1
1.3. AT&T ............................................................1
1.4. AT&T Late Fee Settlement.........................................2
1.5. Basic Service....................................................2
1.6. Books and Records................................................2
1.7. Business.........................................................2
1.8. Business Day.....................................................2
1.9. Closing..........................................................2
1.10. Closing Date.....................................................2
1.11. Closing..........................................................2
1.12. Communications Act...............................................2
1.13. Contracts........................................................2
1.14. Encumbrance......................................................2
1.15. Environmental Law................................................3
1.16. Equipment........................................................3
1.17. Equivalent Basic Subscribers (or EBSs)...........................3
1.18. Excluded Assets..................................................4
1.19. Expanded Basic Service...........................................5
1.20. FCC..............................................................5
1.21. Financial MAC....................................................5
1.22. Franchises.......................................................6
1.23 GAAP ............................................................6
1.24. Governmental Authority...........................................6
1.25. Governmental Permits.............................................6
1.26. Hazardous Substances.............................................6
1.27. Intangibles......................................................6
1.28. Intellectual Property............................................6
1.29. Knowledge........................................................6
1.30. Legal Requirement................................................7
1.31. Licenses.........................................................7
1.32. Losses...........................................................7
1.33. Material Adverse Effect..........................................7
1.34. Pay TV...........................................................7
1.35. Permitted Encumbrances...........................................7
1.36. Person...........................................................8
1.37. Real Property....................................................8
1.38. Required Consents................................................8
1.39. Service Area.....................................................8
1.40. Subscriber Adjustment Amount.....................................8
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1.41. Subscriber Threshold.............................................8
1.42. System Employees.................................................8
1.43. Systems..........................................................8
1.44. Target Closing Date..............................................8
1.45. Taxes............................................................8
1.46. Third Party......................................................9
1.47. Other Definitions................................................9
2. Purchase and Sale of Assets; Assumed Obligations and Liabilities...........10
2.1. Purchase and Sale of Assets.....................................10
2.2. Assumed Obligations and Liabilities.............................10
3. Consideration..............................................................10
3.1. Purchase Price..................................................10
3.2. Adjustments to Purchase Price...................................11
3.3. Determination of Adjustments....................................12
3.4. Allocation of Purchase Price....................................13
4. Representations and Warranties of Seller...................................13
4.1. Organization and Qualification..................................13
4.2. Authority and Validity..........................................14
4.3. No Breach or Violation..........................................14
4.4. Assets .........................................................14
4.5. Franchises and Licenses.........................................15
4.6. Contracts.......................................................15
4.7. Real Property...................................................16
4.8. Environmental Matters...........................................17
4.9. Compliance with Legal Requirements..............................17
4.10. Intellectual Property...........................................18
4.11. Financial Statements............................................19
4.12. Absence of Certain Changes......................................19
4.13. Legal Proceedings...............................................19
4.14. Tax Returns; Other Reports......................................20
4.15. Employment Matters..............................................20
4.16. System Information..............................................21
4.17. Finders and Brokers.............................................22
4.18. Disclosure......................................................22
5. Buyer's Representations and Warranties.....................................22
5.1. Organization and Qualification..................................22
5.2. Authority and Validity..........................................22
5.3. No Conflicts; Required Consents.................................23
5.4. Acknowldegment by Buyer.........................................23
5.5. Finders and Brokers.............................................23
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5.6. Legal Proceedings...............................................23
6. Additional Covenants.......................................................23
6.1. Access to Premises and Records..................................23
6.2. Continuity and Maintenance of Operations; Financial
Statements......................................................24
6.3. Employee Matters................................................26
6.5. Consents,.......................................................26
6.6. Title Commitments and Surveys...................................26
6.7. HSR Notification................................................27
6.8. Notification of Certain Matters.................................28
6.9. Risk of Loss; Condemnation......................................28
6.10. Transfer Taxes..................................................29
6.11. Updated Schedules...............................................29
6.12. Use of Seller's Name............................................29
6.13. Transitional Billing Services...................................30
6.14. Transitional of High Speed Data Services; Other
Transitional Matters............................................30
6.15. Certain Notices.................................................30
6.16. Satisfaction of Conditions......................................30
6.17. Bulk Transfers..................................................30
6.18. Programming Matters.............................................30
6.19. Cooperation as to Rates and Fees................................31
6.20. Cooperation on Pending Litigation...............................32
6.21. Confidentiality.................................................32
6.22. Lien Searches...................................................33
6.23. No Solicitation.................................................33
6.24. Systems' Financial Statements...................................33
6.25. Environmental Assessments.......................................34
6.26. Marketing Efforts...............................................35
6.27. Expired Leases..................................................35
6.28. System Telephone Services.......................................35
7. Conditions to Closing......................................................35
7.1. Conditions to the Obligations of Buyer and Seller...............35
7.2. Conditions to the Obligations of Buyer..........................36
7.3. Conditions to Obligations of Seller.............................37
8. Closing....................................................................38
8.1. Date, Time and Place of Closing.................................38
8.2. Seller's Delivery Obligations...................................38
8.3. Buyer's Delivery Obligations....................................40
9. Termination................................................................40
9.1. Events of Termination...........................................40
9.2. Effect of Termination...........................................41
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10. Survival of Representations and Warranties; Indemnification...............41
10.1. Survival of Representations and Warranties......................41
10.2. Indemnification by Seller.......................................42
10.3. Indemnification by Buyer........................................42
10.4. Third Party Claims..............................................42
10.5. Limitations on Indemnification - Seller.........................43
10.6. Limitations on Indemnification - Buyer..........................44
10.7. Sole Remedy.....................................................44
11. Miscellaneous.............................................................44
11.1. Parties Obligated and Benefited.................................44
11.2. Notices.........................................................45
11.3. Attorneys' Fees.................................................46
11.4. Right to Specific Performance...................................46
11.5. Waiver..........................................................46
11.6. Captions........................................................46
11.7. Choice of Law...................................................46
11.8. Terms...........................................................46
11.9 Further Actions.................................................46
11.10 Time............................................................46
11.11 Late Payments...................................................46
11.12 Counterparts....................................................47
11.13 Entire Agreement................................................47
11.14 Severability....................................................47
11.15 Construction....................................................47
11.16 Expenses........................................................47
11.17 Commercially Reasonable Efforts.................................47
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of the 26th day of
February, 2001, by and among the Affiliates of AT&T whose names appear on the
signature page of this Agreement (collectively, and jointly and severally,
"Seller"), and Mediacom Communications Corporation, a Delaware corporation
("Buyer").
Recitals
A. The parties desire to effect the transfer of substantially all of the
assets of the Business (as defined below) owned by Seller to Buyer for cash.
B. The purpose of this Agreement is to set forth the definitive terms upon
which such transfer will take place.
Agreements
In consideration of the above recitals and the mutual agreements stated in
this Agreement, the parties agree as follows:
1. DEFINITIONS.
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms, when used in this Agreement, will have the meanings set forth
below:
1.1. Affiliate. With respect to any Person, any other Person controlling,
controlled by or under common control with such Person, with "control" for such
purpose meaning the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities or voting interests, by contract or
otherwise. For purposes of this Agreement, At Home Corporation and its
subsidiaries and Liberty Media Corporation and its subsidiaries will not be
treated as Affiliates of Seller.
1.2. Assets. All properties, privileges, rights, interests and claims,
real and personal, tangible and intangible, of every type and description that
are owned, leased or otherwise held by Seller, or are hereafter acquired by
Seller prior to the Closing Time, and used in the Business, including
Franchises, Licenses, Intangibles, Contracts, Books and Records, Equipment, Real
Property and deposits relating to the Business that are held by Third Parties
for the account of Seller or for security for Seller's performance of its
obligations, but excluding any Excluded Assets and any assets disposed of prior
to the Closing Date in the ordinary course of business and not in violation of
this Agreement.
1.3. AT&T. AT&T Broadband, LLC, a Delaware limited liability company.
1.4. AT&T Late Fee Settlement. The Settlement Agreement and Release that
relates to the Systems with respect to the late fees charged, a copy of which,
in the form submitted to the courts, has been provided to Buyer by Seller.
1.5. Basic Service. The lowest tier of service offered to subscribers of a
System.
1.6. Books and Records. All engineering records, files, data, drawings,
blueprints, schematics, reports, lists, plans and processes and all other files
of correspondence, lists, records and reports to the extent concerning the
Business, including subscribers and prospective subscribers of the Systems,
signal and program carriage and dealings with Governmental Authorities with
respect to the Systems, including all reports filed with respect to the Systems
by or on behalf of Seller or its Affiliates with the FCC and statements of
account filed with respect to the Systems by or on behalf of Seller or its
Affiliates with the U.S. Copyright Office, but excluding all corporate,
financial and tax records and all documents, reports and records relating to
System Employees.
1.7. Business. The cable television business and other income-generating
businesses relating to the Systems (including the high speed data, internet
access and advertising sales business) that are conducted by Seller through the
Systems.
1.8. Business Day. Any day other than Saturday, Sunday or a day on which
banking institutions in Denver, Colorado or New York, New York are required or
authorized to be closed.
1.9. Closing. The consummation of the transactions contemplated by this
Agreement, as described in Section 8.
1.10. Closing Date. The date on which the Closing occurs.
1.11. Closing Time. 12:01 a.m., local time at the location of the Assets,
as applicable, on the Closing Date.
1.12. Communications Act. The Communications Act of 1934, as amended, and
the rules and regulations of the FCC promulgated thereunder and currently in
effect.
1.13. Contracts. All contracts and agreements (other than Franchises,
Licenses and those relating to Real Property) to which Seller is a party and
which relate to the operation of the Business.
1.14. Encumbrance. Any mortgage, lien, security interest, security
agreement, conditional sale or other title retention agreement, pledge, option,
charge, encumbrance, adverse interest, assessment, restriction on transfer or
any exception to or defect in title or other ownership interest (including
reservations, rights of way, possibilities of reverter, encroachments,
easements, rights of entry, restrictive covenants, leases and licenses).
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1.15. Environmental Law. Any applicable Legal Requirement governing the
protection of the environment, including those relating to the use, storage,
disposal, release or handling of Hazardous Substances.
1.16. Equipment. All electronic devices, trunk and distribution coaxial
and optical fiber cable, amplifiers, drops, power supplies, conduit, vaults and
pedestals, grounding and pole hardware, subscriber's devices (including
converters, encoders, cable modems, transformers behind television sets and
fittings), headend hardware (including origination, earth stations, transmission
and distribution system, advertising insertion equipment, cable modem
termination system and IP routers), test equipment, vehicles and other tangible
personal property owned or leased by Seller and primarily used in the Business.
1.17. Equivalent Basic Subscribers (or EBS). As of any date of
determination and for each Service Area served by a System, the sum of (a) the
total number of private residential customer accounts that are billed by
individual unit for at least Basic Service (regardless of whether such accounts
are in single-family homes or in individually billed units in apartment
buildings or other multi-unit buildings), but exclusive of (i) "second connects"
and "additional outlets" as such terms are commonly understood in the cable
television industry, and (ii) accounts that are not charged or are charged less
than the standard monthly service fees and charges then in effect for such
System for Basic Service and Expanded Basic Service, if subscribed for (other
than customers receiving a senior discount); and (b) the quotient of (i) the
total monthly xxxxxxxx for sales of Basic Service and Expanded Basic Service by
such System for such Service Area during the most recent billing period ended
prior to the date of calculation to commercial, bulk-billed and other accounts
not billed by individual unit (whether on a discounted or non-discounted basis)
and to private residential customer accounts that are billed by individual unit
but pay less than the standard monthly service fees charged for Basic Service
and Expanded Basic Service, if subscribed for (other than customers receiving a
senior discount), but excluding xxxxxxxx in excess of a single month's charges
for any account, divided by (ii) the standard monthly combined rate (without
discount of any kind) charged by such System for such Service Area to
individually billed subscribers for Basic Service and Expanded Basic Service
offered by such System in effect during such billing period. For purposes of
calculating the EBS number, there will be excluded: (A) all accounts billed by
individual unit that are, and all xxxxxxxx to any commercial, bulk-billed and
other accounts not billed by individual unit that are, more than 60 days past
due in the payment of any amount in excess of the lesser of $10.00 or the
standard rate charged for Basic Service at the time of determination; (B) any
accounts billed by individual unit and all commercial, bulk-billed and other
accounts not billed by individual unit that, as of the date of calculation, have
not paid in full the charges for at least one full month of the subscribed
service; (C) that portion of the xxxxxxxx to all accounts billed by individual
unit included in clause (b) above and any commercial bulk-billed and other
accounts not billed by individual unit representing an installation or other
non-recurring charge, a charge for equipment or for any outlet or connection
other than the first outlet or first connection in any individually billed unit
or, with respect to a bulk account, in any residential unit (e.g., an individual
apartment or rental unit), a charge for any tiered service other than
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Expanded Basic Service (whether or not included within Pay TV), any charge for
Pay TV or a pass-through charge for sales Taxes, line-itemized franchise fees,
@Home service fees, fees charged by the FCC and the like; (D) any individually
billed unit and all xxxxxxxx to any commercial, bulk-billed and other accounts
not billed by individual unit whose service is pending disconnection for any
reason; and (E) any individually billed unit that was solicited between November
1, 2000 and the Closing Date to purchase such services by promotions or offers
of discounts other than of the type disclosed on Schedule 4.16 or as permitted
under this Agreement.
1.18. Excluded Assets. All:
1.18.1. Programming Contracts (including music programming
Contracts), cable guide Contracts, and Contracts to which other cable systems of
Seller or its Affiliates are subject (including the Memorandum of Understanding
Regarding Neutrality and Consent Election by and among CWA, IBEW and certain
business operating units and divisions of AT&T Corp.; retransmission consent
Contracts applicable to one or more headends not included in the Systems; master
billing Contracts and master multiple dwelling unit Contracts), other than any
such Contracts (or interests therein) disclosed or described on Schedule 4.6;
1.18.2. Seller Plans (as defined in Section 4.15.2) and any cash,
reserve, trust or funding arrangement held or set aside for the payment of
benefits under such Seller Plans;
1.18.3. Insurance policies and rights and claims under insurance
policies (except as otherwise provided in Section 6.9);
1.18.4. Bonds, letters of credit, surety instruments and other
similar items;
1.18.5. Except for xxxxx cash to the extent transferred to Buyer,
cash and cash equivalents, including cash relating to subscriber prepayments and
deposits, and notes receivable;
1.18.6. Except as specifically described on Schedule 4.10, the
Intellectual Property held by Seller or any of its Affiliates (subject to
Buyer's rights under Section 6.12);
1.18.7. Subscriber billing Contracts and related equipment if not
owned by Seller or any of its Affiliates (subject to Buyer's rights under
Section 6.13);
1.18.8. Assets, rights and properties of Seller or its Affiliates
used or held for use other than primarily in connection with the Systems;
1.18.9. Except (a) accounts receivable and (b) any other claim,
right or interest to the extent reflected in the adjustment to the Purchase
Price determined pursuant to Section 3.2, all claims, rights and interests in
and to any refunds of, or amounts credited against, Taxes or fees of any nature,
including franchise and copyright
4
fees, or any other claims against Third Parties, relating to the operation of
the Systems prior to the Closing Time;
1.18.10. Except as set forth on Schedule 4.6, any employment,
compensation, bonus, deferred compensation, consulting, agency or management
Contracts;
1.18.11. All Business documents and records not included in the
Books and Records (provided that copies of personnel files will be made
available to Buyer for a period of three years after the Closing Date upon
reasonable request by Buyer accompanied by a waiver and release from the
employee whose records are sought in form and substance reasonably satisfactory
to Seller);
1.18.12. Capital and vehicle leases;
1.18.13. Advertising sales agency or representation Contracts
providing any Third Party or Affiliate of Seller the right to sell available
advertising time for a System (including any Contract with National Cable
Communications or Cable Networks, Inc.), other than any such Contract disclosed
on Schedule 4.6;
1.18.14. Proprietary software of Seller or its Affiliates and
licenses relating to Third Party software and maintenance agreements with
respect thereto, other than transferable licenses relating to Third Party
software installed on personal computers included in the Assets;
1.18.15. Contracts for Internet access or on-line service
arrangements that provide to any Third Party or Affiliate of Seller the right to
use the transmission capacity of a System to provide Internet access or other
on-line services over such System, other than those disclosed on Schedule 4.6;
1.18.16. Contracts and related accounts receivable for providing DMX
service to commercial accounts via direct broadcast satellite; and
1.18.17. The assets specifically disclosed on Schedule 1.18.
1.19. Expanded Basic Service. Any video programming provided over a
System, regardless of service tier, other than Basic Service, any new product
tier, digital services and Pay TV.
