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Exhibit 2.6(d)
ASSET EXCHANGE AGREEMENT
dated as of April 20, 1999
among
INTERMEDIA PARTNERS SOUTHEAST,
on the one hand
and
CHARTER COMMUNICATIONS, LLC, CHARTER COMMUNICATIONS
PROPERTIES, LLC, and
MARCUS CABLE ASSOCIATES, L.L.C.,
on the other hand
IPSE/Charter Asset Exchange Agreement
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TABLE OF CONTENTS
1. DEFINITIONS..........................................................2
1.1 1992 Cable Act..............................................2
1.2 Affiliate...................................................2
1.3 Agreement...................................................2
1.4 Antitrust Division..........................................2
1.5 Assets......................................................2
1.6 Basic Services..............................................2
1.7 Business Day................................................2
1.8 Cable Act...................................................3
1.9 Cable Business..............................................3
1.10 Charter Assets..............................................3
1.11 Charter Books and Records...................................3
1.12 Charter Leased Property.....................................3
1.13 Charter Other Intangibles...................................3
1.14 Charter Other Real Property Interests.......................4
1.15 Charter Owned Property......................................4
1.16 Charter Required Consents...................................4
1.17 Charter Systems Contracts...................................4
1.18 Charter Systems Franchises..................................4
1.19 Charter Systems Licenses....................................5
1.20 Charter Tangible Personal Property..........................5
1.21 Charter's Cable Business....................................5
1.22 Closing.....................................................5
1.23 Closing Time................................................5
1.24 Communications Act..........................................5
1.25 Contract....................................................5
1.26 Copyright Act...............................................6
1.27 Environmental Law...........................................6
1.28 ERISA.......................................................6
1.29 ERISA Affiliate.............................................6
1.30 Expanded Basic Services.....................................6
1.31 FCC.........................................................6
1.32 Governmental Authority......................................6
1.33 Hazardous Substances........................................6
1.34 HSR Act.....................................................7
1.35 Intellectual Property.......................................7
1.36 IPSE Assets.................................................7
1.37 IPSE Books and Records......................................7
1.38 IPSE Leased Property........................................8
IPSE/Charter Asset Exchange Agreement
(i)
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1.39 IPSE Other Intangibles......................................8
1.40 IPSE Other Real Property Interests..........................8
1.41 IPSE Owned Property.........................................8
1.42 IPSE Required Consents......................................8
1.43 IPSE Systems Contracts......................................8
1.44 IPSE Systems Franchises.....................................8
1.45 IPSE Systems Licenses.......................................9
1.46 IPSE Tangible Personal Property.............................9
1.47 IPSE's Cable Business.......................................9
1.48 Judgment....................................................9
1.49 Knowledge...................................................9
1.50 Leased Property.............................................9
1.51 Legal Requirement...........................................9
1.52 Lien.......................................................10
1.53 Litigation.................................................10
1.54 Losses.....................................................10
1.55 MVPD.......................................................10
1.56 Other Real Property Interests..............................10
1.57 Owned Property.............................................10
1.58 Party......................................................10
1.59 Pay TV.....................................................10
1.60 Permitted Liens............................................11
1.61 Person.....................................................11
1.62 Required Consents..........................................11
1.63 Six-Month Date.............................................11
1.64 System.....................................................11
1.65 Systems Contracts..........................................11
1.66 Systems Franchises.........................................11
1.67 Systems Licenses...........................................11
1.68 Tangible Personal Property.................................11
1.69 Taxes......................................................12
1.70 Third Party................................................12
1.71 Transaction Documents......................................12
1.72 Other Definitions..........................................12
1.73 Usage......................................................14
2. EXCHANGE............................................................14
2.1 Exchange of Assets.........................................14
2.2 Method of Exchange.........................................14
3. CONSIDERATION.......................................................15
3.1 Calculation of Values; Cash Consideration..................15
IPSE/Charter Asset Exchange Agreement
(ii)
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4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.............................15
4.1 IPSE's Assumed Obligations and Liabilities.................15
4.2 IPSE Excluded Assets.......................................16
4.3 Charter's Assumed Obligations and Liabilities..............17
4.4 Charter Excluded Assets....................................17
5. CHARTER'S REPRESENTATIONS AND WARRANTIES............................18
5.1 Organization and Qualification of Charter..................18
5.2 Authority and Validity.....................................19
5.3 No Conflict; Required Consents.............................19
5.4 Assets.....................................................20
5.5 Charter Systems Franchises, Charter Systems Licenses,
Charter Systems Contracts and Charter Other Real
Property Interests.........................................20
5.6 Real Property..............................................22
5.7 Environmental..............................................22
5.8 Compliance with Legal Requirements.........................24
5.9 Intellectual Property......................................26
5.10 Financial Statements.......................................26
5.11 Absence of Certain Changes or Events.......................26
5.12 Litigation.................................................27
5.13 Tax Returns; Other Reports.................................27
5.14 Employment Matters.........................................27
5.15 Charter Systems Information................................29
5.16 Taxpayer Identification Number.............................30
5.17 Finder and Brokers.........................................30
5.18 Related Party Transactions.................................30
6. IPSE'S REPRESENTATIONS AND WARRANTIES...............................30
6.1 Organization and Qualification of IPSE.....................30
6.2 Authority and Validity.....................................31
6.3 No Conflict; Required Consents.............................31
6.4 Assets.....................................................32
6.5 IPSE Systems Franchises, IPSE Systems Licenses, IPSE
Systems Contracts and IPSE Other Real Property Interests...32
6.6 Real Property..............................................34
6.7 Environmental..............................................34
6.8 Compliance with Legal Requirements.........................35
6.9 Intellectual Property......................................37
6.10 Financial Statements.......................................38
6.11 Absence of Certain Changes or Events.......................38
6.12 Litigation.................................................38
IPSE/Charter Asset Exchange Agreement
(iii)
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6.13 Tax Returns; Other Reports.................................39
6.14 Employment Matters.........................................39
6.15 IPSE Systems Information...................................40
6.16 Taxpayer Identification Number.............................41
6.17 Finder and Brokers.........................................41
6.18 Related Party Transactions.................................41
7. ADDITIONAL COVENANTS................................................41
7.1 Access to Premises and Records.............................41
7.2 Continuity and Maintenance of Operations, Certain
Deliveries and Notice......................................42
7.3 Employees..................................................44
7.4 Leased Vehicles; Other Capital Leases......................48
7.5 Required Consents; Franchise Renewal.......................48
7.6 Title Commitments and Surveys..............................52
7.7 HSR Notification...........................................53
7.8 Sales and Transfer Taxes...................................53
7.9 Programming................................................53
7.10 Updated Schedules..........................................54
7.11 Use of Name and Logo.......................................54
7.12 Transitional Billing Services..............................55
7.13 Confidentiality and Publicity..............................55
7.14 Bulk Transfer..............................................56
7.15 Lien Searches..............................................56
7.16 Further Assurances.........................................56
7.17 Post-Closing Cooperation as to Rates.......................57
7.18 Distant Broadcast Signals..................................58
7.19 Environmental Assessment...................................59
7.20 Year 2000 Matters..........................................60
7.21 Satisfaction of Conditions.................................63
7.22 Offers.....................................................63
7.23 Retention of Books and Records.............................63
7.24 Cooperation................................................63
8. CONDITIONS PRECEDENT................................................63
8.1 Conditions to Charter's Obligations........................63
8.2 Conditions to IPSE's Obligations...........................65
9. THE CLOSING.........................................................66
9.1 The Closing; Time and Place................................66
9.2 IPSE's Delivery Obligations................................67
9.3 Charter's Delivery Obligations.............................68
IPSE/Charter Asset Exchange Agreement
(iv)
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10. TERMINATION AND DEFAULT.............................................69
10.1 Termination Events.........................................69
10.2 Effect of Termination......................................70
11. SURVIVAL; REMEDIES..................................................70
11.1 Survival of Representations, Warranties Covenants and
Agreements.................................................70
11.2 Exclusive Remedy...........................................70
11.3 Nonrecourse................................................70
12. MISCELLANEOUS PROVISIONS............................................71
12.1 Parties Obligated and Benefitted...........................71
12.2 Notices....................................................71
12.3 Right to Specific Performance..............................71
12.4 Waiver.....................................................72
12.5 Captions...................................................72
12.6 Governing Law..............................................72
12.7 Time.......................................................72
12.8 Late Payments..............................................72
12.9 Counterparts...............................................72
12.10 Entire Agreement...........................................72
12.11 Severability...............................................72
12.12 Construction...............................................72
12.13 Expenses...................................................73
12.14 Risk of Loss...............................................73
12.15 Tax Consequences...........................................73
12.16 Commercially Reasonable Efforts............................73
IPSE/Charter Asset Exchange Agreement
(v)
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IPSE/Charter Asset Exchange Agreement
(vi)
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IPSE/Charter Asset Exchange Agreement
(vii)
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IPSE/Charter Asset Exchange Agreement
(viii)
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Exhibits:
Exhibit 9.2.2 - Xxxx of Sale and Assignment and Assumption Agreement
Schedules:
Schedule 1.12 - Charter Leased Property
Schedule 1.14 - Charter Other Real Property Interests
Schedule 1.15 - Charter Owned Property
Schedule 1.17 - Charter Systems Contracts
Schedule 1.18 - Charter Systems Franchises
Schedule 1.19 - Charter Systems Licenses
Schedule 1.20 - Charter Tangible Personal Property
Schedule 1.38 - IPSE Leased Property
Schedule 1.40 - IPSE Other Real Property Interests
Schedule 1.41 - IPSE Owned Property
Schedule 1.43 - IPSE Systems Contracts
Schedule 1.44 - IPSE Systems Franchises
Schedule 1.45 - IPSE Systems Licenses
Schedule 1.46 - IPSE Tangible Personal Property
Schedule 3.1.1-A - IPSE System Value
Schedule 3.1.1-B - Charter System Value
Schedule 4.2(a) - IPSE Excluded Assets
Schedule 4.2(b) - Exceptions to IPSE Excluded Assets
Schedule 4.4(a) - Charter Excluded Assets
Schedule 4.4(b) - Exceptions to Charter Excluded Assets
Schedule 5.3 - Charter Required Consents
Schedule 5.4.1 - Charter Liens and Permitted Liens
Schedule 5.4.3 - Charter Other Operators
Schedule 5.5.2 - Charter Franchise Matters
Schedule 5.5.3 - Charter Contract Matters
Schedule 5.6 - Charter Real Property Matters
Schedule 5.7 - Charter Environmental Matters
Schedule 5.8 - Charter Compliance with Legal Requirements
Schedule 5.10 - Charter Statements of Income
Schedule 5.11 - Charter Changes and Events
Schedule 5.12 - Charter Litigation
Schedule 5.13 - Charter Tax Matters
Schedule 5.14 - Charter Employee Matters
Schedule 5.15.1 - Charter Systems Information
Schedule 5.15.2 - Charter Systems
Schedule 5.18 - Charter Related Party Transactions
IPSE/Charter Asset Exchange Agreement
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Schedule 6.3 - IPSE Required Consents
Schedule 6.4.1 - IPSE Liens and Permitted Liens
Schedule 6.4.3 - IPSE Other Operators
Schedule 6.5.2 - IPSE Franchise Matters
Schedule 6.5.3 - IPSE Contract Matters
Schedule 6.6 - IPSE Real Property Matters
Schedule 6.7 - IPSE Environmental Matters
Schedule 6.8 - IPSE Compliance with Legal Requirements
Schedule 6.10 - IPSE Statements of Income
Schedule 6.11 - IPSE Changes and Events
Schedule 6.12 - IPSE Litigation
Schedule 6.13 - IPSE Tax Matters
Schedule 6.14 - IPSE Employee Matters
Schedule 6.15.1 - IPSE Systems Information
Schedule 6.15.2 - IPSE Systems
Schedule 6.18 - IPSE Related Party Transactions
Schedule 7.2 - Exceptions to Ordinary Course
Schedule 7.2-A - IPSE 1999 Budgets
Schedule 7.2-B - Charter 1999 Budgets
Schedule 7.2.4 - Form of Monthly Report
Schedule 7.20.1(b)-A - IPSE's Year 2000 Assessment, High-Level Inventory
and Remediation Decisions
Schedule 7.20.1(b)-B - Charter's Year 2000 Assessment, High-Level Inventory
and Remediation Decisions
Schedule 7.20.1(c)-A - IPSE's Year 2000 Plan
Schedule 7.20.1(c)-B - Charter's Year 2000 Plan
IPSE/Charter Asset Exchange Agreement
(x)
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT is made as of April __, 1999, by and among
InterMedia Partners Southeast, a California general partnership ("IPSE"), on the
one hand, and Charter Communications, LLC, a Delaware limited liability company,
Charter Communications Properties, LLC, a Delaware limited liability company,
and Marcus Cable Associates, L.L.C., a Delaware limited liability company (each,
a "Charter Party" and collectively, "Charter"), on the other hand.
RECITALS
A. The Charter Parties own and operate cable television systems that are
franchised or hold other operating authority and operate in and around the
municipalities listed on Schedule 5.15.2 (collectively, the "Charter Systems"
and reference to any Charter Party's Systems will be deemed to refer to the
Charter Systems owned and operated by such Charter Party).
B. IPSE owns and operates cable television systems which are
franchised or hold other operating authority and operate in and around the
municipalities listed on Schedule 6.15.2 (collectively, the "IPSE Systems").
C. This Agreement sets forth the terms and conditions upon which (i)
the Charter Parties will convey, or cause to be conveyed, to IPSE substantially
all of the assets comprising or used or useful in connection with Charter's
Cable Businesses and (ii) IPSE will convey, or cause to be conveyed, to the
Charter Parties substantially all of the assets comprising or used or useful in
connection with IPSE's Cable Business, all in such a manner as to effect, to the
extent reasonably possible, a like-kind exchange of such assets under Section
1031 of the United States Internal Revenue Code, as amended (the "Code").
D. IPSE, Charter and certain of their respective Affiliates have
entered into that certain Common Agreement (the "Common Agreement") pursuant to
which they have agreed to certain issues common to each of the transfers made
pursuant to this Agreement and to certain other related transactions (each as
more fully described in the Common Agreement). The common issues addressed
include revenue and working capital adjustments, closing conditions, and
indemnification for breaches of representations, warranties, covenants and
agreements.
IPSE/Charter Asset Exchange Agreement
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AGREEMENTS
In consideration of the covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this Agreement,
the following capitalized terms or terms otherwise defined in this Section 1
shall have the meanings set forth below:
1.1 1992 Cable Act. The Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
1.2 Affiliate. With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. As used in this
Agreement, "control" means the ownership, directly or indirectly, of voting
securities representing the right generally to elect a majority of the directors
(or similar officials) of a Person or the possession, by contract or otherwise,
of the authority to direct the management and policies of a Person.
Notwithstanding the foregoing, prior to the Closing Date, (a) neither AT&T
Corporation, Tele-Communications, Inc., nor any of their direct or indirect
subsidiaries (collectively, the "AT&T Affiliates"), shall be considered
Affiliates of IPSE for any purpose herein or hereunder; (b) neither Xxxx Xxxxx,
Vulcan Cable, Inc., Vulcan Cable II, Inc., Marcus Cable Properties, L.L.C. nor
any other Person directly or indirectly controlled by Xxxx Xxxxx that is not
engaged in the cable television business (collectively, the "Xxxxx Affiliates")
shall be considered Affiliates of any Charter Party for any purpose herein or
hereunder; and (c) InterMedia Partners, a California Limited Partnership,
Brenmor Cable Partners, L.P. and TCID IP-V, Inc.,on the one hand, and IPSE,
InterMedia Partners of West Tennessee, L.P., InterMedia Partners IV, L.P., and
Xxxxx Media Group, Inc., on the other hand, shall not be deemed Affiliates of
each other.
1.3 Agreement. This Asset Exchange Agreement.
1.4 Antitrust Division. The Antitrust Division of the United States
Department of Justice.
1.5 Assets. The Charter Assets or the IPSE Assets, as the context
requires.
1.6 Basic Services. The lowest tier of service offered to subscribers of a
System.
1.7 Business Day. Any day other than a Saturday, Sunday or a day on which
the banking institutions in New York, New York, Denver, Colorado, San Francisco,
California or St. Louis, Missouri are required or authorized to be closed.
IPSE/Charter Asset Exchange Agreement
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1.8 Cable Act. The Cable Communications Policy Act of 1984, as amended,
and the FCC rules and regulations promulgated thereunder.
1.9 Cable Business. Charter's Cable Businesses, or any of them, or IPSE's
Cable Business, as the context requires.
1.10 Charter Assets. All of the assets, privileges, contracts, licenses,
permits, franchises, authorizations, rights, interests, claims and other
properties, real and personal, tangible and intangible, of every type and
description (a) which are owned, leased, held for, used or useful in, or
otherwise related to, Charter's Cable Businesses, (b) in which any Charter Party
or its Affiliate has any right, title or interest or in which any Charter Party
or its Affiliate acquires any right, title or interest on or before the Closing
Time, and (c) which are not Charter Excluded Assets. The Charter Assets include
the Charter Tangible Personal Property, Charter Owned Property, Charter Leased
Property, Charter Other Real Property Interests, Charter Systems Franchises,
Charter Systems Licenses, Charter Systems Contracts, Charter Books and Records
and Charter Other Intangibles. Reference to any Charter Party's Assets will be
deemed to refer to the Charter Assets of such Charter Party.
1.11 Charter Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and procedures and all
other files of correspondence, lists, records and reports concerning Charter's
Cable Businesses, including subscribers and prospective subscribers of the
Charter Systems, signal and program carriage and dealings with Governmental
Authorities with respect to the Charter Systems, including all reports filed
with respect to the Charter Systems by or on behalf of any Charter Party or its
Affiliate with the FCC and statements of account filed with respect to the
Charter Systems by or on behalf of any Charter Party or its Affiliate with the
U.S. Copyright Office, but excluding all documents, reports and records relating
to any employee of the Charter Systems who has not given consent to disclosure
of such documents, reports and records. Reference to any Charter Party's Books
and Records will be deemed to refer to the Charter Books and Records included
among such Charter Party's Assets.
1.12 Charter Leased Property. The leaseholds of real property included
among the Charter Assets and described as Charter Leased Property on Schedule
1.12. Reference to any Charter Party's Leased Property will be deemed to refer
to the Charter Leased Property included among such Charter Party's Assets.
1.13 Charter Other Intangibles. All intangible assets, other than the
Charter Systems Franchises, Charter Systems Licenses and Charter Systems
Contracts, including subscriber lists, claims (excluding any claims relating to
Charter Excluded Assets), and Intellectual Property, if any, included among the
Charter Assets. Reference to any Charter Party's Other Intangibles will be
deemed to refer to the Charter Other Intangibles included among such Charter
Party's Assets.
IPSE/Charter Asset Exchange Agreement
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1.14 Charter Other Real Property Interests. The easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property held by any Charter Party or its Affiliate in
connection with Charter's Cable Business, including those interests described as
Charter Other Real Property Interests on Schedule 1.14, but not including
Charter Leased Property or Charter Owned Property. Reference to any Charter
Party's Other Real Property Interests will be deemed to refer to the Charter
Other Real Property Interests included among such Charter Party's Assets.
1.15 Charter Owned Property. The fee interests in the real property
included among the Charter Assets and described as Charter Owned Property on
Schedule 1.15 and all improvements and towers thereon and appurtenances thereto.
Reference to any Charter Party's Owned Property will be deemed to refer to the
Charter Owned Property included among such Charter Party's Assets.
1.16 Charter Required Consents. Any and all consents, authorizations and
approvals under or in connection with the Charter Assets (including the Charter
Systems Franchises, Charter Systems Licenses, and Charter Systems Contracts) or
any Contract, Lien or Legal Requirement by which any Charter Party, any of its
Affiliates or their respective Assets are bound, required (a) for each Charter
Party to transfer its Assets to IPSE pursuant to this Agreement, (b) for IPSE to
operate the Charter Systems and to own, lease, use and operate the Charter
Assets and the Charter Systems at the places and in the manner in which the
Charter Assets are used and the Charter Systems are operated as of the date of
this Agreement and as of the Closing, or (c) for IPSE to assume and perform the
Charter Systems Franchises, the Charter Systems Licenses, the Charter Systems
Contracts and the IPSE Assumed Obligations and Liabilities.
1.17 Charter Systems Contracts. All Contracts (other than Charter Systems
Franchises and Charter Systems Licenses) that are included among the Charter
Assets, including the lease agreements for Charter Tangible Personal Property,
pole attachment agreements, underground conduit agreements, crossing agreements,
retransmission consent agreements, multiple dwelling, bulk billing or commercial
service agreements and other Contracts described on Schedule 1.17 and the
Contracts documenting Charter Leased Property and Charter Other Real Property
Interests described on Schedules 1.12 and 1.14. Reference to any Charter Party's
Systems Contracts will be deemed to refer to the Charter Systems Contracts
included among such Charter Party's Assets.
1.18 Charter Systems Franchises. The franchises, permits and similar
authorizations included among the Charter Assets (other than the Charter Systems
Licenses) described on Schedule 1.18, and all rights and benefits of the Charter
Parties and their Affiliates pertaining thereto, including the rights and
benefits arising under Section 626 of the Communications Act (47 U.S.C. 546) to
the extent applicable to a Charter Systems Franchise. Reference to any
IPSE/Charter Asset Exchange Agreement
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Charter Party's Systems Franchises will be deemed to refer to the Charter
Systems Franchises included among such Charter Party's Assets.
1.19 Charter Systems Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, earth station registrations, authorizations, consents or permits
issued by the FCC or any other Governmental Authority included among the Charter
Assets and described on Schedule 1.19 (other than the Charter Systems Franchises
and Charter Systems Contracts) and all rights and benefits of the Charter
Parties and their Affiliates pertaining thereto. Reference to any Charter
Party's Systems Licenses will be deemed to refer to the Charter Systems Licenses
included among such Charter Party's Assets.
1.20 Charter Tangible Personal Property. All tangible personal property
included among the Charter Assets, including towers (other than towers on
Charter Owned Property which are fixtures thereon and a part thereof), tower
equipment, aboveground and underground cable, distribution systems, headend
amplifiers, line amplifiers, microwave equipment, converters, testing equipment,
motor vehicles, office equipment, computers and billing equipment, furniture,
fixtures, supplies, inventory and other physical assets, the principal items of
which are identified and described on Schedule 1.20. Reference to any Charter
Party's Tangible Personal Property will be deemed to refer to the Charter
Tangible Personal Property included among such Charter Party's Assets.
1.21 Charter's Cable Businesses. The cable television businesses and other
revenue-generating businesses and operations relating to the Charter Systems
conducted by the Charter Parties and their Affiliates through the Charter
Systems. Reference to any Charter Party's Cable Business will be deemed to refer
to the Charter's Cable Business operated by such Charter Party.
1.22 Closing. The closing of the exchange transactions contemplated by
this Agreement.
1.23 Closing Time. 11:59 p.m., Eastern time, on the Closing Date.
1.24 Communications Act. The Communications Act of 1934, as amended, and
the FCC rules and regulations promulgated thereunder.
1.25 Contract. Any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
IPSE/Charter Asset Exchange Agreement
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1.26 Copyright Act. The Copyright Act of 1976, as amended, including all
rules, regulations, orders and policies of the U.S. Copyright Office thereunder
applicable to cable television systems generally.
1.27 Environmental Law. Any Legal Requirement relating to pollution or the
protection of public health, safety, welfare or the environment, including
CERCLA, OSHA and RCRA and including Legal Requirements relating to emissions,
discharges, releases or threatened releases of Hazardous Substances into the
environment (including ambient air, surface water, ground water or land) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
1.28 ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.29 ERISA Affiliate. As to any Person, any trade or business, whether or
not incorporated, which together with such Person would be deemed a single
employer within the meaning of Section 4001 of ERISA.
