XXX #0000000.XX
XX. XXXX'X XXXXXX
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AMERICAN CABLE TV INVESTORS 5, LTD.
AND
XXXX MULTIMEDIA PARTNERSHIP
DATED AS OF
NOVEMBER 27, 1996
TABLE OF CONTENTS
Page
1. Definitions 1
Accounts Receivable 1
Adjustment Time 1
Affiliate 1
Alternative Transaction 1
Assets 2
Assumed Liabilities 2
Basic Services 2
Basic Subscriber Rate 2
Best of Seller's Knowledge 2
Business 2
Business Day 2
Buyer 2
Buyer Financial Statement 2
Buyer Interim Financial Statement 2
Cable Act 2
Capital Project 2
Closing 3
Closing Date 3
Code 3
Commitment Expense 3
Communications Act 3
Consents 3
Copyright Act 3
Deposit 3
Employer 3
Employer Plans 3
Encumbrance 3
Environmental Law 3
Equipment 3
Equivalent Basic Subscribers 4
ERISA 4
Escrow Agent 4
Escrow Agreement 4
Exchange Act 4
Excluded Assets 4
Excluded Liabilities 4
Exhibits 4
Expanded Basic Services 5
FCC 5
Final Adjustments Report 5
i
Franchise Areas 5
GAAP 5
General Partner 5
Governmental Authority 5
Governmental Permits 5
Hazardous Substances 5
Homes Passed 6
HSR Act 6
Indemnity Escrow Agent 6
Indemnity Escrow Agreement 6
Intangibles 6
IRS 6
Legal Requirement 6
Limited Partners 6
Management Agreement 6
Partnership Agreement 7
Pay TV 7
Permitted Encumbrances 7
Person 7
Preliminary Adjustments Report 7
Prime Rate 7
Purchase Price 7
Real Property 7
Regulatory Requirement 7
Required Consents 7
Schedules 7
SEC 8
Securities Act 8
Seller 8
Seller Contracts 8
Seller's Escrow 8
Seller Financial Statements 8
System 8
Taking 8
Tax Return 8
Taxes 8
TCI 8
Telecom Act 8
Termination Date 8
WARN Act 9
ARTICLE II 9
2. Purchase and Sale of Assets 9
2.1. Purchase and Sale of Assets 9
ii
2.2. Time and Place of Closing 9
ARTICLE III 9
3. Consideration 9
3.1. Consideration for the Assets 9
3.2. Purchase Price Prorations 10
3.3. Purchase Price Adjustments 10
3.4. Preliminary and Final Settlements 11
3.5. Disputed Liabilities 13
3.6. Allocation of Purchase Price 13
ARTICLE IV 14
4. Assumed Liabilities and Excluded Assets 14
4.1. Assignment and Assumption 14
4.2. Excluded Assets 14
ARTICLE V 15
5. Representations and Warranties of Seller 15
5.1. Organization and Qualification 15
5.2. Authority and Validity 15
5.3. Consents and Approvals; No Violation 16
5.4. Complete Systems 16
5.5. Title 16
5.6. Real Property 17
5.7. Environmental Matters 17
5.8. Compliance with Law; Governmental Permits 17
5.9. Seller Contracts 18
5.10. Copyright Compliance 18
5.11. Financial Statements 19
5.12. Legal Proceedings 19
5.13. Employment Matters 19
5.14. System Information 21
5.15. Finders and Brokers 21
5.16. Tax Matters 21
5.17. Condition of Equipment 21
5.18. Insurance 21
5.19. Franchises 21
5.20. Capital Project 22
ARTICLE VI 22
6. Buyer's Representations and Warranties 22
iii
6.1. Organization and Qualification 22
6.2. Authority and Validity 22
6.3. No Breach or Violation 22
6.4. Litigation 23
6.5. Financial Statements 23
6.6. Adequate Financing 24
6.7. Finders and Brokers 24
6.8. Qualification of Buyer 24
ARTICLE VII 24
7. Additional Covenants 24
7.1. Access to Premises and Records 24
7.2. Continuity and Maintenance of Operations; Financial
Statements 24
7.3. Employee Matters 26
7.4. Franchise Extensions 26
7.5. Environmental Report 26
7.6. Required Consents 26
7.7. HSR Notification 27
7.8. Notification of Certain Matters 27
7.9. Risk of Loss; Condemnation 27
7.10. Adverse Changes 28
7.11. Action By Limited Partners 28
7.12. No Solicitation 29
7.13. Sales and Transfer Taxes and Fees 29
7.14. Commercially Reasonable Efforts 30
7.15. Title Insurance 30
7.16. Non-Competition 30
7.17. Forms 394 30
7.18. Fairness Opinion 30
ARTICLE VIII 31
8. Conditions Precedent to Obligations of Buyer 31
8.1. XXX Xxx 00
8.2. Governmental or Legal Action 31
8.3. Accuracy of Representations and Warranties. 31
8.4. Performance of Agreements 31
8.5. No Material Adverse Change 31
8.6. Consents and Extensions 32
8.7. Transfer Documents 32
8.8. Opinions of Seller's Counsel 32
8.9. Opinion of Seller's FCC Counsel 32
8.10. Discharge of Liens 32
8.11. Additional Documents and Acts 32
iv
8.12. Indemnity Escrow Agreement 32
8.13. Certificates 32
8.14. Minimum Subscribers 32
ARTICLE IX 32
9. Conditions Precedent to Obligations of Seller 32
9.1. XXX Xxx 00
9.2. Governmental or Legal Actions 33
9.3. Accuracy of Representations and Warranties 33
9.4. Performance of Agreements 33
9.5. Consents 33
9.6. Opinions of Buyer's Counsel 33
9.7. Limited Partner Approval 33
9.8. Payment of Purchase Price 33
9.9. Assumption of Liabilities 33
9.10. Additional Documents and Acts 34
9.11. Certificate 34
9.12. Fairness Opinion 34
9.13. Indemnity Escrow Agreement 34
ARTICLE X 34
10. Termination 34
10.1. Events of Termination 34
10.2. Manner of Exercise 36
10.3. Effect of Termination 36
10.4. Liquidated Damages 36
ARTICLE XI 37
11. Nature and Survival of Representations,Warranties and
Agreements 37
11.1. Nature of Representations, Warranties and Agreements37
11.2. Survival of Representations and Warranties 37
11.3. Time Limitations 37
11.4. Limitations as to Xxxxxx 00
XXXXXXX XXX 00
00. Indemnification 38