1.20. FCC. The Federal Communications Commission and any successor
Governmental Authority.
1.21. Financial MAC. A material adverse deterioration in the public or
private equity and debt securities markets, or in the debt securities market for
the syndication of bank loans to corporate borrowers, as a result of which the
sources of Buyer's equity or debt financing have declined to issue or have
exercised their rights to withdraw their commitments with respect to the
transactions contemplated hereby.
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1.22. Franchises. The initial authorizations, or renewals thereof, issued
by a local Governmental Authority, and ratified by the electorate where
required, that are described on Schedule 4.5, which authorize the construction
or operation of the Systems, and all rights and benefits of Seller pertaining
thereto.
1.23. GAAP. Generally accepted accounting principles as in effect from
time to time in the United States of America.
1.24. Governmental Authority. (a) The United States of America; (b) any
state, commonwealth, territory or possession of the United States of America and
any political subdivision thereof (including counties, municipalities and the
like); or (c) any agency, authority or instrumentality of any of the foregoing,
including any court, tribunal, department, bureau, commission or board, or any
instrumentality of any of the foregoing.
1.25. Governmental Permits. All Franchises, Licenses and all other
material approvals, authorizations, permits, licenses, easements, registrations,
qualifications, leases, variances and similar rights obtained with respect to
the Business or Assets from any Governmental Authority.
1.26. Hazardous Substances. (a) Any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. xx.xx. 6901 et
seq.), as amended, and the rules and regulations promulgated thereunder; (b) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. xx.xx. 9601 et seq.) (CERCLA),
as amended, and the rules and regulations promulgated thereunder; (c) any
substance regulated by the Toxic Substances Control Act (TSCA) (42 U.S.C.
ss.ss.2601 et seq.), or the Federal Insecticide, Fungicide and Rodenticide Act
(FIFRA) (7 U.S.C. ss.ss.136 et seq.), each as amended, and the rules and
regulations promulgated thereunder; (d) asbestos or asbestos-containing material
of any kind or character; (e) polychlorinated biphenyls; (f) any substances
regulated under the provisions of Subtitle I of RCRA relating to underground
storage tanks; and (g) any other substance which by any Environmental Law
requires special handling, reporting or notification of any Governmental
Authority in its collection, storage, use, treatment or disposal.
1.27. Intangibles. Subscriber lists, accounts receivable, claims
(excluding any claims relating to Excluded Assets), goodwill, if any, and any
other intangible asset owned or held by Seller and used in the Business.
1.28. Intellectual Property. All (a) trademarks, trade dress, trade names,
service marks, logos and other similar proprietary rights, (b) domain names, (c)
copyrights, and (d) patents and patentable know-how, inventions and processes,
in each case used in connection with the Business.
1.29. Knowledge. The actual knowledge of a particular matter of (a) one or
more of the principal corporate personnel of Seller, AT&T or any direct or
indirect subsidiary of AT&T involved in the transactions contemplated by this
Agreement, or
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(b) after reasonable inquiry, any of the general managers (or holders of
positions of equivalent responsibility) of the Systems, including those
individuals listed on Schedule 1.29.
1.30. Legal Requirement. Applicable common law and any judicial decisions,
statute, ordinance, code, or other law, rule, regulation, order or other
technical or written requirement, standard or procedure enacted, adopted or
applied by any Governmental Authority or private arbitration tribunal.
1.31. Licenses. The cable television relay service, business radio and
other licenses, authorizations or permits issued by the FCC or any other
Governmental Authority that are described on Schedule 4.5 (other than the
Franchises).
1.32. Losses. Any claims, losses, liabilities, damages, penalties, costs
and expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and settlement costs.
1.33. Material Adverse Effect. A material adverse effect on the
operations, assets, or financial condition of the Business, taken as a whole,
but without taking into account any effect resulting from changes in conditions
(including economic conditions, changes in FCC regulations, or federal or state
governmental actions, legislation or regulations) that are applicable to the
economy or the cable television industry on a national, regional or state basis
(other than such changes as would prohibit the transactions contemplated hereby,
subject Buyer to damages or require Buyer to divest itself of other assets or
interests) or any changes in technology affecting the Business.
1.34. Pay TV. Premium programming services selected by and sold to
subscribers of the Systems on an a la carte basis for fees in addition to the
fee for Basic Service or Expanded Basic Service.
1.35. Permitted Encumbrances. The following Encumbrances: (a) liens for
Taxes, assessments and governmental charges not yet due and payable; (b) zoning
laws and ordinances and similar Legal Requirements which are not violated by any
existing improvement or which do not prohibit the use of the Real Property as
currently used in the operation of the Business; (c) any right reserved to any
Governmental Authority to regulate the affected property (including restrictions
stated in the Franchises and Licenses); (d) in the case of any leased Asset, (i)
the rights of any lessor and (ii) any Encumbrance granted by any lessor of such
leased Asset; (e) inchoate materialmens', mechanics', workmen's, repairmen's or
other like Encumbrances arising in the ordinary course of business; (f) in the
case of owned Real Property, any easements, rights-of-way, servitudes, permits,
restrictions and minor imperfections or irregularities in title which do not
individually or in the aggregate materially interfere with the right or ability
to use or operate the Real Property as currently being used, and which do not
materially impair the value of the Real Property; (g) any other Encumbrance
(other than an Encumbrance securing a monetary obligation) that does not
individually or in the aggregate interfere with the continued use of the Assets
subject thereto in the operation
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of the Business as currently being used; and (h) those Encumbrances disclosed on
Schedule 1.35.
1.36. Person. Any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.37. Real Property. The Assets owned or leased by Seller and used in the
Business consisting of realty, including appurtenances, improvements and
fixtures located on such realty, and any other interests in real property,
including fee interests, leasehold interests and easements, wire crossing
permits, and rights of entry (but not including interests in real property
granted in Contracts in connection with services provided by Seller to the
residents or occupants of such real property, including access and service
Contracts with the owners of multiple dwelling unit complexes).
1.38. Required Consents. All authorizations, approvals and consents
required under any Legal Requirement or under any Franchises, Licenses, Real
Property, Contracts disclosed on Schedule 4.6 or Contracts relating to services
provided by Seller to residents of multiple dwelling unit complexes of more than
200 units, for (a) Seller to transfer the Assets and the Business to Buyer, and
(b) Buyer to conduct the Business and to own, lease, use and operate the Assets
at the places and in the manner in which the Business is conducted as of the
date of this Agreement and on the Closing Date.
1.39. Service Area. The municipalities and counties in and around which
Seller operates or is authorized to operate the Systems and the Business, which
are disclosed on Schedule 1.39.
1.40. Subscriber Adjustment Amount. $2,685
1.41. Subscriber Threshold. 540,000 Equivalent Basic Subscribers.
1.42. System Employees. All employees of Seller or of any Affiliate of
Seller who are primarily engaged in the operation of the Business.
1.43. Systems. The complete cable television reception and distribution
systems operated in the conduct of the Business, each consisting of one or more
headends, subscriber drops and associated electronic and other equipment, as
listed on Schedule 1.39 and further designated and described on Schedule 4.16.
1.44. Target Closing Date. June 29, 2001.
1.45. Taxes. All levies and assessments of any kind or nature imposed by
any Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property Taxes and levies, together with any interest
thereon and any penalties, additions to Tax or additional amounts applicable
thereto.
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1.46. Third Party. Any Person other than Seller or Buyer and their
respective Affiliates.
1.47. Other Definitions. The following terms are defined in the Sections
indicated:
Term Section
---- -------
Action 10.4
Agreement Preamble
Allocation Date 3.4
Antitrust Division 6.7
Assumed Obligations and Liabilities 2.2
Bills of Sale 8.2(a)
Buyer Preamble
ERISA 4.15.1
ERISA Affiliate 4.15.2
Escrow Agent 3.3.1
Estimated Purchase Price 3.1
Excluded Liabilities 2.2
Final Adjustments Report 3.3.2
Financial Statements 4.11
FTC 6.7
HSR Act 6.7
Indemnified Party 10.4
Indemnifying Party 10.4
Lien Search 6.22
Maximum Remediation Amount 6.26.1
NASDAQ 6.24
Preliminary Adjustments Report 3.3.1
Prime Rate 11.11
Purchase Price 3.1.1
Qualified Intermediary 11.1
Retained Franchise 7.2.4
Retained Franchise Amount 3.1.1
SEC 6.24
Seller Preamble
Seller Plans 4.15.2
Subscriber Shortfall 3.2.6
Survival Period 10.1
Taking 6.9.2
Threshold Amount 10.5
Transaction Documents 4.2
Transitional Billing Services 6.13
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2. PURCHASE AND SALE OF ASSETS; ASSUMED OBLIGATIONS AND LIABILITIES.
2.1. Purchase and Sale of Assets. Subject to the terms and conditions set
forth in this Agreement, at the Closing Time, Seller will sell to Buyer, and
Buyer will purchase from Seller, free and clear of all Encumbrances (except
Permitted Encumbrances), the Assets.
2.2. Assumed Obligations and Liabilities. At the Closing Time, Buyer will
assume, and after the Closing Time, Buyer will pay, discharge and perform, the
following (the "Assumed Obligations and Liabilities"): (a) those obligations and
liabilities accruing and relating to periods after the Closing Time under or
with respect to the Assets assigned and transferred to Buyer at the Closing; (b)
those obligations and liabilities of Seller to subscribers and customers of
Seller's Business for (i) subscriber deposits held by Seller as of the Closing
Date related to the Systems in the amount for which Buyer received credit under
Section 3.2 and (ii) customer, advertising and other advance payments held by
Seller as of the Closing Date related to the Systems in the amount for which
Buyer received credit under Section 3.2; (c) all obligations and liabilities
accruing and relating to the Business prior to the Closing Time in respect of
which Buyer received a credit pursuant to Section 3.2; and (d) all other
obligations and liabilities accruing and relating to periods after the Closing
Time and arising out of Buyer's ownership of the Assets or operation of the
Systems after the Closing Time, except to the extent that such obligations or
liabilities relate to any Excluded Asset. All obligations and liabilities,
contingent, fixed or otherwise, arising out of or relating to the Assets or the
Systems other than the Assumed Obligations and Liabilities will remain and be
the obligations and liabilities of Seller (collectively, the "Excluded
Liabilities").
3. CONSIDERATION.
3.1. Purchase Price. Buyer will pay to Seller for the Assets total cash
consideration of $1,450,000,000, subject to adjustment as provided in Section
3.2 (the "Estimated Purchase Price").
3.1.1. At the Closing, Buyer will pay to Seller, by wire transfer of
immediately available funds pursuant to wire instructions delivered by Seller to
Buyer no later than two Business Days prior to the Closing Date, cash in an
aggregate amount equal to the excess of (a) the Estimated Purchase Price over
(b) the sum of all Retained Franchise Amounts (such excess, the "Purchase
Price"). For purposes of this Agreement, the "Retained Franchise Amount" for a
Retained Franchise shall be equal to the number of Equivalent Basic Subscribers
served by Seller pursuant to such Retained Franchise multiplied by the
Subscriber Adjustment Amount.
3.1.2. Upon any transfer of a Retained Franchise to Buyer after the
Closing, Buyer will pay to Seller the Retained Franchise Amount with respect to
such Retained Franchise by wire transfer of immediately available funds.
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3.2. Adjustments to Purchase Price. The Purchase Price will be adjusted as
follows:
3.2.1. Adjustments on a pro rata basis as of the Closing Time will
be made for all prepaid expenses (other than inventory), accrued expenses
(including real and personal property Taxes), copyright fees and franchise or
license fees or charges, prepaid income, subscriber prepayments and accounts
receivable related to the Business, all as determined in accordance with GAAP
consistently applied, and to reflect the principle that all expenses and income
attributable to the Business for the period through and including the Closing
Time are for the account of Seller, and all expenses and income attributable to
the Business for the period after the Closing Time are for the account of Buyer.
Notwithstanding the foregoing, with respect to accounts receivable resulting
from cable television services or Internet access or high speed data services,
the Purchase Price will be increased by (a) 100% of the face amount of such
accounts receivable that are 30 days or less past due as of the Closing and (b)
95% of the face amount of such accounts receivable that are 31 to 60 days past
due as of the Closing; provided, however, that Seller will receive no credit for
any accounts receivable resulting from cable television services or Internet
access or high speed data services of which more than the lesser of (A) $10.00
or (B) the standard rate for Basic Service is more than 60 days past due as of
the Closing Date. With respect to accounts receivable resulting from advertising
sales, the Purchase Price will be increased by 100% of the face amount of such
accounts receivable that are less than 120 days past due as of the Closing, and
Seller will receive no credit for any accounts receivable resulting from
advertising sales of which any portion is 120 days or more past due as of the
Closing Date. For purposes of making "past due" calculations for cable
television services or Internet access or high speed data services, the billing
statements of a System will be deemed to be due and payable on the first day of
the period during which the service to which such billing statements relate is
provided.
3.2.2. All advance payments to, or funds of Third Parties on deposit
with, Seller as of the Closing Time and relating to the Business, including
advance payments and deposits by subscribers served by the Business for
converters, encoders, decoders, cable modems, cable television services and
related sales, will be assumed by and credited to the account of Buyer.
3.2.3. There will be credited to Buyer the economic value of all
accrued vacation time that Buyer credits after the Closing Time to Hired
Employees pursuant to Section 6.3, where economic value is the amount equal to
the cash compensation that would be payable to each such Hired Employee at his
or her level of compensation on the Closing Date for a period equal to such
credited accrued vacation.
3.2.4. All deposits relating to the Business and the operation of
the Systems that are held by Third Parties as of the Closing Time for the
account of Seller which relate to the Systems or are held as security for
Seller's performance of Assumed Obligations and Liabilities, including deposits
on leases and deposits for utilities, will be credited to the account of Seller
in their full amounts and will become the property of Buyer. All other deposits
will remain the property of Seller.
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3.2.5. The Purchase Price will be increased by an amount equal to
the capital expenditures made by Seller or Affiliates of Seller between the date
of this Agreement and the Closing Date at the specific written request of Buyer,
and which Seller is not otherwise required to make pursuant to the terms of this
Agreement, as contemplated by Section 6.2.2. The Purchase Price will be
decreased by the amount, if any, by which Seller fails to make any capital
expenditures that Seller is required to make pursuant to Section 6.2.2 of this
Agreement.
3.2.6. The Purchase Price will be decreased by the dollar amount
equal to the product of (a) the Subscriber Shortfall multiplied by (b) the
Subscriber Adjustment Amount. For purposes of this Agreement, the "Subscriber
Shortfall" equals the number, if any, by which the Equivalent Basic Subscribers
of the Systems at the Closing is less than the Subscriber Threshold.
3.2.7. The Purchase Price shall be increased or decreased as
otherwise provided herein or as agreed to by the parties in accordance with the
provisions of this Agreement.
3.2.8. The adjustments provided for in this Section 3.2 will be made
without duplication. In addition, none of the adjustments provided for in this
Section 3.2 will be made with respect to any Excluded Asset or Excluded
Liability or with respect to any item of income or expense related to an
Excluded Asset or Excluded Liability.
3.2.9. The net amount of the adjustments calculated under this
Section 3.2, as preliminarily determined pursuant to Section 3.3.1, will be
added or subtracted, as applicable, to the Purchase Price at the Closing.