1.30 Expanded Basic Services. Any video programming provided over a cable
television system, regardless of service tier, other than Basic Services and Pay
TV.
1.31 FCC. The Federal Communications Commission.
1.32 Governmental Authority. The United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
body, county, municipality, province, parish or other instrumentality of any of
the foregoing.
1.33 Hazardous Substances. Any pollutant, contaminant, chemical,
industrial, toxic, hazardous or noxious substance or waste which is regulated by
a Governmental Authority, including (a) any petroleum or petroleum compounds
(refined or crude), flammable substances, explosives, radioactive materials or
any other materials or pollutants which pose a significant hazard or potential
significant hazard to the Owned Property or Other Real Property Interests or to
Persons in or about the Owned Property or Other Real Property Interests or cause
the Owned Property or Other Real Property Interests to be in violation of any
Legal Requirements; (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. xx.xx. 6901) and the
rules and regulations promulgated thereunder; (c) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. 9601 et seq.) (CERCLA), as amended, and the rules and
regulations promulgated thereunder; (d) any
IPSE/Charter Asset Exchange Agreement
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substance regulated by the Toxic Substances Control Act (TSCA) (42 U.S.C. ss.
2601 et seq.) or the Insecticide, Fungicide and Rodenticide Act (IFRA) (7 U.S.C.
ss. 136 et seq.), each, as amended, and the rules and regulations promulgated
thereunder; (e) asbestos or asbestos- containing material of any kind or
character; (f) polychlorinated biphenyls; (g) any substances regulated under the
provisions of Subtitle I of RCRA relating to underground storage tanks; (h) any
materials or substances designated as "hazardous substances" pursuant to the
Clean Water Act (33 U.S.C. ss. 1251 et seq.); (i) "economic poison," as defined
in the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss. 135 et
seq.); (j) any substance the presence, use, handling, treatment, storage or
disposal of which on the Owned Property or Leased Property is regulated or
prohibited by any Environmental Law; and (k) any other substance which by any
Environmental Law requires special handling, reporting or notification of any
Governmental Authority in its collection, storage, use, treatment or disposal.
1.34 HSR Act. The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
1.35 Intellectual Property. With respect to any Cable Business, any (a)
trademarks, trade dress, trade names, service marks, logos and other similar
proprietary rights, (b) domain names, (c) copyrights and (d) patents and
patentable know-how, inventions and processes, in each case used in such Cable
Business.
1.36 IPSE Assets. All of the assets, privileges, contracts, licenses,
permits, franchises, authorizations, rights, interests, claims and other
properties, real and personal, tangible and intangible, of every type and
description (a) which are owned, leased, held for, used or useful in, or
otherwise related to, IPSE's Cable Business, (b) in which IPSE or any Affiliate
of IPSE has any right, title or interest or in which IPSE or any Affiliate of
IPSE acquires any right, title or interest on or before the Closing Time, and
(c) which are not IPSE Excluded Assets. The IPSE Assets include the IPSE
Tangible Personal Property, IPSE Owned Property, IPSE Leased Property, IPSE
Other Real Property Interests, IPSE Systems Franchises, IPSE Systems Licenses,
IPSE Systems Contracts, IPSE Books and Records and IPSE Other Intangibles.
1.37 IPSE Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and procedures and all
other files of correspondence, lists, records and reports concerning IPSE's
Cable Business, including subscribers and prospective subscribers of the IPSE
Systems, signal and program carriage and dealings with Governmental Authorities
with respect to the IPSE Systems, including all reports filed with respect to
the IPSE Systems by or on behalf of IPSE or any Affiliate of IPSE with the FCC
and statements of account filed with respect to the IPSE Systems by or on behalf
of IPSE or any Affiliate of IPSE with the U.S. Copyright Office, but excluding
all documents, reports and records relating to any employee of the IPSE Systems
who has not given consent to disclosure of such documents, reports and records.
IPSE/Charter Asset Exchange Agreement
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1.38 IPSE Leased Property. The leaseholds of real property included among
the IPSE Assets and described as IPSE Leased Property on Schedule 1.38.
1.39 IPSE Other Intangibles. All intangible assets, other than the IPSE
Systems Franchises, IPSE Systems Licenses and IPSE Systems Contracts, including
subscriber lists, claims (excluding any claims relating to IPSE Excluded
Assets), and Intellectual Property, if any, included among the IPSE Assets.
1.40 IPSE Other Real Property Interests. The easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property held by IPSE or any Affiliate of IPSE in connection
with IPSE's Cable Business, including those interests described as IPSE Other
Real Property Interests on Schedule 1.40, but not including IPSE Leased Property
or IPSE Owned Property.
1.41 IPSE Owned Property. The fee interests in the real property included
among the IPSE Assets and described as IPSE Owned Property on Schedule 1.41 and
all improvements and towers thereon and appurtenances thereto.
1.42 IPSE Required Consents. Any and all consents, authorizations and
approvals under or in connection with the IPSE Assets (including the IPSE
Systems Franchises, IPSE Systems Licenses, and IPSE Systems Contracts) or any
Contract, Lien or Legal Requirement by which IPSE, any of its Affiliates or
their respective Assets are bound, required (a) for IPSE to transfer the IPSE
Assets to the Charter Parties pursuant to this Agreement, (b) for the Charter
Parties to operate the IPSE Systems and to own, lease, use and operate the IPSE
Assets and the IPSE Systems at the places and in the manner in which the IPSE
Assets are used and the IPSE Systems are operated as of the date of this
Agreement and as of the Closing, or (c) for the Charter Parties to assume and
perform the IPSE Systems Franchises, the IPSE Systems Licenses, the IPSE Systems
Contracts and the Charter Assumed Obligations and Liabilities.
1.43 IPSE Systems Contracts. All Contracts (other than IPSE Systems
Franchises and IPSE Systems Licenses) that are included among the IPSE Assets,
including the lease agreements for IPSE Tangible Personal Property, pole
attachment agreements, underground conduit agreements, crossing agreements,
retransmission consent agreements, multiple dwelling, bulk billing or commercial
service agreements and other Contracts described on Schedule 1.43 and the
Contracts documenting IPSE Leased Property and IPSE Other Real Property
Interests described on Schedules 1.38 and 1.40.
1.44 IPSE Systems Franchises. The franchises, permits and similar
authorizations included among the IPSE Assets (other than IPSE Systems Licenses)
described on Schedule 1.44, and all rights and benefits of IPSE and its
Affiliates pertaining thereto,
IPSE/Charter Asset Exchange Agreement
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including the rights and benefits arising under Section 626 of the
Communications Act (47 U.S.C. 546) to the extent applicable to an IPSE Systems
Franchise.
1.45 IPSE Systems Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, earth station registrations, authorizations, consents or permits
issued by the FCC or any other Governmental Authority included among the IPSE
Assets and described on Schedule 1.45 (other than the IPSE Systems Franchises
and IPSE Systems Contracts) and all rights and benefits of IPSE and its
Affiliates pertaining thereto.
1.46 IPSE Tangible Personal Property. All tangible personal property
included among the IPSE Assets, including towers (other than towers on IPSE
Owned Property which are fixtures thereon and a part thereof), tower equipment,
aboveground and underground cable, distribution systems, headend amplifiers,
line amplifiers, microwave equipment, converters, testing equipment, motor
vehicles, office equipment, computers and billing equipment, furniture,
fixtures, supplies, inventory and other physical assets, the principal items of
which are identified and described on Schedule 1.46.
1.47 IPSE's Cable Business. The cable television businesses and other
revenue-generating businesses and operations relating to the IPSE Systems
conducted by IPSE or an Affiliate of IPSE through the IPSE Systems.
1.48 Judgment. Any judgment, writ, order, injunction, award or decree of
any court, judge, justice or magistrate, including any bankruptcy court or judge
or the arbitrator in any binding arbitration, and any order of or by any
Governmental Authority.
1.49 Knowledge. The actual knowledge of a particular matter with respect
to any System of (a) in the case of any Charter System, Xxxxxx X. Xxxx, Xxxx X.
Xxxxxxxx, Xxxxxx X. Xxxx, Xxxxx X. Xxxxxxx, Xxxx Xxxxxxxx or Xxxxxxxxx Xxxxx,
(b) in the case of any IPSE System, Xxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxx, Xxxxxx
X. Xxxxx, Xxxx X. Xxxxx or Xxxxxx X. Xxxxxxxxx, and (c) in addition to those
Persons described in (a) and (b) above, the general manager or one or more of
the managers of the System.
1.50 Leased Property. Charter Leased Property or IPSE Leased Property, as
the context requires.
1.51 Legal Requirement. Applicable common law and any statute, ordinance,
code or other law, rule, regulation, order, technical or other written standard,
requirement or procedure enacted, adopted, promulgated, applied or followed by
any Governmental Authority, including any Judgment.
IPSE/Charter Asset Exchange Agreement
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1.52 Lien. Any security interest, security agreement, financing statement
filed with any Governmental Authority, conditional sale or other title retention
agreement, any lease, consignment or bailment given for purposes of security,
any mortgage, lien (including any lien for Taxes), indenture, pledge, option,
encumbrance, adverse interest, constructive trust or other trust, claim,
attachment, exception to, defect in, or other condition adversely affecting
title or other ownership interest (including reservations, rights of entry,
possibilities of reverter, encroachments, protrusions, easements, rights-of-way,
rights of first refusal, restrictive covenants, leases and licenses) of any
kind, which constitutes an interest in or claim against property, whether
arising pursuant to any Legal Requirement, Systems License, Systems Franchise,
Systems Contract or otherwise.
1.53 Litigation. Any claim, action, suit, proceeding, arbitration,
investigation or hearing that could result in a Judgment, any other activity or
procedure that could reasonably be expected to result in a Judgment, or any
notice of any of the foregoing.
1.54 Losses. Any claims, losses, liabilities, damages, penalties, costs
and expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and, as applicable, the cost to any Person making a claim or
seeking indemnification under this Agreement with respect to funds expended by
such Person by reason of the occurrence of any event or the existence or
assertion of any Liens (other than Permitted Liens) with respect to which
indemnification is sought.
1.55 MVPD. A distributor of cable television services, multichannel multi
point distribution service, direct broadcast satellite service or television
receive-only satellite programming, who makes available for purchase, by
subscribers or customers, multiple channels of video programming, other than
Persons distributing such services only to multiple dwelling unit or other
commercial customers (including hotels, motels, resorts, hospitals, dormitories,
prisons, restaurants, bars and similar establishments).
1.56 Other Real Property Interests. The Charter Other Real Property
Interests or the IPSE Other Real Property Interests, as the context requires.
1.57 Owned Property. Charter Owned Property or IPSE Owned Property, as the
context requires.
1.58 Party. Charter or IPSE, as the context requires.
1.59 Pay TV. Premium programming services selected by and sold to
subscribers on a per channel or per program basis.
IPSE/Charter Asset Exchange Agreement
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1.60 Permitted Liens. (a) Liens for Taxes, assessments and governmental
charges, in each case not yet due and payable, (b) zoning laws or ordinances or
any similar Legal Requirements, (c) rights reserved to any Governmental
Authority to regulate the affected property, (d) Liens described on Schedule
5.4.1 (with respect to Charter) and Schedule 6.4.1 (with respect to IPSE), (e)
as to Leased Property or Tangible Personal Property that is leased, the
interests of the lessors thereof, and (f) as to Owned Property, Leased Property
and Other Real Property Interests, any easements, rights-of-way, servitudes,
conditions, covenants, restrictions and minor imperfections or irregularities in
title, in each case, which are reflected in the public records and which do not
individually or in the aggregate interfere with the right or ability of the
applicable Party to own, use, enjoy or operate the Owned Property, Leased
Property or Other Real Property Interests in the manner currently used or to
convey good, marketable and indefeasible fee simple title to the same; provided
that "Permitted Liens" will not include any Lien which could prevent or inhibit
in any way (other than as permitted under clause (f)) the conduct of the
business of the affected System, and provided further that classification of any
Lien as a "Permitted Lien" will not affect any liability which a Party may have
for any such Lien, including pursuant to any indemnity obligation under this
Agreement.
1.61 Person. Any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.62 Required Consents. The Charter Required Consents or the IPSE Required
Consents, as the context requires.
1.63 Six-Month Date. The date that is six months after the Closing Date.
1.64 System. Any of the Charter Systems or the IPSE Systems, as the
context requires.
1.65 Systems Contracts. The Charter Systems Contracts or the IPSE Systems
Contracts, as the context requires.
1.66 Systems Franchises. The Charter Systems Franchises or the IPSE
Systems Franchises, as the context requires.
1.67 Systems Licenses. The Charter Systems Licenses or the IPSE Systems
Licenses, as the context requires.
1.68 Tangible Personal Property. The Charter Tangible Personal Property or
the IPSE Tangible Personal Property, as the context requires.
IPSE/Charter Asset Exchange Agreement
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1.69 Taxes. Levies and assessments of any kind or nature imposed by any
Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies or assessments related to
unclaimed property, together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto. For purposes of
determining any Tax cost or Tax benefit to any Person, such amount will be the
actual cost or benefit recognized by such Person at the time of actual payment
of the additional Tax or actual receipt of the Tax benefit. In the event that
any Loss, payment or other amount is required to be determined on an after-Tax
basis, such payment or other amount will be determined without regard to any Tax
cost or Tax benefit not actually recognized at the time of the determination,
and appropriate adjustments will be made when and to the extent that such Tax
cost or Tax benefit is actually recognized.
1.70 Third Party. Any Person other than IPSE and its Affiliates or Charter
and its Affiliates.
1.71 Transaction Documents. The Common Agreement and all instruments and
documents described in Sections 9.2 and 9.3 which are being executed and
delivered by or on behalf of any Charter Party or IPSE in connection with this
Agreement or the transactions contemplated hereby.
1.72 Other Definitions. The following terms have the meanings set forth in
the sections indicated in the table below:
Term Section
---- -------
Agent's Fees 5.17
Xxxxx Affiliates 1.2
ALTA 7.6
AT&T Affiliates 1.2
Cash Consideration 3.1.1
Charter Party First Paragraph
Charter Excluded Assets 4.4
Charter Matching Franchise 7.5.5(a)
Charter Retained Franchise 7.5.5(b)
Charter System Value 3.1.1
Charter Systems Recital A
Charter's Assumed Obligations and Liabilities 4.3
Closing Date 9.1
Code Recital C
commercially reasonable efforts 12.16
Common Agreement Recital D
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Computer and Other Systems 7.20.1(a)
Confidential Information 7.13.1
control 1.2
Cost of Service Election 5.8.4
Exchange 2.1
FCC Rate Forms 5.8.4
FTC 7.7
Hired Employee 7.3.6(a)
IPSE First Paragraph
IPSE Excluded Assets 4.2
IPSE Matching Franchise 7.5.5(b)
IPSE Retained Franchise 7.5.5(a)
IPSE System Value 3.1.1
IPSE Systems Recital B
IPSE's Assumed Obligations and Liabilities 4.1
Matching Franchise 7.5.5(a)
New Properties 7.10(b)
Nonrecourse 11.3
Operating Agreements 7.5.5(c)
Phase I Assessment 7.19.1
Phase II Assessment 7.19.1
Primary Transfer 7.5.5(d)
Prime Rate 12.8
Retained Franchise 7.5.5(a)
Subsequent Transfer 7.5.5(e)
Surveys 7.6
Survival Period 11.1
System Employees 7.3.1
Taking 12.14
Third Party Testing 7.20.2(c)
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Transfer Tax Returns 7.8
Transfer Taxes 7.8
Transferee Party 7.17.3
Transferor Party 7.17.3
Transitional Billing Services 7.12
WARN 5.14.1
Year 2000 High-Level Inventory,
Assessment and Remediation Decisions 7.20.1(b)
Year 2000 Plan 7.20.1(c)
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Year 2000 Ready or Year 2000 Readiness 7.20.1(d)
Year 2000 Remediation Program 7.20.1(e)
1.73 Usage. The definitions in Article 1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed to be references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. All Exhibits and Schedules attached hereto shall be deemed incorporated
herein as if set forth in full herein and, unless otherwise defined therein, all
terms used in any Exhibit or Schedule shall have the meaning ascribed to such
term in this Agreement. The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise expressly provided herein, any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. All accounting terms
not otherwise defined in this Agreement will have the meanings ascribed to them
under generally acceptable accounting principles as in effect from time to time
in the United States, consistently applied.
2. EXCHANGE.
2.1 Exchange of Assets. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, IPSE and the Charter Parties agree to
exchange simultaneously the IPSE Assets for the Charter Assets, free and clear
of all Liens (except Permitted Liens) (the "Exchange"), including the assignment
and transfer of all interests in Leased Property and leased Tangible Personal
Property. IPSE and the Charter Parties agree to use all reasonable efforts to
structure the Exchange in such a way that to the extent reasonably possible it
will be a tax free exchange of like-kind assets under Section 1031 of the Code,
including either Party's assignment of its rights under this Agreement to a
"qualified intermediary" engaged by such Party to effectuate a deferred
like-kind exchange under Section 1031 of the Code.
2.2 Method of Exchange. The Exchange is to occur as follows: (A) the IPSE
Tangible Personal Property and the Charter Tangible Personal Property are being
exchanged each for the other in "Exchange Groups" as defined under Internal
Revenue Regulations Sections 1.1031(a)-2 and 1.1031(j)-1(b)(2); (B) the IPSE
Owned Property, IPSE Leased Property and IPSE Other Real Property Interests, and
the Charter Owned Property, Charter Leased Property and Charter Other Real
Property Interests, are being exchanged each for the
IPSE/Charter Asset Exchange Agreement
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other; and (C) the IPSE Systems Contracts, IPSE Systems Franchises, IPSE Systems
Licenses and IPSE Other Intangibles, and the Charter Systems Contracts, Charter
Systems Franchises, Charter Systems Licenses and Charter Other Intangibles, are
being exchanged each for the other, in each case to the maximum extent permitted
by Section 1031 of the Code and the regulations promulgated thereunder.
Liabilities assumed or taken subject to by each Party are being exchanged each
for the other to the maximum extent permitted under Section 1031 of the Code and
regulations thereunder.
3. CONSIDERATION. Each Party agrees that cash consideration will be paid at
Closing by either IPSE to the Charter Parties or by the Charter Parties to IPSE,
and that such amount will be determined as follows:
3.1 Calculation of Values; Cash Consideration.
3.1.1 For the purposes of this Agreement, the gross value of the
IPSE Assets comprising all of the IPSE Systems, in the aggregate, shall be as
set forth on Schedule 3.1.1- A (each, an "IPSE System Value") and the gross
value of the Charter Assets comprising all of the Charter Systems, in the
aggregate, shall be as set forth on Schedule 3.1.1-B (each, a "Charter System
Value"). The gross value of the IPSE Systems and the gross value of the Charter
Systems shall be adjusted in accordance with the provisions of the Common
Agreement. At the Closing, IPSE (or its permitted assignee) will pay to the
Charter Parties (or their permitted assignees), or the Charter Parties (or their
permitted assignees) will pay (without duplication) to IPSE (or its permitted
assignee), as appropriate, an amount in cash to be determined pursuant to the
Common Agreement (the "Cash Consideration"), which payment shall then be deemed
made pursuant and subject to this Agreement. Preliminary and final
determinations of the Cash Consideration will be made in accordance with the
Common Agreement.
4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.
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4.1 IPSE's Assumed Obligations and Liabilities. At the Closing and
effective as of the Closing Time, IPSE will assume and after the Closing Date,
IPSE will pay, discharge and perform the following (collectively, "IPSE's
Assumed Obligations and Liabilities"): (a) those obligations and liabilities
accruing and relating to periods after the Closing Time under or with respect to
the Charter Assets assigned and transferred to IPSE at the Closing; (b) those
obligations and liabilities of Charter for subscriber prepayments and deposits
related to the Charter Systems existing at the Closing Time; (c) other
obligations and liabilities of the Charter Parties only to the extent that the
Adjusted Value of the Charter Systems was decreased with respect thereto
pursuant to Section 2.2 of the Common Agreement; and, (d) all other obligations
and liabilities accruing and relating to periods after the Closing Time and
arising out of IPSE's ownership, use or operation of the Charter Assets
(including those items listed or described on Schedule 4.4(b)) or its operation
of, or conduct of business through, the Charter Systems after the Closing
(including with respect to late fees that may be charged by IPSE after the
Closing to subscribers of the Charter Systems) except to the extent that such
obligations or liabilities relate to any Charter Excluded Asset. All obligations
and liabilities arising out of or relating to the Charter Assets, the Charter
Systems or Charter's Cable Businesses other than IPSE's Assumed Obligations and
Liabilities will remain and be the obligations and liabilities solely of the
Charter Parties, including any obligation, liability or claims relating to or
arising pursuant to (w) Taxes (including franchise fees) with respect to periods
or portions thereof ending on or prior to the Closing Date, (x) refunds of
rates, charges or late fees with respect to periods through and including the
Closing Date, (y) Litigation commenced, or related to an event occurring, on or
prior to the Closing Date, or (z) credit, loan or other agreements pursuant to
which the Charter Parties have created, incurred, assumed or guaranteed
indebtedness for borrowed money or under which any Lien securing such
indebtedness has been or may be imposed on any Charter Asset.
4.2 IPSE Excluded Assets. "IPSE Excluded Assets" means all: (a)
programming Contracts (including music programming Contracts), cable guide
Contracts, and Contracts to which IPSE and one or more Affiliates of IPSE or
other cable systems of IPSE or its Affiliates are parties (including master
retransmission consent agreements and master billing, collection and related
agreements), other than any such Contracts (such as local programming
agreements) listed on Schedule 4.2(b); (b) except as set forth on Schedule
4.2(b), each employee benefit plan (as defined in Section 3(3) of ERISA) or any
multiemployer plan (as defined in Section 3(37) of ERISA) with respect to which
IPSE or any of its ERISA Affiliates has any liability or in which any employees
or agents, or any former employees or agents, of IPSE or any of its ERISA
Affiliates participate; (c) except as provided in Section 12.14, insurance
policies and rights and claims thereunder; (d) bonds, letters of credit, surety
instruments and other similar items; (e) cash and cash equivalents, including
cash relating to subscriber prepayments and deposits, and notes receivable; (f)
except as set forth on Schedule 4.2(b) and subject to Section 7.11, Intellectual
Property held by IPSE or any of its Affiliates; (g) except as set forth on
Schedule 4.2(b), subscriber billing Contracts and related equipment if not owned
by IPSE or any Affiliate of IPSE; (h) assets, rights or properties of IPSE or
its
IPSE/Charter Asset Exchange Agreement
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Affiliates used or held for use other than principally in connection with the
IPSE Systems; (i) except for any items for which the Adjusted Value of the IPSE
Systems is increased under Section 2.2 of the Common Agreement, claims, rights,
and interest in and to any refunds of Taxes or fees of any nature, or other
claims against third parties, relating to the operation of the IPSE Systems
prior to the Closing Time; (j) account books of original entry, general ledgers,
financial records, minute books, stock ledgers, organizational documents and, to
the extent not included in the IPSE Books and Records, personnel files and
records, in each case used in connection with the IPSE Systems; (k) except for
the leases described on Schedule 4.2(b), capital and vehicle leases; (l)
advertising sales agency or representation Contracts providing any Third Party
or Affiliate of IPSE the right to sell available advertising time for an IPSE
System other than any such Contract listed on Schedule 4.2(b); (m) to the extent
licensed pursuant to a master license agreement or not otherwise transferable,
software of IPSE or any Affiliate of IPSE and licenses relating to Third Party
software; (n) Contracts for any fiber or fiber capacity lease or use
arrangements that provide to any Third Party or Affiliate of IPSE the right to
use any fiber or capacity of an IPSE System other than any such Contract listed
on Schedule 4.2(b); (o) except as set forth on Schedule 4.2(b), Contracts for
any internet access or on-line services arrangements that provide to any Third
Party or Affiliate of IPSE the right to use the transmission capacity of an IPSE
System to provide internet access or other on-line services over such IPSE
System; (p) except as set forth on Schedule 4.2(b), Contracts between IPSE and
its Affiliates; and (q) other rights, assets and properties described on
Schedule 4.2(a).