12.1. Rights to Indemnification 38
12.2. Procedure for Indemnification. 38
12.3. Indemnity Escrow 39
ARTICLE XIII 39
v
13. Miscellaneous 39
13.1. Parties Obligated and Benefitted 39
13.2. Press Releases 40
13.3. Notices 40
13.4. Waiver 41
13.5. Captions 41
13.6. CHOICE OF LAW 41
13.7. Nonrecourse 42
13.8. Terms 42
13.9. Rights Cumulative 42
13.10.Further Actions 42
13.11.Time 42
13.12.Expenses 42
13.13.Specific Performance 42
13.14.Schedules 42
13.15.Counterparts 42
13.16.Entire Agreement 43
13.17.Severability 43
vi
EXHIBITS
Exhibit A Geographic Areas of Seller's Business
Exhibit B Escrow Agreement
Exhibit C Form of Engagement Letter
Exhibit D Form for Opinion of Seller's Counsel
Exhibit E Form for Opinion of Buyer's Counsel
Exhibit F Form for Opinion of Seller's FCC Counsel
Exhibit G Form of Indemnity Escrow Agreement
SCHEDULES
Schedule 1.1 Subscriber Rates
Schedule 1.2 Consents
Schedule 1.3 Equipment
Schedule 1.4 Franchise Areas
Schedule 1.5 Governmental Permits
Schedule 1.6 Permitted Encumbrances
Schedule 1.7 Real Property
Schedule 1.8 Seller Contracts
Schedule 1.9 System
Schedule 4.2 Excluded Assets
Schedule 5.3(b) Violations of Partnership Agreement and
Legal Requirements
Schedule 5.4 Complete Systems
Schedule 5.5 Encumbrances on Seller's Title
Schedule 5.8(f) FCC Information
Schedule 5.12 Legal Proceedings
Schedule 5.13(c) Employment Matters
Schedule 5.13(d) Employees
Schedule 5.13(e) Employer Plans
Schedule 5.14 System Information
Schedule 5.16 Taxes
Schedule 6.3(a) Consents to be Obtained or Waived by
Closing Date
vii
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as
of the 27th day of November, 1996, by and between AMERICAN CABLE
TV INVESTORS 5, LTD., a Colorado limited partnership ("Seller"),
and XXXX MULTIMEDIA PARTNERSHIP, a Pennsylvania general
partnership ("Buyer").
R E C I T A L S:
A. Seller is engaged in the business of providing
cable television service to subscribers in and around the
geographic areas set forth on Exhibit A.
B. Buyer desires to purchase and Seller desires to
sell the assets of Seller designated in this Agreement used or
held for use in connection with that business, upon the terms and
subject to the conditions set forth in this Agreement.
Accordingly, the parties agree as follows:
ARTICLE I
1. Definitions.
"Accounts Receivable" shall mean all accounts
receivable of Seller representing amounts earned by Seller in
connection with its operation of the Business through the
Adjustment Time.
"Adjustment Time" shall have the meaning set forth in
Section 3.2.
"Affiliate" shall mean, with respect to any Person, any
other Person controlling, controlled by or under common control
with such Person, with "control" for such purpose meaning the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or voting
interests, by contract or otherwise.
"Alternative Transaction" shall mean any transaction
which could result in the transfer of control over, or ownership
of, all or substantially all the Assets, including (a) any merger
or consolidation of Seller in which another Person or group of
Persons acquires 50% or more of the partnership interests in
Seller or the equity interests of the surviving entity, as the
case may be, (b) any tender offer or exchange offer for
partnership interests in Seller which, if consummated, would
result in a Person or group of Persons (other than the existing
partners in such entities as of the date of this Agreement)
owning 50% or more of the partnership interests in Seller or (c)
any sale or other disposition of all or substantially all the
Assets.
"Assets" shall mean all properties, privileges, rights,
interests and claims, real and personal, tangible and intangible,
of every type and description that are owned, leased, used or
held for use in the Business in which Seller has any right, title
or interest or in which Seller acquires any right, title or inter
est on or before the Closing Date, including, without limitation,
the System, Accounts Receivable, Governmental Permits,
Intangibles, Seller Contracts, Equipment, inventory and Real
Property and including, without limitation, all of the foregoing
disclosed in any Schedule but excluding any Excluded Assets and
any Assets disposed of by Seller in the ordinary course of
business prior to the Closing Date.
"Assumed Liabilities" shall have the meaning set forth
in Section 4.1.
"Basic Services" shall mean the lowest tier of cable
television programming sold to subscribers of the System for
which a subscriber served by the System pays a fixed monthly fee
to Seller, excluding Expanded Basic Services, Pay TV and any
charges for additional outlets and installation fees and revenues
derived from the rental of converters, remote control devices and
other like charges for equipment.
"Basic Subscriber Rate" shall mean, for the System, the
monthly fees and charges derived from the provision of Basic
Services to single family households, as of June 30, 1996, as set
forth on Schedule 1.1.
"Best of Seller's Knowledge" shall mean the actual
knowledge of Xxxxxx Xxxxx, Xxxxxx Xxxxxxx and Xxxx X. Xxxxxx.