3.3. Determination of Adjustments. Preliminary and final adjustments to
the Purchase Price will be determined as follows:
3.3.1. Not later than a date Seller reasonably believes is at least
15 Business Days prior to the Closing, Seller will deliver to Buyer a report
(the "Preliminary Adjustments Report"), certified by Seller, showing in detail
the preliminary determination of the adjustments referred to in Section 3.2,
which have been calculated as of the Closing Time (or as of any other date and
time agreed by the parties) and any documents substantiating the adjustments
proposed in the Preliminary Adjustments Report. Buyer will have 10 Business Days
following receipt of the Preliminary Adjustments Report to review such Report
and supporting information and to notify Seller of any disagreements of Buyer
with Seller's estimates. If Buyer provides a notice of disagreement with
Seller's estimates of the adjustments referred to in Section 3.2 within such 10
Business Day period, Buyer and Seller will negotiate in good faith to resolve
any such dispute and to reach an agreement prior to the Closing Date on such
estimated adjustments as of the Closing Time. The basis for determining the
Purchase Price to be paid at the Closing will be (a) the estimate so agreed upon
by Buyer and Seller or (b) if the parties do not reach such an agreement on the
estimated amount of the adjustments set forth in the Preliminary Adjustments
Report prior to the
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Closing Date or if Buyer fails to provide a notice of disagreement with Seller's
estimates of such adjustments within the requisite time provided, the estimates
of such adjustments set forth in the Preliminary Adjustments Report.
3.3.2. Within 90 days after the Closing Date, Seller will deliver to
Buyer a report (the "Final Adjustments Report") certified by Seller showing in
detail the final determination of all adjustments which were not calculated as
of the Closing Time and containing any corrections to the Preliminary
Adjustments Report, together with any documents substantiating the adjustments
proposed in the Final Adjustments Report. Buyer will provide Seller with
reasonable access to all records that Buyer has in its possession and which are
necessary for Seller to prepare the Final Adjustments Report.
3.3.3. Within 30 days after receipt of the Final Adjustments Report,
Buyer will give Seller written notice of Buyer's objections, if any, to the
Final Adjustments Report. If Buyer timely makes any such objection, the parties
will agree on the amount, if any, which is not in dispute within 30 days after
Seller's receipt of Buyer's notice of objections to the Final Adjustments
Report, and payment of the amount not in dispute will be made by the responsible
party by wire transfer of immediately available funds within three Business Days
after such agreement. Any disputed amounts will be determined by a national
accounting firm agreed to by Buyer and Seller which has not provided services to
Buyer, Seller or their respective Affiliates in the prior 12 months, which firm
will be obligated to determine such amounts within 90 days after the dispute is
submitted to it, and the determination of which will be conclusive. Seller and
Buyer will bear equally the fees and expenses payable to such firm in connection
with such determination. The responsible party will make the payment required
after determination of all disputed amounts by wire transfer of immediately
available funds to the other party within three Business Days after the final
determination of all disputed items.
3.4. Allocation of Purchase Price. The consideration payable by Buyer
under this Agreement will be allocated among the Assets as set forth in a
schedule prepared by an independent appraiser with significant experience in the
cable television industry. Such appraiser will be selected by Buyer and will be
instructed to complete such schedule not later than 45 days after the Closing
Date. The fees of such appraiser will be the responsibility solely of Buyer.
Buyer and Seller agree to be bound by the allocation and will not take any
position inconsistent with such allocation and will file all returns and reports
with respect to the transactions contemplated by this Agreement, including all
federal, state and local Tax returns, on the basis of such allocation.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer, as of the date of this Agreement
and as of the Closing, as follows:
4.1. Organization and Qualification. Each entity comprising Seller is duly
organized, validly existing and in good standing under the laws of the state of
its
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organization and has all requisite power and authority to own, lease and use the
Assets as they are currently owned, leased and used and to conduct the Business
as it is currently conducted. Each entity comprising Seller is duly qualified to
do business and is in good standing under the laws of each jurisdiction where it
operates the Business.
4.2. Authority and Validity. Seller has all requisite power and authority
to execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and all other documents and
instruments to be executed and delivered in connection with the transactions
contemplated by this Agreement (collectively, the "Transaction Documents") to
which Seller is a party. The execution and delivery by Seller of, the
performance by Seller of its obligations under, and the consummation by Seller
of the transactions contemplated by, this Agreement and the Transaction
Documents to which Seller is a party have been, or will by the Closing Date be,
duly authorized by all requisite entity action. This Agreement is, and when
executed and delivered by Seller the Transaction Documents will be, duly and
validly executed and delivered by Seller and the valid and binding obligations
of Seller, enforceable against Seller in accordance with their respective terms,
except insofar as enforceability may be affected by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting creditors' rights generally or by principles governing the
availability of equitable remedies.
4.3. No Conflict; Required Consents. Subject to obtaining the Required
Consents, all of which are disclosed on Schedule 4.3, and the receipt of any
consent required or the expiration or termination of the applicable waiting
period under the HSR Act, the execution and delivery by Seller, the performance
of Seller under, and the consummation by Seller of the transactions contemplated
by, this Agreement and the Transaction Documents to which Seller is a party do
not and will not: (a) violate any provision of the organizational documents of
Seller; (b) violate any Legal Requirement in any material respect; (c) require
any consent, waiver, approval or authorization of, or any filing with or notice
to, any Person; or (d) (i) violate, conflict with or constitute a breach of or
default under (without regard to requirements of notice, lapse of time, or
elections of any Person, or combination thereof), (ii) permit or result in the
termination, suspension or modification of, (iii) result in the acceleration of
(or give any Person the right to accelerate) the performance of Seller under, or
(iv) result in the creation or imposition of any Encumbrance under, any Contract
disclosed on Schedule 4.6 or any other instrument evidencing any of the Assets
(other than Contracts), or any instrument or other agreement(other than
Contracts) by which Seller or any of the Assets (other than Contracts) is bound
or affected.
4.4. Assets. Seller has good title to (or, in the case of Assets that are
leased, valid leasehold interests in) the Assets (other than Real Property, as
to which the representations and warranties in Section 4.7 apply). The Assets
are free and clear of all Encumbrances, except (a) Permitted Encumbrances and
(b) Encumbrances disclosed on Schedule 4.4, all of which will be terminated,
released or waived, as appropriate, at or prior to the Closing. Except for the
Excluded Assets, the Assets are all the assets necessary to permit Buyer to
conduct the Business and to operate the Systems substantially as the Business is
being conducted and the Systems are being operated on
14
the date of this Agreement and in compliance in all material respects with all
Legal Requirements, Franchises, Licenses and Contracts. Except as disclosed on
Schedule 4.4, all of the Equipment is in good operating condition and repair,
ordinary wear and tear excepted.
4.5. Franchises and Licenses. Except as disclosed on Schedule 4.5, Seller
is not bound or affected by any (a) Franchise in connection with the operation
of the Business or (b) license, authorization or permit issued by the FCC or
other Governmental Permit that, in each case, relates to the Systems or the
operation of the Business. Except as disclosed on Schedule 4.5, the Franchises,
Licenses and other Governmental Permits are currently in full force and effect
and Seller is not and, to Seller's Knowledge, no other party thereto is, in
material breach or default of any terms or conditions thereunder. Seller has
delivered to Buyer true and complete copies of the Franchises. Except as
disclosed on Schedule 4.5, there is no legal action, governmental proceeding or
investigation, pending or, to Seller's Knowledge, threatened, to terminate,
suspend or modify any Franchise, License or other Governmental Permit. As of the
date of this Agreement, except as disclosed on Schedule 4.5, to Seller's
Knowledge, (i) no construction programs have been undertaken or are proposed to
be undertaken, by any municipality or other cable television, multichannel
multipoint distribution systems or multipoint distribution system provider or
operator in any Service Area; (ii) no cable television franchise has been issued
to any Person other than Seller in any Service Area; and (iii) no cable
television franchise or other application or request of any Person for a cable
television franchise is pending or proposed which relates to any Service Area.
4.6. Contracts. All Contracts are disclosed on Schedule 4.6, except for:
(a) subscription agreements with individual residential subscribers or
commercial establishments for the cable services provided by the Systems in the
ordinary course of business; (b) miscellaneous service Contracts terminable at
will or upon notice of 90 days or less without penalty; (c) Contracts not
involving any material monetary or non-monetary obligation; (d) bank financing
documents; (e) Contracts constituting Excluded Assets; and (f) Contracts
relating to services provided by Seller to residents of multiple dwelling unit
complexes or to commercial accounts. Seller has delivered to Buyer true and
complete copies of each of the written Contracts disclosed on Schedule 4.6. As
soon as reasonably practicable, but in no event more than 60 days after the date
of this Agreement, Seller will provide to Buyer a complete list of all multiple
dwelling unit complexes served by the Systems as of the date specified in such
list, including with respect to each such complex, to the extent readily
available in the Books and Records of Seller, the number of units served, the
rate charged (if bulk billed) and the expiration date of the agreement. Except
as set forth in Schedule 4.6, (i) each Contract listed on Schedule 4.6, and each
Contract relating to services provided by Seller to residents of multiple
dwelling unit complexes of more than 200 units, is in full force and effect and
constitutes the valid, legal, binding and enforceable obligation of Seller, and
(ii) Seller is not, and to Seller's Knowledge no other party thereto is, in
breach or default of any material terms or conditions thereunder.
15
4.7. Real Property.
4.7.1. All of the Assets consisting of Real Property interests are
disclosed and described on Schedule 4.7. Except as otherwise disclosed on
Schedule 4.7, Seller holds, or at the time of the Closing will hold, fee simple
title to the Real Property disclosed as being owned by Seller on Schedule 4.7
and the valid and enforceable right to use and possess such Real Property,
subject only to the Permitted Encumbrances and Encumbrances which will be
terminated, released or, in the case of rights of first refusal, waived, as
appropriate, at or prior to the Closing. All improvements on Real Property that
is owned by Seller are in good repair and suitable for the purposes for which
they are currently used, ordinary wear and tear excepted. Except as otherwise
disclosed on Schedule 4.7, Seller has valid and enforceable leasehold interests
in Real Property disclosed as being leased by Seller on Schedule 4.7 and, with
respect to other material Real Property not owned or leased by Seller, Seller
has the valid and enforceable right to use all such other Real Property pursuant
to the easements, licenses, rights-of-way or other rights disclosed on Schedule
4.7, in each case as currently being used by Seller in the operation of the
Business, subject only to Permitted Encumbrances and Encumbrances which will be
terminated, released or, in the case of rights of first refusal, waived, as
appropriate, at or prior to the Closing. Except as otherwise disclosed on
Schedule 4.7, with respect to leasehold interests in Real Property, each lease
is in full force and effect and Seller is not, and to Seller's Knowledge no
other party thereto is, in material breach or default of any terms or conditions
of any written instrument or other written agreement relating thereto.
4.7.2. There are no material leases or other agreements, oral or
written, granting to any Person other than Seller the right to occupy or use any
Real Property, except as disclosed on Schedule 4.7. Each parcel of Real
Property, any improvements constructed on any owned or leased Real Property and
their current use, conforms in all material respects to (a) all applicable Legal
Requirements, and (b) all restrictive covenants, if any, or other Encumbrances
affecting all or part of such Real Property.
4.7.3. Except as disclosed on Schedule 4.7, each parcel of owned
Real Property and each parcel of leased Real Property (a) has access to and over
public streets or private streets for which Seller has a valid right of ingress
and egress, (b) conforms in its current use and occupancy in all material
respects to all zoning requirements and (c) conforms in its current use in all
material respects to all restrictive covenants, if any, or other Encumbrances
affecting all or part of such parcel. There are no pending or, to Seller's
Knowledge, threatened condemnation actions or special assessments or proceedings
for changes in the zoning with respect to such Real Property or any part thereof
and Seller has not received any notice of the desire of any Governmental
Authority or other entity to take or use any Real Property or any part thereof.
Seller has complied in all material respects with all notices or orders to
correct violations of Legal Requirements issued by any Governmental Authority
having jurisdiction against or affecting any of the Real Property.
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4.8. Environmental Matters.
4.8.1. Except as disclosed on Schedule 4.8: (a) to the Knowledge of
Seller, the Real Property currently complies in all material respects with
applicable Environmental Laws; (b) neither the Real Property owned by Seller
nor, to the Knowledge of Seller, the Real Property leased by Seller is the
subject of any court order, administrative order, agreement or decree arising
under any Environmental Law; and (c) the Real Property has not been used by
Seller for the generation, storage, discharge or disposal of any Hazardous
Substances except as permitted under applicable Environmental Laws. Except as
disclosed on Schedule 4.8, Seller has not received any written notice from any
Governmental Authority alleging that any parcel of the Real Property is in
violation of any Environmental Law or has been placed on the National Priorities
List, and no claim based on any applicable Environmental Law has been asserted
to Seller in writing in the past or is currently pending or, to the Knowledge of
Seller, threatened, with respect to any Real Property.
4.8.2. Seller has provided Buyer with complete and correct copies of
(a) all studies, reports, surveys or other materials in Seller's possession
relating to the presence or alleged presence of Hazardous Substances at, on or
affecting the Real Property, (b) all notices or other materials in Seller's
possession that were received from any Governmental Authority administering or
enforcing any Environmental Laws relating to Seller's ownership, use or
operation of the Real Property or activities at the Real Property and (c) all
materials in Seller's possession relating to any litigation or claim by any
Person concerning any Environmental Law.
4.9. Compliance with Legal Requirements. Except as disclosed on Schedule
4.9:
4.9.1. The ownership, leasing and use of the Assets as they are
currently owned, leased and used, and the conduct of the Business as it is
currently conducted, do not violate or infringe in any material respect any
applicable Legal Requirements (other than Legal Requirements with respect to the
regulation of rates charged to subscribers of the Systems, as to which the
representations and warranties set forth in subsection 4.9.10 will exclusively
apply).
4.9.2. A valid request to invoke the formal renewal provisions under
Section 626(a) of the Communications Act has been duly and timely filed with the
proper Governmental Authority with respect to all Franchises that have expired
prior to, or will expire within 30 months after, the date of this Agreement.
4.9.3. Seller has complied in all material respects, and the
Business is in compliance in all material respects, with the specifications set
forth in Part 76, Subpart K of the rules and regulations of the FCC.
4.9.4. Seller has made timely filings and has paid the proper
copyright fees with respect to the Business under Section 111 of the Copyright
Act of 1976, and the Systems qualifies for the compulsory license under such
Section 111.
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4.9.5. The carriage of all television station signals (other than
satellite superstations) by the Systems are permitted by valid retransmission
consent agreements or by must-carry elections by broadcasters.
4.9.6. The Systems and the Business are in compliance with the
Subscriber Privacy Act set forth at Section 631 of the Communications Act (47
U.S.C. Section 551, et seq.).
4.9.7. The Systems are not subject to effective competition under
the Communications Act.
4.9.8. No Governmental Authority has notified Seller of its
application to be certified to regulate rates with respect to the Systems as
provided in 47 C.F.R. Section 76.910.
4.9.9. No Governmental Authority has notified Seller that it has
been certified and has adopted regulations required to commence regulation with
respect to any System as provided in 47 C.F.R. Section 76.910(c)(2).
4.9.10. The Systems are in compliance in all material respects with
the FCC rules currently in effect implementing the cable television rate
regulation provisions of the Communications Act.
4.9.11. To Seller's Knowledge, and except as set forth in the AT&T
Late Fee Settlement, no reduction of rates or refunds to subscribers is required
as of the date hereof.
4.9.12. Seller is in compliance in all material respects with its
obligations under 47 C.F.R. Part 17 concerning the construction, marking and
lighting of antenna structures used by Seller in connection with the operation
of the Systems.
4.9.13. Seller has made timely filings required under applicable
Legal Requirements to be made in connection with the Governmental Permits,
including FCC Forms 320, 159 and 395, if applicable.
4.9.14. Where required, appropriate authorizations from the FCC have
been obtained for the use of all aeronautical frequencies in use in the Systems
(and Seller will provide to Buyer a schedule of such aeronautical frequencies in
use in the Systems prior to the Closing), and the Systems are presently being
operated in compliance with such authorizations, and all required certificates,
permits and clearances, including from the FAA, with respect to towers, earth
stations, business radio and frequencies utilized and carried by the Systems
have been obtained.