4.3 Charter's Assumed Obligations and Liabilities. At the Closing and
effective as of the Closing Time, the Charter Parties will assume and after the
Closing Date, the Charter Parties will pay, discharge and perform the following
(collectively, "Charter's Assumed Obligations and Liabilities"): (a) those
obligations and liabilities accruing and relating to periods after the Closing
Time under or with respect to the IPSE Assets assigned and transferred to the
Charter Parties at the Closing; (b) those obligations and liabilities of IPSE
for subscriber prepayments and deposits related to the IPSE Systems existing at
the Closing Time; (c) other obligations and liabilities of IPSE only to the
extent that the Adjusted Value of the IPSE Systems was decreased with respect
thereto pursuant to Section 2.2 of the Common Agreement; and (d) all other
obligations and liabilities accruing and relating to periods after the Closing
Time and arising out of the Charter Parties' ownership, use or operation of the
IPSE Assets (including those items listed or described on Schedule 4.2(b)) or
its operation of, or the conduct of business through, the IPSE Systems after the
Closing (including with respect to late fees that may be charged by the Charter
Parties after the Closing to subscribers of the IPSE Systems), except to the
extent that such obligations or liabilities relate to any IPSE Excluded Asset.
All obligations and liabilities arising out of or relating to the IPSE Assets,
the IPSE Systems or IPSE's Cable Business other than Charter's Assumed
Obligations and Liabilities will remain and be the obligations and liabilities
solely of IPSE including any obligation, liability or claims relating to or
arising pursuant to (w) Taxes (including franchise fees) with respect to periods
or portions thereof ending on or prior to the Closing Date,
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(x) refunds of rates, charges or late fees with respect to periods through and
including the Closing Date, (y) Litigation commenced, or related to an event
occurring, on or prior to the Closing Date, or (z) credit, loan or other
agreements pursuant to which IPSE has created, incurred, assumed or guaranteed
indebtedness for borrowed money or under which any Lien securing such
indebtedness has been or may be imposed on any IPSE Asset.
4.4 Charter Excluded Assets. "Charter Excluded Assets" means all: (a)
programming Contracts (including music programming Contracts), cable guide
Contracts, and Contracts to which the Charter Parties one or more Affiliates of
the Charter Parties or other cable systems of the Charter Parties or their
Affiliates are parties (including master retransmission consent agreements and
master billing, collection and related agreements), other than any such
Contracts (such as local programming agreements) listed on Schedule 4.4(b), (b)
except as set forth on Schedule 4.4(b), each employee benefit plan (as defined
in Section 3(3) of ERISA) or any multiemployer plan (as defined in Section 3(37)
of ERISA) with respect to which any Charter Party or any of their ERISA
Affiliates has any liability or in which any employees or agents, or any former
employees or agents, of any Charter Party or any of their ERISA Affiliates
participate; (c) except as provided in Section 12.14, insurance policies and
rights and claims thereunder; (d) bonds, letters of credit, surety instruments
and other similar items; (e) cash and cash equivalents, including cash relating
to subscriber prepayments and deposits, and notes receivable; (f) except as set
forth on Schedule 4.4(b), and subject to Section 7.11, Intellectual Property
held by Charter or any of its Affiliates; (g) except as set forth on Schedule
4.4(b), subscriber billing Contracts and related equipment if not owned by the
Charter Parties or any Affiliate of the Charter Parties; (h) assets, rights or
properties of the Charter Parties or their Affiliates used or held for use other
than principally in connection with the Charter Systems; (i) except for any
items for which the Adjusted Value of the Charter Systems is increased under
Section 2.2 of the Common Agreement, claims, rights, and interest in and to any
refunds of Taxes or fees of any nature, or other claims against third parties,
relating to the operation of the Charter Systems prior to the Closing Time; (j)
account books of original entry, general ledgers, financial records, minute
books, stock ledgers, organizational documents and, to the extent not included
in the Charter Books and Records, personnel files and records, in each case used
in connection with the Charter Systems; (k) except for the leases described on
Schedule 4.4(b), capital and vehicle leases; (l) advertising sales agency or
representation Contracts providing any Third Party or Affiliate of Charter the
right to sell available advertising time for a Charter System other than any
such Contract listed on Schedule 4.4(b); (m) to the extent licensed pursuant to
a master license agreement or otherwise not transferable, software of the
Charter Parties or any Affiliate of the Charter Parties and licenses relating to
Third Party software; (n) Contracts for any fiber or fiber capacity lease or use
arrangements that provide to any Third Party or Affiliate of Charter the right
to use any fiber or capacity of a Charter System other than any such Contract
listed on Schedule 4.4(b); (o) except as set forth on Schedule 4.4(b), Contracts
for any internet access or on-line services arrangements that provide to any
Third Party or Affiliate of Charter the right to use the transmission capacity
of a Charter System to provide
IPSE/Charter Asset Exchange Agreement
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internet access or other on-line services over such Charter System; (p) except
as set forth on Schedule 4.4(b), Contracts between any Charter Party and its
Affiliates; and (q) other rights, assets and properties described on Schedule
4.4(a).
5. CHARTER'S REPRESENTATIONS AND WARRANTIES. Each Charter Party represents and
warrants to IPSE, jointly and severally, as of the date of this Agreement and as
of the Closing, as follows:
5.1 Organization and Qualification of Charter. Such Charter Party is a
single-member limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware. As of the Closing Date,
such Charter Party will be treated for federal income tax purposes as a
disregarded entity with respect to Charter Communications Operating LLC under
Treasury Regulation ss. 301.7701-3(b)(1)(ii). Such Charter Party has all
requisite power and authority to own, lease and use the Charter Assets owned,
leased or used by it and to conduct its Cable Business as it is currently being
conducted by it. As of the date of this Agreement, such Charter Party is duly
qualified to do business and is in good standing under the laws of each
jurisdiction in which the ownership, leasing or use of the Charter Assets owned,
leased or used by it or the nature of its activities in connection with its
Charter Systems makes such qualification necessary.
5.2 Authority and Validity. Such Charter Party has all requisite corporate
power and authority to execute and deliver, to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Transaction Documents to which it is a party. The execution and delivery by such
Charter Party of, its performance under, and its consummation of the
transactions contemplated by, this Agreement and the Transaction Documents to
which it is a party have been duly and validly authorized by all action by or on
behalf of such Charter Party. This Agreement has been, and when executed and
delivered by such Charter Party the Transaction Documents to which it is a party
will be, duly and validly executed and delivered by such Charter Party and the
valid and binding obligations of such Charter Party, enforceable against it in
accordance with their terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to the enforcement of creditors' rights generally
or by principles governing the availability of equitable remedies.
5.3 No Conflict; Required Consents. Except as set forth on Schedule 5.3,
and assuming all IPSE Required Consents have been obtained and the expiration or
earlier termination of the waiting period under the HSR Act has occurred, the
execution and delivery by such Charter Party of, its performance under, and its
consummation of the transactions contemplated by, this Agreement and the
Transaction Documents to which it is a party do not and will not: (a) conflict
with or violate any provision of the organizational documents of such Charter
Party; (b) violate any provision of any Legal Requirement; (c) require any
consent, approval or authorization of, or filing of any certificate, notice,
application, report or other
IPSE/Charter Asset Exchange Agreement
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31
document with, any Governmental Authority or other Person; or (d) (i) conflict
with, violate, result in a breach of or constitute a default under (without
regard to requirements of notice, lapse of time or elections of other Persons or
any combination thereof), (ii) permit or result in the termination, suspension
or modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of such Charter Party under, or (iv) result
in the creation or imposition of any Lien under any Charter Systems Contract,
Charter Systems Franchise, Charter Systems License, or other instrument
evidencing any of the Charter Assets or by which such Charter Party or any of
its assets is bound or affected, except for purposes of clauses (c) and (d) such
consents, approvals, authorizations and filings that, if not obtained or made,
would not, and such violations, conflicts, breaches, defaults, terminations,
suspensions, modifications and accelerations as would not, individually or in
the aggregate, have an adverse effect on any of such Charter Party's Systems,
its Cable Business or on such Charter Party, or on its ability to perform its
obligations under this Agreement or the Transaction Documents to which it is a
party.
5.4 Assets.
5.4.1 Such Charter Party has good and marketable title to (or, in
the case of Assets that are leased, valid leasehold interests in) its Assets.
None of the Xxxxx Affiliates has any right, title or interest in or to any of
the Charter Assets. The Charter Assets are free and clear of all Liens, except
Permitted Liens and rights of first refusal which will be waived at Closing by
the Person holding such rights. All of the Liens described on Schedule 5.4.1
(except for those marked with an asterisk on Schedule 5.4.1) will be terminated,
released or, in the case of rights of first refusal (except for those listed on
Schedule 5.4.1), waived, as appropriate, at or prior to the Closing. Except as
described on Schedule 1.20, such Charter Party's Tangible Personal Property, as
an integrated system and in its component parts, is in good operating condition
and repair (ordinary wear and tear and routine failures excepted) and is usable
and adequate for the operation of such Charter Party's Cable Business.
5.4.2 Except for items included in the Charter Excluded Assets, such
Charter Party's Assets constitute substantially all the assets necessary to (a)
conduct its Cable Business as it is being conducted on the date of this
Agreement and in compliance with all applicable Legal Requirements, (b) to
operate its Systems as they are being operated on the date of this Agreement and
in compliance with all applicable Legal Requirements and (c) to perform all of
IPSE's Assumed Obligations and Liabilities.
5.4.3 Except as described on Schedule 5.4.3, and other than direct
broadcast satellite and satellite master antenna television, with respect to
each area in which such Charter Party's Systems currently provide cable
television service: (i) no Person is operating a cable television system or
other non-satellite MVPD other than a Charter System in such area; (ii) no local
franchising authority has awarded a cable television franchise in such area to
any
IPSE/Charter Asset Exchange Agreement
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32
Person other than a Charter Party; and (iii) to the Knowledge of such Charter
Party, no MVPD has applied for a cable television franchise to serve such area.
5.5 Charter Systems Franchises, Charter Systems Licenses, Charter
Systems Contracts and Charter Other Real Property Interests.
5.5.1 Except as described on Schedules 1.12, 1.14, 1.17, 1.18 and
1.19, and except for the Charter Excluded Assets, Charter is not bound or
affected by any of the following that relate primarily or in whole to its Cable
Business: (a) leases of real property or capital leases of personal property;
(b) operating leases of personal property that are terminable upon more than 30
days notice and that contemplate annual lease payments in excess of $20,000; (c)
franchises for the construction or operation of cable television systems or
Charter Systems Contracts of substantially equivalent effect; (d) licenses,
authorizations, consents or permits of the FCC; (e) other licenses,
authorizations, consents or permits of any other Governmental Authority,
individually or in the aggregate, material to any Charter System; (f) easements
or rights of access, individually or in the aggregate, material to any Charter
System; (g) pole attachment agreements, underground conduit agreements, crossing
agreements, retransmission consent agreements or bulk or commercial service
agreements, individually or in the aggregate, material to any Charter System; or
(h) Charter Systems Contracts other than those described in any other clause of
this Section 5.5.1 which contemplate payments by or to Charter in any 12-month
period exceeding $25,000 under any single contract or $100,000 in the aggregate.
5.5.2 Complete and correct copies of such Charter Party's Systems
Franchises and Systems Licenses have been provided to IPSE. Except as set forth
on Schedule 5.5.2, (a) such Charter Party's Systems Franchises contain all of
the commitments and obligations of such Charter Party to the applicable
Governmental Authority granting such Franchises with respect to the
construction, ownership and operation of its Systems, and (b) other than as set
forth in Charter Party's Systems Franchises, such Charter Party has not made any
commitment to any local franchising authority to make any material expenditure
or capital addition or betterment to any of its Systems or Assets that will not
be fulfilled or satisfied prior to the Closing Time. Such Charter Party's
Systems Franchises and Systems Licenses are currently in full force and effect,
are not in default and are valid under all applicable Legal Requirements
according to their terms. No event has occurred that, with notice or lapse of
time or both, would constitute a breach, violation or default by any such
Charter Party, and to such Charter Party's Knowledge, no event has occurred
that, with notice or lapse of time or both, would constitute a breach, violation
or default by any other Person, of any material obligations under any of such
Charter Party's Systems Franchises or Systems Licenses. Except for routine
filings with Governmental Authorities and as described on Schedule 5.5.2, there
are no applications relating to any of such Charter Party's Systems Franchise or
Systems License pending before any Governmental Authority which are material to
any of its Systems or its Cable Business. Except where a request for renewal has
been timely filed under Section
IPSE/Charter Asset Exchange Agreement
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33
626(a) of the Cable Act, since December 31, 1998, no Systems Franchise or
Systems License of such Charter Party has been surrendered by such Charter Party
or has expired or otherwise terminated without the issuance of a replacement
Charter Systems Franchise or Charter Systems License. There is no legal action,
governmental proceeding or investigation pending or, to such Charter Party's
Knowledge, threatened to terminate, suspend or modify any Systems Franchise or
Systems License of such Charter Party. Except as set forth on Schedule 5.5.2,
such Charter Party is, or will be as of the Closing Date, in material compliance
with the terms and conditions of all its Systems Franchises and Systems Licenses
and other applicable requirements of all Governmental Authorities (including the
FCC and the U.S. Copyright Office) relating to such Charter Systems Franchises
and Charter Systems Licenses, including all requirements for notification,
filing, reporting, posting and maintenance of logs and records.
5.5.3 Such Charter Party has delivered to IPSE true and complete
copies of all of such Charter Party's Systems Contracts (including each Contract
relating to Charter Leased Property and Charter Other Real Property Interests),
including any amendments thereto (or, in the case of oral Contracts, true and
complete written summaries thereof) and each document evidencing such Charter
Party's ownership of its Owned Property. Except as described in Schedule 5.5.3,
such Charter Party has fulfilled when due, or has taken all action necessary to
enable it to fulfill when due, all of its obligations under each of its
Contracts and, to the Knowledge of such Charter Party, there has not occurred
any default (without regard to requirements of notice, lapse of time, elections
of other Persons, or any combination thereof) by any other Person of any
material obligations under any of its Contracts or Real Property Interests.
5.6 Real Property. All the Assets of such Charter Party consisting of
Charter Owned Property, Charter Leased Property and material Charter Other Real
Property Interests are described on Schedules 1.12, 1.14 and 1.15. Except for
ordinary wear and tear and routine repairs and as set forth on Schedule 5.6, all
of the improvements, leasehold improvements and the premises of such Charter
Party's Owned Property and the premises demised under the leases and other
documents evidencing such Charter Party's Leased Property and are in good
condition and repair and are suitable for the purposes used. Each parcel of such
Charter Party's Owned Property and each parcel of such Charter Party's Leased
Property and any improvements thereon (a) has access to and over public streets
or private streets for which such Charter Party has a valid right of ingress and
egress, (b) except as set forth on Schedule 1.12 or 1.14, conforms in its
current use and occupancy to all material zoning requirements without reliance
upon a variance issued by a Governmental Authority or a classification of the
parcel in question as a nonconforming use, (c) conforms in all material respects
in its current use to all restrictive covenants, if any, or other Liens
affecting all or part of such parcel (of record, with respect to Charter Owned
Property, or of record or as set forth in an agreement listed on Schedule 1.12
or 1.14 with respect to Charter Leased Property or Charter Other Real Property
Interests), and (d) is available for immediate use in the conduct
IPSE/Charter Asset Exchange Agreement
22
34
of the business or operations of such Charter Party's Systems. There are no
pending condemnation, expropriation, eminent domain or similar proceedings of
which such Charter Party has received notice or has Knowledge affecting, in any
material respect, all or any portion of such Charter Party's Owned Property,
Leased Property, or Other Real Property Interests. Such Charter Party has good
and marketable title to each such parcel of real property included in its Owned
Property and in all buildings, structures and improvements thereon, in each case
free and clear of all Liens except for Permitted Liens.
5.7 Environmental.
5.7.1 Except as described on Schedule 5.7, such Charter Party is in
material compliance with all Environmental Laws, insofar as they relate to its
Owned Property or Leased Property. Except as described on Schedule 5.7, such
Charter Party has not received any notice of, and has no Knowledge of, any
alleged, actual, or potential responsibility for, or any inquiry regarding, (i)
any release or threatened release of any Hazardous Substances from or on its
Owned Property or Leased Property, or (ii) any material violation of any
Environmental Laws associated with its Owned Property or Leased Property. Except
as described on Schedule 5.7, to such Charter Party's Knowledge, its own
operations on its Other Real Property Interests do not violate any Environmental
Laws in any material respect, and such Charter Party has received no notice of
any such violation. Except as described on Schedule 5.7, such Charter Party has
not received any notice of, and has no Knowledge of circumstances relating to,
any past, present or future events, conditions, circumstances, activities,
practices or incidents (including the presence, use, generation, manufacture,
disposal, release or threatened release of any Hazardous Substances from or on
its Owned Property or Leased Property), which could interfere with or prevent
continued compliance, or which are reasonably likely to give rise to any
liability, based upon or related to the processing, distribution, use,
treatment, storage, disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of any Hazardous Substance
from or attributable to its Owned Property or Leased Property.
5.7.2 Except as described on Schedule 5.7, to such Charter Party's
Knowledge, (a) no aboveground or underground storage tanks are currently or have
been located on any Charter Owned Property or Charter Leased Property of such
Charter Party and (b) no Charter Owned Property or Charter Leased Property of
such Charter Party has been used at any time as a gasoline service station or
any other facility for storing, pumping, dispensing or producing gasoline or any
other petroleum products or wastes.
5.7.3 Complete and correct copies of (a) all studies, reports,
surveys or other similar written materials in Charter's possession or to which
Charter, to its Knowledge, has access relating to the presence or alleged
presence of Hazardous Substances at, on, under or affecting the Charter Owned
Property or Charter Leased Property of such Charter Party, (b) all notices
(other than general notices made by general publication) in Charter's possession
IPSE/Charter Asset Exchange Agreement
23
35
or to which Charter, to its Knowledge, has access that were received from any
Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
such Charter Party's Owned Property or Leased Property or activities at its
Owned Property or Charter Leased Property and (c) all notices and related
materials in Charter's possession or to which Charter, to its Knowledge, has
access relating to any Litigation concerning any Environmental Law to which such
Charter Party is a party or written allegation by any private Third Party
concerning any Environmental Law and such Charter Party, have been provided to
IPSE (other than those materials constituting attorney-client privileged
communications).
5.8 Compliance with Legal Requirements.
5.8.1 Except as set forth on Schedule 5.8, the operation of such
Charter Party's Systems as currently conducted does not violate or infringe any
Legal Requirement currently in effect in any material respect (other than Legal
Requirements described in Sections 5.7, 5.8.3 and 5.8.4, as to which the
representations and warranties set forth in those subsections will apply) or the
grounding requirements of the National Electrical Safety Code. Except as set
forth on Schedule 5.8, such Charter Party has not received any notice and has no
Knowledge of any material violation by such Charter Party or any of its Systems
of any Legal Requirement applicable to the installation, ownership and operation
of its Systems as currently conducted, and knows of no basis for the allegation
of any such violation.
5.8.2 Except as set forth on Schedule 5.8, without limiting the
generality of the foregoing, since such Charter Party's acquisition of its
Systems: it has submitted to the FCC all filings, including cable television
registration statements, annual reports and aeronautical frequency usage notices
and paid all regulatory fees, that are required under the rules and regulations
of the FCC; the operation of its Systems has been and is in material compliance
with the rules and regulations of the FCC, and it has not received any notice
from the FCC of any violation of its rules and regulations; such Charter Party
is and since 1986 (or since its acquisition, if later) has been certified as in
compliance with the FCC's equal employment opportunity rules; its Systems are in
material compliance with all signal leakage criteria prescribed by the FCC; and
for each relevant semi-annual reporting period since its acquisition of a
Charter System, such Charter Party has timely filed with the United States
Copyright Office all required Statements of Account in true and correct form,
has paid when due all required copyright royalty fee payments in correct amount,
relating to its Systems' carriage of television broadcast signals and is
otherwise in material compliance with all applicable rules and regulations of
the Copyright Office. Except as set forth on Schedule 5.8, such Charter Party
has no Knowledge, with respect to any Charter System acquired by such Charter
Party since January 1, 1996, of any previous owner's failure to comply with the
copyright licensing requirements with respect to such System or any written
claim or inquiry from any Person which questions such System's failure to
comply. Charter has delivered to IPSE copies of all reports, filings and
correspondence made or filed by such Charter Party
IPSE/Charter Asset Exchange Agreement
24
36
with the FCC or pursuant to the FCC rules and regulations for the past year and
all reports, filings and correspondence made or filed by such Charter Party with
the Copyright Office or pursuant to Copyright Office rules and regulations for
the past three years. Except as set forth on Schedule 5.8, (i) a request for
renewal has been timely filed under Section 626(a) of the Cable Act with the
proper Governmental Authority with respect to each Systems Franchise of such
Charter Party expiring within 36 months after the date of this Agreement; and
(ii) such Charter Party has received no written notice from any Governmental
Authority that it has determined or intends to deny renewal of any Charter
Systems Franchise to which it is a party.
5.8.3 Except as set forth on Schedule 5.8 and as otherwise provided
in this Section, such Charter Party has used commercially reasonable efforts to
comply in all material respects with the provisions of the Cable Act and the
1992 Cable Act pertaining to the carriage of television broadcast signals, as
such Legal Requirements relate to the operation of its Systems. Such Charter
Party has complied in all material respects with the must carry and
retransmission consent provisions of the 1992 Cable Act, including (i) duly and
timely notifying "local commercial television stations" of inadequate signal
strength or increased copyright liability, if applicable, (ii) duly and timely
notifying non-commercial educational stations of the location of its System's
principal headend, (iii) duly and timely notifying subscribers of changes in the
channel alignment on its Systems, (iv) duly and timely notifying "local
commercial and non-commercial television stations" of the broadcast signals
carried on its Systems and their channel positions, (v) maintaining the
requisite public file identifying broadcast signal carriage, (vi) carrying the
broadcast signals after June 1, 1993, on its Systems for all "local commercial
television stations" which elected must carry status and, if required, up to two
"qualified low power stations" and (vii) obtaining retransmission consents for
all broadcast signals carried on its Systems after October 5, 1993, except for
the non-exempt signals carried pursuant to a must carry election. No must carry
complaint is pending against any of System such Charter Party at the FCC, nor,
to such Charter Party's Knowledge, is any threatened except as set forth in
Schedule 5.8. Charter has delivered to IPSE copies of any pending petitions such
Charter Party has on file with the FCC, including requests for market
modifications or petitions for special relief or any market modification
requests or special relief petitions affecting any Charter System that have been
served on such Charter Party. The FCC has not issued any decision with respect
to a must carry complaint finding any System of such Charter Party in violation
of the must carry rules except as set forth on Schedule 5.8.
5.8.4 Such Charter Party has used commercially reasonable efforts to
establish rates charged and a la carte packages provided to subscribers,
effective as of September 1, 1993, that would be allowable under rules and
regulations promulgated by the FCC under the 1992 Cable Act, and any
authoritative interpretation thereof, whether or not such rates or packages were
subject to regulation at that date by any Governmental Authority, including any
state regulatory agency, local franchising authority and/or the FCC.