"Business" shall mean the cable television business con
ducted by Seller on the date of this Agreement through the System
in and around the Franchise Areas.
"Business Day" shall mean any day other than Saturday,
Sunday or a day on which banking institutions in Denver, Colorado
or New York, New York are required or authorized to be closed.
"Buyer" shall mean the Person identified as such in the
preamble to this Agreement.
"Buyer Financial Statement" shall have the meaning set
forth in Section 6.5.
"Buyer Interim Financial Statement" shall have the
meaning set forth in Section 6.5.
"Cable Act" shall have the meaning set forth in Section 5.8.
"Capital Project" shall have the meaning set forth in
Section 5.20.
"Closing" shall mean the consummation of the
transactions contemplated by this Agreement, as described in Article II.
2
"Closing Date" shall mean the date on which the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment Expense" shall have the meaning set forth
in Section 3.3(b).
"Communications Act" shall have the meaning set forth
in Section 5.8(c).
"Consents" shall mean any registration with, consent or
approval of, notice to, or action by any Person or Governmental
Authority required to permit the transfer of the Assets to Buyer
or permit Seller to perform any of its other obligations under
this Agreement, as set forth on Schedule 1.2.
"Copyright Act" shall mean Title 17 of the United
States Code, as amended, and all rules and regulations
thereunder.
"Deposit" shall have the meaning set forth in Section 3.1.
"Employer" shall have the meaning set forth in Section 5.13(a).
"Employer Plans" shall have the meaning set forth in
Section 5.13(e).
"Encumbrance" shall mean any mortgage, lien, security
interest, security agreement, conditional sale or other title
retention agreement, limitation, pledge, option, charge,
assessment, restrictive agreement, restriction, encumbrance,
adverse interest, restriction on transfer or any exception
to or defect in title or other ownership interest (including
reservations, rights of way, possibilities of reverter, encroach
ments, easements, rights of entry, restrictive covenants, leases
and licenses).
"Environmental Law" shall mean any Legal Requirement
relating to pollution or protection of public health, safety
or welfare or the environment, including those relating to
emissions, discharges, releases or threatened releases of
Hazardous Substances into the environment (including ambient
air, surface water, ground water or land), or otherwise relating
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
"Equipment" shall mean all tangible personal property
used or held for use by Seller in the conduct of the Business and
operation of the System, including without limitation, all
electronic devices, trunk and distribution coaxial and optical
fiber cable, amplifiers, power supplies, conduit, vaults and
pedestals, grounding and pole hardware, subscriber's devices
(including converters, encoders, transformers behind television
sets and fittings), headend hardware (including origination,
earth stations, transmission and distribution system), test
equipment, vehicles and computers, including the items described
on Schedule 1.3.
3
"Equivalent Basic Subscribers" shall mean, with respect
to each Franchise Area, as of any date, the number of active
customers for Basic Services either in a single household, a
commercial establishment or a multi-unit dwelling (including a
hotel unit); provided, however, that the number of customers in a
commercial establishment or multi-unit dwelling that obtain
service on a "bulk-rate" basis shall be determined for each
Franchise Area by dividing the gross bulk-rate xxxxxxxx for Basic
Services and Expanded Basic Services (but excluding xxxxxxxx from
a la carte tiers or premium services, installation or other non-
recurring charges, converter rental or any outlet or connection
other than the first outlet or connection, pass-through charges
for sales taxes, line-itemized franchise fees, fees charged by
the FCC and the like) attributable to such commercial
establishment or multi-unit dwelling during the most recent
billing period ended prior to the date of calculation (but
excluding xxxxxxxx in excess of a single month's charge) by the
rate charged at the date of determination to individual
households for the highest level of Basic Services and Expanded
Basic Services offered in the Franchise Area, such rate not to be
less than the rate for such Franchise Area set forth on Schedule
1.1 (excluding xxxxxxxx from a la carte tiers or premium
services, installation or other non-recurring charges, converter
rental, pass-through charges for sales taxes, line-itemized
franchise fees, fees charged by the FCC and the like). For
purposes of this definition, (i) an "active customer" shall mean,
as of any date, any person, commercial establishment or multi-
unit dwelling that is paying for and receiving Basic Services
from the System in that Franchise Area who has an account that is
not more than 60 days past due (except for past due amounts of
$10.00 or less, provided such account is otherwise current) but
excluding any person, commercial establishment or multi-unit
dwelling that as of the date of calculation has not paid in full
the charges for at least one month of the services ordered and
(ii) the number of days a customer account is past due shall be
calculated from the first day of the period for which the
applicable billing relates.
"ERISA" shall have the meaning set forth in Section 5.13(b).
"Escrow Agent" shall have the meaning set forth in Section 3.1.
"Escrow Agreement" shall have the meaning set forth in
Section 3.1.
"Exchange Act" shall mean the Securities and Exchange
Act of 1934, as amended.
"Excluded Assets" shall have the meaning set forth in
Section 4.2.
"Excluded Liabilities" shall have the meaning set forth
in Section 4.1(b).
"Exhibits" shall mean the exhibits prepared and
delivered pursuant to this Agreement.
"Expanded Basic Services" shall mean any video
programming provided over the System, regardless of service tier,
other than Basic Services, any new product tier and video
programming offered on a per channel or per program basis, for
which a subscriber served by the System pays a fixed monthly fee
to Seller, excluding Pay TV and any charges for additional
4
outlets and installation fees and revenues derived from the
rental of converters, remote control devices and other like
charges for equipment.
"FCC" shall have the meaning set forth in Section 5.8(c).
"Final Adjustments Report" shall have the meaning set
forth in Section 3.4(b).