4.10. Intellectual Property. Except for Excluded Assets and except as
described on Schedule 4.10, Seller does not possess any Intellectual Property
material to the operation of the Business, and Seller is not a party to any
material license or royalty agreement with respect to any patent, trademark or
copyright except for licenses respecting program material and obligations under
the Copyright Act of 1976 applicable
18
to cable television systems generally and commercially available software. The
Business and the Systems have been operated in such a manner so as not to
violate or infringe in any material respect upon the rights of, or give rise to
any rightful claim of any Person for copyright, trademark, service xxxx, patent,
license, trade secret infringement or the like. Seller owns or possesses
licenses or other rights to use all Intellectual Property necessary to the
operation of the Business as presently conducted without any conflict with, or
infringement of, the rights of others. Except as disclosed on Schedule 4.10,
there is no claim pending or, to Seller's Knowledge, threatened with respect to
any Intellectual Property.
4.11. Financial Statements. Seller has delivered to Buyer correct and
complete copies of the unaudited balance sheets and unaudited statements of
operations for the Systems and the Business as of and for the 12-month periods
ended December 31, 1999 and December 31, 2000 (the "Financial Statements").
Seller has also delivered to Buyer correct and complete copies of capital
expenditures summaries for the Systems and the Business for the 12-month periods
ended December 31, 1999 and December 31, 2000. The Financial Statements fairly
present, in all material respects, Seller's financial position and results of
operations as of the dates and for the periods indicated, subject to normal
year-end adjustments, allocations and accruals (none of which are deemed to be
material to the operating cash flow of Seller as reflected in its statements of
operations). The Financial Statements have been prepared in accordance with
GAAP, except that they do not (a) reflect income taxes, (b) contain a statement
of cash flows, (c) contain footnotes, or (d) fully reflect the allocation of
AT&T Corp.'s purchase price to acquire Tele-Communications, Inc. for the 1999
period. Such purchase price allocations would primarily affect franchise costs,
property and equipment, depreciation and amortization.
4.12. Absence of Certain Changes. Except as disclosed on Schedule 4.12, or
as disclosed by or reserved against in the most recent balance sheet included in
the Financial Statements, since December 31, 2000: (a) no event or circumstance
has occurred which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect or materially adversely affect any of
the Systems; (b) Seller has operated the Business only in the ordinary course;
and (c) there has been no sale, assignment or transfer of any material Assets,
or any theft, damage, removal of property, destruction or casualty loss which
might be expected to materially adversely affect the Business or the Systems,
(d) there has been no waiver or release of any material right or claim of Seller
against any third party, (e) there has been no amendment or termination of any
Governmental Permit, and (f) there has been no agreement by Seller to take any
of the actions described in the preceding clauses (a) through (e), except as
contemplated by this Agreement.
4.13. Legal Proceedings. Except as disclosed on Schedule 4.13: (a) there
is no claim, investigation or litigation pending or, to Seller's Knowledge,
threatened, by or before any Governmental Authority or arbitration tribunal
against Seller which, if adversely determined, would have a Material Adverse
Effect, would materially adversely affect any of the Systems or would materially
adversely affect the ability of Seller to perform its obligations under this
Agreement; and (b) there is not in existence
19
any judgment or order requiring the Seller to take or to refrain from taking any
action of any kind with respect to or otherwise affecting the Assets or the
operation of the Business, or to which Seller, the Business, the System or the
Assets are subject or by which they are bound or affected that, in either case,
would have a Material Adverse Effect, would materially adversely affect any of
the Systems or would materially adversely affect the ability of Seller to
perform its obligations under this Agreement or the Transaction Documents.
Seller is not in default or violation of, and no event or condition exists
which, with notice or lapse of time or both, could become or result in a default
under or a violation of, any judgment, award or order of any Governmental
Authority or arbitration tribunal binding upon Seller.
4.14. Tax Returns; Other Reports. Seller has duly and timely filed all
federal, state, local and foreign Tax returns and other Tax reports required to
be filed by Seller, and has timely paid all Taxes which have become due and
payable, whether or not so shown on any such return or report, the failure of
which to be filed or paid could adversely affect or result in the imposition of
an Encumbrance upon the Assets, except such amounts as are (a) being contested
diligently and in good faith and for which an adequate reserve has been
established, or (b) are not in the aggregate material. Seller has received no
notice of, nor does Seller have any Knowledge of, any deficiency, assessment or
audit, or proposed deficiency, assessment or audit from any taxing Governmental
Authority which could affect or result in the imposition of an Encumbrance upon
the Assets.
4.15. Employment Matters.
4.15.1. Seller has complied in all material respects with all
applicable Legal Requirements relating to the employment of labor, including the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
continuation coverage requirements with respect to group health plans, and those
relating to wages, hours, collective bargaining, unemployment insurance,
worker's compensation, equal employment opportunity, age, sex, race and
disability discrimination, immigration control and the payment and withholding
of Taxes, and Seller is not liable for any arrearages of wages or any Taxes or
any penalties for failure to comply with any of the foregoing for which Buyer
will have any liability after the Closing.
4.15.2. For purposes of this Agreement, "Seller Plans" means each
employee benefit plan (as defined in Section 3(3) of ERISA) or any multiemployer
plan (as defined in Section 3(37) of ERISA) which is sponsored or maintained by
Seller or its Affiliates or to which Seller contributes, and which benefits
System Employees. The Seller Plans in which any System Employee participates are
disclosed on Schedule 4.15. None of Seller, any Seller Plan other than a
multiemployer plan (as defined in Section 3(37) of ERISA), or, to the Knowledge
of Seller, any Seller Plan that is a multiemployer plan (as defined in Section
3(37) of ERISA), is in violation of any provision of ERISA or the Code for which
Buyer will have any liability after the Closing Date. No material (i)
"reportable event" described in Sections 4043(c)(1), (2), (3), (5), (6), (7),
(10) and (13) of ERISA, (ii) non-exempt "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code), (iii) "accumulated
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funding deficiency" (as defined in Section 302 of ERISA) or (iv) "withdrawal
liability" (as determined under Section 4201 et seq. of ERISA) has occurred or
exists and is continuing with respect to any Seller Plan other than a
multiemployer plan (as defined in Section 3(37) of ERISA), or, to the Knowledge
of Seller or any of its ERISA Affiliates, any Seller Plan that is a
multiemployer plan (as defined in Section 3(37) of ERISA). After the Closing,
none of Buyer and any of Buyer's ERISA Affiliates will be required, under ERISA,
the Code, any collective bargaining agreement or this Agreement, to establish,
maintain or continue any Seller Plan currently maintained by Seller or any of
its ERISA Affiliates. "ERISA Affiliate" means, as to any Person, any trade or
business, whether or not incorporated, which together with such Person would be
deemed a single employer as determined under Section 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended.
4.15.3. Except as disclosed on Schedule 4.15, as of the date of this
Agreement, no collective bargaining agreements are applicable to any System
Employee and Seller has no duty to bargain with any labor organization with
respect to any System Employees. Except as disclosed on Schedule 4.15, as of the
date of this Agreement, there are not pending, or to Seller's Knowledge,
threatened, any labor disputes, unfair labor practice charges against Seller,
any demand for recognition or any other request or demand from a labor
organization for representative status with respect to any System Employee.
Except as disclosed on Schedule 4.15, Seller has no employment agreements,
either written or oral, with any System Employee.
4.16. System Information. With respect to each of the Systems, disclosed
on Schedule 4.16 are (a) the approximate number of plant and fiber miles (aerial
and underground) for the System, (b) the minimum bandwidth capability of the
System, (c) the stations and signals carried by the System, (d) the channel
position of each such signal and station (including a designation of which
broadcast stations are distributed pursuant to a retransmission consent and
which are distributed pursuant to a must-carry election), and (e) the
approximate number of digital and @Home subscribers, analog Pay TV subscribers
and Pay TV units, which information is true and correct in all material
respects, in each case as of the applicable dates specified therein and subject
to any qualifications set forth therein. Also disclosed on Schedule 4.16 are the
approximate number of homes passed by the System, and the approximate number of
Equivalent Basic Subscribers of the System as of the applicable dates specified
therein. Seller has delivered to Buyer information on the channel lineups and
the monthly rates charged for each class of service for the Systems (including
installation charges), which information is true, complete and correct, in each
case as of the applicable dates specified therein and subject to any
qualifications set forth therein. Seller has implemented, or will implement in
accordance with its operating budget and the schedule of rate increases provided
to Buyer, any rate increases for calendar year 2001 set forth in its operating
budget or such schedule. Disclosed on Schedule 4.16 is a list of all promotions
and offers of discounts made by Seller in the 12 months prior to the date of
this Agreement with respect to the Systems, which list is true, complete and
correct in all material respects as of the date of this Agreement.
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4.17. Finders and Brokers. Other than Xxxxxxx & Associates (whose fees
will be paid by Seller), Seller has not employed any financial advisor, broker
or finder or incurred any liability for any financial advisory, brokerage,
finder's or similar fee or commission in connection with the transactions
contemplated by this Agreement for which Buyer could be liable.
4.18. Disclosure. Any item required to be disclosed on more than one
Schedule to this Agreement will be deemed properly disclosed on all such
Schedules if it is disclosed on any Schedule to this Agreement.
4.19. Accounts Receivable. The accounts receivable included in the Assets
have not been assigned to or for the benefit of any other Person. Such accounts
receivable arose and will arise from bona fide transactions in the ordinary
course of business.
4.20. Inventory. Seller has, and at the Closing will have, and there will
be maintained by the Systems and the Assets will include at Closing, an
inventory of spare parts and other materials (including analog and digital
converters and DOCSIS compliant cable modems) relating to the Systems of the
type and nature and maintained at a level consistent with past practices in the
ordinary course of business and otherwise in accordance with AT&T practices
(which level will include any inventory maintained for the Systems, consistent
with past practices, in regional warehouses or distribution centers located
outside of the Service Area).
4.21. Books and Records. All Books and Records of Seller required to be
maintained by applicable Legal Requirement are complete in all material
respects.
5. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants to Seller, as of the date of this Agreement
and as of the Closing, as follows:
5.1. Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite power and authority to carry on its business as currently
conducted and to own, lease, use and operate its assets. Buyer is duly qualified
to do business and is in good standing under the laws of each jurisdiction in
which the character of the properties owned, leased or operated by it or the
nature of the activities conducted by it makes such qualification necessary,
except any such jurisdiction where the failure to be so qualified and in good
standing would not have a material adverse effect on the ability of Buyer to
perform its obligations under this Agreement.
5.2. Authority and Validity. Buyer has all requisite power and authority
to execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Transaction Documents. The
execution and delivery by Buyer of, the performance by Buyer of its obligations
under, and the consummation by Buyer of the transactions contemplated by, this
Agreement and the Transaction Documents to which Buyer is a party have been duly
authorized by
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all requisite entity action. This Agreement is, and when executed and delivered
by Buyer, the Transaction Documents will be, the valid and binding obligations
of Buyer, enforceable in accordance with their respective terms, except insofar
as enforceability may be limited or affected by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting creditors' rights generally or by principles governing the
availability of equitable remedies.
5.3. No Conflicts; Required Consents. Subject to the receipt of any
consent or the expiration or termination of the applicable waiting period under
the HSR Act, the execution and delivery by Buyer, the performance of Buyer
under, and the consummation by Buyer of the transactions contemplated by, this
Agreement and the Transaction Documents to which Buyer is a party do not and
will not: (a) violate any provision of the organizational documents of Buyer;
(b) violate any material Legal Requirement; or (c) require any consent, waiver,
approval or authorization of, or any filing with or notice to, any Person.
5.4. Acknowledgment by Buyer. Buyer understands that the representations
and warranties of the Seller contained in this Agreement will only survive the
Closing as set forth in Section 10.1 and constitute the sole and exclusive
representations and warranties of Seller to Buyer in connection with the
transaction contemplated hereby. BUYER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT
ALL OTHER REPRESENTATIONS AND WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND ANY WARRANTIES RELATING TO THE FUTURE OR HISTORICAL
FINANCIAL CONDITION, RESULTS OF OPERATIONS, ASSETS OR LIABILITIES OF THE
BUSINESS ARE SPECIFICALLY DISCLAIMED BY SELLER.
5.5. Finders and Brokers. Buyer has not employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which Seller could be liable.
5.6. Legal Proceedings. There are no claims, actions, suits, proceedings
or investigations pending or, to Buyer's knowledge, threatened, by or before any
Governmental Authority, or any arbitrator, by, against, affecting or relating to
Buyer which, if adversely determined, would restrain or enjoin the consummation
of the transactions contemplated by this Agreement or declare unlawful the
transactions or events contemplated by this Agreement or cause any of such
transactions to be rescinded.
6. ADDITIONAL COVENANTS.
6.1. Access to Premises and Records. Between the date of this Agreement
and the Closing Date, upon reasonable advance notice from Buyer to Seller,
Seller will give Buyer and its representatives reasonable access during normal
business hours to all the premises and the Books and Records of the Business, to
all the Assets, to the general managers of the Systems, and to other AT&T
corporate personnel to the extent
23
reasonably necessary to effect a transition of the operations of the Systems to
Buyer following the Closing, and will furnish to Buyer and its representatives
all information regarding the Business, the Assets and, to the extent reasonably
necessary to effect any transition with respect to any Excluded Assets, the
Excluded Assets, as Buyer may from time to time reasonably request. All requests
for access to AT&T corporate personnel will be made to Xx. Xxxxx Xxxxxx, at
000-000-0000.
6.2. Continuity and Maintenance of Operations; Financial Statements.
Except as Buyer may otherwise consent in writing (which consent will not be
withheld unreasonably), until the Closing:
6.2.1. Seller will conduct the Business and operate the Systems only
in the ordinary course consistent in all material respects with past practices,
and will use commercially reasonable efforts, to (a) preserve the Business
intact, including preserving existing relationships with franchising
authorities, suppliers, customers and others having business dealings with
Seller relating to the Business and (b) keep available the services of the
System Employees (but will be under no obligation to incur any costs in addition
to what Seller is currently incurring to do so).
6.2.2. Without limiting the generality of the foregoing, Seller will
(a) make capital expenditures in the ordinary course of business consistent with
its 2001 capital budget (a complete and correct copy of which Seller has
provided to Buyer), as modified as described on Schedule 6.2.2; (b) make the
capital expenditures required with respect to the specific capital projects
disclosed on Schedule 6.2.2; (c) make any capital expenditures required to
comply with the commitments, if any, in the Franchise and Contracts; and (d)
make other capital expenditures to the extent reasonably requested by Buyer, up
to an aggregate of $12,500,000 and subject to reimbursement by Buyer pursuant to
Section 3.2.5. In addition, Seller will deploy digital converter boxes and cable
modems in a manner consistent with its past practices and with the practices
generally applicable to cable systems owned and operated by AT&T, including with
respect to the make and model of such converter boxes and modems.
6.2.3. Seller will maintain the Assets in good repair, order and
condition (ordinary wear and tear excepted), will maintain in full force and
effect, policies of insurance with respect to the Business in such amounts and
covering such risks as customarily maintained by operators of cable television
systems of similar size and geographic location as the Systems, and will
maintain its books, records and accounts in the ordinary manner on a basis
consistent with past practices. Seller will (a) only report and write off
accounts receivable in accordance with past practice, (b) withhold and pay when
due all Taxes relating to System Employees, the Assets or the System, (c)
maintain service quality of the Systems at a level at least consistent with past
practices, (d) file with the FCC all reports required to be filed under
applicable FCC rules and regulations, and (e) comply in all material respects
with all Legal Requirements with respect to the System.