Notwithstanding the foregoing, such Charter Party makes no representation or
warranty that either the rates charged to subscribers or the a la carte packages
provided would be allowable under any rules
IPSE/Charter Asset Exchange Agreement
25
37
and regulations of the FCC, or any authoritative interpretation thereof,
promulgated after the date of the Closing. Charter has delivered to IPSE
complete and correct copies of (i) the most recent FCC Forms 328, 329, 393,
1200, 1205, 1210, 1215, 1220, 1235 and 1240 and other FCC rate forms
(collectively, "FCC Rate Forms") filed by such Charter Party with the local
franchising authority and/or the FCC and will deliver as soon as available all
FCC Rate Forms that are prepared with respect to such Charter Party's Systems,
(ii) all historical FCC Rate Forms with respect to any Charter System in which
there is currently a rate issue pending, including any accounting order or any
rate order on appeal, (iii) copies of all complaints, petitions, answers,
responses and other filings made with or by any Governmental Authority in
connection with any rate orders issued by such Governmental Authority or any
appeal therefrom, and (iv) any documentation supporting an exemption from the
rate regulation provisions of the 1992 Cable Act claimed by such Charter Party
with respect to its Systems. Except as set forth on Schedule 5.8, such Charter
Party has not made any election with respect to any cost of service proceeding
conducted in accordance with Part 76.922 of Title 47 of the Code of Federal
Regulations or any similar proceeding (a "Cost of Service Election") with
respect to any of such Charter Party's Systems.
5.8.5 Except as set forth on Schedule 5.8, all necessary FAA
approvals have been obtained and all necessary FCC tower registrations have been
filed with respect to the height and location of towers used in connection with
the operation of such Charter Party's Systems, and such towers are being
operated in compliance in all material respects with applicable FCC and FAA
rules. The ownership, height (with and without appurtenances), location
(address, latitude, longitude and ground elevation), structure type and FCC call
signs of each tower used in connection with the operation of such Charter
Party's Systems are correctly described on Schedule 5.8. To the extent
applicable, Charter has delivered to IPSE true and correct copies of the FAA
final determinations that are available and FCC registrations for all such
towers.
5.9 Intellectual Property. Except for Intellectual Property which
constitutes Charter Excluded Assets and the Intellectual Property described on
Schedule 4.4(b), such Charter Party does not possess any Intellectual Property
related to or material to the operation of its Systems, and such Charter Party
is not a party to any license or royalty agreement with respect to any such
Intellectual Property, except for licenses respecting program material or
incidental to any Systems Contract and obligations under the Copyright Act. To
the Knowledge of such Charter Party, its Systems and Cable Business have been
operated in such a manner so as not to violate or infringe upon the rights, or
give rise to any rightful claim of any Person for copyright, trademark, service
xxxx, patent or license infringement or the like.
5.10 Financial Statements. Charter's statements of income for the years
ended December 31, 1997 and 1998, attached hereto as Schedule 5.10, are in
accordance with the books and records of the Charter Systems, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered
IPSE/Charter Asset Exchange Agreement
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38
thereby and, except as may be described therein, present fairly the operating
results of the Charter Systems for the periods indicated, subject only to
standard year-end adjustments and the omission of footnotes thereto.
5.11 Absence of Certain Changes or Events. Except as set forth on Schedule
5.11, since December 31, 1998, there has been no (i) material adverse change in,
nor has any event or events (other than any affecting the cable television
industry generally) occurred that, individually or in the aggregate, are
reasonably likely to result in a material adverse change in such Charter Party's
Assets, Cable Business, operations, condition (financial or otherwise) or
results of operations of its Systems, taken as a whole and (ii) material change
in accounting principles or practices with respect to such Charter Party's Cable
Business or revaluation by such Charter Party of its Assets for financial
reporting, property tax or other purposes. From December 31, 1998 to the date of
this Agreement, such Charter Party's Cable Business has been conducted only in
the usual, regular and ordinary course, except as disclosed on Schedule 5.11 and
except where the failure to conduct business in such manner would not have a
material adverse effect on such Charter Party's Assets, Cable Business,
operations, condition (financial or otherwise) or results of operations of its
Systems taken as a whole or on the ability of such Charter Party to perform its
obligations under this Agreement.
5.12 Litigation. Except as set forth on Schedule 5.12: (a) there is no
Litigation pending or, to the Knowledge of such Charter Party, threatened
against such Charter Party or any of its Affiliates which, if adversely
determined, would (i) materially and adversely affect the financial condition or
operations of such Charter Party's Cable Business, any of its Systems or Assets
or the ability of such Charter Party to perform its obligations under this
Agreement or (ii) result in the modification, revocation, termination,
suspension or other limitation of any of such Charter Party's Systems
Franchises, Systems Licenses, or Systems Contracts; and (b) there is not in
existence any Judgment requiring such Charter Party or any of its Affiliates to
take any action of any kind with respect to its Assets or the operation of any
of its Systems, or to which such Charter Party (with respect to its Systems),
any of its Systems or Assets are subject or by which they are bound or affected,
that has not been fully complied with by such Charter Party.
5.13 Tax Returns; Other Reports. Such Charter Party has duly and timely
filed in correct form all federal, state, local and foreign Tax returns and
other Tax reports required to be filed by it, and has timely paid all Taxes
which have become due and payable, whether or not so shown on any such return or
report, the failure of which to be filed or paid could affect or result in the
imposition of a Lien upon its Assets or create any transferee or other liability
upon IPSE, except such amounts as are being contested diligently and in good
faith and are not in the aggregate material. Except as set forth on Schedule
5.13, such Charter Party has not received any notice of, nor does such Charter
Party have any Knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing
IPSE/Charter Asset Exchange Agreement
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39
Governmental Authority which could affect, or result in the imposition of a Lien
upon, any of its Assets or transferee or other liability upon IPSE.
5.14 Employment Matters.
5.14.1 Such Charter Party has complied in all material respects with
all applicable Legal Requirements relating to the employment of labor, including
the Worker Adjustment and Retraining Notification Act, 29 U.S.C. ss. 2101, et
seq. ("WARN"), continuation coverage requirements with respect to group health
plans and those relating to wages, hours, collective bargaining, unemployment
insurance, workers' compensation, equal employment opportunity, age, sex, race
and disability discrimination, immigration control and the payment and
withholding of Taxes.
5.14.2 There are no Liens against such Charter Party's Assets under
Section 412(n) of the Code or Sections 302(f) or 4068 of ERISA. At the Closing,
IPSE and its ERISA Affiliates will have no obligation to contribute to, or any
liability in respect of, (i) any employee benefit plan within the meaning of
Section 3(3) of ERISA, or (ii) any similar employment, severance or other
arrangement or policy (whether written or oral) providing for insurance coverage
(including self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, fringe benefits
or retirement benefits, or for profit sharing, deferred compensation, bonuses,
stock options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits, sponsored or maintained by
any Charter Party or any of their ERISA Affiliates, or to which any Charter
Party or any of their ERISA Affiliates was obligated to contribute. The Charter
Parties will not, in connection with the transactions contemplated by this
Agreement, cease to provide any group health plan coverage to their employees in
a manner which would cause IPSE or any of its ERISA Affiliates to be deemed a
successor employer of such Charter Party within the meaning of Proposed Treasury
Regulations Section 54.4980B-9 Q&A8(c). With respect to any multi-employer plan
within the meaning of Section 3(37) of ERISA, or any plan subject to Title IV of
ERISA, to which any Charter Party or any of their ERISA Affiliates is or ever
was obligated to contribute, (a) there has been no material "reportable event"
described in Sections 4043(c)(1), (2), (3), (5), (6), (7), (10), or (13) of
ERISA, (b) no "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or "withdrawal liability" (as determined under Section 4201 et seq. of
ERISA) has occurred, exists or is continuing with respect to any such plan other
than a multi-employer plan (as defined in Section 3(37) of ERISA), or, to the
Knowledge of Charter or any of its ERISA Affiliates, with respect to any such
plan which is a multi-employer plan (as defined in Section 3(37) of ERISA), (c)
no such plan has been terminated other than in accordance with ERISA or at a
time when such plan was not sufficiently funded, and (d) there has been no (i)
withdrawal by any Charter Party or any of their ERISA Affiliates that is a
substantial employer from a single-employer plan and that has two or more
contributing sponsors at least two of whom are not under common control, as
referred to in Section
IPSE/Charter Asset Exchange Agreement
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40
4063(b) of ERISA, or (ii) cessation by any Charter Party or any of their ERISA
Affiliates of operations at a facility causing more than 20% of plan
participants to be separated from employment, as referred to in Section 4062(e)
of ERISA. With respect to any plan maintained, sponsored by, or contributed to
by any Charter Party, which is intended to comply with the provisions of Section
401(k) of the Code, and from which any similar plan maintained or sponsored by
IPSE or any of its ERISA Affiliates accepts a plan-to-plan transfer under
Section 7.3.3, (I) such plan has received a favorable determination letter from
Internal Revenue Service, and no Charter Party or any of their ERISA Affiliates
has any Knowledge of any fact which could adversely affect the qualified status
of such plan, and (II) such plan has been administered and maintained in
material compliance with ERISA, the Code and all other applicable laws.
5.14.3 Except as set forth on Schedule 5.14, there are no collective
bargaining agreements applicable to any Person employed by such Charter Party
that renders services in connection with its Systems and such Charter Party has
no duty to bargain with any labor organization with respect to any such Person.
Except as set forth on Schedule 5.14, there are not pending any unfair labor
practice charges against such Charter Party, any demand for recognition or any
other request or demand from a labor organization for representative status with
respect to any Person employed by it that renders services in connection with
its Systems. Except as described on Schedule 5.14, such Charter Party has no
employment agreements, either written or oral, with any employee of its Systems
and none of the employment agreements listed on Schedule 5.14 requires such
Charter Party, or will require IPSE or any Affiliate of IPSE, to employ any
Person after the Closing.
5.15 Charter Systems Information.
5.15.1 Schedule 5.15.1 sets forth a materially true and accurate
description, on a System-by-System basis, of the following information relating
to such Charter Party's Systems as of December 31, 1998:
(a) the approximate number of aerial and underground miles of
plant included in the Charter Assets and served by each headend;
(b) the approximate number of single family homes and
residential multiple dwelling units passed by each such Charter System;
(c) the MHZ capacity and channel capacity of each headend; and
(d) the number of subscribers served by each such Charter
System and a description of the calculation methodology used by Charter to
calculate such subscribers.
IPSE/Charter Asset Exchange Agreement
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5.15.2 Schedule 5.15.2 sets forth a materially true and accurate
description of the following information relating to such Charter Party's
Systems as of the date of this Agreement:
(a) a description of the Basic Services, the Expanded Basic
Services, Pay TV and a la carte services available from each such Charter
System, and the rates charged by such Charter Party therefor, including all
rates, tariffs and other charges for cable television or other services provided
by each such Charter System;
(b) the stations and signals carried by each such Charter
System and the channel position of each such signal and station; and
(c) the cities, towns, villages, boroughs and counties served
by each such Charter System.
5.15.3 Each of such Charter Party's Systems is capable of providing
all channels, stations and signals reflected as being carried on such Charter
System on Schedule 5.15.2.
5.16 Taxpayer Identification Number. The U.S. Taxpayer Identification
Number for the Charter Parties are as follows:
Charter Communications, LLC 00-0000000
Charter Communications Properties, LLC 00-0000000
Marcus Cable Associates, L.L.C. 00-0000000
5.17 Finder and Brokers. Such Charter Party has not entered into any
Contract with any person which will result in the obligation of IPSE to pay any
finder's fees, brokerage or agent's commissions or other like payments
(collectively, "Agent's Fees") in connection with the negotiations leading to
this Agreement or the consummation of the transactions contemplated hereby.
5.18 Related Party Transactions. Set forth on Schedule 5.18 hereto, are
the Contracts, agreements, arrangements or understandings between such Charter
Party and any of its Affiliates and between such Charter Party and any Xxxxx
Affiliate included in or related to the Charter Assets.
6. IPSE'S REPRESENTATIONS AND WARRANTIES.
IPSE represents and warrants to the Charter Parties as of the date of this
Agreement and as of the Closing, as follows:
IPSE/Charter Asset Exchange Agreement
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6.1 Organization and Qualification of IPSE.
6.1.1 IPSE is a general partnership which has been duly formed under
the laws of the State of California. IPSE has all requisite power and authority
to own, lease and use the IPSE Assets owned, leased or used by it and to conduct
IPSE's Cable Business as it is currently being conducted.
6.1.2 InterMedia Capital Management, LLC, the managing general
partner of IPSE, is a limited liability company duly formed, validly existing,
and in good standing under the laws of the State of Delaware, and has all
requisite power and authority to own all of its assets and to conduct its
business as currently conducted. InterMedia Capital Management, LLC is duly
qualified to do business and in good standing under the laws of each
jurisdiction in which the nature of its activities or its ownership, lease or
use of its assets makes such qualification necessary.
6.2 Authority and Validity. IPSE has all requisite power and authority to
execute and deliver, and to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Transaction Documents to
which it is a party. The execution and delivery by IPSE of, the performance of
IPSE under, and the consummation by IPSE of the transactions contemplated by,
this Agreement and the Transaction Documents to which IPSE is a party have been
duly and validly authorized by all action by or on behalf of IPSE. This
Agreement has been, and when executed and delivered by IPSE the Transaction
Documents to which it is a party will be, duly and validly executed and
delivered by IPSE and the valid and binding obligations of IPSE, enforceable
against IPSE in accordance with their terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to the enforcement of creditors' rights
generally or by principles governing the availability of equitable remedies.
6.3 No Conflict; Required Consents. Except as set forth on Schedule 6.3,
and assuming all Charter Required Consents have been obtained and the expiration
or earlier termination of the waiting period under the HSR Act has occurred, the
execution and delivery by IPSE, the performance of IPSE under, and the
consummation by IPSE of the transactions contemplated by, this Agreement and the
Transaction Documents to which IPSE is a party do not and will not: (a) conflict
with or violate any provision of the organizational documents of IPSE; (b)
violate any provision of any Legal Requirement; (c) require any consent,
approval or authorization of, or filing of any certificate, notice, application,
report or other document with, any Governmental Authority or other Person; or
(d) (i) conflict with, violate, result in a breach of or constitute a default
under (without regard to requirements of notice, lapse of time or elections of
other Persons or any combination thereof), (ii) permit or result in the
termination, suspension or modification of, (iii) result in the acceleration of
(or give any
IPSE/Charter Asset Exchange Agreement
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Person the right to accelerate) the performance of IPSE under, or (iv) result in
the creation or imposition of any Lien under any IPSE Systems Contract, IPSE
Systems Franchise, IPSE Systems License, or other instrument evidencing any of
the IPSE Assets or by which IPSE or any of its assets is bound or affected,
except for purposes of clauses (c) and (d) such consents, approvals,
authorizations and filings that, if not obtained or made, would not, and such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have an adverse effect on any IPSE System, IPSE's Cable Business or IPSE, or on
the ability of IPSE to perform its obligations under this Agreement or the
Transaction Documents to which it is a party.
6.4 Assets.
6.4.1 IPSE has good and marketable title to (or, in the case of IPSE
Assets that are leased, valid leasehold interests in) the IPSE Assets. None of
the AT&T Affiliates has any right, title or interest in or to any of the IPSE
Assets. The IPSE Assets are free and clear of all Liens, except Permitted Liens
and rights of first refusal which will be waived at Closing by the Person
holding such rights. All of the Liens described on Schedule 6.4.1 (except for
those marked with an asterisk on Schedule 6.4.1) will be terminated, released
or, in the case of rights of first refusal (except for those listed on Schedule
6.4.1), waived, as appropriate at or prior to Closing. Except as described on
Schedule 1.46, the IPSE Tangible Personal Property, as an integrated system and
in its component parts, is in good operating condition and repair (ordinary wear
and tear and routine failures excepted) and is usable and adequate for the
operation of IPSE's Cable Business.
6.4.2 Except for items included in the IPSE Excluded Assets, the
IPSE Assets constitute substantially all the assets necessary (a) to conduct
IPSE's Cable Business as it is being conducted on the date of this Agreement and
in compliance with all applicable Legal Requirements, (b) to operate the IPSE
Systems as they are being operated on the date of this Agreement and in
compliance with all applicable Legal Requirements and (c) to perform all of
Charter's Assumed Obligations and Liabilities.
6.4.3 Except as described on Schedule 6.4.3, and other than direct
broadcast satellite and satellite master antenna television, with respect to
each area in which the IPSE Systems currently provide cable television service,
(i) no Person is operating a cable television system or other non-satellite MVPD
other than an IPSE System in such area; (ii) no local franchising authority has
awarded a cable television franchise in such area to any Person other than IPSE;
and (iii) to the Knowledge of IPSE, no MVPD has applied for a cable television
franchise to serve such area.
6.5 IPSE Systems Franchises, IPSE Systems Licenses, IPSE Systems
Contracts and IPSE Other Real Property Interests.
IPSE/Charter Asset Exchange Agreement
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6.5.1 Except as described on Schedules 1.38, 1.40, 1.43, 1.44 and
1.45, and except for the IPSE Excluded Assets, IPSE is not bound or affected by
any of the following that relate primarily or in whole to IPSE's Cable Business:
(a) leases of real property or capital leases of personal property; (b)
operating leases of personal property that are terminable upon more than 30 days
notice and that contemplate annual lease payments in excess of $20,000; (c)
franchises for the construction or operation of cable television systems or
System Contracts of substantially equivalent effect; (d) licenses,
authorizations, consents or permits of the FCC; (e) other licenses,
authorizations, consents or permits of any other Governmental Authority,
individually or in the aggregate, material to the IPSE Systems; (f) easements or
rights of access, individually or in the aggregate, material to the IPSE
Systems; (g) pole attachment agreements, underground conduit agreements,
crossing agreements, retransmission consent agreements, or bulk or commercial
service agreements, individually or in the aggregate, material to the IPSE
Systems; or (h) IPSE Systems Contracts other than those described in any other
clause of this Section 6.5.1 which contemplate payments by or to IPSE in any
12-month period exceeding $25,000 under any single contract or $100,000 in the
aggregate.
6.5.2 Complete and correct copies of the IPSE Systems Franchises and
IPSE Systems Licenses have been provided to Charter. Except as set forth on
Schedule 6.5.2, (a) the IPSE Systems Franchises contain all of the commitments
and obligations of IPSE to the applicable Governmental Authority granting such
Franchises with respect to the construction, ownership and operation of the IPSE
Systems, and (b) other than as set forth in the IPSE Systems Franchises, IPSE
has not made any commitment to any local franchising authority to make any
material expenditure or capital addition or betterment to any IPSE System or the
IPSE Assets that will not be fulfilled or satisfied prior to the Closing Time.
The IPSE Systems Franchises and IPSE Systems Licenses are currently in full
force and effect, are not in default and are valid under all applicable Legal
Requirements according to their terms. No event has occurred that, with notice
or lapse of time or both, would constitute a breach, violation or default by
IPSE, and to IPSE's Knowledge, no event has occurred that, with notice or lapse
of time or both, would constitute a breach, violation or default by any other
Person, of any material obligations under any such IPSE Systems Franchises or
IPSE Systems Licenses. Except for routine filings with Governmental Authorities
and as described on Schedule 6.5.2, there are no applications relating to any
IPSE Systems Franchise or IPSE Systems License pending before any Governmental
Authority which are material to any IPSE System or IPSE's Cable Business. Except
where a request for renewal has been timely filed under Section 626(a) of the
Cable Act, since December 31, 1998, no IPSE Systems Franchise or IPSE Systems
License has been surrendered by IPSE or has expired or otherwise terminated
without the issuance of a replacement IPSE Systems Franchise or IPSE Systems
License. There is no legal action, governmental proceeding or investigation
pending or, to IPSE's Knowledge, threatened to terminate, suspend or modify any
IPSE Systems Franchise or IPSE Systems License. Except as set forth on Schedule
6.5.2, IPSE is, or will be as of the Closing Date, in material compliance with
the terms and conditions of all the IPSE Systems Franchises and
IPSE/Charter Asset Exchange Agreement
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45
IPSE Systems Licenses and other applicable requirements of all Governmental
Authorities (including the FCC and the U.S. Copyright Office) relating to the
IPSE Systems Franchises and IPSE Systems Licenses, including all requirements
for notification, filing, reporting, posting and maintenance of logs and
records.
6.5.3 IPSE has delivered to Charter true and complete copies of all
IPSE Systems Contracts (including each Contract relating to IPSE Leased Property
and IPSE Other Real Property Interests), including any amendments thereto (or,
in the case of oral Contracts, true and complete written summaries thereof) and
each document evidencing IPSE's ownership of the IPSE Owned Property. Except as
described in Schedule 6.5.3, IPSE has fulfilled when due, or has taken all
action necessary to enable it to fulfill when due, all of its obligations under
each of its Contracts and, to the Knowledge of IPSE, there has not occurred any
default (without regard to requirements of notice, lapse of time, elections of
other Persons, or any combination thereof) by any other Person of any material
obligations under any of its Contracts or Real Property Interests.
6.6 Real Property. All the Assets consisting of IPSE Owned Property, IPSE
Leased Property and material IPSE Other Real Property Interests are described on
Schedules 1.38, 1.40 and 1.41. Except for ordinary wear and tear and routine
repairs and as set forth on Schedule 6.6, all of the improvements, leasehold
improvements and the premises of the IPSE Owned Property and the premises
demised under the leases and other documents evidencing the IPSE Leased Property
are in good condition and repair and are suitable for the purposes used. Each
parcel of IPSE Owned Property and each parcel of IPSE Leased Property and any
improvements thereon (a) has access to and over public streets or private
streets for which IPSE has a valid right of ingress and egress, (b) except as
set forth on Schedule 1.38 or 1.40, conforms in its current use and occupancy to
all material zoning requirements without reliance upon a variance issued by a
Governmental Authority or a classification of the parcel in question as a
nonconforming use, (c) conforms in all material respects in its current use to
all restrictive covenants, if any, or other Liens affecting all or part of such
parcel (of record, with respect to IPSE Owned Property, or of record or as set
forth in an agreement listed on Schedule 1.38 or 1.40, with respect to IPSE
Leased Property or IPSE Other Real Property Interests), and (d) is available for
immediate use in the conduct of the business or operations of the IPSE Systems.
There are no pending condemnation, expropriation, eminent domain or similar
proceedings of which IPSE has received notice or IPSE has Knowledge affecting,
in any material respect, all or any portion of the IPSE Owned Property, IPSE
Leased Property, or IPSE Other Real Property Interests. IPSE has good and
marketable title to each such parcel of real property included in the IPSE Owned
Property and in all buildings, structures and improvements thereon, in each case
free and clear of all Liens except for Permitted Liens.
6.7 Environmental.
IPSE/Charter Asset Exchange Agreement
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6.7.1 Except as described on Schedule 6.7, IPSE is in material
compliance with all Environmental Laws, insofar as they relate to its Owned
Property or Leased Property. Except as described on Schedule 6.7, IPSE has not
received any notice of, and has no Knowledge of, any alleged, actual, or
potential responsibility for, or any inquiry regarding, (i) any release or
threatened release of any Hazardous Substances from or on its Owned Property or
Leased Property, or (ii) any material violation of any Environmental Laws
associated with its Owned Property or Leased Property. Except as described on
Schedule 6.7, to IPSE's Knowledge, its own operations on its Other Real Property
Interests do not violate any Environmental Laws in any material respect, and
IPSE has received no notice of any such violation. Except as described on
Schedule 6.7, IPSE has not received any notice of, and has no Knowledge of
circumstances relating to, any past, present or future events, conditions,
circumstances, activities, practices or incidents (including the presence, use,
generation, manufacture, disposal, release or threatened release of any
Hazardous Substances from or on its Owned Property or Leased Property), which
could interfere with or prevent continued compliance, or which are reasonably
likely to give rise to any liability, based upon or related to the processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
Hazardous Substance from or attributable to its Owned Property or Leased
Property.
6.7.2 Except as described on Schedule 6.7, to IPSE's Knowledge, (a)
no aboveground or underground storage tanks are currently or have been located
on any IPSE Owned Property or IPSE Leased Property and (b) no IPSE Owned
Property or IPSE Leased Property has been used at any time as a gasoline service
station or any other facility for storing, pumping, dispensing or producing
gasoline or any other petroleum products or wastes.