"Franchise Areas" shall mean those areas in which
Seller is authorized under one or more Governmental Permits
issued by the applicable franchising authorities to provide cable
television service to subscribers located in such areas through
the ownership and operation of the System, as set forth on
Schedule 1.4.
"GAAP" shall mean generally accepted accounting
principles as in effect in the United States of America on the
date of this Agreement.
"General Partner" shall mean IR-TCI Partners V, L.P.,
the general partner of Seller.
"Governmental Authority" shall mean any of the
following: (a) the United States of America; (b) any state,
commonwealth, territory or possession of the United States of
America and any political subdivision thereof (including
counties, municipalities and the like); or (c) any agency,
authority or instrumentality of any of the foregoing, including
any court, tribunal, department, bureau, commission or board.
"Governmental Permits" shall mean all franchises,
authorizations, permits, licenses, easements, registrations,
leases, variances and similar rights obtained from any
Governmental Authority which authorize or are required in
connection with the operation of the Business, including those
described on Schedule 1.5.
"Hazardous Substances" shall mean any pollutant,
contaminant, chemical, industrial, toxic, hazardous or noxious
substance or waste which is regulated by any Governmental
Authority, including without limitation (a) any petroleum or
petroleum compounds (refined or crude), flammable substances,
explosives, radioactive materials or any other materials or
pollutants which pose a hazard or potential hazard to the Real
Property or to Persons in or about the Real Property or cause the
Real Property to be in violation of any laws, regulations or
ordinances of federal, state or applicable local governments, (b)
asbestos or any asbestos-containing material of any kind or
character, (c) polychlorinated biphenyls ("PCBs"), as regulated
by the Toxic Substances Control Act, 15 U.S.C. 2601 et seq.,
(d) any materials or substances designated as "hazardous
substances" pursuant to the Clean Water Act, 33 U.S.C. 1251
et seq., (e) "economic poison," as defined in the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. 135
et seq., (f) "chemical substance," "new chemical substance" or
"hazardous chemical substance or mixture" pursuant to the Toxic
Substances Control Act, referred to above, (g) "hazardous
substances" pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. 9601 et seq. and
(h) "hazardous waste" pursuant to the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq.
5
"Homes Passed" shall mean, with respect to the System
and as of June 30, 1996, the total of (a) the number of single
family residences capable of being serviced without further line
construction, (b) the number of units in multi-family residential
buildings capable of being serviced without further line
construction and not then governed by bulk-service agreements and
(c) the number of bulk service agreements regardless of the
number of units serviced or the equivalent billing units.
"HSR Act" shall have the meaning set forth in Section 7.6.
"Indemnity Escrow Agent" shall mean The Chase Manhattan Bank.
"Indemnity Escrow Agreement" shall mean the Indemnity
Escrow Agreement to be entered into at Closing among Buyer,
Seller and the Indemnity Escrow Agent, in the form attached as
Exhibit G.
"Intangibles" shall mean all general intangibles,
including subscriber lists, claims (excluding any claims relating
to Excluded Assets), patents, copyrights and goodwill, if any,
owned, used or held for use by Seller in connection with the
Business.
"IRS" shall mean the Internal Revenue Service.
"Legal Requirement" shall mean any statute, ordinance,
code, law, rule, regulation, order or other requirement, standard
or procedure enacted, adopted or applied by any Governmental
Authority, including judicial decisions applying common law or
interpreting any other Legal Requirement.
"Limited Partners" shall mean the Persons who own or
hold units of limited partnership interests in Seller.
"Management Agreement" shall mean the agreement related
to the operation of the System and the other cable systems owned
by Seller between Seller and TCI Cablevision Associates, Inc.
(formerly known as Xxxxxxx & Associates, Inc.).
"Partnership Agreement" shall mean the Amended and
Restated Limited Partnership Agreement of Seller, dated as of
January 1, 1987, by and between IR-TCI Partners V, L.P. (formerly
known as IR-Xxxxxxx Partners V, L.P.), as the general partner,
and Xxxxx X. Xxxxx, as the initial limited partner.
"Pay TV" shall mean premium programming services
selected by and sold to subscribers of the System for monthly
fees in addition to the fee for Basic Services.
"Permitted Encumbrances" shall mean the following:
(a) liens for taxes, assessments and governmental charges not yet
due and payable; (b) zoning laws and ordinances and similar Legal
Requirements; (c) rights reserved to any Governmental Authority
to regulate
6
the affected property; (d) as to leased Assets, interests of lessors and
Encumbrances affecting the interests ofthe lessors; (e) the Encumbrances
described on Schedule 1.6; and (f) any liens, easements, rights-of-way,
servitudes, permits, leases, restrictions and imperfections or irregularities
in title that do not in any material respect, individually or in the
aggregate, affect or impair the value or use of the affected
Asset as it is currently being used by Seller in the Business or System.
"Person" shall mean any natural person, corporation,
partnership, trust, unincorporated organization, association,
limited liability company, Governmental Authority or other entity.
"Preliminary Adjustments Report" shall have the meaning
set forth in Section 3.4(a).
"Prime Rate" shall mean the rate of interest quoted
from time to time in The Wall Street Journal as the prime rate.
"Purchase Price" shall have the meaning set forth in
Section 3.1.
"Real Property" shall mean all Assets consisting of
interests in real property (including, to the extent applicable,
improvements, fixtures and appurtenances), including the fee and
leasehold interests described on Schedule 1.7.
"Regulatory Requirement" shall mean any filing required
pursuant to the Securities Act, the Exchange Act, the HSR Act,
state securities laws (including, but not limited to, state "blue
sky" laws) and state corporate laws (including, but not limited
to, takeover statutes).
"Required Consents" shall mean the Consents designated
as such on Schedule 1.2 by an asterisk.
"Schedules" shall mean the schedules prepared and
delivered pursuant to this Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Seller" shall mean the Person indicated as such in the
preamble to this Agreement.