6.2.4. Seller will not, except as disclosed on Schedule 6.2: (a)
sell, transfer or assign any material portion of the Assets other than sales in
the ordinary
24
course of business; (b) modify, renew, terminate, suspend or abrogate any
Franchises, Licenses or material Contracts (other than those constituting
Excluded Assets); (c) enter into any non-ordinary course Contract or commitment
involving an expenditure in excess of $75,000, other than Contracts or
commitments which are cancellable on 60 days' notice or less without penalty and
other than as contemplated by this Agreement; (d) modify its procedures for
disconnection and discontinuation of service to subscribers whose accounts are
delinquent; (e) increase the compensation or change any benefits available to
System Employees, except as required pursuant to existing written agreements or
except in the ordinary course of business consistent with past practice or in
accordance with an AT&T-wide plan or program (in which case Seller will give
prior notice to Buyer); (f) create, assume or permit to exist any Encumbrance
(other than Permitted Encumbrances) on any of the Assets, other than those
Encumbrances existing on the date hereof or any Encumbrance which will be
released at or prior to the Closing; (g) enter into any collective bargaining
agreement covering the System Employees who are not now covered by a collective
bargaining agreement (h) enter into any new bonus, stock option, profit sharing,
compensation, pension, welfare, retirement, employment or similar agreement,
except in the ordinary course of business consistent with past practices, in
accordance with an AT&T-wide plan or program (in which case Seller will give
prior notice to Buyer) or where required by any Legal Requirement; (i) decrease
the rate charged for any level of Basic Service, Expanded Basic Service or any
Pay TV, except to the extent required by any Legal Requirement; and (j) solicit
any Person to subscribe to any services of the Business other than in the
ordinary course of business and consistent with past practices, which shall
include promotions or offers of discount of the type disclosed on Schedule 4.16;
provided, however, that notwithstanding the foregoing, from and after the date
of this Agreement, Seller shall not solicit any Person to subscribe to (or offer
to any Person to retain such Person as a subscriber to) any services of the
Business in any manner which, directly or indirectly, involves the compromise,
write-off or release of any amount due for services previously rendered to such
Person by Seller.
6.2.5. Seller will deliver to Buyer, within 20 days following the
end of each month prior to the Closing Date, the following unaudited financial
reports (by GL number) for the prior month: "New System P&L (expanded)" report,
"Field P&L" report, a capital expenditure summary, and a summary installation
and disconnect activity report to include Equivalent Basic Subscribers
(calculated in a manner consistent with Schedule 4.16) digital subscribers and
@Home subscribers, and such other financial reports that Seller regularly
prepares in the ordinary course of business as Buyer may reasonably request. All
financial reports so delivered will present fairly and accurately, in all
material respects, the financial condition and results of operations of the
Business for the period of such report and will be prepared in accordance with
GAAP on a basis consistent with the Financial Statements except as otherwise
noted therein. Further, Seller will deliver to Buyer CSG reports CPRM-006 and
CPSM-318 with respect to the Systems for January and March 2001 within 30 days
following the end of each such month, and for May 2001, as soon as available,
but in no event less than 15 days prior to the anticipated Closing Date.
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6.3. Employee Matters. Buyer may, but shall have no obligation to, employ
or offer employment to any of the System Employees. All employment-related
matters relating to System Employees arising from and after the date of this
Agreement will be handled in such manner as Buyer and Seller agree.
6.4. Leased Vehicles and Other Capital Leases. Seller will pay the
remaining balances on any leases for vehicles or capital leases included in the
Equipment and will deliver title to such vehicles and other Equipment free and
clear of all Encumbrances (other than Permitted Encumbrances) to Buyer at the
Closing.
6.5. Consents.
6.5.1. Prior to the Closing, Seller will use commercially reasonable
efforts to obtain in writing, as promptly as possible and at its expense, all
the Required Consents, in form and substance reasonably satisfactory to Buyer
and will deliver to Buyer copies of such Required Consents promptly after they
are obtained by Seller. Buyer will cooperate with Seller to obtain all Required
Consents, but Buyer will not be required to accept or agree or accede to any
modifications or amendments to, or changes in, or the imposition of any
condition to the transfer to Buyer of any Contract, Franchise, License or other
Governmental Permit that are not reasonably acceptable to Buyer. Notwithstanding
the foregoing, Buyer will comply with the reasonable requests of Seller and, to
the extent required, negotiate in good faith with any Third Party, as necessary
for Seller to assign to Buyer in part the rights and obligations under any
master Contract disclosed on Schedule 4.6.
6.5.2. Notwithstanding the provisions of Section 6.5.1, Seller will
not have any further obligation to obtain Required Consents: (a) with respect to
Contracts relating to pole attachments where the licensing party will not, after
Seller's exercise of commercially reasonable efforts, consent to an assignment
of such Contract but requires that Buyer enter into a new agreement with such
licensing authority, in which case Buyer will use its commercially reasonable
efforts to enter into such agreement prior to the Closing or as soon as
practicable thereafter and Seller will cooperate with and assist Buyer in
obtaining such agreements; (b) for any business radio license which Seller
reasonably expects can be obtained within 120 days after the Closing and so long
as a temporary authorization is available to Buyer under FCC rules with respect
thereto and Seller has reasonably cooperated in the filing of assignment
applications prior to the Closing; and (c) with respect to leased Real Property,
if Seller obtains and makes operational prior to the Closing substitute leased
Real Property that is reasonably satisfactory to Buyer.
6.5.3. Buyer and Seller will mutually agree upon their respective
obligations with respect to, and ultimate disposition of, any Retained
Franchise.
6.5.4. Subject to receiving information necessary from Buyer, Seller
will execute and use commercially reasonable efforts to deliver all required FCC
Forms 394 to the appropriate Governmental Authorities on or before February 28,
2001.
26
6.6. Title Commitments and Surveys. After the execution of this Agreement,
Buyer may obtain, at its sole expense, (a) commitments for owner's title
insurance policies (and if Buyer decides to do so, title insurance) on some or
all Real Property owned by Seller and on easements which provide access to each
such parcel of Real Property, and (b) an ALTA survey on each parcel of Real
Property for which a commitment for a title insurance policy is to be obtained.
Seller will provide reasonable assistance in connection with Buyer obtaining
such commitments (and title insurance) and surveys, as Buyer may request from
time to time (including delivering such affidavits and other documents that the
title company or Buyer may reasonable request in order to cause the title
company to issue title insurance in favor of Buyer). Without limiting the
foregoing, Seller will as soon as practicable after the execution of this
Agreement deliver to Buyer such information as shall be reasonably necessary to
permit Buyer to order commitments for title insurance on Real Property owned by
Seller and Buyer will promptly after receipt of such information order such
commitments. If Buyer notifies Seller in writing that the commitment or survey
discloses a defect in title that constitutes a breach, or any facts which could
be reasonably expected to result in a breach, of the representations of Seller
contained in Section 4.7, then Seller will promptly commence further
investigation and use commercially reasonable efforts to, at its expense, cure
the defect prior to the Closing. If Seller, having used such commercially
reasonable efforts, is unable to cure the defect prior to the Closing and the
Closing occurs, then (i) Buyer and Seller may enter into a written agreement at
the Closing mutually acceptable to both parties with respect to Seller's
obligation to cure such defect after the Closing, and (ii) any claim for
indemnification that Buyer may have with respect to the defect may be brought
without the requirement that such claims meet or exceed the Threshold Amount.
6.7. HSR Notification. As soon as practicable after the execution of this
Agreement, but in any event no later than 30 days after such execution, Seller
and Buyer will each complete and file, or cause to be completed and filed, any
notification and report required to be filed under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"); and each such
filing will request early termination of the waiting period imposed by the HSR
Act. Each party will bear its own costs incurred with respect to such filings.
The parties will use their commercially reasonable efforts to respond as
promptly as reasonably practicable to any inquiries received from the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") for additional information or documentation
and to respond as promptly as reasonably practicable to all inquiries and
requests received from any other Governmental Authority in connection with
antitrust matters. The parties will use their respective commercially reasonable
efforts to overcome any objections which may be raised by the FTC, the Antitrust
Division or any other Governmental Authority having jurisdiction over antitrust
matters. Notwithstanding the foregoing, neither Buyer nor Seller will be
required to make any significant change in the operations or activities of their
respective business (or any material assets employed therein) or that of any of
their respective Affiliates, if such party determines in good faith that such
change would be materially adverse to the operations or activities of such
business (or any material assets employed therein), provided such business has
significant assets, net worth, or revenue. Each of Buyer and
27
Seller will coordinate with the other with respect to its filings and will
cooperate to prevent inconsistencies between their respective filings and will
furnish to each other such necessary information and reasonable assistance as
the other may reasonably request in connection with its preparation of necessary
filings or submissions under the HSR Act.
6.8. Notification of Certain Matters. Seller will promptly notify Buyer of
any fact, circumstance, event or action by it or otherwise (a) which, if known
at the date of this Agreement, would have been required to be disclosed in or
pursuant to this Agreement or (b) the existence, occurrence or taking of which
would result in any of Seller's representations and warranties in this Agreement
or any Transaction Document not being true, complete and correct in all material
respects when made or at the Closing. Seller will further notify Buyer of (i)
any construction programs that Seller becomes aware are undertaken, or proposed
or threatened to be undertaken, by any municipality or other cable television,
multichannel multipoint distribution systems or multipoint distribution system
provider or operator in any franchise area served by the System and (ii) any
cable television franchise or other application or request of any Person for a
cable television franchise that Seller becomes aware has been submitted or
threatened or proposed which relates to any Service Area.
6.9. Risk of Loss; Condemnation.
6.9.1. Seller will bear the risk of any loss or damage to the Assets
resulting from fire, theft or other casualty (except reasonable wear and tear)
at all times prior to the Closing. If any such loss or damage is so substantial
as to prevent normal operation of any material portion of the Systems or the
replacement or restoration of the lost or damaged property within 45 days after
the occurrence of the event resulting in such loss or damage, Seller will
immediately notify Buyer of that fact and Buyer, at any time within 10 days
after receipt of such notice, may elect by written notice to Seller either (a)
to waive such defect and proceed toward consummation of the transactions
contemplated by this Agreement in accordance with terms of this Agreement or (b)
terminate this Agreement. If Buyer elects so to terminate this Agreement, Buyer
and Seller will be discharged of any and all obligations hereunder. If Buyer
elects to consummate the transactions contemplated by this Agreement
notwithstanding such loss or damage and does so, there will be no adjustment in
the consideration payable to Seller on account of such loss or damage (other
than the amount of any insurance deductible), but all insurance proceeds payable
as a result of the occurrence of the event resulting in such loss or damage will
be delivered by Seller to Buyer, or the rights to such proceeds will be assigned
by Seller to Buyer if not yet paid over to Seller.
6.9.2. If, prior to the Closing, all or any portion of the Assets
are taken or condemned as a result of the exercise of the power of eminent
domain (which shall not be deemed to include the exercise of any right of first
refusal in any Franchise), or if a Governmental Authority having such power
seeks to condemn a portion of the Assets by proper statutory process (such event
being called, a "Taking"), then Seller will promptly so notify Buyer and Buyer
may, by giving notice to Seller within 10 days of receiving notice of the
Taking, elect, in the name of Seller, to
28
negotiate for, claim, contest and receive all damages with respect to the
Taking. If Buyer so elects, (a) Seller will be relieved of its obligation to
convey to Buyer the Assets or interests that are the subject of the Taking, (b)
at the Closing, Seller will assign to Buyer all of the Seller's rights
(including the right to receive payment of damages) with respect to the Taking
and will pay to Buyer all damages previously received by Seller with respect to
the Taking, and (c) following the Closing, Seller will give the Buyer such
further assurances of such rights and assignment with respect to the Taking as
may from time to time reasonably request. If the portion of the Assets subject
to such Taking is material to the operation of the Business or the Systems,
taken as a whole, Buyer may elect to terminate this Agreement with no liability
to Seller.
6.10. Transfer Taxes. Any state or local sales, use, transfer, or
documentary transfer Taxes or fees or any other charge imposed by any
Governmental Authority (other than any of Seller's income, franchise, gross
receipts, corporation, excess profits, rental, devolution, or payroll tax by
whatsoever authority imposed or howsoever designated) arising from or payable by
reason of the transfer of the Assets contemplated by this Agreement will be
shared equally by Buyer and Seller.
6.11. Updated Schedules. Not less than 10 Business Days prior to the
projected Closing Date, Seller will deliver to Buyer revised copies of each of
the Schedules, except for Schedules 4.15 and 4.16, in each case updated and
marked to show any changes occurring between the date of this Agreement and the
date of delivery; provided, however, that for purposes of Seller's
representations and warranties and covenants in this Agreement, all references
to the Schedules will mean the version of the Schedules attached to this
Agreement on the date of signing, and provided, further, that if the effect of
any such updates to Schedules is to disclose any one or more additional
properties, privileges, rights, interests or claims not included on the
Schedules as of the date of this Agreement, Buyer will have the right (to be
exercised by written notice to Seller at or before the Closing) to cause any one
or more of such items to be designated as and deemed to constitute Excluded
Assets for all purposes under this Agreement unless such items are Contracts
that were not required to be scheduled or that were entered into after the date
of this Agreement in accordance with the terms of this Agreement.
6.12. Use of Seller's Name. Seller and its Affiliates will retain all
rights with respect to the names "AT&T," "Tele-Communications, Inc." and "TCI"
or any and all derivations thereof after the Closing. Buyer will remove or
delete such names or any and all derivations thereof from the Business and
Assets as soon as reasonably practicable, but in any event by the 120th day
following the Closing. Notwithstanding the foregoing, nothing in this Section
6.12 will require Buyer to remove or discontinue using any such name or xxxx
that is affixed to converters or other items in consumer homes or properties on
the Closing Date, or as are used in a similar fashion which makes such removal
or discontinuation impracticable, provided that Buyer makes a reasonable effort
to request and provides necessary materials to enable subscribers to cover or
remove names and marks affixed to such converters and other items.
29
6.13. Transitional Billing Services. Seller will provide to Buyer, upon
request, access to and the right to use its billing system computers, software
and related fixed assets ("Transitional Billing Services") in connection with
the System for a period of up to 180 days following the Closing to allow for
conversion of existing billing arrangements. Buyer will notify Seller at least
30 days prior to the Closing as to whether it desires Transitional Billing
Services from Seller. Buyer will reimburse Seller for all direct expenses
incurred by Seller in providing the Transitional Billing Services.
6.14. Transition of High Speed Data Services; Other Transitional Matters.
Seller and Buyer will cooperate in good faith to establish a mutually agreeable
plan to allow for the conversion of high speed data customers from Seller to
Buyer. Seller will take such action as Buyer reasonably requests with respect to
such conversion, and Buyer will reimburse Seller for all direct expenses
incurred by Seller in complying with such requests. Between the date of this
Agreement and the Closing, Seller and Buyer will further cooperate in good faith
with respect to such other matters as necessary to provide for the orderly
transition of the Business from Seller to Buyer at the Closing.
6.15. Certain Notices. Seller will duly and timely file a valid request to
invoke the formal renewal provisions of Section 626(a) of the Communications Act
with the appropriate Governmental Authority with respect to all Franchises of
the Business that will expire within 35 months after any date between the date
of this Agreement and the Closing Date.
6.16. Satisfaction of Conditions. Each party will use commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other party to consummate the transactions contemplated
by this Agreement, as set forth in Section 7, as soon as practicable and in
order to permit the Closing to occur on or prior to the Target Closing Date.
6.17. Bulk Transfers. Buyer and Seller each waive compliance by the other
with Legal Requirements relating to bulk transfers that may be applicable to the
transactions contemplated hereby.
6.18. Programming Matters.
6.18.1. Buyer will execute and deliver to Seller such documents as
may be reasonably requested by Seller to comply with the requirements of its
programming Contracts and channel line-up requirements with respect to
divestitures of cable television systems (other than agreements to assume such
programming Contracts or make any payments or commitments or assume any
obligations thereunder). Seller will execute and deliver such documents as may
be reasonably requested by Buyer to comply with the requirements of its
programming Contracts and channel line-up requirements with respect to
acquisitions of cable television systems. Neither party will be required to make
any payments to the other's programmers in the fulfillment of its obligations
under this Section 6.18.
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6.18.2. Seller will reasonably cooperate with Buyer, at Buyer's
request, in connection with Buyer's efforts to (a) negotiate with programming
providers with respect to on-going support provided by such programmers for
programming services carried by the Systems, and (b) obtain carriage agreements
with respect to digital programming services provided by the Systems that Buyer
intends to continue to offer after the Closing.