6.7.3 Complete and correct copies of (a) all studies, reports,
surveys or other similar written materials in IPSE's possession or to which
IPSE, to its Knowledge, has access relating to the presence or alleged presence
of Hazardous Substances at, on, under or affecting the IPSE Owned Property or
IPSE Leased Property, (b) all notices (other than general notices made by
general publication) in IPSE's possession or to which IPSE, to its Knowledge,
has access that were received from any Governmental Authority having the power
to administer or enforce any Environmental Laws relating to current or past
ownership, use or operation of the IPSE Owned Property or IPSE Leased Property
or activities at the IPSE Owned Property or IPSE Leased Property and (c) all
notices and related materials in IPSE's possession or to which IPSE, to its
Knowledge, has access relating to any Litigation concerning any Environmental
Law to which IPSE is a party or written allegation by any private Third Party
concerning any Environmental Law and IPSE, have been provided to Charter (other
than those materials constituting attorney-client privileged communications).
IPSE/Charter Asset Exchange Agreement
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6.8 Compliance with Legal Requirements.
6.8.1 Except as set forth on Schedule 6.8, the operation of each
IPSE System as currently conducted does not violate or infringe any Legal
Requirement currently in effect in any material respect (other than Legal
Requirements described in Sections 6.7, 6.8.3 and 6.8.4, as to which the
representations and warranties set forth in those subsections will apply) or the
grounding requirements of the National Electrical Safety Code. Except as set
forth on Schedule 6.8, IPSE has not received any notice and IPSE has no
Knowledge of any material violation by it or any IPSE System of any Legal
Requirement applicable to the installation, ownership and operation of its
Systems as currently conducted, and knows of no basis for the allegation of any
such violation.
6.8.2 Except as set forth on Schedule 6.8, without limiting the
generality of the foregoing, since IPSE's acquisition of its Systems: IPSE has
submitted to the FCC all filings, including cable television registration
statements, annual reports and aeronautical frequency usage notices and paid all
regulatory fees, that are required under the rules and regulations of the FCC;
the operation of its Systems has been and is in material compliance with the
rules and regulations of the FCC, and IPSE has not received any notice from the
FCC of any violation of its rules and regulations; IPSE is and since 1986 (or
since its acquisition, if later) has been certified as in compliance with the
FCC's equal employment opportunity rules; its Systems are in material compliance
with all signal leakage criteria prescribed by the FCC; and for each relevant
semi-annual reporting period since its acquisition of an IPSE System, IPSE has
timely filed with the United States Copyright Office all required Statements of
Account in true and correct form, has paid when due all required copyright
royalty fee payments in correct amount, relating to its Systems' carriage of
television broadcast signals and is otherwise in material compliance with all
applicable rules and regulations of the Copyright Office. Except as set forth on
Schedule 6.8, IPSE has no Knowledge, with respect to any IPSE System acquired
since January 1, 1996, of any previous owner's failure to comply with the
copyright licensing requirements with respect to such System or any written
claim or inquiry from any Person which questions such System's failure to
comply. IPSE has delivered to Charter copies of: (i) all reports, filings and
correspondence made or filed by IPSE with the FCC or pursuant to the FCC rules
and regulations for the past year; and (ii) all reports, filings and
correspondence made or filed by IPSE with the Copyright Office or pursuant to
Copyright Office rules and regulations for the past three years. Except as set
forth on Schedule 6.8, (i) a request for renewal has been timely filed under
Section 626(a) of the Cable Act with the proper Governmental Authority with
respect to each Franchise expiring within 36 months after the date of this
Agreement; and (ii) IPSE has received no written notice from any Governmental
Authority that it has determined or intends to deny renewal of any IPSE Systems
Franchise.
6.8.3 Except as set forth on Schedule 6.8 and as otherwise provided
in this Section, IPSE has used commercially reasonable efforts to comply in all
material respects with
IPSE/Charter Asset Exchange Agreement
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the provisions of the 1984 Cable Act and the 1992 Cable Act pertaining to the
carriage of television broadcast signals, as such Legal Requirements relate to
the operation of its Systems. IPSE has complied in all material respects with
the must carry and retransmission consent provisions of the 1992 Cable Act,
including (i) duly and timely notifying "local commercial television stations"
of inadequate signal strength or increased copyright liability, if applicable,
(ii) duly and timely notifying non-commercial educational stations of the
location of its System's principal headend, (iii) duly and timely notifying
subscribers of changes in the channel alignment on its Systems, (iv) duly and
timely notifying "local commercial and non- commercial television stations" of
the broadcast signals carried on its Systems and their channel positions, (v)
maintaining the requisite public file identifying broadcast signal carriage,
(vi) carrying the broadcast signals after June 1, 1993, on its Systems for all
"local commercial television stations" which elected must carry status and, if
required, up to two "qualified low power stations" and (vii) obtaining
retransmission consents for all broadcast signals carried on its Systems after
October 5, 1993, except for the non-exempt signals carried pursuant to a must
carry election. No must carry complaint is pending against any IPSE System at
the FCC, nor, to IPSE's Knowledge, is any threatened except as set forth in
Schedule 6.8. IPSE has delivered to Charter copies of any pending petitions it
has on file with the FCC, including requests for market modifications or
petitions for special relief or any market modification requests or special
relief petitions affecting any IPSE System that have been served on IPSE. The
FCC has not issued any decision with respect to a must carry complaint finding
any IPSE System in violation of the must carry rules except as set forth on
Schedule 6.8.
6.8.4 IPSE has used commercially reasonable efforts to establish
rates charged and a la carte packages provided to subscribers, effective as of
September 1, 1993, that would be allowable under rules and regulations
promulgated by the FCC under the 1992 Cable Act, and any authoritative
interpretation thereof, whether or not such rates or packages were subject to
regulation at that date by any Governmental Authority, including any state
regulatory agency, local franchising authority and/or the FCC. Notwithstanding
the foregoing, IPSE makes no representation or warranty that either the rates
charged to subscribers or the a la carte packages provided would be allowable
under any rules and regulations of the FCC, or any authoritative interpretation
thereof, promulgated after the date of the Closing. IPSE has delivered to
Charter complete and correct copies of (i) the most recent FCC Rate Forms filed
by IPSE with the local franchising authority and/or the FCC and will deliver as
soon as available all FCC Rate Forms that are prepared with respect to the IPSE
Systems, (ii) all historical FCC Rate Forms with respect to any IPSE System in
which there is currently a rate issue pending, including any accounting order or
any rate order on appeal, (iii) copies of all complaints, petitions, answers,
responses and other filings made with or by any Governmental Authority in
connection with any rate orders issued by such Governmental Authority or any
appeal therefrom, and (iv) any documentation supporting an exemption from the
rate regulation provisions of the 1992 Cable Act claimed by IPSE with respect to
its Systems.
IPSE/Charter Asset Exchange Agreement
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Except as set forth on Schedule 6.8, IPSE has not made a Cost of Service
Election with respect to any of the IPSE Systems.
6.8.5 Except as set forth on Schedule 6.8, all necessary FAA
approvals have been obtained and all necessary FCC tower registrations have been
filed with respect to the height and location of towers used in connection with
the operation of the IPSE Systems, and such towers are being operated in
compliance in all material respects with applicable FCC and FAA rules. The
ownership, height (with and without appurtenances), location (address, latitude,
longitude and ground elevation), structure type and FCC call signs of each tower
used in connection with the operation of the IPSE Systems are correctly
described on Schedule 6.8. To the extent applicable, IPSE has delivered to
Charter true and correct copies of the FAA final determinations that are
available and FCC registrations for all such towers.
6.9 Intellectual Property. Except for Intellectual Property which
constitutes IPSE Excluded Assets and the Intellectual Property described on
Schedule 4.2(b), IPSE does not possess any Intellectual Property related to or
material to the operation of the IPSE Systems and IPSE is not a party to any
license or royalty agreement with respect to any such Intellectual Property,
except for licenses respecting program material or incidental to any Systems
Contract and obligations under the Copyright Act applicable to cable television
systems generally. To the Knowledge of IPSE, the IPSE Systems and IPSE's Cable
Business have been operated in such a manner so as not to violate or infringe
upon the rights, or give rise to any rightful claim of any Person for copyright,
trademark, service xxxx, patent or license infringement or the like.
6.10 Financial Statements. IPSE's statements of income for the years ended
December 31, 1997 and 1998, attached hereto as Schedule 6.10, are in accordance
with the books and records of the IPSE Systems, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby and, except as may be described therein,
present fairly the operating results of the IPSE Systems for the periods
indicated, subject only to standard year-end adjustments and the omission of
footnotes thereto.
6.11 Absence of Certain Changes or Events. Except as set forth on Schedule
6.11, since December 31, 1998, there has been no (i) material adverse change in,
nor has any event or events (other than any affecting the cable television
industry generally) occurred that, individually or in the aggregate, are
reasonably likely to result in a material adverse change in the IPSE Assets,
business, operations, condition (financial or otherwise) or results of
operations of the IPSE Systems, taken as a whole and (ii) material change in
accounting principles or practices with respect to the IPSE Systems or
revaluation by IPSE of the IPSE Assets for financial reporting, property tax or
other purposes. From December 31, 1998 to the date of this Agreement, IPSE's
Cable Business has been conducted only in the usual, regular and ordinary
course, except as disclosed on Schedule 6.11 and except where the
IPSE/Charter Asset Exchange Agreement
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failure to conduct business in such manner would not have a material adverse
effect on the IPSE Assets, IPSE's Cable Business, the operations, condition
(financial or otherwise) or results of operations of the IPSE Systems taken as a
whole or on the ability of IPSE to perform its obligations under this Agreement.
6.12 Litigation. Except as set forth on Schedule 6.12: (a) there is no
Litigation pending or, to IPSE's Knowledge, threatened against IPSE or any
Affiliate of IPSE which, if adversely determined, would (i) materially and
adversely affect the financial condition or operations of IPSE's Cable Business,
any of the IPSE Systems, the IPSE Assets or the ability of IPSE to perform its
obligations under this Agreement or (ii) result in the modification, revocation,
termination, suspension or other limitation of any of the IPSE Systems
Franchises, IPSE Systems Licenses, or IPSE Systems Contracts; and (b) there is
not in existence any Judgment requiring IPSE or any Affiliate of IPSE to take
any action of any kind with respect to the IPSE Assets or the operation of any
of the IPSE Systems, or to which IPSE (with respect to the IPSE Systems), any of
the IPSE Systems or the IPSE Assets are subject or by which they are bound or
affected, that has not been fully complied with by IPSE.
6.13 Tax Returns; Other Reports. IPSE has duly and timely filed in correct
form all federal, state, local and foreign Tax returns and other Tax reports
required to be filed by IPSE, and has timely paid all Taxes which have become
due and payable, whether or not so shown on any such return or report, the
failure of which to be filed or paid could affect or result in the imposition of
a Lien upon the IPSE Assets or create any transferee or other liability upon
Charter, except such amounts as are being contested diligently and in good faith
and are not in the aggregate material. Except as set forth on Schedule 6.13,
IPSE has not received any notice of, nor does IPSE have any Knowledge of, any
deficiency, assessment or audit, or proposed deficiency, assessment or audit
from any taxing Governmental Authority which could affect, or result in the
imposition of a Lien upon, any of the IPSE Assets or transferee or other
liability upon Charter.
6.14 Employment Matters.
6.14.1 IPSE has complied in all material respects with all
applicable Legal Requirements relating to the employment of labor, including
WARN, continuation coverage requirements with respect to group health plans and
those relating to wages, hours, collective bargaining, unemployment insurance,
workers' compensation, equal employment opportunity, age, sex, race and
disability discrimination, immigration control and the payment and withholding
of Taxes.
6.14.2 There are no Liens against the IPSE Assets under Section
412(n) of the Code or Sections 302(f) or 4068 of ERISA. At the Closing, Charter
and its ERISA Affiliates will have no obligation to contribute to, or any
liability in respect of, (i) any employee benefit plan within the meaning of
Section 3(3) of ERISA, or (ii) any similar employment, severance
IPSE/Charter Asset Exchange Agreement
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or other arrangement or policy (whether written or oral) providing for insurance
coverage (including self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
fringe benefits or retirement benefits, or for profit sharing, deferred
compensation, bonuses, stock options, stock appreciation or other forms of
incentive compensation or post-retirement insurance, compensation or benefits,
sponsored or maintained by IPSE or any of its ERISA Affiliates, or to which IPSE
or any of its ERISA Affiliates was obligated to contribute. IPSE will not, in
connection with the transactions contemplated by this Agreement, cease to
provide any group health plan coverage to their employees in a manner which
would cause any Charter Party or any of their ERISA Affiliates to be deemed a
successor employer of IPSE within the meaning of Proposed Treasury Regulations
Section 54.4980B-9 Q&A8(c). With respect to any multi-employer plan within the
meaning of Section 3(37) of ERISA, or any plan subject to Title IV of ERISA, to
which IPSE or any of its ERISA Affiliates is or ever was obligated to
contribute, (a) there has been no material "reportable event" described in
Sections 4043(c)(1), (2), (3), (5), (6), (7), (10), or (13) of ERISA, (b) no
"accumulated funding deficiency" (as defined in Section 302 of ERISA) or
"withdrawal liability" (as determined under Section 4201 et seq. of ERISA) has
occurred, exists or is continuing with respect to any such plan other than a
multi-employer plan (as defined in Section 3(37) of ERISA), or, to the Knowledge
of IPSE or any of its ERISA Affiliates, with respect to any such plan which is a
multi-employer plan (as defined in Section 3(37) of ERISA), (c) no such plan has
been terminated other than in accordance with ERISA or at a time when such plan
was not sufficiently funded, and (d) there has been no (i) withdrawal by IPSE or
any of its ERISA Affiliates that is a substantial employer from a single-
employer plan and that has two or more contributing sponsors at least two of
whom are not under common control, as referred to in Section 4063(b) of ERISA,
or (ii) cessation by IPSE or any of its ERISA Affiliates of operations at a
facility causing more than 20% of plan participants to be separated from
employment, as referred to in Section 4062(e) of ERISA. With respect to any plan
maintained, sponsored by, or contributed to by IPSE, which is intended to comply
with the provisions of Section 401(k) of the Code, and from which any similar
plan maintained or sponsored by any Charter Party or any of their ERISA
Affiliates accepts a plan-to-plan transfer under Section 7.3.3, (I) such plan
has received a favorable determination letter from Internal Revenue Service, and
neither IPSE nor any of its ERISA Affiliates has any Knowledge of any fact which
could adversely affect the qualified status of such plan, and (II) such plan has
been administered and maintained in material compliance with ERISA, the Code and
all other applicable laws.
6.14.3 Except as set forth on Schedule 6.14, there are no collective
bargaining agreements applicable to any Person employed by IPSE that renders
services in connection with the IPSE Systems and IPSE has no duty to bargain
with any labor organization with respect to any such Person. Except as set forth
on Schedule 6.14, there are not pending any unfair labor practice charges
against IPSE, any demand for recognition or any other request or demand from a
labor organization for representative status with respect to any Person employed
by IPSE that renders services in connection with the IPSE Systems. Except as
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described on Schedule 6.14, IPSE has no employment agreements, either written or
oral, with any employee of the IPSE Systems and none of the employment
agreements listed on Schedule 6.14 requires IPSE, or will require Charter or any
Affiliate of Charter, to employ any Person after the Closing.
6.15 IPSE Systems Information.
6.15.1 Schedule 6.15.1 sets forth a materially true and accurate
description, on a System-by-System basis, of the following information relating
to the IPSE Systems as of December 31, 1998:
(a) the approximate number of aerial and underground miles of
plant included in the IPSE Assets and served by each headend;
(b) the approximate number of single family homes and
residential multiple dwelling units passed by each IPSE System;
(c) the MHZ capacity and channel capacity of each headend; and
(d) the number of subscribers served by each IPSE System and a
description of the calculation methodology used by IPSE to calculate such
subscribers.
6.15.2 Schedule 6.15.2 sets forth a materially true and accurate
description of the following information relating to the IPSE Systems as of the
date of this Agreement:
(a) a description of the Basic Services, the Expanded Basic
Services, Pay TV and a la carte services available from each IPSE System, and
the rates charged by IPSE therefor, including all rates, tariffs and other
charges for cable television or other services provided by each IPSE System;
(b) the stations and signals carried by each IPSE System and
the channel position of each such signal and station; and
(c) the cities, towns, villages, boroughs and counties served
by each IPSE System.
6.15.3 Each IPSE System is capable of providing all channels,
stations and signals reflected as being carried on such IPSE System on Schedule
6.15.2.
6.16 Taxpayer Identification Number. The U.S. Taxpayer Identification
Number for IPSE is 00-0000000.
IPSE/Charter Asset Exchange Agreement
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6.17 Finder and Brokers. IPSE has not entered into any Contract with any
person which will result in the obligation of Charter to pay any Agent's Fees in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
6.18 Related Party Transactions. Set forth on Schedule 6.18 hereto, are
the Contracts, agreements, arrangements or understandings between IPSE and any
of its Affiliates and between IPSE and any AT&T Affiliates included in or
related to the IPSE Assets.
7. ADDITIONAL COVENANTS.
7.1 Access to Premises and Records. Between the date of this Agreement and
the Closing Date, each Party (a) will give to the other and its counsel,
accountants and other representatives reasonable access during normal business
hours and upon reasonable advance notice to all the premises and books and
records of its Cable Business and to all of its Assets and the personnel engaged
in the management or operation of its Systems; and (b) will furnish to the other
and such representatives all such documents, financial information and other
information regarding its Cable Business and its Assets as the other from time
to time reasonably may request; provided that no investigation will affect or
limit the scope of any of the representations, warranties, covenants and
indemnities of the other in this Agreement or in any Transaction Document or
limit liability for any breach of any of the foregoing.
7.2 Continuity and Maintenance of Operations, Certain Deliveries and
Notice. Except as set forth on Schedule 7.2, in the 1999 operating budgets set
forth on Schedule 7.2-A, with respect to IPSE, and on Schedule 7.2-B, with
respect to Charter, or as the other Party may otherwise consent in writing,
between the date of this Agreement and the Closing, each of IPSE with respect to
IPSE's Cable Business, the IPSE Systems and the IPSE Assets, and each Charter
Party with respect to its Cable Business, Systems and Assets:
7.2.1 will conduct its Cable Business in good faith and operate its
Systems only in the usual, regular and ordinary course (including making routine
capital expenditures and operating substantially in accordance with the 1999
capital and operating budgets with respect to each such System (copies of which
are set forth on Schedule 7.2-A, with respect to IPSE, and on Schedule 7.2-B,
with respect to Charter), completing ongoing and planned line extensions,
placing conduit or cable in new developments, fulfilling installation requests,
completing disconnection work orders and disconnecting and discontinuing service
to customers whose accounts are delinquent) and, to the extent consistent with
such conduct and operation, use its commercially reasonable efforts to (a)
preserve its current business intact in all material respects, including
preserving existing relationships with franchising authorities, suppliers,
customers and others having business dealings with its Systems, (b) keep
available the services of its employees and agents providing services in
connection with its Cable Business, (c) continue budgeted marketing, advertising
and promotional expenditures with
IPSE/Charter Asset Exchange Agreement
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respect to its Cable Business, (d) enter into written agreements with respect to
all multiple dwelling unit and bulk billed accounts having greater than 200
individual units, and (e) operate its Cable Business in material compliance with
all Legal Requirements;
7.2.2 will maintain its Assets in good operating repair, order and
condition, ordinary wear and tear excepted; will maintain equipment and
inventory for its Systems at normal historical levels consistent with its past
practices (as adjusted to account for abnormally high inventory levels related
to periodic rebuild activity); will maintain in full force and effect policies
of insurance with respect to its Cable Business in such amounts and with respect
to such risks as are currently in effect for its Systems; and will maintain its
books, records and accounts with respect to its Assets and the operation of its
Systems in the usual, regular and ordinary manner on a basis consistent with its
past practices;
7.2.3 will not, outside the ordinary course of business or to the
extent inconsistent with past practice or the 1999 operating budget included in
Schedule 7.2-A (with respect to IPSE) or Schedule 7.2-B (with respect to
Charter), as applicable, (a) modify, terminate, renew, suspend or abrogate any
System Contract (other than retransmission consent System Contracts, System
Contracts evidencing Leased Property or Other Real Property Interests and lease
agreements for Tangible Personal Property); (b) modify, terminate, renew,
suspend or abrogate any retransmission consent System Contract, System
Franchise, System Contract evidencing Leased Property or Other Real Property
Interests, lease agreements for Tangible Personal Property or System License
except for renewals (other than renewals of System Franchises) on terms that are
not materially different from those which currently exist and renewals of System
Franchises as otherwise required or permitted under this Agreement; (c) engage
in any marketing, subscriber installation, collection or disconnection
practices; (d) make any Cost of Service Election; (e) other than as set forth on
Schedule 7.2, enter into any agreement with or commitment to any competitive
access provider and/or local exchange company or any internet access or on-line
services provider with respect to the use or lease of any of its Assets; (f)
sell, transfer or assign any portion of its Assets other than sales in the
ordinary course of business or permit the creation of a Lien (other than
Permitted Liens) on any of its Assets; (g) take any actions that would cause the
transactions contemplated hereby to fail to qualify as a like-kind exchange
under Section 1031 of the Code; (h) decrease the rate charged for any level of
Basic Services, Expanded Basic Services or any Pay TV or, except as expressly
permitted by Schedule 7.2, add, delete, retier or repackage any analog
programming services, in each case except to the extent required under the 1992
Cable Act or any other Legal Requirement; provided, however, that if rates are
decreased in order to so comply, the Party decreasing the rates will provide the
other with copies of any FCC forms (even if not filed with any Governmental
Authority) that such Party used to determine that the new rates were required;
(i) convert any of its Systems to any billing system or otherwise change billing
arrangements for any of its Systems; (j) enter into any Contract of any kind
relating to the Cable Business to be assumed by the other Party hereunder that
individually or in the aggregate call for payments over its terms or otherwise
involving expenditures in excess of
IPSE/Charter Asset Exchange Agreement
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$100,000, except for the renewal of Contracts that would, but for such renewal,
terminate in accordance with their terms prior to Closing; (k) except pursuant
to or required by plans, agreements or arrangements already in effect on the
date hereof, make any material increase in compensation or benefits payable or
to become payable to employees or make any material change in personnel
policies; (l) take any action with respect to the grant or increase of severance
or termination pay payable after the Closing Date; (m) engage in any material
transaction with respect to its Cable Business; or (n) agree to do any of the
foregoing;
7.2.4 will promptly deliver to the other (i) true and complete
copies of all monthly statements of income and such other information with
respect to its Systems or the operation of its Cable Business in a format
consistent with the form of report attached hereto as Schedule 7.2.4 for the
period from January 1, 1999, through the Closing, and if the Closing occurs as
of the end of a month, as soon as practicable after Closing and (ii) such
financial information reasonably requested by such other party in connection
with the qualification, reporting and record-keeping requirements under Section
1031 of the Code (and the revenue regulations thereunder) with respect to the
Exchange;
7.2.5 will give or cause to be given to the other, as soon as
reasonably possible but in any event within five Business Days after the date of
submission to the appropriate Governmental Authority, copies of all FCC Forms
1200, 1205, 1210, 1215, 1220, 1225, 1235 and 1240 or any other FCC forms
required to be filed with any Governmental Authority under the 1992 Cable Act
with respect to rates and prepared with respect to any of its Systems;
7.2.6 will duly and timely file a valid notice of renewal under
Section 626 of the Cable Act with the appropriate Governmental Authority with
respect to any System Franchise that will expire within 36 months after any date
between the date of the Agreement and the Closing Date;
7.2.7 will promptly notify the other of any fact, circumstance,
event or action by it or otherwise (a) which, if known at the date of this
Agreement, would have been required to be disclosed by it in or pursuant to this
Agreement or (b) the existence, occurrence or taking of which would result in
the condition of IPSE in Section 8.2.1 (with respect to the representations and
warranties of the Charter Parties) or the condition of the Charter Parties in
Section 8.1.1 (with respect to the representations and warranties of IPSE) not
being satisfied at any time prior to or on the Closing, and, with respect to
clause (b), use its commercially reasonable efforts to remedy the same and to
satisfy such condition to the other Party's obligation to consummate the
transactions contemplated by this Agreement;
7.2.8 will use its commercially reasonable efforts to challenge and
contest any Litigation brought against or otherwise involving such Party that
could result in the imposition of Legal Requirements that could cause the
conditions to the Closing not to be satisfied; and
IPSE/Charter Asset Exchange Agreement
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7.2.9 will cause its appropriate Affiliates to be bound by and
comply with the provisions of this Section 7.2 to the extent such Affiliates
own, operate or manage any of the IPSE Assets, IPSE Systems, Charter Assets or
Charter Systems, as the case may be.