"Seller Contracts" shall mean all contracts, agreements
and leases, other than those that are Governmental Permits, to
which Seller is a party and pertain to the ownership, operation
or maintenance of the Assets or the Business, including those
described on Schedule 1.8.
7
"Seller's Escrow" shall have the meaning set forth in
Section 3.1.
"Seller Financial Statements" shall have the meaning
set forth in Section 5.11.
"System" shall mean a cable television reception and
distribution system operated in the conduct of the Business,
consisting of one or more headends, subscriber drops and
associated electronic and other equipment, and which is, or is
capable of being without modification, operated as an independent
system without interconnections to other systems as set forth on
Schedule 1.9.
"Taking" shall have the meaning set forth in Section 7.7(b).
"Tax Return" shall mean any return, report, information
return or other document (including any related or supporting
information) filed or required to be filed with any taxing
authority in connection with the determination, assessment,
collection, administration or imposition of any Taxes.
"Taxes" shall mean all taxes, charges, fees, liens,
imposts, duties or other assessments including, but not limited
to, income, withholding, excise, employment, property, sales,
franchise, use and gross receipt taxes, imposed by the United
States or any state, county, local or foreign government or any
subdivision thereof. Such term shall also include any interest,
penalties or additions attributable to such assessments.
"TCI" shall mean TCI Communications, Inc., a Delaware
corporation.
"Telecom Act" shall have the meaning set forth in
Section 5.8(e).
"Termination Date" shall mean June 25, 1997; provided,
however, Seller shall have the right, upon five days notice to
Buyer, to extend the Termination Date to a date designated in
such notice, which date shall in no event be later than
August 25, 1997; provided further, Seller shall have the right,
upon five days notice to Buyer, to further extend the Termination
Date to a date designated in such notice, which date shall in no
event be later than November 24, 1997.
"WARN Act" shall mean the Worker Adjustment and
Retraining Notification Act.
ARTICLE II
2. Purchase and Sale of Assets.
2.1. Purchase and Sale of Assets. Subject to the
satisfaction of the conditions to each party's obligations set
forth in Articles VIII and IX (or, with respect to any condition
not satisfied, the waiver thereof by the party or parties for
whose benefit the condition exists), Seller shall sell, assign,
transfer and deliver to Buyer all of Seller's right, title and
interest in, and Buyer shall purchase, acquire, accept and pay
for, the Assets.
8
2.2. Time and Place of Closing. Subject to the terms
and conditions of this Agreement, the Closing shall take place at
10:00 a.m. New York City time on a date specified by notice from
Seller to Buyer (but shall not in any event be prior to the
satisfaction or waiver of the conditions to Closing as set forth
in Sections 8.1, 8.6, 9.1, 9.5 and 9.7), in New York, New York at
the offices of Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, or at
such other time or place as the parties may agree; provided,
however, the date specified in such notice shall not be less than
15 nor more than 40 days after the date of such notice (unless
the Termination Date would occur within such 15-day period, in
which event Seller shall have the right to designate any date
prior to the Termination Date as the date of Closing).
ARTICLE III
3. Consideration.
3.1. Consideration for the Assets. The aggregate
consideration for the Assets shall consist of (i) an amount equal
to $30,636,900, subject to proration as set forth in Section 3.2
and adjustment as set forth in Section 3.3 (the "Purchase Price")
and (ii) the assumption by Buyer of the Assumed Liabilities. The
Purchase Price shall be payable as follows: (a) $765,923 (such
amount, as increased by any earnings thereon and as reduced by
any disbursements or losses on investments, the "Deposit"),
payable concurrently with the execution and delivery of this
Agreement in cash by means of wire or interbank transfer in
immediately available funds to the trust account of Xxxx,
Scholer, Fierman, Xxxx & Handler, LLP (the "Escrow Agent"), to be
held, administered and distributed for the respective benefits of
the parties hereto in accordance with the terms of this Agreement
and the Escrow Agreement among Seller, Buyer and the Escrow Agent
dated the date of this Agreement (the "Escrow Agreement") in the
form set forth as Exhibit B attached hereto and (b) $30,636,900
payable by Buyer to Seller, or Seller's designee, at Closing in
cash by means of wire or interbank transfer in immediately
available funds, reduced by the amount, if any, of the Deposit
actually released to Seller, or Seller's designee. At Closing,
Seller and Buyer shall direct the Escrow Agent to release the
Deposit to Seller, or Seller's designee, in accordance with the
terms of the Escrow Agreement. Simultaneously with the payment of
the Purchase Price, Seller shall deposit $765,923 ("Seller's
Escrow") at Closing in cash by means of wire or interbank
transfer of immediately available funds to the account of the
Indemnity Escrow Agent, to be held, administered and distributed
in accordance with the terms of this Agreement and the Indemnity
Escrow Agreement.
3.2. Purchase Price Prorations. (a) All revenues
(other than Accounts Receivable being purchased by Buyer
hereunder) and all expenses arising from the operations of the
Business up until 12:01 a.m. on the Closing Date (the "Adjustment
Time"), including, but not limited to, pole rental fees, rental
or other charges payable in respect of the Seller Contracts,
sales and use taxes payable with respect to cable television
service and equipment, which shall not include sales or use taxes
arising out of the consummation of the transaction contemplated
hereunder, power and utility charges, real and personal property
taxes and assessments levied against the Assets, applicable
franchise, copyright or other fees, sales and service charges, wages,
9
payroll taxes and payroll expenses (including accrued
vacation pay except to the extent a Purchase Price adjustment in
Buyer's favor is made under Section 3.3) of employees of Employer
who primarily perform services in connection with the operation
of the Business who are employed by Buyer as of the Closing, and
other prepaid and deferred items shall be prorated between Buyer
and Seller as of the Adjustment Time in accordance with GAAP and
the principle that Seller shall receive all revenues (other than
Accounts Receivable being purchased by Buyer hereunder) and shall
be responsible for all expenses, costs and liabilities allocable
to the period prior to the Adjustment Time and Buyer shall
receive all revenues and shall be responsible for all expenses,
costs and liabilities allocable to the period after the
Adjustment Time.