6.19. Cooperation as to Rates and Fees.
6.19.1. After the Closing, notwithstanding the terms of Section
10.4, Buyer will have the right at its own expense to assume control of the
defense of any rate proceeding with respect to the Systems that remains pending
as of the Closing or that arises after the Closing but relates to the
pre-Closing operation of the Systems; provided that Seller may complete the
pending AT&T Late Fee Settlement and the defense of such litigation as it
relates to the Systems will not be turned over to Buyer. Buyer will promptly
notify Seller regarding the commencement of any such rate proceeding relating to
the pre-Closing operation of the Systems. In any such rate proceeding involving
the Systems, Seller will cooperate in such proceeding and promptly deliver to
Buyer all information reasonably requested by Buyer as necessary or helpful in
such proceeding.
(a) If Buyer elects to assume control of the defense of any
such rate proceeding, then (i) Seller will have the right to participate,
at its expense, in the defense in such rate proceeding, and (ii) Buyer
will have the right to settle any rate proceeding relating to the
pre-Closing operation of the Systems unless under such settlement Seller
would be required to bear liability with respect to the pre-Closing time
period, in which event such settlement will require Seller's prior written
consent, which consent will not be unreasonably withheld, conditioned or
delayed.
(b) If Buyer does not elect to assume control of the defense
of any such rate proceeding, then (i) Buyer will have the right to
participate, at its expense, in the defense in such rate proceeding, and
(ii) without the prior consent of Buyer (which will not be unreasonably
withheld, conditioned or delayed), Seller will not settle such rate
proceeding if such settlement would require Buyer to bear any liability or
would adversely affect the rates to be charged by Buyer. In any such rate
proceeding involving the Systems, Buyer will cooperate in such proceeding
and promptly deliver to Seller all information in its possession that is
reasonably requested by Seller as necessary or helpful in such proceeding.
6.19.2. If Seller is required, following the Closing, pursuant to
any Legal Requirement, settlement or otherwise, including the AT&T Late Fee
Settlement, to reimburse or provide in-kind or another form of consideration to
any subscribers of the Systems in respect of any subscriber payments previously
made by them, including fees for cable television service, late fees and similar
payments, Buyer agrees that it will make such reimbursement or provide such
in-kind or other form of consideration
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through Buyer's billing system on terms specified by Seller, and Seller will
reimburse Buyer for all such payments and other consideration made by Buyer
following the Closing and for Buyer's reasonable out-of-pocket expenses incurred
in connection therewith. Such reimbursement will be reflected in the Final
Adjustments Report, to the extent then known. For expenses incurred after
completion of the Final Adjustments Report, Seller will reimburse Buyer within
60 days after receipt of a statement therefor. Buyer will provide Seller with
all information in Buyer's possession that is reasonably required by Seller in
connection with such reimbursement.
6.20. Cooperation on Pending Litigation. With respect to any defense or
prosecution of any litigation or legal proceeding with respect to the Systems
that relates to the period prior to the Closing Time and for which Seller and
its Affiliates are responsible pursuant to this Agreement, Buyer will cooperate
with and assist Seller and its Affiliates, upon reasonable request, by making
witnesses available and providing all information in its possession (including,
upon reasonable advance notice, access to employees with information regarding
such proceedings and access to books and records that may relate to the
proceedings, in each case without interfering in any material respect with the
conduct of Buyer's business) that Seller and its Affiliates may reasonably
require in connection with such litigation or legal proceedings or in response
to any complaint, claim, inquiry, order or requirements of any Governmental
Authority or other Third Party.
6.21. Confidentiality.
6.21.1. Neither Buyer nor Seller will, nor will it permit any of its
Affiliates to, issue any press release or make any other public announcement or
any oral or written statements to Seller's employees concerning this Agreement
or the transactions contemplated hereby except as required by applicable Legal
Requirements, without the prior written consent of the other party. Each party
will hold, and will cause its employees, consultants, advisors and agents to
hold, the terms of this Agreement in confidence; provided that (a) such party
may use and disclose such information once it has become publicly disclosed
(other than by such party in breach of its obligations under this Section) or
which rightfully has come into the possession of such party (other than from the
other party) and (b) to the extent that such party may be compelled by Legal
Requirements to disclose any of such information, but the party proposing to
disclose such information will first notify and consult with the other party
concerning the proposed disclosure, to the extent reasonably feasible. Each
party also may disclose such information to employees, consultants, advisors,
agents and actual or potential lenders or investors whose knowledge is necessary
to facilitate the consummation of the transactions contemplated by this
Agreement. The obligation by either party to hold information in confidence
pursuant to this Section will be satisfied if such party exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information.
6.21.2. All information concerning the Business or Assets obtained
by Buyer or its Affiliates pursuant to or in connection with negotiation of this
Agreement will be used by Buyer and its Affiliates solely for purposes related
to this Agreement
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and, in the case of nonpublic information, will, except as may be required for
the performance of this Agreement or by Legal Requirement, be kept in strict
confidence by Buyer and its Affiliates in accordance with the terms of the
letter agreement dated October 24, 2000, which letter agreement is hereby
incorporated in this Agreement by reference. Any breach of such letter agreement
will be deemed a material breach of this Agreement.
6.22. Lien Searches. Promptly after the Effective Date, Seller will
provide to Buyer copies of Requests for Information or Copies (Form UCC-11) (or
a similar search report acceptable to Buyer) (each, a "Lien Search") listing all
judgments and tax liens, and all effective financing statements with respect to
any of the Assets, which name as debtor either Seller, any of its Affiliates
which operate cable television businesses in each Service Area for which the
respective Lien Search is made, AT&T Broadband, LLC, or Tele-Communications,
Inc.. Seller will exercise commercially reasonable efforts to remove
Encumbrances (other than a Permitted Encumbrance or an Encumbrance which will be
terminated or released at or prior to the Closing) prior to the Closing. If such
Encumbrance cannot be removed prior to the Closing and if Buyer elects to waive
such Encumbrance and proceed towards consummation of the transaction in
accordance with this Agreement (such election to proceed to be exercised by
Buyer in its reasonable discretion), Buyer and Seller will enter into a written
agreement at the Closing containing the commitment of Seller to use commercially
reasonable efforts to remove the Encumbrance following the Closing on terms
satisfactory to Buyer in its reasonable discretion or such other agreement
mutually acceptable to the parties.
6.23. No Solicitation. Between the date of this Agreement and the Closing
Date, Seller will not, and will cause its respective shareholders, officers,
directors, employees, agents and representatives not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making of any proposal
with respect to the Systems or the Business, engage in any negotiations
concerning, or provide to any other Person any information or data relating to
the Systems, the Assets, or Seller for the purposes of, or have any discussions
with any Person relating to, or otherwise cooperate in any way with or assist or
participate in, facilitate or encourage, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any effort
or attempt by any other Person to seek or effect a sale directly or indirectly
of all or substantially all of the Assets, the Systems or the Business.
6.24. Systems' Financial Statements. Seller will use commercially
reasonable efforts to deliver to Buyer (a) audited consolidated financial
statements for the Business for the years ended December 31, 1998, 1999 and
2000, not later than April 17, 2001, and (b) unaudited consolidated financial
statements for the three months ended March 31, 2001, not later than May 1,
2001, all in a form conforming to SEC rules. All accounting costs and fees
incurred by reason of the preparation of such financial statements will be borne
by Buyer. Seller hereby consents to (i) the inclusion by Buyer of the Systems'
financial statements, if required to be so included by Buyer, in any report
required to be filed by Buyer with the Securities and Exchange Commission
("SEC"), National Association of Securities Dealers' Automated Quotations
33
("NASDAQ") System or any stock exchange pursuant to applicable law, rule or
regulation, including the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, and (ii) the disclosure by Buyer of the
Systems' financial statements to Buyer's public and private debt and equity
financing sources. Seller will request, and use commercially reasonable efforts
at no out-of-pocket cost to Seller to obtain, the consent of the independent
public accountants of Seller to the inclusion of the Systems' financial
statements in any report required to be filed by Buyer with the SEC, NASDAQ
System or stock exchange.
6.25. Environmental Assessments.
6.25.1. Buyer may, at its sole expense, commission a qualified
engineering firm to conduct an assessment in accordance with ASTM Standard
E1527-00, and including an evaluation for asbestos and asbestos containing
materials, with respect to any or all owned parcels of Real Property. If Buyer
notifies Seller in writing as soon as is reasonably practicable after the date
Buyer receives the assessment with respect to a parcel of owned Real Property
that the assessment discloses an environmental condition that (a) constitutes a
breach, or could be reasonably expected to result in a breach, of the
representations of Seller contained in Section 4.8 or (b) could reasonably be
expected to impair the use or value of such Real Property for the continued
operations of the Business or subject Buyer to any Losses if Buyer consummates
this Agreement, then Seller shall promptly commence further investigation and
use commercially reasonable efforts at its expense to cure the condition prior
to the Closing, provided that Seller shall have no obligation to spend more than
$25,000,000 (the "Maximum Remediation Amount") in the aggregate in its attempt
to cure all such conditions. If Seller exercises its right not to cure such
conditions because the aggregate cost would exceed the Maximum Remediation
Amount, Buyer may (a) terminate this Agreement with no cost or obligation on the
part of Buyer, or (b) waive the obligation to cure, in which event Buyer will
receive a credit at the Closing in the amount, if any, by which the Maximum
Remediation Amount exceeds the aggregate amount paid by Seller to third parties
in connection with curing such conditions, and Buyer will assume all liabilities
and obligations in connection with such conditions. If the foregoing is
inapplicable because (i) the aggregate amount to cure all conditions does not
exceed the Maximum Remediation Amount or (ii) Seller does not exercise its right
not to cure conditions that exceed the Maximum Remediation Amount, and Seller
having used commercially reasonable efforts is unable to cure all conditions
prior to the Closing, then (A) Seller shall remain obligated to cure as promptly
as reasonably practicable after the Closing all such remaining conditions, and
(B) Buyer may seek indemnification with respect to any breach of this
post-Closing obligation and such claim for indemnification may be brought
without the requirement that such claims meet or exceed the Threshold Amount.
6.25.2. In the event this Agreement is terminated or fails to close
in accordance with its terms, Buyer agrees to repair any damage or disturbance
it causes to the Real Property in the course of such investigative activities by
returning such Real Property to approximately the same condition as existed
prior to such investigative activities. Buyer will indemnify, defend and hold
Seller free and harmless from and
34
against any and all Losses of any type arising directly out of any act or
omission of Buyer or any of Buyer's representatives on or about the Real
Property in the course of such investigative activities.
6.25.3. All information collected and generated as a result of the
environmental due diligence authorized by Section 6.25.1 will be subject to the
terms and conditions of Section 6.21 of this Agreement. Buyer will provide to
Seller copies of all reports, assessments and other information composed or
compiled by Buyer's environmental consultants within five Business Days after
Buyer's receipt of copies thereof.
6.26. Marketing Efforts. Seller will continue to market digital video
services and the cable modem services provided through @Home in the ordinary
course of business consistent with past practices.
6.27. Expired Leases. Seller will exercise commercially reasonable efforts
prior to the Closing to obtain written renewals or extensions for at least one
year following the Closing of all leases of Real Property that will have expired
prior to the Closing.
6.28. System Telephone Services. Prior to the Closing, Buyer will select a
vendor for the provision, and arrange for the transition, of all telephony
services (e.g., long distance, data circuits, and 800 number) used in connection
with the operation of the Systems. If Buyer fails to effect the transition of
telephony services to its selected vendor as of the Closing Date, then Buyer
will reimburse Seller for all direct charges incurred by Seller after the
Closing with respect to telephony services used in connection with the operation
of the Systems or in the conduct of the Business.
7. CONDITIONS TO CLOSING.
7.1. Conditions to the Obligations of Buyer and Seller. The obligations of
each party to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, at or before the Closing, of the following, which
may be waived by the parties to the extent not prohibited by applicable Legal
Requirements:
7.1.1. HSR Act Filings. All filings required under the HSR Act have
been made and the applicable waiting period has expired or been earlier
terminated without the receipt of a formal complaint or objection by the
Antitrust Division or the FTC.
7.1.2. Absence of Legal Proceedings. No suit, action or proceeding
is pending or threatened by any Person, no judgment has been entered and not
vacated by any Governmental Authority and no Legal Requirement has been enacted,
promulgated or issued or become or deemed applicable to any of the transactions
contemplated by this Agreement by any Governmental Authority, which prevents or
makes illegal, or is reasonably likely to prevent or make illegal, the purchase
and sale of the Assets contemplated by this Agreement. No party will assert that
this condition has not been satisfied by reason of any suit, action or
proceeding pending or threatened
35
against Seller by any Governmental Authority with respect to a Franchise or the
proposed assignment thereof, provided that the conditions set forth in Section
7.2.4 and 7.3.4 have been satisfied or waived.
7.2. Conditions to the Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or before the Closing, of the following conditions, which may
be waived by Buyer to the extent not prohibited by applicable Legal
Requirements:
7.2.1. Accuracy of Representations and Warranties. The
representations and warranties of Seller in this Agreement, are true in all
respects without giving effect to any qualifications related to materiality or
Knowledge, in each case at and as of the Closing with the same effect as if made
at and as of the Closing, except for any representation or warranty which is
made as of a specified date, which representation or warranty will be so true
and correct as of such specified date; provided, this condition will be deemed
satisfied if all such untrue or incorrect representations and warranties in the
aggregate, do not have a Material Adverse Effect.
7.2.2. Performance of Agreements. Seller in all material respects
shall have performed and complied with each obligation, agreement, covenant and
condition required by this Agreement to be performed or complied with by Seller
at or prior to the Closing.
7.2.3. Deliveries. Seller shall have delivered the items and
documents required to be delivered by it pursuant to this Agreement, including
those required under Section 8.2.
7.2.4. Required Consents.
(a) As of the Closing Date, the number of Equivalent Basic
Subscribers served by Retained Franchises (as defined in Schedule 7.2.4)
shall not exceed 10% of the Subscriber Threshold; provided that Buyer may
at any time designate any Franchise as a non-Retained Franchise, in which
event such non-Retained Franchise shall be transferred to Buyer at the
Closing in accordance with the provisions of this Agreement and shall not
be subject to any provisions relating to Retained Franchises.
(b) Except as otherwise provided in Section 6.5.2, Buyer shall
have received all of the Required Consents marked with an asterisk on
Schedule 4.3 (other than Required Consents with respect to Franchises, as
to which subsection (a) above shall apply).
7.2.5. Subscribers. The number of Equivalent Basic Subscribers
served by the Systems (including those served under Retained Franchises) is not
less than 85% of the Subscriber Threshold.
7.2.6. Material Adverse Effect. During the period from the date of
this Agreement through and including the Closing Date, there shall not have
occurred
36
and be continuing any event or events having, individually or in the aggregate,
a Material Adverse Effect.
7.2.7. Franchise Extensions. Seller shall have obtained for each
Franchise for which a valid request to invoke the formal renewal provisions
under Section 626(a) of the Communications Act has not been timely filed with
the appropriate Governmental Authority either (a) a renewal or extension of such
Franchise for a period expiring no earlier than three years after the Closing
Date, or (b) a written confirmation from the appropriate Governmental Authority
that the procedure established by Section 626(a) of the Communications Act
nonetheless will apply to the renewal of such Franchise.
7.2.8. Lease Extensions. Seller shall have obtained extensions of at
least one year with respect to the expired Real Property leases designated with
an asterisk on Schedule 4.7.
7.2.9. Other. Such other conditions as Buyer and Seller may agree.
7.3. Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or before the Closing, of the following, which may be waived by
Seller, to the extent not prohibited by applicable Legal Requirements:
7.3.1. Accuracy of Representations and Warranties. The
representations and warranties of Buyer in this Agreement and in any Transaction
Document, if specifically qualified by materiality, are true in all respects
and, if not so qualified, are true in all material respects, in each case at and
as of the Closing with the same effect as if made at and as of the Closing,
except where the failure to be so true would not, individually or in the
aggregate, have a material adverse effect on the ability of Buyer to perform its
obligations hereunder.