7.3 Employees.
7.3.1 Except as set forth in this Section 7.3.1, each Party may, but
shall have no obligation to employ or offer employment to, any employee of the
other Party's Cable Business. Within 30 days after the date of execution of this
Agreement, each Party shall provide to the other a list of all employees of its
Systems (collectively for each Party, its "System Employees") as of a recent
date, showing the original hire date, the then-current positions and rates of
compensation and whether the employee is subject to an employment agreement, a
collective bargaining agreement or represented by a labor organization. Within
60 days after the date of execution of this Agreement (but in no event less than
30 days after receipt of such list), or such other date as the Parties may
agree, the Party receiving such list will provide to the other in writing a list
of the other's System Employees such Party or its Affiliates will employ
following the Closing, subject only to the evaluations permitted by this
Section. Each Party agrees, and shall cause its appropriate Affiliates, to
cooperate in all reasonable respects with the other Party to allow the other
Party or its Affiliates to evaluate its System Employees to make hiring
decisions. In this regard, each Party shall have the opportunity to make such
appropriate prehire investigation of each of such other Party's System
Employees, as it deems necessary, including, subject to obtaining the consent of
such System Employee, the right to review personnel files and conduct background
checks and the right to interview such employees during normal working hours so
long as such interviews are conducted after notice to the other Party and do not
unreasonably interfere with the other Party's operations. Each Party will use
its good faith efforts to obtain the consent of each of its System Employees to
allow the other Party to review personnel files and to conduct background checks
in connection with the foregoing. Each Party or its Affiliates may, if it
wishes, condition any offer of employment upon the employee's passing a
pre-placement physical examination (including drug screening test) and the
completion of a satisfactory background check. The Party requesting such
examination shall bear the expense of such examination but the other Party
shall, upon reasonable notice, cooperate in the scheduling of such examinations
so long as the examinations do not unreasonably interfere with the other Party's
operations. As of the Closing Date, each Party shall have no obligation to the
other Party, its Affiliates or to the other Party's employees, with regard to
any employee it has determined not to hire. Notwithstanding any of the
foregoing, each Party agrees not to solicit for employment, without the written
consent of the other, any employee listed on Schedule 7.3 or any other employee
of the other Party whose position is System manager or higher.
7.3.2 Each Party, or its appropriate Affiliate, will pay to all of
its System Employees all compensation, including salaries, commissions, bonuses,
deferred
IPSE/Charter Asset Exchange Agreement
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compensation, severance (to the extent applicable), insurance, vacation (except
for accrued vacation time (not to exceed four weeks) and sick time (not to
exceed 10 days) included in the calculation of such Party's Adjusted Value under
the Common Agreement), and other compensation or benefits to which they are
entitled for periods prior to the Closing, including all amounts, if any,
payable on account of the termination of their employment.
7.3.3 Each Party, or its appropriate Affiliate, will be responsible
for maintenance and distribution of benefits accrued under any employee benefit
plan (as defined in ERISA) maintained by such Party, or its appropriate
Affiliate, pursuant to the provisions of such plan and any Legal Requirements.
Neither Party will assume any obligation or liability for any such accrued
benefits or any fiduciary or administrative responsibility to account for or
dispose of any such accrued benefits under any employee benefit plans maintained
by the other Party or any Affiliate. In the event that a transferor Party
determines that the transactions contemplated by this Agreement will not permit
a distribution to be made to a Hired Employee (as defined below) from the
transferor Party's tax qualified plan in accordance with Section 401(k)(10) of
the Code then the other Party may accept a plan-to-plan transfer of Hired
Employees' plan benefits to its own tax qualified plan. If there is no
plan-to-plan transfer, in order to permit a transferor Party, or its appropriate
Affiliate, to make distributions to any former System Employee of such Party who
becomes a Hired Employee of the other Party of the balance of such employee's
401(k) account in the transferor Party's or its Affiliate's tax qualified plan,
if any, as soon as legally permitted, each transferee Party shall notify the
other Party of the date of termination of such employee's employment with the
transferee Party for any reason.
7.3.4 All claims and obligations under, pursuant to or in connection
with any welfare, medical, insurance, disability or other employee benefit plans
of a Party or any Affiliate or arising under any Legal Requirement affecting
employees of such Party or any Affiliate incurred on or before the Closing Date
or resulting from or arising from events or occurrences occurring or commencing
on or before the Closing Date will remain the responsibility of such Party, or
the appropriate Affiliate, whether or not such employees are hired by the other
Party as of or after the Closing. Neither Party will have or assume any
obligation or liability under or in connection with any such plan of the other
Party or any Affiliate of the other Party.
7.3.5 Each Party, or its appropriate Affiliate, will remain solely
responsible for, and will indemnify and hold harmless the other from and against
all Losses arising from or with respect to, all salaries and all severance,
vacation (except for accrued vacation time and sick time included in the
calculation of such Party's Adjusted Value under the Common Agreement), medical,
holiday, continuation coverage and other compensation or benefits to which its
employees may be entitled, whether or not such employees may be hired by the
other Party or any Affiliate of the other Party, as a result of their employment
by such Party or any Affiliate of such Party on or prior to the Closing Date,
the termination of their employment on
IPSE/Charter Asset Exchange Agreement
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or prior to the Closing Date, the consummation of the transactions contemplated
hereby or pursuant to any applicable Legal Requirement or otherwise relating to
their employment prior to the Closing Date. Any liability under WARN with regard
to any employee terminated on or prior to the Closing Date, or not hired by the
other Party on or after the Closing Date, shall, as a matter of contract between
the Parties, be the responsibility of the Party or its Affiliates by which the
employee was employed prior to the Closing Date. Each Party and its Affiliates
shall cooperate with the other Party and its Affiliates, if requested, in the
giving of WARN notices on behalf of the other.
7.3.6 Notwithstanding anything to the contrary herein, each Party
shall:
(a) credit each System Employee of the other Party who is
offered on or prior to the Closing employment by such Party and becomes an
employee of such Party after the Closing Date (a "Hired Employee") the amount of
vacation time (to a maximum of four weeks) and sick time (to a maximum of 10
days) accrued by him or her as a System Employee of the transferor Party through
and including the Closing Date to the extent the transferor Party's System Value
is decreased pursuant to Section 2.2(c)(ii) of the Common Agreement in the case
of IPSE System Employees who become employees of any Charter Party or its
Affiliates and Section 2.2(c)(ii) of the Common Agreement in the case of Charter
System Employees who become employees of IPSE or its Affiliates, provided,
however, that if any Hired Employee has accrued vacation time and/or sick time
in excess of four weeks or 10 days, respectively, then the transferor Party
shall, and shall cause its appropriate Affiliate to, pay to such employee the
amount of such excess and the transferee Party shall not assume any liability or
obligation in respect of such excess;
(b) permit each Hired Employee to participate in such Party's
employee benefit plans to the same extent as similarly situated employees of
such Party and their dependents are permitted to participate;
(c) give each Hired Employee credit for such employee's past
service with the other Party and its Affiliates as of the Closing Date
(including past service with any prior owner or operator of the other Party's
Systems or Cable Business) for purposes of eligibility and vesting under such
Party's employee benefit and other plans to the same extent as other similarly
situated employees of such Party;
(d) not subject any Hired Employee to any waiting periods or
limitations on benefits for pre-existing conditions under such Party's employee
benefit plans, including any group health and disability plans, except to the
extent such employees were subject to such limitations under the employee
benefit plans of such other Party or any Affiliate of such other Party; and
IPSE/Charter Asset Exchange Agreement
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(e) credit each Hired Employee under any group health plan for
any deductible amount previously met by such Hired Employee as of the Closing
Date under any of the group health plans of the transferor Party or any of its
Affiliates.
7.3.7 If a transferee Party discharges any Hired Employee without
cause within one hundred twenty days after Closing, then such transferee Party
shall pay severance benefits to such Hired Employee in accordance with such
transferor Party's severance benefit plan. For purposes of this Section 7.3.7,
"cause" shall have the meaning set forth in the transferee Party's employment
policies, procedures or agreements applicable to such transferee Party's
employees who are situated similarly to the discharged Hired Employee.
7.3.8 If a transferor Party has, or acquires, a duty to bargain with
any labor organization, then such transferor Party will (i) give prompt written
notice of such development to the other Party, including notice of the date and
place of any negotiating sessions as they are planned or contemplated and permit
the other Party to have a representative present at all negotiating sessions
with such labor organization and at all meetings preparatory thereto (including
making the transferee Party's representative a representative of the transferor
Party's delegation if required by the labor organization) and (ii) not, without
the transferee Party's written consent, enter into any Contract with such labor
organization that purports to bind the transferee Party, including any successor
clause or other clause which would have this purpose or effect. Each Party (as a
transferor Party) acknowledges and agrees that the other Party has not agreed to
be bound, and will not be bound, without an explicit assumption of such
liability or responsibility by the transferee Party, by any provision of any
collective bargaining agreement or similar Contract with any labor organization
to which the transferor Party or any of its Affiliates is or may become bound.
7.3.9 Nothing in this Section 7.3 or elsewhere in this Agreement
shall be deemed to make any employee of either Party a third party beneficiary
of this Agreement.
7.3.10 Notwithstanding any other provision of this Agreement, in
respect of wages paid with respect to the 1999 calendar year to employees of
Charter who after the Closing become employees of IPSE, or vice versa, IPSE and
Charter agree to comply, and to cause their respective affiliates to comply,
with the alternative procedures set forth in Section 5 of Revenue Procedure
96-60 and shall cooperate, and shall cause their respective affiliates to
cooperate, with each other in complying with such procedures.
7.4 Leased Vehicles; Other Capital Leases. Except for leases described in
Schedule 4.2(b) (with respect to IPSE Tangible Personal Property) or Schedule
4.4(b) (with respect to Charter Tangible Personal Property), each Party will pay
the remaining balances on any leases for vehicles or capital leases included in
its Tangible Personal Property and will
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deliver title to such vehicles and other Tangible Personal Property, free and
clear of all Liens, to the other Party at the Closing.
7.5 Required Consents; Franchise Renewal.
7.5.1 Each Party will use its commercially reasonable efforts to (i)
obtain in writing as promptly as possible and at its expense, all of the
Required Consents and any other consent, authorization or approval required to
be obtained by such Party in connection with the transactions contemplated by
this Agreement, and deliver to the other Party copies of such Required Consents
and such other consents, authorizations or approvals promptly after they are
obtained by such Party and (ii) give any required written notice in connection
with the transactions; provided, that each Party will afford the other Party the
opportunity to review, approve and revise the form of letter or application
proposed to request the Required Consent or form of written notice prior to
delivery to the Third Party or the Affiliate of a Party whose consent is sought
or to whom such notification is required. All documents delivered or filed with
any Governmental Authority or any Person by or on behalf of such Party pursuant
to this Section 7.5.1, when so delivered or filed, will be correct, current and
complete in all material respects. Each Party will cooperate with the other
Party to obtain all Required Consents and no Party shall intentionally take any
action or steps that would prejudice or jeopardize the obtaining of any Required
Consent. No Party will accept or agree or accede to any modifications or
amendments to, or the imposition of any condition to the transfer of, any of the
System Franchises, System Licenses or System Contracts of its Cable Business
that are not acceptable to the other Party. Notwithstanding the foregoing, as
soon as practicable after the date of this Agreement (and in no event more than
15 Business Days hereafter), each Party will cooperate with each other to
complete, execute and deliver, or cause to be completed, executed and delivered,
to the appropriate Governmental Authority, a FCC Form 394 with respect to each
System Franchise other than any such Governmental Authority that the Parties
have agreed will not initially receive FCC Form 394; provided, that if either
Party subsequently requests that FCC Form 394 be completed, executed and
delivered to any appropriate Governmental Authority that did not initially
receive a FCC Form 394 for any System Franchise, then the Parties will cooperate
to complete, execute and deliver a FCC Form 394 to such Governmental Authority
as soon as practicable but in any event within 15 Business Days after a Party
has made such request. Without the prior consent of the other Party, neither
Party shall agree with any Governmental Authority to extend or to toll the time
limits applicable to such Governmental Authority's consideration of any FCC Form
394 filed with such Governmental Authority.
7.5.2 Each Party will use commercially reasonable efforts to obtain
and cooperate with the other Party to obtain a renewal or extension of any
System Franchise (for a period expiring no earlier than three years after the
Closing Date) for which a valid notice of renewal pursuant to the formal renewal
procedures established by Section 626 of the Cable Act has not been timely
delivered to the appropriate Governmental Authority and no written
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confirmation has been received from such Governmental Authority that the
procedures established by Section 626 nonetheless will be applicable with
respect to the renewal or extension of such System Franchise.
7.5.3 Notwithstanding the provisions of Section 7.5.1, no Party will
have any further obligation to obtain Required Consents: (a) with respect to
license agreements relating to pole attachments where the licensing authority
will not consent to an assignment of such license agreement but requires that
the other Party enter into a new agreement with such licensing authority, in
which case the other Party shall use its commercially reasonable efforts to
enter into such agreement prior to Closing or as soon as practicable thereafter
and such Party will cooperate with and assist the other Party in obtaining such
agreements; (b) for any business radio license or any private operational fixed
service (POFS) microwave license which such Party reasonably expects can be
obtained within 120 days after the Closing and so long as a conditional
temporary authorization (for a business radio license) or a special temporary
authorization (for a POFS license) is obtained by the other Party under FCC
rules with respect thereto; (c) with respect to Contracts evidencing Leased
Property, if, with the consent of the other Party, such Party obtains and makes
operational prior to Closing substitute Leased Property that is reasonably
satisfactory to the other Party; (d) with respect to Contracts evidencing leased
Tangible Personal Property that is material to its Cable Business, if, with the
consent of the other Party, such Party obtains and makes operational prior to
Closing substitute Tangible Personal Property that is reasonably satisfactory to
the other Party; and (e) with respect to Contracts which are not identified with
an asterisk (*) on Schedule 5.3 or 6.3, if IPSE, with respect to Contracts
relating to IPSE Systems, or Charter, with respect to Contracts relating to
Charter Systems, uses its commercially reasonable efforts to obtain the Required
Consent of the other party to such Contract but fails to obtain such consent on
or prior to Closing.
7.5.4 If and to the extent that IPSE and the Charter Parties, or any
of them, fails to obtain all Required Consents identified with an asterisk (*)
on Schedule 5.3 (except Required Consents for the transfer of Systems Franchises
which shall be governed by Section 7.5.5) on or prior to the Closing (whether or
not Charter or IPSE shall have waived satisfaction of the condition to Closing
set forth in Section 8.1.5 or Section 8.2.5, respectively), subsequent to the
Closing, each of IPSE with respect to its Systems and Assets and the Charter
Parties with respect to their Systems and Assets will continue to use
commercially reasonable efforts to obtain in writing as promptly as possible
such Required Consents and will deliver copies of the same, reasonably
satisfactory in form and substance, to the other. The obligations set forth in
this Section will survive the Closing and will not be merged in the consummation
of the transactions contemplated hereby.
7.5.5 If less than all of the Required Consents for the transfer of
Systems Franchises are obtained as of the Closing Date, then subject to the
conditions set forth in Sections 4.1(c) and 4.2(d) of the Common Agreement the
following will occur:
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(a) With respect to each IPSE Systems Franchise for which an
IPSE Required Consent has not been obtained as of the Closing Date (including
any IPSE Assets that are located in the franchise area for such franchise or
relate exclusively to such franchise, an "IPSE Retained Franchise"), the parties
will negotiate in good faith to reach agreement on a Charter Systems Franchise
(including any Charter Assets that are located in the franchise area for such
franchise or relate exclusively to such franchise, a "Charter Matching
Franchise") that is to the greatest extent possible, like kind to such IPSE
Retained Franchise for purposes of Section 1031 of the Code and the applicable
exchange. A Charter Matching Franchise may also be a Charter Retained Franchise.
For purposes of this Section 7.5.5, a "Retained Franchise" means either an IPSE
Retained Franchise or a Charter Retained Franchise or both, as the context
requires, and a "Matching Franchise" means either an IPSE Matching Franchise or
a Charter Matching Franchise or both, as the context requires.
(b) With respect to each Charter Systems Franchise for which a
Charter Required Consent has not been obtained as of the Closing Date (including
any Charter Assets that are located in the franchise area for such franchise or
relate exclusively to such franchise, a "Charter Retained Franchise"), the
parties will negotiate in good faith to reach agreement on an IPSE Systems
Franchise (including any IPSE Assets that are located in the franchise area for
such franchise or relate exclusively to such franchise, a "IPSE Matching
Franchise") that is to the greatest extent possible, like kind to such Charter
Retained Franchise for purposes of Section 1031 of the Code and the applicable
exchange. An IPSE Matching Franchise may also be an IPSE Retained Franchise.
(c) The parties shall negotiate in good faith to reach
agreement on one or more operating agreements pursuant to which the intended
transferee of each Retained Franchise and Matching Franchise will operate such
Retained Franchise and Matching Franchise to the extent not prohibited under the
terms thereof, and for compensation as may be agreed upon, which operating
agreements shall also contain any required signal sharing arrangements that the
parties, each acting in good faith, may determine to be necessary (the
"Operating Agreements").
(d) At the Closing, the Charter Parties and IPSE shall
transfer, convey and assign (the "Primary Transfer") all of the IPSE System
Assets other than any IPSE Retained Franchises and IPSE Matching Franchises and
all of the Charter System Assets other than any Charter Retained Franchises and
Charter Matching Franchises.
(e) Following the Closing of the Primary Transfer, the parties
will continue to use commercially reasonable efforts to obtain on an expedited
basis the Required Consents for all IPSE Retained Franchises and Charter
Retained Franchises. The Operating Agreements will contain mutually acceptable
terms regarding the post-Closing exchange or transfer (a "Subsequent Transfer")
of the Retained Franchises and Matching Franchises after
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the receipt or failure to receive the Required Consents applicable to such
Retained Franchises and Matching Franchises.
(f) All references in this Agreement to the Closing and the
Closing Date will mean the Closing and Closing Date of the Primary Transfer
except as specifically provided otherwise in this Section 7.5.5(f). Without
limiting the foregoing, all representations and warranties (except as to those
Required Consents that have not been obtained) made in connection with the
Retained Franchises and the Matching Franchises will be made as of the Closing
Date rather than the date of the Subsequent Transfer, the other covenants in
Article 7 will not apply to the Retained Franchises or the Matching Franchises
following the Closing Date, and the Survival Period applicable under Article 11
for all such representations, warranties and covenants will accrue from the
Closing Date; provided, that the parties will negotiate in good faith to include
appropriate covenants in the Operating Agreements that will apply to the
Retained Franchises and the Matching Franchises following Closing. The closing
conditions in Article 8 will not apply to any Retained Franchise or Matching
Franchise transfer; provided, that the parties will negotiate in good faith to
include appropriate conditions to the later transfer of the Retained Franchises
and the Matching Franchises in the Operating Agreements. Notwithstanding the
foregoing, the adjustments provided for in Article 3 will be made as of the
Closing Date for both the Retained Franchises and the Matching Franchises.
(g) If the provisions of this Section 7.5.5 become operative,
the parties agree to use commercially reasonable efforts and act in good faith
in taking such actions and negotiating such additional provisions or other
agreements, including amendments to this Agreement, as may be necessary or
appropriate to carry out the intent of this Section 7.5.5, including keeping
franchise transfers effective.
7.6 Title Commitments and Surveys. Each Party will have the option to
obtain, at its own expense, (i) commitments of title insurance ("Title
Commitments") issued by a nationally recognized title insurance company selected
by the requesting party (the "Title Company") and containing policy limits and
other terms reasonably acceptable to the requesting party, and photocopies of
all recorded items described as exceptions therein committing to insure (A) fee
title in the requesting party to each parcel of IPSE Owned Property or Charter
Owned Property, as the case may be, and (B) a leasehold interest in the
requesting party in each parcel of IPSE Leased Property or Charter Leased
Property, as the case may be, that is the site of a System headend or tower, by
American Land Title Association ("ALTA") (1992) owner's or lessee's policies of
title insurance, and (ii) current ALTA as-built surveys (in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly established
and adopted by ALTA and the American Congress on Surveying and Mapping in 1992)
of each such parcel of IPSE or Charter Owned Property or IPSE or Charter Leased
Property with monuments placed at all major corners of the property boundary
unless already marked and showing the location and identification by recorded
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instrument number of all easements or rights-of-way burdening or benefiting the
property in question and all other documents and matters referenced as
exceptions on the Title Commitment, the location of all apparent easements and
rights-of-way, flood zone designation, setback lines, if applicable, the
location of all substantial visible improvements on such property and the
location of all adjoining streets and indication of access to a public way such
as curb cuts and driveways, in such form as is reasonably satisfactory to the
requesting party and as is necessary to obtain the title insurance to be issued
pursuant to the Title Commitments with the standard printed exceptions relating
to survey matters deleted (the "Surveys"), certified to the parties and the
Title Company issuing a Title Commitment. If the requesting party notifies the
other party within 20 days of this Agreement or, if later, of its receipt of
both the Title Commitments and the Surveys of any Lien (other than a Permitted
Lien) or other matter affecting title to IPSE or Charter Owned Property or IPSE
or Charter Leased Property of the other which renders (or presents a material
risk of rendering) title to any parcel of IPSE or Charter Owned Property not
good and marketable or prevents or materially interferes with (or presents a
material risk of preventing or interfering with) the use of any parcel of IPSE
or Charter Owned Property or IPSE or Charter Leased Property for the purposes
for which it is currently used or intended to be used by such Party (each a
"Title Defect"), such party will exercise commercially reasonable efforts to
remove or, with the consent of the requesting party, cause the Title Company to
commit to insure over, each such Title Defect prior to the Closing.
7.7 HSR Notification. As soon as practicable after the execution of this
Agreement, but in any event no later than 30 days after such execution, the
Charter Parties and IPSE will each complete and file, or cause to be completed
and filed at its own cost and expense, any notification and report required to
be filed under the HSR Act with respect to the transactions contemplated by this
Agreement and each such filing shall request early termination of the waiting
period imposed by the HSR Act. The Parties shall use their respective
commercially reasonable efforts to respond as promptly as reasonably practicable
to any inquiries received from the Federal Trade Commission (the "FTC") and the
Antitrust Division for additional information or documentation and to respond as
promptly as reasonably practicable to all inquiries and requests received from
any other Governmental Authority in connection with antitrust matters. The
Parties shall use their respective commercially reasonable efforts to overcome
any objections which may be raised by the FTC, the Antitrust Division or any
other Governmental Authority having jurisdiction over antitrust matters. Each
Party will cooperate to prevent inconsistencies between their respective filings
and between their respective responses to all such inquiries and responses, and
will furnish to each other such necessary information and reasonable assistance
as the other may reasonably request in connection with its preparation of
necessary filings or submissions under the HSR Act. Notwithstanding the
foregoing, no Party shall be required to make any significant change in the
operations or activities of the business (or any material assets employed
therein) of such Party or any of its Affiliates, if a Party determines in good
faith that such change would be materially adverse to
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the operations or activities of the business (or any material assets employed
therein) of such Party or any of its Affiliates having significant assets, net
worth or revenue.