(b) The amount of each item of revenue prorated
under subsection (a) above, to a party which has not received,
and under the terms of this Agreement will not receive, such
revenue shall be deemed a charge against the other party. The
amount of any item of cost or expense prorated under subsection
(a) above to a party which has not paid, and under the terms of
this Agreement will not pay, such cost or expense shall be deemed
a charge against such party. If the aggregate charges allocated
to Seller as set forth in this Section 3.2(b) exceed the
aggregate charges allocated to Buyer as set forth in this Sec
tion 3.2(b), the Purchase Price shall be decreased by an amount
equal to the difference between the aggregate charges allocated
to Seller and the aggregate charges allocated to Buyer. If the
aggregate charges allocated to Buyer as set forth in this Sec
tion 3.2(b) exceed the aggregate charges allocated to Seller as
set forth in this Section 3.2(b), the Purchase Price shall be
increased by an amount equal to the difference between the
aggregate charges allocated to Buyer and the aggregate charges
allocated to Seller.
3.3. Purchase Price Adjustments. (a) The Purchase
Price shall be increased by an amount equal to the aggregate of
the following:
(i) the face amount of all Accounts Receivable
which, as of the Closing Date, are outstanding for a period of
not more than 60 days after their respective invoice dates; and
(ii) to the extent not included in the prorations
to the Purchase Price as set forth in Section 3.2, the dollar
amount of all advance payments to, or deposits with, third
parties relating to the Business which, as of the Closing Date,
are for the account of Seller or are security for Seller's
performance of its obligations under any agreement relating to
the Business or any Assets, including, but not limited to,
deposits made with lessors and deposits for utilities to the
extent the foregoing will inure to the benefit of Buyer and are
net of known claims or charges against such payments or deposits.
(b) The Purchase Price shall be decreased by an
amount equal to the aggregate of the following:
(i) the dollar amount of the remaining balance,
as of the Closing Date, of all advance payments to, or monies of
third parties on deposit with, Seller relating to the Business,
including advance payments and deposits by customers served by
the Business for converters, encoders, decoders, cable service
and related sales;
10
(ii) the dollar amount of accrued vacation pay of
employees of Employer identified on Schedule 5.13(d) who are
employed by Buyer as of the Closing;
(iii) (a) 50% of the dollar amount of all
charges and fees of any financial institution incurred by Buyer
to extend its commitment and maintain its loan availability
necessary to pay the Purchase Price to Seller on and after
June 30, 1997 (the "Commitment Expense"), which Buyer would not
have incurred if the Closing had occurred prior to June 30, 1997;
provided, that the failure to close by such date is not
attributable to any default or breach by Buyer or Seller and
(b) 100% of the Commitment Expense if the failure to close by
June 30, 1997 is solely attributable to any default or breach by
Seller; provided, however, that, in either case, the amount by
which the Purchase Price is increased pursuant to this
Section 3.3(b)(iii) shall not exceed $125,000; and
(iv) if, as of the Closing Date, the aggregate
number of Equivalent Basic Subscribers served by the System is
less than 18,900, an amount equal to (x) the difference between
18,900 and the aggregate number of Equivalent Basic Subscribers
served by the System as of the Closing Date times (y) $1,621;
provided, that the amount by which the Purchase Price is
decreased pursuant to this Section 3.3(b) (iv) shall not exceed
$1,531,845; provided, however, that if the Preliminary
Adjustments Report sets forth a pro forma determination of the
adjustments set forth in this Section 3.3(c) based on an estimate
of the aggregate number of Equivalent Basic Subscribers served by
the System as of the Closing Date being greater than or equal to
17,955, then there shall be no limitation on the amount by which
the Purchase Price may be decreased pursuant to this Section
3.3(b)(iv).
3.4. Preliminary and Final Settlements. Preliminary
and final adjustments to the Purchase Price will be determined as
follows:
(a) At least five Business Days prior to the
Closing Date, Seller will deliver to Buyer a report (the
"Preliminary Adjustments Report"), prepared in good faith and on
a reasonable basis, setting forth in reasonable detail a pro
forma determination as of the Closing Date of the prorations set
forth in Section 3.2 and the adjustments set forth in Sec
tion 3.3. The Preliminary Adjustments Report shall be certified
by an authorized officer of the general partner of the General
Partner to have been prepared in good faith and on a reasonable
basis.
(b) Within 60 days after the Closing Date, Seller
will deliver to Buyer a report (the "Final Adjustments Report"),
prepared in good faith and on a reasonable basis, setting forth
in reasonable detail the final determination of the prorations
set forth in Section 3.2 and the adjustments set forth in Sec
tion 3.3. The Final Adjustments Report shall make such changes
to the Preliminary Adjustments Report as are necessary to cover
those prorations or adjustments which (i) were estimated or were
not calculated as of the Closing Date in the Preliminary
Adjustments Report and (ii) were adjusted in the Preliminary
Adjustments Report and which require subsequent adjustment. The
Final Adjustments Report shall be certified by an authorized
officer of the general partner of the General Partner to be true,
complete and correct as of the date it is delivered.
11
Buyer shall provide Seller with reasonable access to
all records which Buyer has in its possession and which are
necessary for Seller to prepare the Final Adjustments Report.
Seller shall provide Buyer with reasonable access to all records
which Seller has in its possession which are necessary for Buyer
to review and verify the Final Adjustments Report.