7.3.2. Performance of Agreements. Buyer in all material respects
shall have performed and complied with each obligation, agreement, covenant and
condition required by this Agreement to be performed or complied with by Buyer
at or prior to the Closing.
7.3.3. Deliveries. Buyer shall have delivered the payment, items and
documents required to be delivered by it pursuant to this Agreement, including
those required under Section 8.3.
7.3.4. Required Consents. As of the Closing Date, the number of
Equivalent Basic Subscribers served by Retained Franchises shall not exceed 10%
of the Subscriber Threshold; provided that Buyer may at any time designate any
Franchise as a non-Retained Franchise, in which event such non-Retained
Franchise shall be transferred to Buyer at the Closing in accordance with the
provisions of this Agreement and shall not be subject to any provisions relating
to Retained Franchises.
37
7.3.5. Contemporaneous or Prior Closings. If the closing of the
transactions contemplated by the Asset Purchase Agreement, of even date
herewith, among certain Affiliates of AT&T and Buyer and relating to certain
cable television systems operating in central Missouri shall have been
consummated prior to the Closing, then the closing of the transactions
contemplated by the Asset Purchase Agreements, of even date herewith, among
certain Affiliates of AT&T and Buyer and relating to certain cable television
systems operating in (a) southern Illinois, on the one hand, and (b) central
Georgia, on the other hand, shall have been consummated prior to or
contemporaneously with the Closing.
8. CLOSING.
8.1. Date, Time and Place of the Closing.
8.1.1. The Closing will be held on a date mutually selected by Buyer
and Seller which is no less than five nor more than 10 Business Days following
the date all conditions to the Closing contained in this Agreement (other than
those based on acts to be performed at the Closing) have been satisfied or
waived; provided, however, that (a) either party may postpone the Closing Date
until the last day of the month in which all such conditions are satisfied or
waived; (b) if all such conditions are satisfied or waived such that the Closing
could occur prior to the Target Closing Date, either party may postpone the
Closing Date to a date not later than the Target Closing Date; (c) Buyer may (i)
postpone the Closing through the later of (A) August 31, 2001 and (B) the date
which is 60 days after all conditions to the Closing contained in this Agreement
have been satisfied or waived, if there shall have occurred a Financial MAC,
(ii) postpone the Closing to a date not later than 75 days after receipt of the
audited financial statements contemplated by Section 6.24, if such financial
statements are not received by Buyer, through no fault of Buyer, on or before
April 17, 2001, and (iii) postpone the Closing to a date not later than 60 days
after receipt of the unaudited financial statements contemplated by Section
6.24, if such financial statements are not received by Buyer, through no fault
of Buyer, on or before May 1, 2001.
8.1.2. The Closing will be held at 9:00 a.m., local time, at Buyer's
counsel's office located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place and time as Buyer and Seller may agree.
8.2. Seller's Delivery Obligations . At the Closing, Seller will deliver
(or cause to be delivered) to Buyer the following:
(a) Xxxx of Sale and Assignment and Assumption Agreements in
substantially the form of Exhibit A to this Agreement (the "Bills of
Sale");
(b) A special or limited warranty (or local equivalent) deed
in a form reasonably acceptable to Buyer (and complying with applicable
state laws) with respect to each parcel of Real Property which is owned by
Seller, duly executed and acknowledged and in recordable form, warranting
only to defend
38
title to such owned Real Property in the peaceable possession of Buyer
against all persons claiming by, through or under Seller, subject,
however, to any Permitted Encumbrances, and in form sufficient to permit
the applicable title company to issue the title policies requested by
Buyer, together with any title affidavit reasonably required by the title
insurer that does not expand the aforesaid limited or special warranty of
Seller;
(c) Title certificates to all vehicles included among the
Assets, endorsed for transfer of valid and good title to Buyer, free and
clear of all Encumbrances (other than Permitted Encumbrances), and
separate bills of sale or other transfer documentation for such vehicles,
if required by the laws of the states in which such vehicles are titled;
(d) A certificate, dated the Closing Date, signed by an
authorized Person on behalf of Seller, stating that, to Seller's
Knowledge, the conditions set forth in Sections 7.2.1 and 7.2.2 are
satisfied;
(e) Certified resolutions of the Board of Directors or other
evidence reasonably satisfactory to Buyer that Seller has taken all
corporate action necessary to authorize this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby;
(f) A FIRPTA Non-Foreign Seller Certificate from Seller
certifying that it is not a foreign person within the meaning of Section
1445 of the Internal Revenue Code of 1986 reasonably satisfactory in form
and substance to Buyer;
(g) Evidence reasonably satisfactory to Buyer that all
Encumbrances (other than Permitted Encumbrances) affecting or encumbering
the Assets have been terminated, released or waived, as appropriate, or
original, executed instruments in form reasonably satisfactory to Buyer
effecting such terminations, releases or waivers;
(h) All Books and Records, delivery of which will be deemed
made to the extent such Books and Records are then located at any of the
offices of the Systems included in the Real Property;
(i) A certificate executed by the secretary or assistant
secretary of Seller authenticating Seller's organizational documents,
certifying as to the incumbency, and authenticating the signatures, of
those persons executing this Agreement and certificates or other documents
delivered hereunder on behalf of Seller;
(j) A certificate as of a recent date from the appropriate
office of the state of organization of each Seller and the state in which
the Business is operated as to the good standing of such Seller;
39
(k) An opinion of in-house counsel for Seller, in a form
reasonably acceptable to Buyer;
(l) An opinion of Cole Raywid & Xxxxxxxxx, FCC counsel to
Seller, in a form reasonably acceptable to Buyer;
(m) A noncompetition agreement in the form of Exhibit B to
this Agreement; and
(n) Such other documents as Buyer may reasonably request in
connection with the transactions contemplated by this Agreement, including
the Retained Franchise Management Agreement.
8.3. Buyer's Delivery Obligations . At the Closing, Buyer will deliver (or
cause to be delivered) to Seller the following:
(a) the Purchase Price required to be paid at the Closing, as
adjusted in accordance with this Agreement;
(b) the Bills of Sale executed by Buyer;
(c) a certificate, dated the Closing Date, signed by an
authorized Person of Buyer, stating that, to Buyer's knowledge, the
conditions set forth in Sections 7.3.1 and 7.3.2 are satisfied;
(d) An opinion of Sonnenschein, Nath and Xxxxxxxxx, counsel
for Buyer, in a form reasonably acceptable to Seller;
(e) such other documents as Seller may reasonably request in
connection with the transactions contemplated by this Agreement, including
the Retained Franchise Management Agreement and the Escrow Agreement, if
required under this Agreement.
9. TERMINATION.
9.1. Events of Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing:
9.1.1. by the mutual written consent of Buyer and Seller;
9.1.2. by either party, upon written notice to the other party, if
the transactions contemplated by this Agreement to take place at the Closing
have not been consummated by the date which is 12 months after the date of this
Agreement, for any reason other than (a) a breach or default by such party in
the performance of any of its obligations under this Agreement, or (b) the
failure of any representation or warranty of such party to be accurate;
40
9.1.3. by either party at any time upon written notice to the other,
if the other is in material breach or default of any of its covenants,
agreements or other obligations in this Agreement or in any Transaction Document
and fails to cure such breach or default (a) within the 30-day period following
such written notice or, (b) if such breach or default is incapable of being
cured within such 30-day period and the defaulting party does not promptly
initiate and diligently pursue such cure to completion upon receipt of such
notice, within a reasonable period of time; or
9.1.4. by either party, immediately upon written notice to the
other, if all of the conditions to the Closing have been satisfied or waived and
the other party refuses or is unable to consummate the transactions contemplated
by this Agreement for any reason within the time period determined pursuant to
Section 8.1.1.
9.1.5. by either party as otherwise provided in this Agreement.
9.2. Effect of Termination. If this Agreement is terminated pursuant to
Section 9.1, all obligations of the parties under this Agreement will terminate
except for the obligations set forth in this Section and in Sections 6.21 and
11.16. Notwithstanding a party's right to pursue remedies for breach of contract
upon termination of this Agreement in accordance with Section 9.1, no remedies
for breaches of representations and warranties will be available if this
Agreement is terminated pursuant to Section 9.1, and no party will be liable for
any incidental, consequential, exemplary, special, or punitive damages in
connection with any claim for breach of this Agreement. Notwithstanding the
foregoing, if this Agreement is terminated by Seller pursuant to Sections 9.1.3
or 9.1.4, then Seller will be entitled to receive, as liquidated damages and in
lieu of any other damages for breach of contract, the amount of $50,000,000. The
parties acknowledge that it is impractical and would be extremely difficult to
determine the actual damages that may proximately result from Buyer's failure to
perform its obligations under this Agreement. Accordingly, the liquidated
damages provided in this Section 9.2 are (a) not a penalty, and (b) reasonable
and not disproportionate to the presumed damages to Seller from a failure by
Buyer to comply with its obligations under this Agreement.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
10.1. Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of Seller in this Agreement and the
Transaction Documents (other than covenants and agreements which by their terms
are to be performed after the Closing Date) will survive until 12 months after
the Closing Date, except that the representations, warranties and covenants with
respect to Taxes, title and environmental matters, and third party claims
relating to Excluded Assets or Excluded Liabilities, will survive until 30 days
after the expiration of the relevant statute of limitations. The
representations, warranties, covenants and agreements (other than the covenants
and agreements which by their terms are to be performed after the Closing Date)
of Buyer in this Agreement and the Transaction Documents will survive until 12
months after the Closing Date. The covenants and agreements of the parties in
this Agreement and in the Transaction Documents to be delivered by Seller or
Buyer
41
pursuant to this Agreement, that are by their terms intended to be performed
after the Closing will survive the Closing and will continue in full force and
effect in accordance with their terms. The applicable periods of survival of the
representations, warranties, covenants and agreements prescribed by this Section
10.1 are referred to as the "Survival Period." The liabilities of the parties
under their respective representations, warranties, covenants and agreements
will expire as of the expiration of the applicable Survival Period; provided,
however, that such expiration will not include, extend or apply to any breach of
which has been asserted by a party in a written notice to the breaching party
before such expiration or about which the breaching party has given the other
party written notice before such expiration indicating that facts or conditions
exist that, with the passage of time or otherwise, can reasonably be expected to
result in a breach (and describing such potential breach in reasonable detail).
10.2. Indemnification by Seller. Following the Closing, Seller will
indemnify, defend and hold harmless Buyer and its shareholders and its and their
respective Affiliates, and the shareholders, directors, officers, employees,
agents, successors and assigns of any of such Persons, from and against all
Losses of or to Buyer or any such other indemnified Person resulting from or
arising out of (a) any breach of any representation or warranty made by Seller
in this Agreement, (b) any breach of any covenant, agreement or obligation of
Seller contained in this Agreement, (c) any liability or obligation of Seller or
relating to the Business not included in the Assumed Obligations and
Liabilities, and (d) any labor or employment matter relating to the System
Employees that is attributable to any act or omission of Seller occurring prior
to the Closing.
10.3. Indemnification by Buyer. Following the Closing, Buyer will
indemnify, defend and hold harmless Seller and Seller's shareholders, directors,
officers, employees, agents, successors and assigns, from and against all Losses
of or to Seller or any such other indemnified Person resulting from or arising
out of (a) any breach of any representation or warranty made by Buyer in this
Agreement, (b) any breach of any covenant, agreement or obligation of Buyer
contained in this Agreement, (c) the failure by Buyer to perform the Assumed
Obligations and Liabilities, (d) any claim made by a System Employee relating to
Buyer's use of such Employee's personnel files obtained from Seller at the
request of Buyer, and (e) Buyer's waiver of its condition to Closing set forth
in Section 7.2.4 and the resulting transfer of the Assets without having
obtained the necessary Required Consents.
10.4. Third Party Claims. Promptly after the receipt by any party of
notice of any claim, action, suit or proceeding by any Person who is not a party
to this Agreement (collectively, an "Action"), which Action is subject to
indemnification under this Agreement, such party (the "Indemnified Party") will
give reasonable written notice to the party from whom indemnification is claimed
(the "Indemnifying Party"). The Indemnified Party will be entitled, at the sole
expense and liability of the Indemnifying Party, to exercise full control of the
defense, compromise or settlement of any such Action unless the Indemnifying
Party, within a reasonable time after the giving of such notice by the
Indemnified Party, (a) admits in writing to the Indemnified Party the
Indemnifying Party's liability to the Indemnified Party for such Action under
the terms
42
of this Section 10, (b) notifies the Indemnified Party in writing of the
Indemnifying Party's intention to assume such defense, (c) provides evidence
reasonably satisfactory to the Indemnified Party of the Indemnifying Party's
ability to pay the amount, if any, for which the Indemnified Party may be liable
as a result of such Action and (d) retains legal counsel reasonably satisfactory
to the Indemnified Party to conduct the defense of such Action. The other party
will cooperate with the party assuming the defense, compromise or settlement of
any such Action in accordance with this Agreement in any manner that such party
reasonably may request. If the Indemnifying Party so assumes the defense of any
such Action, the Indemnified Party will have the right to employ separate
counsel and to participate in (but not control) the defense, compromise or
settlement of the Action, but the fees and expenses of such counsel will be at
the expense of the Indemnified Party unless (i) the Indemnifying Party has
agreed to pay such fees and expenses, (ii) any relief other than the payment of
money damages is sought against the Indemnified Party or (iii) the Indemnified
Party will have been advised by its counsel that there may be one or more
defenses available to it which are different from or additional to those
available to the Indemnifying Party, and in any such case that portion of the
fees and expenses of such separate counsel that are reasonably related to
matters covered by the indemnity provided in this Section 10 will be paid by the
Indemnifying Party. No Indemnified Party will settle or compromise any such
Action for which it is entitled to indemnification under this Agreement without
the prior written consent of the Indemnifying Party, unless the Indemnifying
Party has failed, after reasonable notice, to undertake control of such Action
in the manner provided in this Section 10.4. No Indemnifying Party will settle
or compromise any such Action (i) in which any relief other than the payment of
money damages is sought against any Indemnified Party or (ii) in the case of any
Action relating to the Indemnified Party's liability for any Tax, if the effect
of such settlement would be an increase in the liability of the Indemnified
Party for the payment of any Tax for any period beginning after the Closing
Date, unless the Indemnified Party consents in writing to such compromise or
settlement.
10.5. Limitations on Indemnification - Seller. Seller will not be liable
for indemnification arising under Section 10.2 (except for indemnification
claims made pursuant to subsection (d) of Section 10.2) for any Losses of or to
Buyer or any other person entitled to indemnification from Seller unless the
amount of such Losses for which Seller would, but for the provisions of this
Section 10.5, be liable exceeds, on an aggregate basis, $5,000,000 (the
"Threshold Amount"), provided that in determining whether the Threshold Amount
has been exceeded, there shall not be included any Losses arising from any
single claim that is less than $10,000 in the aggregate. If the Threshold Amount
is exceeded, Seller will be liable for the full amount of all Losses (including
any claims for Losses of less than $10,000), which amount will be due and
payable within 15 days after the later of (a) the date Seller receives a
statement therefor and (b) the date an Action with respect to such Losses is
settled or decided in accordance with Section 10.4. Seller will not be liable
for Buyer's incidental, consequential, exemplary, special, or punitive damages.
The maximum aggregate amount that Seller will be required to pay for
indemnification arising under Section 10.2 in respect of all claims by all
indemnified parties is $75,000,000. Notwithstanding the preceding, neither the
Threshold Amount nor the maximum limits specified in this
43
Section 10.5 will apply to the obligation to pay post-Closing adjustments
pursuant to Section 3.3, Seller's obligation to discharge the Excluded
Liabilities, or to Seller's breach of its representations and warranties that it
has title to the Assets (including Real Property), and the Threshold Amount will
not apply as otherwise provided in this Agreement.