7.8 Sales and Transfer Taxes. All sales, use or excise Taxes arising from
or payable by reason of the transfer of any of the IPSE Assets or any of the
Charter Assets ("Transfer Taxes") will be shared equally by IPSE and Charter.
All transfer and similar taxes or assessments, including transfer fees and
similar assessments for or under System Franchises, System Licenses and System
Contracts, arising from or payable by reason of the conveyance of the IPSE
Assets or the Charter Assets also will be shared equally by IPSE and Charter.
Tax Returns required to be filed in respect of Transfer Taxes ("Transfer Tax
Returns") shall be prepared and filed by the party that has the primary
responsibility under applicable law for filing such Transfer Tax Returns. If no
party has primary responsibility for filing a Transfer Tax Return, then Charter
shall be responsible for preparing and filing any such Transfer Tax Return.
7.9 Programming. Each Party will execute and deliver such documents and
take such action as may be reasonably requested by another Party to enable such
other Party to comply with the requirements of its programming agreements with
respect to divestitures and acquisitions of cable television systems; provided,
however, that neither Party will be required to provide specific programming or
channels or to assume any liability with respect to or in connection with the
programming agreements of the other Party or any Affiliate of the other Party,
except to the extent included on Schedule 4.4(b) (with respect to Charter) or
Schedule 4.2(b) (with respect to IPSE).
7.10 Updated Schedules.
(a) Schedule and exhibit references contained in this Agreement are
for convenience only and any matter disclosed pursuant to one section,
subsection or other provision of this Agreement, are deemed disclosed for all
purposes of this Agreement, as long as the disclosure with respect to such
matter provides a truthful, accurate and adequate description of all relevant
aspects of such matter.
(b) Not less than ten Business Days prior to Closing, each of IPSE
and Charter will deliver to the other revised copies of each of its Schedules,
except for Schedules 5.15 and 6.15 as they relate to matters addressed in
Sections 5.15.1 and 5.15.2, and Sections 6.15.1 and 6.15.2, respectively
(regardless of whether the original Schedule is as of a certain date) which
shall have been updated and marked to show any changes occurring between the
date of this Agreement and the date of delivery; provided, however, that such
updates are for informational purposes only, and for purposes of determining
whether such Party's representations, warranties and covenants in this Agreement
are true and correct at Closing, all references to the Schedules will mean the
version of the Schedules attached to this Agreement on the date of signing.
Notwithstanding the foregoing, if the effect of any such updates to
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Schedules is to disclose any one or more additional properties, privileges,
rights, interests or claims, in each case acquired after the date of this
Agreement ("New Properties") as Assets that would have been (if owned on the
date of this Agreement) required by this Agreement to have been disclosed by
such Party in its original Schedules or that were acquired by such Party after
the date of this Agreement in breach of this Agreement, then the other Party, at
or before Closing, will have the right (to be exercised by written notice to
such Party) to cause any one or more of such New Properties to be designated as
and deemed to constitute Excluded Assets of such Party for all purposes under
this Agreement. If such right is not exercised by any Party entitled to exercise
such right and if such Party waives the applicable condition to Closing provided
in Section 8.1.1, 8.1.2, 8.2.1 or 8.2.2, such Party shall be deemed to have
accepted such new disclosure with respect to such New Properties and it shall be
deemed incorporated by reference into the Schedules. Notwithstanding anything to
the contrary contained in this Agreement, and except as set forth in the
preceding sentence with respect to New Properties, the waiver of any condition
to Closing by a Party who has knowledge of a breach by the other Party will not
be deemed a waiver of any rights and remedies with respect to such breach under
this Agreement or the Common Agreement.
7.11 Use of Name and Logo. For a period of 180 days after the Closing,
each of the Charter Parties and IPSE will be entitled to use the trademarks,
trade names, service marks, service names, logos and similar proprietary rights
of the transferor to the extent incorporated in or on the Assets transferred to
it at the Closing on a royalty-free basis, provided that each of the Charter
Parties and IPSE will exercise commercially reasonable efforts to remove all
such names, marks, logos and similar proprietary rights of the transferor
(except to the extent otherwise permitted by Charter or IPSE) from the Assets as
soon as reasonably practicable, and in any event within 180 days, following the
Closing. Notwithstanding the foregoing, nothing in this Section will require any
Party to remove or discontinue using any such name or xxxx that is affixed to
converters or other items in or to be used in customer homes or properties, or
as are used in a similar fashion making such removal or discontinuation
impracticable.
7.12 Transitional Billing Services. Charter and IPSE will each provide to
the other, upon written request delivered a reasonable amount of time in advance
and to the extent reasonably practicable, access to and the right to use its
billing system computers, software and related fixed assets in connection with
the Systems acquired by the other for a period of up to 150 days following the
Closing to allow for conversion of existing billing arrangements, including
billing and related arrangements regarding internet access services being
provided to customers of a System on the Closing Date ("Transitional Billing
Services"). Each Party will notify the other at least thirty days prior to the
Closing as to whether it desires Transitional Billing Services from the other.
All Transitional Billing Services, if any, that are requested by a Party will be
provided on terms and conditions reasonably satisfactory to each Party;
provided, however, that the amount to be paid by the Party receiving
Transitional Billing Services will not exceed the out-of-pocket cost to the
other Party of providing such Transitional Billing Services. Each Party will
notify the other of the cost to such Party of providing such
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Transitional Billing Services within ten Business Days after receiving the other
Party's notice requesting the provision of such Transitional Billing Services.
7.13 Confidentiality and Publicity.
7.13.1 Prior to the Closing, each Party will keep confidential any
non-public information that such Party may obtain from the other in connection
with this Agreement, and following the Closing, each Party will keep
confidential any non-public information that such Party may obtain from the
other in connection with this Agreement unrelated to the Cable Business and
Systems transferred by the other Party pursuant to this Agreement as well as any
non-public information in the possession of such Party related to the Cable
Business and Systems transferred by such Party to the other Party pursuant to
this Agreement (any such information that a Party is required to keep
confidential pursuant to this sentence shall be referred to as "Confidential
Information"). Each Party will not disclose, and will cause its employees,
consultants, advisors and agents not to disclose, any Confidential Information
to any other Person (other than its directors, officers and employees and
representatives of its advisers and lenders whose knowledge thereof is necessary
in order to facilitate the consummation of the transactions contemplated hereby)
or use, and will cause its controlled Affiliates, directors, officers,
employees, consultants, advisors and agents not to use, such Confidential
Information to the detriment of the other; provided that (i) such Party may use
and disclose any such Confidential Information once it has been publicly
disclosed (other than by such Party in breach of its obligations under this
Section) or which rightfully has come into the possession of such Party (other
than from the other Party and other than from another Person in violation of any
duty or obligation of confidentiality) and (ii) to the extent that such Party
may, in the reasonable opinion of its counsel, be compelled by Legal
Requirements to disclose any of such Confidential Information, such Party may
disclose such Confidential Information if it will have used all reasonable
efforts, and will have afforded the other the opportunity, to obtain an
appropriate protective order or other satisfactory assurance of confidential
treatment, for the Confidential Information compelled to be disclosed. In the
event of termination of this Agreement, each Party will cause to be delivered to
the other, and retain no copies of, any documents, work papers and other
materials obtained by such Party or on its behalf from the other, whether so
obtained before or after the execution hereof.
7.13.2 No Party will issue any press releases or make any other
public announcement concerning this Agreement and the transactions contemplated
hereby, except as required by applicable Legal Requirements, without the prior
written consent and approval of the other Party, which consent and approval may
not be unreasonably withheld.
7.13.3 Each Party expressly agrees that, in addition to any other
right or remedy the other may have, such other Party may seek and obtain
specific performance of the covenants and agreements set forth in or made
pursuant to this Section 7.13 and temporary
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and permanent injunctive relief to prevent any breach or violation thereof, and
that no bond or other security may be required from such other parties in
connection therewith.
7.14 Bulk Transfer. Each Party waives compliance by each other Party with
Legal Requirements relating to bulk transfers applicable to the transactions
contemplated hereby.
7.15 Lien Searches. Each Party will obtain, at its expense, the results of
a lien search conducted by a professional search company of records in the
offices of the secretaries of state in each state and county clerks in each
county where there exist any of its Owned Property or Tangible Personal
Property, and in the state and county where such Party's principal offices are
located, including copies of all financing statements or similar notices or
filings (and any continuation statements) discovered by such search company.
7.16 Further Assurances. At or after the Closing, each Party at the
request of the other Party, will promptly execute and deliver, or cause to be
executed and delivered, to the other Party all such documents and instruments,
in addition to those otherwise required by this Agreement, in form and substance
reasonably satisfactory to the other Party as the other Party may reasonably
request in order to carry out or evidence the terms of this Agreement or to
collect any accounts receivable or other claims included in the Assets
transferred to the other Party. Without limiting the generality of the
foregoing, the Charter Parties and IPSE will take, or cause to be taken, all
actions consistent with the terms of this Agreement, including execution and
delivery of any documents or instruments, as the other may reasonably request to
effect the qualification of the transactions contemplated hereby as a like-kind
exchange under Section 1031 of the Code.
7.17 Post-Closing Cooperation as to Rates.
7.17.1 Each of IPSE and the Charter Parties will use commercially
reasonable efforts to cooperate with and assist the other by providing, upon
reasonable request, all information in that Party's possession (and not
previously made available to the requesting Party) relating directly to the
rates set forth on Schedule 5.15.2 or 6.15.2, as applicable, or on any of FCC
Forms 1200, 1205, 1210, 1220, 1225, 1235 or 1240 or any other FCC Form, that the
requesting Party may reasonably require to justify such rates in response to any
inquiry, order or requirements of any Governmental Authority.
7.17.2 Prior to Closing, neither Party shall settle or permit to be
settled any rate proceeding with respect to its Systems without the consent of
the other Party, which consent will not be unreasonably withheld or delayed,
unless the proposed settlement includes injunctive or other relief that
adversely affects its Assets or its ability of such other Party to operate such
Systems substantially in the manner in which they are operated on the date of
this Agreement (other than changing the rates in question), in which case
consent may be withheld or delayed in such other Party's sole discretion.
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7.17.3 After the Closing, each Party, as a transferor (the
"Transferor Party") will be responsible for and follow to conclusion any rate
order of any Governmental Authority or proceeding with respect to rates of any
of its Systems charged by it immediately prior to the Closing; provided,
however, that the Transferor Party shall not: (i) agree to any forward-looking
rate adjustment; (ii) submit any refund plan to a Governmental Authority that
would impact any rates charged or impose financial liability on the Transferee
Party after the Closing; or (iii) appeal or take any other action with regard to
such proceeding that would impact any rates charged or impose financial
liability on the Transferee Party after the Closing, in any case without
obtaining the prior written consent of the System's current owner (the
"Transferee Party"), which consent shall not be unreasonably withheld. Each
Party will cooperate with and assist the other by providing, upon reasonable
request, all information in its possession (and not previously made available to
the requesting Party) that the requesting Party may reasonably require to
justify rates in response to any inquiry, order or requirements of any
Governmental Authority.
7.17.4 If, following Closing any System is required pursuant to any
Legal Requirement, settlement or otherwise to refund to subscribers any
payments, in whole or in part, made by such subscribers prior to Closing,
including fees for cable television service, equipment charges, late fees and
similar payments, then at the election of the Transferee Party and upon the
Transferor Party's prior written consent, which consent shall not be
unreasonably withheld: (i) the Transferor Party must fulfill such refund
obligation through a one-time cash payment to subscribers, in which case the
Transferor Party shall provide funds for such payment to the Transferee Party,
the Transferee Party shall cooperate with the Transferor Party or implement and
administer such refund payment through the Transferee Party's billing system,
and the Transferor Party shall reimburse the Transferee Party for all reasonable
expenses incurred by the Transferee Party in connection therewith; (ii) the
Transferee Party may fulfill such refund obligation through a cash payment,
credit or in-kind or other form of consideration, at its discretion and subject
to any required approval by a Governmental Authority, and the Transferor Party
shall reimburse the Transferee Party in the amount of any payment or in the
amount of the cost to the Transferee Party of any credit or in-kind or other
form of consideration and all reasonable expenses incurred by the Transferee
Party in connection therewith. Without limiting the foregoing, the Transferee
Party will provide the Transferor Party with all information in the Transferee
Party's possession that is reasonably required by the Transferor Party in
connection with such reimbursement.
7.17.5 If a Transferee Party is permitted following Closing to pass
through to subscribers of Systems acquired by it at Closing, the amount of any
"franchise fees on franchise fees" paid by a Transferor Party to the appropriate
local franchising authority with respect to the period prior to Closing, the
Transferee Party agrees that it will collect for the benefit of the Transferor
Party such amounts specified no later than the Six-Month Date as paid by the
Transferor Party and, except as specified below, will promptly remit such
amounts
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to the Transferor Party; provided, however, that if a local franchising
authority challenges such collection or orders the Transferee Party to refund
such fees to subscribers, then the Transferee Party shall not remit the fees to
the Transferor Party but shall hold such fees in escrow and the parties will
cooperate reasonably and in good faith to challenge such local franchising
authority action. Upon the final resolution of such local franchising authority
action, the escrowed fees shall be released from escrow and, to the extent not
refunded to subscribers, paid over to the Transferor Party. The Transferor Party
agrees to provide the Transferee Party with such documentation as necessary to
demonstrate its payment of the "franchise fees on franchise fees" and to enable
the Transferee Party to collect the pass through amounts from subscribers.
7.18 Distant Broadcast Signals. Unless otherwise restricted or prohibited
by any Governmental Authority, applicable Legal Requirements or Contract, each
Party will, if requested by the other Party, delete prior to the Closing any
distant broadcast signals which such other Party determines will result in
unacceptable liability on the part of the transferee for copyright payments with
respect to continued carriage of such signals after the Closing; provided,
however, that any Party may refuse to honor such a request if such deletion
could reasonably be expected to delay or otherwise jeopardize the Parties'
ability to complete the transactions contemplated herein.
7.19 Environmental Assessment.
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7.19.1 Each Party acknowledges and agrees, subject to any
enforceable restrictions placed thereon by a Third Party owner or lessor of any
real property involved, that the other Party may commission, at such other
Party's cost and expense, a so-called "Phase I" environmental site assessment of
such Party's Assets (a "Phase I Assessment"). If the Phase I Assessment or any
other information known to such Party (including information disclosed in
connection with the negotiation of this Agreement or described in the Schedules
hereto) indicates that a so-called "Phase II" assessment or other additional
testing or analysis of such Party's Assets as the investigating Party may deem
appropriate (a "Phase II Assessment") is advisable, then, subject to any
enforceable restrictions placed thereon by a Third Party owner or lessor of any
real property involved, the other Party may elect to cause its agents or
representatives to conduct such testing and analysis. Each Party will use its
commercially reasonable efforts to comply with any reasonable request for
information made by the other Party or its agents in connection with any such
investigation, but in no event will either Party be required under this Section
7.19.1 to disclose any materials constituting attorney-client privileged
communications. Each Party covenants that any response to any such request for
information will be complete and correct in all material respects. Each Party
will afford the other Party and its agents or representatives access to all
operations of such Party at all reasonable times and in a reasonable manner in
connection with any such investigation subject to any reasonably required
approval of such Party's landlords, which approval such Party will use its
commercially reasonable efforts to obtain. Should the other Party commission
such an investigation, such investigation will have no effect upon the
representations and warranties made by one Party to the other Party under this
Agreement except that if any Phase I Assessment or Phase II Assessment uncovers
an environmental condition which then comprises a breach of a Party's
representations or warranties herein and such breach is capable of being cured,
such Party shall be deemed not to have breached such representation or warranty
if such Party cures such breach in accordance with the provisions of this
Agreement. In the event this Agreement is terminated or fails to close in
accordance with its terms, each Party agrees to repair any damage or disturbance
it causes to the other Party's Owned Property or Leased Property in the course
of such investigative activities by returning such Owned Property or Leased
Property to approximately the same condition as existed prior to such
investigative activities. Each Party shall indemnify, protect, defend, and hold
the other Party and the other Party's Assets free and harmless from and against
any and all claims, actions, causes of action, suits, proceedings, costs,
expenses (including reasonable attorneys' and consultants' fees and costs),
liabilities, damages, and liens of any type arising directly out of any act or
omission of that Party or any of that Party's representatives on or about the
other Party's Owned Property or Leased Property in the course of such
investigative activities. However, neither of the two preceding sentences shall
be interpreted to impose any obligation upon either Party with respect to
Hazardous Substances present at, on, in, under or about, or any conditions
existing on, the other Party's Owner Property or Leased Property at the time of
such investigative activities, except to the extent of a Party's negligence or
willful misconduct causes a release of such Hazardous Substances or otherwise
exacerbates any such condition in a manner that leads to liability under any
Environmental Law.
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7.19.2 All information collected and generated as a result of the
environmental due diligence authorized by Section 7.19.1 will be subject to the
terms and conditions of Section 7.13 of this Agreement. Each Party shall provide
to the other Party copies of all draft and final reports, assessments and other
information composed or compiled by such Party's environmental consultants
within five Business Days after such Party's receipt of copies thereof
7.20 Year 2000 Matters.
7.20.1 Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Computer and Other Systems" means any level of hardware
or software, equipment and cable plant, or environmental and security systems
and other facilities used in connection with IPSE's Cable Business or Charter's
Cable Business, as the case may be, which are date dependent or which process
date data, including any firmware, embedded systems, application programs, user
interfaces, files and databases, and which might be adversely affected by any
date-related issue or calculation prior to, during or after January 1, 2000,
including any problem related to a leap year.
(b) "Year 2000 High-Level Inventory, Assessment and
Remediation Decisions" means the subject entity's documentation of its Year 2000
inventory, assessment and remediation decisions performed in accordance with its
Year 2000 Plan, consisting of (i) database reports identifying each category of
items inventoried at the subject entity's cable Systems and specifying as
appropriate the manufacturer or vendor and release, version or model number of
each item listed, (ii) risk or critically assessments, (iii) determination and
execution of evaluation approaches with respect to Year 2000 Readiness, (iv)
determination of Year 2000 Readiness based on evaluation approaches employed,
and (v) decisions regarding disposition alternatives (i.e., do nothing, repair,
replace or retire). All such reports have been reviewed at appropriate levels
within the subject entity's organization in accordance with the entity's Year
2000 Plan. IPSE's and Charter's Year 2000 High-Level Inventory, Assessment and
Remediation Decisions are attached hereto as Schedules 7.20.1(b)-A and
7.20.1(b)-B, respectively.
(c) "Year 2000 Plan" means the plans adopted in accordance
with a Party's Year 2000 Remediation Program to make Year 2000 Ready by a date
no later than August 31, 1999, all of such Party's Computer and Other Systems
having a significant impact on the Party's business. Such Year 2000 Plan will
include scope of methodologies and timelines (including objective milestones)
for inventory, assessment, remediation and/or replacement, and testing or
evaluation of Third Party Testing, as applicable, of its Computer
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and Other Systems having a significant impact on the Party's business. IPSE's
and Charter's Year 2000 Plans are attached hereto as Schedules 7.20.1(c)-A and
7.20.1(c)-B, respectively.
(d) "Year 2000 Ready" or "Year 2000 Readiness" means that the
referenced component, system, software, equipment or other item is designed or
has been modified to be used prior to, during and after the calendar year 2000
A.D., and that such item will operate at all levels, including microcode,
firmware, application programs, user interfaces, files and databases, during
each such time period without error or interruption relating to, or the product
of, date-related issues or calculations, including date data which represents or
references different centuries or more than one century or leap year.
(e) "Year 2000 Remediation Program" means an enterprise wide
program to make Year 2000 Ready all Computer and Other Systems having a
significant impact on the Party's business. Such Year 2000 Remediation Program
must be conducted by Persons with experience in issues related to Year 2000
Readiness and such Persons must have organized an enterprise wide program
management office which reports to, or an enterprise wide program management
structure with oversight by, executive level management and the board of
directors (or committee thereof or other governing body of such entity).
7.20.2 Acknowledgments. The Parties acknowledge the following:
(a) Each of Charter and certain of its Affiliates, and IPSE
and certain of its Affiliates, have established a Year 2000 Remediation Program.
(b) Each of Charter and IPSE has reviewed and approved the
other's Year 2000 Plan and Year 2000 High-Level Inventory, Assessment and
Remediation Decisions.
(c) Each Party acknowledges and agrees with the other Party's
preliminary decision to rely on testing of cable plant and related equipment to
be performed by certain cable industry technical and trade associations, certain
critical vendors or other cable operators ("Third Party Testing"). Each Party
will continue to review the progress of such Third Party Testing plans and
results as they become available. Each Party has developed test methodologies as
part of its Year 2000 Plan to address implementation of additional testing
should IPSE and Charter mutually consider such additional testing to be
necessary or prudent.
(d) Neither party makes any representation, warranty or
guarantee that its Computer and Other Systems will be Year 2000 Ready at the
Closing Date or thereafter.
7.20.3 Covenants. Notwithstanding any other provision set forth in
this Agreement, the Parties agree as follows:
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(a) Through the Closing Date, each Party will exercise prudent
and reasonable care and diligence to take such actions with respect to its Cable
Business when and as required by its approved Year 2000 Plan.
(b) Through the Closing Date, each of IPSE and Charter will
cooperate with the other with respect to the nature and results of its
activities relating to its Year 2000 Plan. Such cooperation shall include
providing the appropriate Party with any non-confidential information possessed
by a Party or one of its Affiliates and reasonably requested by the other Party
regarding the Year 2000 Readiness of any material component of the Computer and
Other Systems having a significant impact on such Party's business.
(c) Each Party shall deliver to the other Party on or before
July 31, 1999, and again on August 31, 1999 (if Closing has not occurred prior
to such date), a statement, certified by an authorized officer of such Party who
is responsible for implementation of its Year 2000 Plan, setting forth in
reasonable detail that as of such date all of the milestones contained in its
Year 2000 Plan to be completed as of such date have been fully completed (or if
not, indicating which such milestones have not been completed and describing the
efforts required to complete the same).
(d) From the date hereof through the Closing Date, each Party
shall have the opportunity to conduct due diligence regarding the Year 2000
Readiness of the other Party's Computer and Other Systems having a significant
impact on the other Party's business in accordance with this Section 7.20.3(d).
Each Party may conduct a review of the Year 2000 Ready assessment activities
with respect to the Computer and Other Systems having a significant impact on
the other Party's business, including inspecting individual headend and office
sites and reviewing existing reports, correspondence and related material
regarding the Year 2000 Readiness of the Computer and Other Systems having a
significant impact on the other Party's business. Each Party shall conduct no
more than three visits to any site of the other Party, and no single site visit
shall exceed three Business Days. Each Party shall give the other Party at least
five Business Days written notice prior to any visit to any System facilities of
the other Party and, if a Party intends during such visit to perform testing at
a headend, office or other site of the other Party, such Party also must provide
a description of the scope of work regarding such testing. If the other Party
does not notify such Party in writing of the other Party's objection to such
proposed site visit and/or testing within three Business Days after receipt of
such notice, the other Party shall be deemed to have consented to the proposed
site visit and any described testing. A Party shall not unreasonably object to
the other Party's request to perform testing. A representative of the other
Party shall be present at all times during any such visit and testing. All
activities of a Party regarding its Year 2000 due diligence shall be conducted
to minimize any inconvenience or interruption of the normal use and enjoyment of
the other Party's Cable Business and Computer and Other Systems.