(c) Within 45 days after receipt of the Final
Adjustments Report, Buyer shall review the Final Adjustments
Report and notify Seller whether or not Buyer accepts all or any
of the prorations and adjustments set forth on the Final
Adjustments Report. If Buyer accepts the Final Adjustments
Report with respect to all prorations and adjustments contained
therein, Buyer or Seller, as appropriate, shall, within ten
Business Days of such acceptance, make the following payments:
(i) if the Purchase Price calculated based on the Final
Adjustments Report is greater than the Purchase Price calculated
based on the Preliminary Adjustments Report, Buyer shall pay such
difference to Seller in cash by wire or interbank transfer in
immediately available funds, or (ii) if the Purchase Price
calculated based on the Final Adjustments Report is less than the
Purchase Price calculated based on the Preliminary Adjustments
Report, Seller shall pay such difference to Buyer in cash by wire
or interbank transfer in immediately available funds. In the
event any payment required by this Section 3.4(c) is not made
when due, Seller or Buyer, as appropriate, shall make the payment
required by this Section 3.4(c) with interest accruing from the
date such payment was due at the Prime Rate plus 2.5%.
(d) If Buyer in good faith objects to any
prorations and/or adjustments set forth on the Final Adjustments
Report, Buyer shall give notice thereof to Seller within 45 days
after receipt of the Final Adjustments Report, specifying in
reasonable detail the nature and extent of such disagreement and
Buyer and Seller shall have a period of 45 days from Seller's
receipt of such notice in which to resolve such disagreement. If
such notice of objection is not received by Seller within 45 days
after receipt of the Final Adjustments Report, it shall be deemed
that Buyer has accepted the Final Adjustments Report with respect
to all items set forth therein and within three Business Days
after the expiration of such 45-day period Buyer or Seller, as
appropriate, shall make the payments described in Section 3.4(c).
Any disputed amounts which cannot be agreed to by the parties
within 45 days from Seller's receipt of Buyer's notice of
objection to any of the adjustments set forth in the Final
Adjustments Report shall be determined by a nationally recognized
accounting firm selected by Buyer and Seller who has not been
employed by Buyer or Seller for two years prior to the date
hereof (the "Accountants") in accordance with the engagement
letter set forth on Exhibit C attached hereto with such changes
as may be requested by the Accountants and approved by Buyer and
Seller. The engagement of and the determination by the
Accountants shall be binding on and shall be nonappealable by
Seller and Buyer. In the event that (a) the Purchase Price
calculated based on the determination by the Accountants is less
than the Purchase Price calculated based on the Final Adjustments
Report, the fees and expenses payable to the Accountants shall be
paid by Seller or (b) the Purchase Price calculated based on the
determination of the Accountants is greater than or equal to the
Purchase Price calculated based on the Final Adjustments Report,
the fees and expenses payable to the Accountants shall be paid by
Buyer. Seller and Buyer will bear equally the fees and expenses
payable to the Accountants in connection with such determination,
unless (a) the determination of the Accountants results in a
payment by Seller to Buyer of an amount which
12
exceeds 10 percent of the cash amount paid by Buyer to Seller on the Closing
Date, in which case the fees and expenses payable to the Accountants
shall be paid by Seller or (b) the determination of the
Accountants results in no payment from Seller to Buyer or results
in an additional payment from Buyer to Seller, in which case the
fees and expenses payable to the Accountants shall be paid by
Buyer. Within five Business Days after the determination by the
Accountants of all disputed prorations and/or adjustments, Buyer
or Seller, as appropriate, shall make the payments described in
Section 3.4(c) as if the determinations of the Accountants were
included in the Final Adjustments Report. In the event any
payment required by this Section 3.4(d) is not made when due,
Seller or Buyer, as appropriate, shall make the payment required
by this Section 3.4(d) with interest accruing from the date such
payment was due at the Prime Rate plus 2.5%.
3.5. Disputed Liabilities. If a proration or
adjustment to the Purchase Price is made in Buyer's favor for any
liability assumed by Buyer but is in good faith being contested
by Seller as of the Closing Date, and if Buyer is relieved of
this liability, Buyer shall pay to Seller or its designee in cash
(by means of wire or interbank transfer in immediately available
funds) an amount equal to the unpaid portion of this liability
within five Business Days after the date Buyer is relieved of
this liability. In the event any payment required by this Sec
tion 3.5 is not made by Buyer when due, Buyer shall make the
payment required by this Section 3.5 with interest accruing from
the date such payment was due at the Prime Rate plus 2.5%.
3.6. Allocation of Purchase Price. The Purchase Price
shall be allocated among the classes of assets set forth in Sec
tion 1060 of the Code and the regulations thereunder in the
manner agreed to by the parties prior to the Closing. After the
Closing, Seller shall cooperate with Buyer in the preparation,
execution and filing with the IRS of all information returns and
supplements thereto required to be filed by the parties under Sec
tion 1060 of the Code relating to the allocation of such
consideration, and Seller and Buyer agree to file Form 8594 (or
any substitute therefor) when required by applicable law.