10.6. Limitations on Indemnification - Buyer. Buyer will not be liable for
indemnification arising under Section 10.3 for any Losses of or to Seller or any
other person entitled to indemnification from Buyer unless the amount of such
Losses for which Buyer would, but for the provisions of this Section 10.6, be
liable exceeds, on an aggregate basis, the Threshold Amount, provided that in
determining whether the Threshold Amount has been exceeded, there shall not be
included any Losses arising from any single claim that is less than $10,000 in
the aggregate. If the Threshold Amount is exceeded, Seller will be liable for
the full amount of all Losses (including any claims for Losses of less than
$10,000), which amount will be due and payable within 15 days after the later of
(a) the date Buyer receives a statement therefor and (b) the date an Action with
respect to such Losses is settled or decided in accordance with section 10.4.
Buyer will not be liable for Seller's incidental, consequential, exemplary,
special, or punitive damages. The maximum aggregate amount that Buyer will be
required to pay for indemnification arising under Section 10.3 in respect of all
claims by all indemnified parties is $75,000,000. Notwithstanding the preceding,
neither the Threshold Amount nor the maximum limits specified in this Section
10.6 will apply to the obligation to pay the Purchase Price, as adjusted, and
post-Closing adjustments pursuant to Section 3.3, or to Buyer's obligation to
assume and perform the Assumed Obligations and Liabilities, and the Threshold
Amount will not apply as otherwise provided in this Agreement.
10.7. Sole Remedy. Each party acknowledges and agrees that, should the
Closing occur, its sole and exclusive remedy against the other with respect to
any breach of representation, warranty, covenant, agreement or obligation will
be pursuant to the indemnification provisions set forth in this Section 10.
11. MISCELLANEOUS.
11.1. Parties Obligated and Benefited. Subject to the limitations set
forth below, this Agreement will be binding upon the parties and their
respective permitted assigns and successors in interest and will inure solely to
the benefit of the parties and their respective permitted assigns and successors
in interest, and no other Person will be entitled to any of the benefits
conferred by this Agreement. Without the prior written consent of the other
party, no party will assign any of its rights under this Agreement or delegate
any of its duties under this Agreement; provided, however, that (i) Seller may
assign its rights under this Agreement (but not obligations) to a qualified
intermediary within the meaning of Code Section 1.1031(k)-1(g)(4)(iii)
("Qualified Intermediary") and (ii) either party may assign its rights to an
Affiliate so long as the assigning party continues to be bound by the terms of
this Agreement. If Seller elects to assign its rights under this Agreement to a
Qualified Intermediary, Buyer will cooperate with Seller as may be reasonably
necessary in connection with such assignment and the
44
deferred tax-free exchange to be accomplished in connection therewith, including
acknowledging the execution of a written agreement between Seller and the
Qualified Intermediary.
11.2. Notices. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement will be in writing and
will be deemed to have been duly given only if delivered in person or by first
class, prepaid, certified mail, or sent by courier or, if receipt is confirmed,
by telecopier:
To Buyer at: Mediacom Communications Corporation
000 Xxxxxxx Xxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
24th Floor
1221 Avenue of the Americas
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
To Seller at: c/o AT&T Broadband, LLC
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xx Xxxxxx
Fax: (000) 000-0000
With a copy similarly addressed to the
attention of Xxxxx Xxxxx, Esq., Fax: (303)
858-3487.
With a copy (which will not constitute notice) to:
Holland & Xxxx LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Any party may change the address to which notices are required to be sent
by giving notice of such change in the manner provided in this Section
11.2. All notices will be deemed to have been received on the date of
actual receipt.
45
11.3. Attorneys' Fees. In the event of any action or suit based upon or
arising out of this Agreement, the prevailing party will be entitled to recover
reasonable attorneys' fees and other costs of such action or suit from the other
party.
11.4. Right to Specific Performance. Each party acknowledges that the
unique nature of the transactions contemplated by this Agreement and the
circumstances under which this Agreement has been entered into renders money
damages for a breach of the parties' respective obligations to consummate the
transactions contemplated by this Agreement an inadequate remedy, and the
parties agree that either party will be entitled to pursue specific performance
as a remedy for such breach without the requirement of posting a bond or other
security therefor; provided, however, that Seller will have such right to
specific performance only in connection with a breach of Buyer's confidentiality
obligations under Section 6.21 hereof.
11.5. Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
11.6. Captions. The captions of this Agreement are for convenience only
and do not constitute a part of this Agreement.
11.7. Choice of Law. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES UNDER IT
WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES OF
DELAWARE.
11.8. Terms. Terms used with initial capital letters will have the
meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. The word "include" and derivatives of that word are
used in this Agreement in an illustrative sense rather than limiting sense.
11.9. Further Actions. Seller and Buyer will execute and deliver to the
other, from time to time at or after the Closing, for no additional
consideration and at no additional cost to the requesting party, such further
assignments, certificates, instruments, records, or other documents, assurances
or things as may be reasonably necessary to give full effect to this Agreement
and to allow each party fully to enjoy and exercise the rights accorded and
acquired by it under this Agreement.
11.10. Time. Time is of the essence under this Agreement. If the last day
permitted for giving of any notice or the performance of any act required or
permitted under this Agreement falls on a day which is not a Business Day, the
time for the giving of such notice or the performance of such act will be
extended to the next succeeding Business Day.
11.11. Late Payments. If either party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the annual rate publicly announced from time to
time by The Bank
46
of New York as its prime rate (the "Prime Rate") plus 3%, adjusted as and when
changes in the Prime Rate are made.
11.12. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original. This Agreement will become binding when one
or more counterparts, individually or taken together, bear the signatures of all
parties to this Agreement. Delivery of an executed signature page of this
Agreement by facsimile transmission will constitute effective and binding
execution and delivery of this Agreement.
11.13. Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to in this Agreement, which are incorporated in and constitute
a part of this Agreement) and the Transaction Documents contain the entire
agreement of the parties and supersede all prior oral or written agreements and
understandings with respect to the subject matter hereof other than any letter
or agreement between the Buyer and Seller that specifically refers to this
Section 11.13. This Agreement may not be amended or modified except by a writing
signed by the parties.
11.14. Severability. Any term or provision of this Agreement which is
invalid or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefited by such provision or any other provisions
of this Agreement.
11.15. Construction. This Agreement has been negotiated by Buyer and
Seller and their respective legal counsel, and legal or equitable principles
that might require the construction of this Agreement or any provision of this
Agreement against the party drafting this Agreement will not apply in any
construction or interpretation of this Agreement.
11.16. Expenses. Except as otherwise expressly provided in this Agreement,
each party will pay all of its expenses, including attorneys' and accountants'
fees, in connection with the negotiation of this Agreement, the performance of
its obligations and the consummation of the transactions contemplated by this
Agreement.
11.17. Commercially Reasonable Efforts. For purposes of this Agreement,
unless a different standard is expressly provided with respect to any particular
matter, any requirement herein that a party use "commercially reasonable
efforts" will not be deemed to require that party to undertake extraordinary
measures, including the initiation or prosecution of legal proceedings or the
payment of amounts in excess of normal and usual filing fees and processing
fees, if any.
[SIGNATURE PAGE FOLLOWS]
47
The parties have executed this Agreement as of the day and year first
above written.
MEDIACOM COMMUNICATIONS
CORPORATION, a Delaware corporation
By: ____________________________________
Xxxxx X. Xxxxxxxx
Chairman and CEO
TCI AMERICAN CABLE HOLDINGS, L.P.,
a Colorado limited partnership
By: TCI of Council Bluffs, Inc.,
its general partner
By: ________________________________
Xxxxxxx Xx Xxxxxx
Vice President
TELEVENTS GROUP JOINT VENTURE,
a Colorado general partnership
By: Televents of Florida, Inc.,
its general partner
By: ________________________________
Xxxxxxx Xx Xxxxxx
Vice President
CABLEVISION IV, LTD.,
an Iowa corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
48
HERITAGE CABLEVISION, INC.,
an Iowa corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
CABLEVISION VI, INC.,
an Iowa corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
WESTMARC CABLE HOLDING, INC.,
a Delaware corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
TCI OF ILLINOIS, INC.,
an Illinois corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
TCI CABLEVISION OF OHIO, INC.,
an Ohio corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
49
CLINTON CABLEVISION,
an Iowa general partnership
By: Clinton TV Cable Company, Inc.
its general partner
By: ________________________________
Xxxxxxx Xx Xxxxxx
Vice President
CABLEVISION VII, INC.,
an Iowa corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
CABLEVISION V, INC.,
an Iowa corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
AMES CABLEVISION, INC.,
an Iowa corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
OTTUMWA CABLEVISION, INC.,
an Iowa corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
50
TCI OF IOWA, INC.,
an Iowa corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
TCI CABLEVISION OF NEBRASKA, INC.,
a Nebraska corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
MISSISSIPPI CABLEVISION, INC.,
a Mississippi corporation
By: ____________________________________
Xxxxxxx Xx Xxxxxx
Vice President
51
List of Exhibits and Schedules
Exhibit A Xxxx of Sale and Assignment and Assumption Agreement
Exhibit B Form of Noncompetition Agreement
Schedule 1.18* Excluded Assets
Schedule 1.29* System Managers
Schedule 1.35* Permitted Encumbrances
Schedule 1.39* Systems and Service Area
Schedule 4.3* Required Consents
Schedule 4.4* Encumbrances; Exceptions to Operating Condition of Equipment
Schedule 4.5* Franchises and Licenses
Schedule 4.6* Contracts
Schedule 4.7* Real Property
Schedule 4.8* Environmental Matters
Schedule 4.9* Compliance with Legal Requirements - Exceptions
Schedule 4.10* Intellectual Property
Schedule 4.12* Absence of Certain Changes
Schedule 4.13* Legal Proceedings
Schedule 4.15* Employment Matters
Schedule 4.16* System Information
Schedule 6.2* Permitted Activities
Schedule 6.2.2* Capital Expenditures
Schedule 7.2.4 Retained Franchises
----------
* Pursuant to Item 601(b)(2) of Regulation S-K, such schedule is omitted from
this exhibit. Registrant agrees to furnish the Securities and Exchange
Commission a copy of such schedule upon request.
EXHIBIT A
TO
ASSET PURCHASE AGREEMENT
DATED FEBRUARY 26, 2001
AMONG
MEDIACOM COMMUNICATIONS CORPORATION
AND
THE AT&T BROADBAND PARTIES
FORM OF XXXX OF SALE AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
WHEREAS, the undersigned Affiliate of AT&T Broadband, LLC ("Seller") and
Mediacom Communications Corporation are parties to an Asset Purchase and Sale
Agreement (the "Agreement"), dated February 26, 2001, pursuant to which Seller
has agreed, inter alia, to sell, transfer, convey, assign, and deliver to Buyer
all of Seller's right, title and interest in and to all the Assets, that are
owned, leased, used or held for use by Seller in connection with, or necessary
to, the operation of the Systems, in exchange for the Purchase Price, as
adjusted, and on the terms and conditions set forth in the Agreement; and
WHEREAS, in partial consideration therefore, the Agreement requires Buyer
to assume certain of the obligations of Seller with respect to the System.
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that for and in
consideration of the promises set forth in the Agreement and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereunder, the parties hereto
hereby agree as follows:
1. Seller has bargained and sold, and by these presents does sell,
transfer, convey, assign, and deliver to Buyer, its successors and assigns, all
of Seller's right title and interest, free and clear of Encumbrances (other than
Permitted Encumbrances), in and to the Assets with such representations,
warranties and covenants as are set forth in the Agreement and the Exhibits and
Schedules thereto.
TO HAVE AND TO HOLD said property and assets unto Buyer, its successors
and assigns, to and for its and their own proper use and benefit forever.
2. Upon the terms and subject to the conditions of the Agreement, as of
the date hereof, Buyer shall assume, pay, perform, and discharge the Assumed
Obligations and Liabilities.
3. This instrument is executed and delivered pursuant to the Agreement,
subject to the provisions thereof. Nothing contained herein shall be deemed to
enlarge,
alter, or amend the provisions of the Agreement. If any provision set forth in
this instrument conflicts with any provision set forth in the Agreement, the
provision of the Agreement shall control.
4. All capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Agreement. This instrument shall be
governed, construed, and enforced in accordance with the laws of the State of
Delaware. This instrument shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns. In
the event that any of the provisions contained herein or any application thereof
shall be invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein and
any other application thereof shall not in any way be affected or impaired
thereby, unless any manifest injustice or inequity would result from the
applicability and enforceability of such remaining provisions. This instrument
may be executed in two or more counterparts, all of which taken together, shall
be deemed one original.
[SIGNATURE PAGE FOLLOWS]
2
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed by their authorized officers as of the day and year first above
written.
[SIGNATURE XXXXXX]
0
XXXXXXX X
TO
ASSET PURCHASE AGREEMENT
DATED FEBRUARY 26, 2001
AMONG
MEDIACOM COMMUNICATIONS CORPORATION
AND
THE AT&T BROADBAND PARTIES
FORM OF NONCOMPETITION AGREEMENT
___________, 2001
Mediacom Communications Corporation
000 Xxxxxxx Xxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Gentlemen:
Reference is made to that certain Asset Purchase Agreement dated as of
February 26, 2001 (the "Agreement"), among the undersigned Affiliates ("Seller")
of AT&T Broadband, LLC ("AT&T Broadband") and Mediacom Communications
Corporation ("Buyer"). This letter is being delivered to you pursuant to Section
8.2(m) of the Agreement. Capitalized terms used herein, unless otherwise defined
herein, shall have the meanings ascribed to them in the Agreement.
In order to effectuate the purposes and intent of the Agreement, each
Seller and AT&T Broadband hereby covenants and agrees that for a period
commencing on the date hereof and expiring on the third anniversary from the
date hereof, that it shall not be involved, directly or indirectly, either
personally, or as an owner, employee, partner, associate, officer, manager,
agent, advisor, consultant or otherwise, with any business which is competitive
with the business of Buyer within the Service Area. A business shall be deemed
competitive with the business of Buyer if it involves the development,
construction, sale, lease, rental or operation of any cable television system,
satellite master antenna television system, multi-point distribution system or
"open video" system, as such terms are generally defined and used in the
communications industry, and provides video, telephony or data services over
such system; provided, however, that nothing herein shall restrict Seller or
AT&T Broadband from being a passive investor or shareholder holding less than
five percent of the outstanding voting stock or equity interest in any such
competitive business, and provided, further, that nothing
herein shall restrict [Excite@Home] from being involved or engaging in any
business within the Service Area.
If the terms or provisions of this Noncompetition Agreement are breached
or threatened to be breached, each of Seller and AT&T Broadband expressly
consents that, in addition to any other remedy Buyer may have, Buyer may apply
to any court of competent jurisdiction for injunctive relief in order to prevent
the continuation of any existing breach or the occurrence of any threatened
breach.
If any provision of this Noncompetition Agreement is determined to be
unreasonable or unenforceable, such provision and the remainder of this
Noncompetition Agreement shall not be declared invalid, but rather shall be
modified and enforced to the maximum extent permitted by law.
This letter is intended to form a part of the Agreement and, accordingly,
reference is hereby made to Section 11.13 of the Agreement.
Sincerely,
[SIGNATURE BLOCKS]
2
Schedule 7.2.4
to the
Asset Purchase Agreement
among
MEDIACOM COMMUNICATIONS CORPORATION
and
THE AT&T BROADBAND PARTIES
RETAINED FRANCHISES
For purposes of this Agreement, a "Retained Franchise" means any Franchise for
which by the Closing Date: (a) the Required Consent to transfer such Franchise
to Buyer either was not obtained, has not been granted by operation of law, or
the applicable Governmental Authority or its designee has taken public action to
the effect, or has given written notice to Buyer or Seller of its, or its
designee's assertion, that the Required Consent has not been granted by
operation of law, or (b) a Governmental Authority has the right directly or
indirectly to acquire all or any portion of a System, which right has not
expired by its terms or expressly been waived or abandoned. The Retained
Franchise includes not only the applicable Franchise, but also all of the Assets
that are: (i) located in the Service Area of the Retained Franchise; and (ii)
used solely for the operation of the portion of the System in the portion of the
Service Area of the Retained Franchise.