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7.21 Satisfaction of Conditions. Each Party will use its commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other Party to consummate the transactions contemplated
by this Agreement, as set forth in Article 8.
7.22 Offers. Each Party (and its directors, officers, employees,
representatives and agents) shall not directly or indirectly, (i) offer its
Assets or Cable Business for sale, (ii) solicit, encourage or entertain offers
for such Assets or Cable Business, (iii) initiate negotiations or discussions
for the sale of such Assets or Cable Business or (iv) make information about
such Assets or Cable Business available to any Third Party in connection with
the possible sale of such Assets or Cable Business prior to the Closing Date or
the date this Agreement is terminated in accordance with its terms.
7.23 Retention of Books and Records. At or prior to the Closing, each
Party shall make arrangements reasonably satisfactory to the other Party to
deliver all such Party's Books and Records not located at any of the offices
included in its Owned Property or Leased Property. Following the Closing, each
Party shall give access to the other Party, its counsel, accountants and other
authorized representatives during normal business hours to such Party's
materials, books, records and documents which relate to the operations of such
Party's Cable Business prior to the Closing Date or which relate to the
operations of the other Party's Cable Business after the Closing Date, in each
case as may be reasonably necessary in connection with any legitimate purpose
(including the preparation of tax reports and returns and the preparation of
financial statements). Such access will be subject to reasonable advance written
notice, will be conducted in a manner that is not disruptive of such Party's
business, and will be subject to any other reasonable limitations imposed by
such Party. The requesting Party shall have the right to make copies of such
materials at its own expense. If either Party proposes to destroy or otherwise
dispose of any of its materials, books, records or documents that related to the
operations of its Cable Business prior to the Closing Date, it will give no less
than 30 days advance written notice to the other Party so as to permit such
other Party to exercise its rights under this Section 7.23.
7.24 Cooperation. IPSE and Charter shall reasonably cooperate in
connection with the preparation and filing of any Tax Return for which the other
is responsible for preparing and filing with respect to the Systems.
8. CONDITIONS PRECEDENT.
8.1 Conditions to Charter's Obligations. The obligations of Charter to
consummate the transactions contemplated by this Agreement will be subject to
the satisfaction, at or before the Closing, of the following conditions, one or
more of which may be waived by Charter:
8.1.1 Accuracy of Representations and Warranties. The
representations and warranties of IPSE in this Agreement and in the Transaction
Documents, without giving effect
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to any materiality qualifications contained therein, are true, complete and
accurate on and as of the date hereof and at and as of the Closing with the same
effect as if made at and as of the Closing, except to the extent that all
misstatements, omissions and inaccuracies, in the aggregate, do not have a
material adverse effect on the IPSE Assets, IPSE's Cable Business, the
operations, condition (financial or otherwise) or results of operations of the
IPSE Systems taken as a whole, or on the ability of IPSE to perform its
obligations under this Agreement.
8.1.2 Performance of Agreements. IPSE shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and in any Transaction Document to
be performed and complied with by it at or before the Closing.
8.1.3 Deliveries. IPSE shall have delivered the items and documents
required to be delivered by it pursuant to this Agreement, including those
required to be delivered to Charter under Section 9.2.
8.1.4 Legal Proceedings. No Legal Requirement of any Governmental
Authority (including any temporary Legal Requirement) shall be in effect which
would prevent or make illegal the consummation of any of the transactions
contemplated by this Agreement or any Transaction Document.
8.1.5 Consents.
(a) Except as otherwise provided in Section 7.5.5, Required
Consents relating to all IPSE System Franchises shall have been obtained in form
and substance reasonably satisfactory to Charter, or the consent of the
appropriate Governmental Authority shall be deemed to have been received in
accordance with Section 617 of the Communications Act (47 U.S.C. ss.537).
(b) Except as otherwise provided in Section 7.5.3, Charter
shall have received evidence, in form and substance reasonably satisfactory to
it, that the IPSE Required Consents relating to the IPSE Systems Licenses and
the IPSE Systems Contracts identified with an asterisk (*) on Schedule 6.3 have
been obtained.
8.1.6 No Material Adverse Changes. There shall not have been any
material adverse change in the IPSE Assets or the condition (financial or
otherwise) or operations of IPSE's Cable Business or the IPSE Systems, taken as
a whole, since December 31, 1998.
8.1.7 Franchise Renewals. Each IPSE Systems Franchise for which (a)
a valid notice of renewal pursuant to the formal renewal procedures established
by Section 626 of the Cable Act has not been timely delivered to the appropriate
Governmental Authority, and (b) with respect to which the appropriate
Governmental Authority has not confirmed in writing
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that the procedures established by Section 626 nonetheless shall apply to the
renewal or extension of such IPSE Systems Franchise, shall have been renewed or
extended for a period expiring no earlier than three years after the Closing
Date.
8.1.8 Common Agreement and Related Closings.
(a) The conditions set forth in Section 4.1 of the Common
Agreement shall have been satisfied or waived.
(b) The transactions contemplated by the IP Agreements and the
Redemption Agreement (each as defined in the Common Agreement) shall have been,
or will be, consummated as set forth in Section 4.4 of the Common Agreement,
except to the extent such Agreements are not consummated as a result of a breach
by any Charter Party or their Affiliates of its or their obligation to
consummate such transactions.
8.2 Conditions to IPSE's Obligations. The obligations of IPSE to
consummate the transactions contemplated by this Agreement will be subject to
the satisfaction, at or before the Closing, of the following conditions, one or
more of which may be waived by IPSE:
8.2.1 Accuracy of Representations and Warranties. The
representations and warranties of Charter in this Agreement and in the
Transaction Documents, without giving effect to any materiality qualification
contained therein, are true, complete and accurate on and as of the date hereof
and at and as of the Closing with the same effect as if made at and as of the
Closing, except to the extent that all misstatements, omissions and
inaccuracies, in the aggregate, do not have a material adverse effect on the
Charter Assets, Charter's Cable Businesses, the operations, condition (financial
or otherwise) or results of operations of the Charter Systems taken as a whole,
or on the ability of any Charter Party to perform its obligations under this
Agreement.
8.2.2 Performance of Agreements. Charter shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and in any Transaction Document to
be performed and complied with by it at or before the Closing.
8.2.3 Deliveries. Charter shall have delivered the items and
documents required to be delivered by it pursuant to this Agreement, including
those required to be delivered to IPSE under Section 9.3.
8.2.4 Legal Proceedings. No Legal Requirement of any Governmental
Authority (including any temporary Legal Requirement) shall be in effect which
would prevent or make illegal the consummation of any of the transactions
contemplated by this Agreement or any Transaction Document.
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8.2.5 Consents.
(a) Except as otherwise provided in Section 7.5.5, Required
Consents relating to all Charter System Franchises shall have been obtained in
form and substance reasonably satisfactory to IPSE, or the consent of the
appropriate Governmental Authority shall be deemed to have been received in
accordance with Section 617 of the Communications Act (47 U.S.C. ss.537).
(b) Except as otherwise provided in Section 7.5.3, IPSE shall
have received evidence, in form and substance reasonably satisfactory to it,
that the Charter Required Consents relating to the Charter Systems Licenses and
the Charter Systems Contracts identified with an asterisk (*) on Schedule 5.3
have been obtained.
8.2.6 No Material Adverse Changes. There shall not have been any
material adverse change in the Charter Assets or the condition (financial or
otherwise) or operations of Charter's Cable Business or the Charter Systems,
taken as a whole, since December 31, 1998.
8.2.7 Franchise Renewals. Each Charter Systems Franchise for which
(a) a valid notice of renewal pursuant to the formal renewal procedures
established by Section 626 of the Cable Act has not been timely delivered to the
appropriate Governmental Authority, and (b) with respect to which the
appropriate Governmental Authority has not confirmed in writing that the
procedures established by Section 626 nonetheless shall apply to the renewal or
extension of such Charter Systems Franchise, shall have been renewed or extended
for a period expiring no earlier than three years after the Closing Date.
8.2.8 Common Agreement and Related Closings.
(a) The conditions set forth in Section 4.2 of the Common
Agreement shall have been satisfied or waived.
(b) The transactions contemplated by the IP Agreements and the
Redemption Agreement (each as defined in the Common Agreement) shall have been,
or will be, consummated as set forth in Section 4.4 of the Common Agreement,
except to the extent such Agreements are not consummated as a result of a breach
by IPSE or its Affiliates of its or their obligation to consummate such
transactions.
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9. THE CLOSING.
9.1 The Closing; Time and Place. Subject to the terms and conditions of
this Agreement, the Closing shall be held in San Francisco, California, or as
otherwise agreed, at a place mutually agreed upon by the Parties at 10:00 a.m.,
local time, on the last calendar day of the calendar month in which the
conditions set forth in Article 8 (other than Sections 8.1.3 and 8.2.3) shall
have been satisfied or waived (provided that each Party shall have at least 10
days' prior notice of the scheduled Closing Date in order to prepare for the
Closing) or at such other place, date and time as may be mutually agreed upon by
the Parties (the "Closing Date"). The transactions to be consummated at Closing
shall be deemed to have been consummated as of the Closing Time. If the Closing
Date is not a Business Day, then the Closing Date shall be the immediately
preceding Business Day.
9.2 IPSE's Delivery Obligations. At the Closing, IPSE will deliver or
cause to be delivered to Charter the following:
9.2.1 Cash Consideration. If applicable, the Cash Consideration will
be paid (without duplication) by IPSE to the Charter Parties in accordance with
the Common Agreement.
9.2.2 Xxxx of Sale and Assignment and Assumption Agreement. The Xxxx
of Sale and Assignment and Assumption Agreement in the form of Exhibit 9.2.2.
9.2.3 Deeds. Special warranty deeds in recordable form conveying to
the applicable Charter Parties each parcel of IPSE Owned Property, and
assignments of leases and easements in recordable form, with respect to IPSE
Leased Property and IPSE Other Real Property Interests as to which prior
assignments into IPSE were recorded in the applicable real estate records.
9.2.4 Lien Releases. Evidence reasonably satisfactory to Charter
that all Liens (other than Permitted Liens) affecting or encumbering the IPSE
Assets have been terminated, released or waived, as appropriate, or original,
executed instruments in form reasonably satisfactory to Charter effecting such
terminations, releases or waivers.
9.2.5 Vehicle Titles. Title certificates to all vehicles included
among the IPSE Assets, endorsed for transfer of title to the applicable Charter
Parties, and separate bills of sale therefor or other transfer documentation, if
required by the laws of the States in which such vehicles are titled.
9.2.6 Evidence of Authorization Actions. Certified resolutions or
other evidence reasonably satisfactory to Charter that IPSE has taken all action
necessary to
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authorize the execution of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby.
9.2.7 FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that IPSE is not a foreign person within the meaning of Section 1445
of the Code reasonably satisfactory in form and substance to Charter.
9.2.8 Officer's Certificate. The Charter Parties will have received
a certificate executed by an executive officer of IPSE dated the date of the
Closing, reasonably satisfactory in form and substance to Charter certifying
that the conditions specified in Sections 8.1.1. and 8.1.2 have been satisfied.
9.2.9 Opinions of Counsel. Opinions of Pillsbury Madison & Sutro LLP
and Dow, Xxxxxx & Xxxxxxxxx, PLLC, substantially in the forms of Exhibits C.1
and C.3, respectively of the Common Agreement.
9.2.10 Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
9.3 Charter's Delivery Obligations. At the Closing, each Charter Party
will deliver or cause to be delivered to IPSE the following:
9.3.1 Cash Consideration. If applicable, the Cash Consideration will
be paid by such Charter Party to IPSE in accordance with the Common Agreement.
9.3.2 Xxxx of Sale and Assignment and Assumption Agreement. The Xxxx
of Sale and Assignment and Assumption Agreement in the form of Exhibit 9.2.2.
9.3.3 Deeds. Special warranty deeds in recordable form conveying to
IPSE each parcel of such Charter Party's Owned Property, and assignments of
leases and easements in recordable form, with respect to such Charter Party's
Leased Property and Other Real Property Interests as to which prior assignments
into such Charter Party were recorded in the applicable real estate records.
9.3.4 Lien Releases. Evidence reasonably satisfactory to IPSE that
all Liens (other than Permitted Liens) affecting or encumbering such Charter
Party's Assets have been terminated, released or waived, as appropriate, or
original, executed instruments in form reasonably satisfactory to IPSE effecting
such terminations, releases or waivers.
9.3.5 Vehicle Titles. Title certificates to all vehicles included
among such Charter Party's Assets, endorsed for transfer of title to IPSE, and
separate bills of sale therefor
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or other transfer documentation, if required by the laws of the States in which
such vehicles are titled.
9.3.6 Evidence of Authorization Actions. Certified resolutions of
such Charter Party or other evidence reasonably satisfactory to IPSE that such
Charter Party has taken all action necessary to authorize the execution of this
Agreement and the Transaction Documents and the consummation of the transactions
contemplated hereby.
9.3.7 FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that such Charter Party is not a foreign person within the meaning of
Section 1445 of the Code reasonably satisfactory in form and substance to IPSE.
9.3.8 Officer's Certificate. IPSE will have received a certificate
executed by an executive officer of Charter dated the date of the Closing,
reasonably satisfactory in form and substance to IPSE certifying that the
conditions specified in Sections 8.2.1 and 8.2.2 have been satisfied.
9.3.9 Opinions of Counsel. Opinions of Irell & Xxxxxxx LLP and
Wiley, Rein & Fielding substantially in the forms of Exhibits C.2 and C.4,
respectively of the Common Agreement.
9.3.10 Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
10. TERMINATION AND DEFAULT.
10.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
10.1.1 At any time, by the mutual agreement of Charter and IPSE;
10.1.2 By either Charter or IPSE at any time, if the other is in
material breach or default of any of the other's covenants, agreements or other
obligations herein or in any Transaction Document;
10.1.3 By either Charter or IPSE upon written notice to the other,
if any of the conditions to its obligations set forth in Sections 8.1 and 8.2,
respectively, are not satisfied on or before the later of January 15, 2000, or
nine months after the date of this Agreement, for any reason other than an
intentional and material breach or default by such Party of its respective
covenants, agreements or other obligations under this Agreement, or any of its
representations herein not being true and accurate in all material respects when
made or when otherwise required by this Agreement to be true and accurate in all
material respects;
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10.1.4 By either Charter or IPSE if an injunction, restraining order
or decree of any nature of any Governmental Authority of competent jurisdiction
is issued that prohibits the consummation of any of the transactions
contemplated hereby and such injunction, restraining order or decree is final
and nonappealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this clause has used commercially reasonable efforts to
have such injunction, order or decree vacated or denied; or
10.1.5 As otherwise provided in the Common Agreement.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, all obligations of the Parties under this Agreement will
terminate, except for the obligations set forth in Sections 7.13, 7.19 and
12.13. Termination of this Agreement pursuant to Sections 10.1.2, 10.1.3, 10.1.4
or 10.1.5 will not limit or impair any remedies that any of IPSE or the Charter
Parties may have pursuant to the terms of this Agreement with respect to a
breach or default by the other of its covenants, agreements or obligations under
this Agreement.
11. SURVIVAL; REMEDIES.
11.1 Survival of Representations, Warranties Covenants and Agreements. The
representations, warranties, covenants and agreements of IPSE and Charter in
this Agreement and in the Transaction Documents will survive Closing for a
period of twelve months after the Closing Date. The period of survival of the
representations, warranties, covenants and agreements prescribed by this Section
11.1 are referred to as the "Survival Period." The liabilities of each Party
under its respective representations, warranties, covenants and agreements will
expire as of the expiration of the Survival Period; provided, however, that such
expiration will not include, extend or apply to (a) any representation,
warranty, covenant or agreement the breach of which has been asserted by a Party
in a written notice to the other Party before such expiration or about which a
Party has given the other Party written notice before such expiration indicating
that facts or conditions exist that, with the passage of time or otherwise, can
reasonably be expected to result in a breach (and describing such potential
breach in reasonable detail), (b) the Party's obligations under Sections 7.13
and 7.23, or (c) the Party's obligations under Sections 7.16, 7.17.1, 7.17.3 and
7.17.4, but only to the extent reasonably practicable.
11.2 Exclusive Remedy. The Parties hereby agree that the rights set forth
in the Common Agreement shall be each Party's sole and exclusive remedies
against the other Party for any claims arising after the Closing Time and
relating to any breaches of the representations, warranties or covenants
contained in this Agreement other than based on fraud.
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11.3 Nonrecourse. The Parties agree that, notwithstanding any other
provision in this Agreement or in any Transaction Document, and any rule of law
or equity to the contrary, to the fullest extent permitted by law, each Party's
obligations and liabilities under this Agreement will be nonrecourse to all
direct and indirect equity holders or other owners of such Party, except to the
extent of distributions to such Persons, directly or indirectly, from such Party
that are required to be returned, directly or indirectly, to such Party pursuant
to applicable provisions of law; provided, however, that the foregoing shall not
limit or abridge any Party's indemnification rights or obligations pursuant to
the Common Agreement or the Redemption Agreement. "Nonrecourse" means that the
obligations and liabilities are limited in recourse solely to the assets of the
Parties (for those purposes, any capital contribution obligations of the equity
holders or other owners of such Party, or any negative capital account balances
of such Persons will not be deemed be assets of such Party) and are not
guaranteed, directly or indirectly by, or the primary obligations of, any owner
of such Party in such capacity, and no partner, member or other owner in such
capacity of any successor entity (including any limited liability company or
partnership), either directly or indirectly, will be personally liable in any
respect (except to the extent of (i) such Person's interests in the assets of
such Party and (ii) any distribution which has been received by such Person and
is required by applicable law to be returned, directly or indirectly, to such
Party) for any obligation or liability of such Party under this Agreement.
12. MISCELLANEOUS PROVISIONS.
12.1 Parties Obligated and Benefitted. Subject to the limitations set
forth below, this Agreement will be binding upon each of the Parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the Parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement. Without the prior written consent of the other Parties, no Party will
assign any of its rights under this Agreement or delegate any of its duties
under this Agreement, provided that the appropriate Party may assign any or all
of its rights under this Agreement (a) to a "qualified intermediary" engaged by
such Party to effectuate a deferred like-kind exchange under Section 1031 of the
Code, and the other Party agrees in connection with such an assignment to take
such actions and execute such documents as may be reasonably requested by the
assigning Party in order to facilitate such Party's intent to effectuate a
deferred like-kind exchange; provided, however, that no such assignment will
affect the assigning Party's liabilities or obligations pursuant to this
Agreement or (b) to an Affiliate, provided that such assignment will not result
in any adverse tax consequences to the other Party, will not give rise to any
material requirements for additional Required Consents, and will not, in the
reasonable judgment of the other Party, delay the Closing.
12.2 Notices. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement to either Party will be
given as set forth in the Common Agreement.
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12.3 Right to Specific Performance. Each Party acknowledges that the
unique nature of the Assets to be exchanged hereunder pursuant to this Agreement
renders money damages an inadequate remedy, and the Parties agree that either
Party shall be entitled to pursue specific performance as a remedy without the
requirement of posting a bond or other security therefor.
12.4 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any Party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
12.5 Captions. The section and other captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
12.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (other than its rules of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby).
12.7 Time. Time is of the essence under this Agreement. If the last day
permitted for the giving of any notice or the performance of any act required or
permitted under this Agreement falls on a day which is not a Business Day, the
time for the giving of such notice or the performance of such act will be
extended to the next succeeding Business Day.
12.8 Late Payments. If either Party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the rate per annum publicly announced from time
to time by The Bank of New York as its Prime Rate (the "Prime Rate") plus 2%,
adjusted as and when changes in the Prime Rate are made.
12.9 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed an original.
12.10 Entire Agreement. This Agreement (including the Transaction
Documents and the Schedules and Exhibits referred to in this Agreement, which
are incorporated in and constitute a part of this Agreement) contains the entire
agreement of the Parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings with respect
to such subject matter. This Agreement may not be amended or modified except by
a writing signed by all of the parties hereto.
12.11 Severability. Any term or provision of this Agreement which is
invalid or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without
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rendering invalid or unenforceable the remaining rights of the Person intended
to be benefitted by such provision or any other provisions of this Agreement.
12.12 Construction. This Agreement has been negotiated by the Parties and
their respective legal counsel, and legal or other equitable principles that
might require the construction of this Agreement or any provision of this
Agreement against the Party drafting this Agreement will not apply in any
construction or interpretation of this Agreement.
12.13 Expenses. Except as otherwise expressly provided in this Agreement,
each Party will pay all of its expenses, including attorneys' and accountants'
fees, in connection with the negotiation of this Agreement, the performance of
its obligations and the consummation of the transactions contemplated by this
Agreement.
12.14 Risk of Loss. The risk of any loss or damage to the Charter Assets
or IPSE Assets resulting from fire, theft or other casualty (except reasonable
wear and tear) will be borne by Charter or IPSE respectively, at all times prior
to the Closing Time. In the event of any such loss or damage after December 31,
1998, Charter or IPSE as appropriate, will immediately notify the other in
writing of that fact. All insurance proceeds paid or payable as a result of the
occurrence of the event resulting in such loss or damage will be delivered by
the Party transferring such Assets to the other Party, or the rights thereto
will be assigned if not yet paid over by the insurer to the Party transferring
such Assets. The obligations under this Section 12.14 to pay or assign insurance
proceeds will not apply to the extent that any insurance proceeds are applied to
replace or restore such loss or damage prior to Closing.
If, on or prior to the Closing Date, all or any part of or interest in the
Charter Assets or the IPSE Assets, as appropriate, is taken or condemned as a
result of a Governmental Authority's exercise of its powers of eminent domain,
or if a Governmental Authority having such power informs a Party that it intends
to condemn all or any part of such Party's Assets (such event being called, in
either case, a "Taking"), then (i) IPSE, in the case of a Taking of Charter
Assets, or Charter, in the case of a Taking of IPSE Assets, may elect, in the
name of the other Party, to negotiate for, claim, contest and receive all
damages with respect to the Taking, (ii) the Party whose Assets were the subject
of the Taking will be relieved of its obligation to convey to the other Party
those of its Assets that were the subject of the Taking, (iii) at Closing, the
Party whose Assets were the subject of the Taking will assign to the other Party
all of its rights to damages payable as a result of the Taking, and will pay to
the other Party all damages previously paid to it in connection with the Taking,
and (iv) following the Closing, the Party whose Assets were the subject of the
Taking will give to the other Party any further assurances of such rights and
assignment with respect to the Taking as the other Party reasonably may request
from time to time.
12.15 Tax Consequences. No Party makes any representation or warranty,
express or implied, with respect to the Tax implications of any aspect of this
Agreement on any other Party, and each Party expressly disclaims any such
representation or warranty with respect to
IPSE/Charter Asset Exchange Agreement
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any Tax consequences arising under this Agreement. Each Party has relied solely
on its own Tax advisors with respect to the Tax implications of this Agreement.
12.16 Commercially Reasonable Efforts. For purposes of this Agreement,
"commercially reasonable efforts" will not be deemed to require a Party to
undertake extraordinary or unreasonable measures, including the payment of
amounts in excess of normal and usual filing fees and processing fees, if any or
other payments with respect to any Contract that are significant in the context
of such Contract (or significant on the aggregate basis as to all Contracts).
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The parties have executed this Agreement as of the day and year first above
written.
CHARTER COMMUNICATIONS, LLC
By: /s/ Xxxxxx X. Xxxx
----------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
CHARTER COMMUNICATIONS PROPERTIES,
LLC
By: /s/ Xxxxxx X. Xxxx
----------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
MARCUS CABLE ASSOCIATES, L.L.C.
By: /s/ Xxxxxx X. Xxxx
----------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
INTERMEDIA PARTNERS SOUTHEAST
By: InterMedia Capital Management, LLC, its
managing general partner
By: InterMedia Management, Inc., its
managing member
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx, President
and Chief Executive Officer
IPSE/Charter Asset Exchange Agreement
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