ARTICLE IV
4. Assumed Liabilities and Excluded Assets.
4.1. Assignment and Assumption. (a) Seller will
assign, and Buyer will assume and perform for all periods on or
after the Adjustment Time (and prior to the Assignment Time with
respect to liabilities and obligations for which a Purchase Price
Adjustment has been made in Buyer's favor under Section 3.3) the
following liabilities and obligations of Seller (collectively,
the "Assumed Liabilities"): (A) Seller's obligations to
subscribers of the Business for (i) refunds of subscriber
deposits held by Seller as of the Closing Date in respect of
which a Purchase Price adjustment is made in Buyer's favor under
Section 3.3(b), (ii) refunds of subscriber advance payments held
by Seller as of the Closing Date for services to be rendered by
the System after the Closing Date, in respect of which a Purchase
Price adjustment is made in Buyer's favor under Section 3.3(b)
and (iii) the delivery of cable television service to customers
of the System after the Closing Date; (B) obligations and
liabilities in respect of which a
13
Purchase Price adjustment in Buyer's favor is made under Section 3.3 including,
but not limited to, accrued but unpaid real and personal property taxes
related to the Assets which correspond to a period of time prior
to the Adjustment Time, expenses accrued under Governmental
Permits and Seller Contracts which correspond to a period of time
prior to the Adjustment Time and certain accrued vacation pay;
(C) obligations accruing and relating to periods on or after the
Adjustment Time under Governmental Permits and Seller Contracts;
(D) any taxes accrued and relating to periods on or after the
Adjustment Time in connection with the ownership of the Assets
and the ownership of the Assets and the operation of the
Business; and (E) all other liabilities or obligations of Seller
arising out of or relating to the conduct of the Business and
incurred in the ordinary course of business.
(b) Notwithstanding any other provision of this
Agreement, except for the Assumed Liabilities, Buyer will not and
shall not assume or have any responsibility for any liabilities
or obligations of Seller or Employer which arise out of, result
from, or relate to the Excluded Assets or any matters allocable
to the period prior to the Adjustment Time, whether relating to
the Assets, the Business, the System or otherwise, unless a
Purchase Price adjustment in Buyer's favor has been made under
Section 3.3 (collectively, the "Excluded Liabilities").
Liabilities or obligations which relate to the Excluded
Liabilities shall be the obligation of Seller, which Seller
covenants and agrees to discharge in the ordinary course unless
such liability or obligation is being disputed by Seller in good
faith.
4.2. Excluded Assets. Excluded from the assets which
will be transferred from Seller to Buyer pursuant to this
Agreement (collectively, the "Excluded Assets") are all Seller's
right, title and interest in, to and under the following:
(a) all programming agreements relating to the Business; (b) all
insurance policies and rights and claims thereunder (except as
otherwise provided in Section 7.7(a)); (c) all bonds, letters of
credit, surety instruments and other similar items and any cash
surrender value thereunder; (d) all cash, cash equivalents and
securities; (e) all trademarks, trade names, service marks,
service names, logos and similar proprietary rights used in the
Business; (f) any contracts, licenses, authorizations, agreements
or commitments which are not assumed by Buyer pursuant to this
Agreement; (g) the Management Agreement; (h) any asset or
properties owned by Seller that are not used in the Business;
(i) all subscriber deposits and advance payments held by Seller
as of the Closing Date in connection with the operation of the
Business for which a Purchase Price adjustment is made in Buyer's
favor under Section 3.3(b); (j) all claims, rights and interests
in and to any refund for federal, state or local franchise,
income or other taxes or fees (including, but not limited to,
copyright fees) of any nature relating to the operation of the
Business prior to the Closing Date; (k) the account books of
original entry, general ledgers and financial records used in
connection with the Business, provided that for a period of three
years after the Closing Date, Buyer shall have access to and the
right to copy, at its expense, during usual business hours upon
reasonable prior notice to Seller, portions of such books and
records that are relevant to Buyer's ownership and operation of
the System; (l) the retransmission consent agreements relating to
the carriage of WMAR, WRC, WTTG, WBAL, WBFF and WJZ; and
(m) those properties, rights and interests set forth on Schedule 4.2.
14
ARTICLE V
5. Representations and Warranties of Seller.
Seller represents and warrants to Buyer as follows:
5.1. Organization and Qualification. Seller is a
limited partnership duly organized, validly existing and in good
standing under the laws of the state of Colorado and has all
requisite partnership power and authority to own, lease and use
the Assets as they are currently owned, leased and used and to
conduct the Business as it is currently conducted. Seller is
duly qualified or licensed to do business and is in good standing
under the laws of each jurisdiction where the Assets are located
and the Business is conducted, except any such jurisdiction where
the failure to be so qualified or licensed and in good standing
would not have a material adverse effect on the validity, binding
effect or enforceability of this Agreement, or on the ability of
Seller to perform its obligations under this Agreement.
5.2. Authority and Validity. Seller has full
partnership power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby by Seller have been duly
and validly authorized by all necessary action on the part of
Seller (other than, with respect to the sale of the Assets, the
approval of such transaction contemplated by this Agreement by
the Limited Partners). The General Partner has taken all
necessary action so that it may recommend that the Limited
Partners approve the transactions contemplated by this Agreement.
This Agreement has been duly and validly executed and delivered
by Seller and constitutes a valid and binding obligation of
Seller enforceable in accordance with its terms. Except for the
approval by the Limited Partners, no further partnership action
on the part of Seller is required in connection with the
consummation of the transactions contemplated by this Agreement.
5.3. Consents and Approvals; No Violation. (a) Except
for (i) the Consents, (ii) the consent of the Limited Partners
with respect to the transactions contemplated by this Agreement
and (iii) the Regulatory Requirements, no consent, waiver,
approval or authorization of, or filing, registration or
qualification with, any Governmental Authority is required to be
made or obtained by Seller in connection with the execution,
delivery and performance of this Agreement by Seller.
(b) Except as set forth on Schedule 5.3(b), the
execution, delivery and performance of this Agreement by Seller
do not and will not: (a) violate or conflict with any provision
of the Partnership Agreement; (b) violate any Legal Requirement;
or (c) (i) violate, conflict with or constitute a breach of or
default under (without regard to requirements of notice, passage
of time or elections of any Person), (ii) permit or result in the
termination, suspension or modification of, (iii) result in the
acceleration of (or give any Person the right to accelerate) the
performance of Seller under, or (iv) result in the creation or
imposition of any Encumbrance under, any Seller Contract or any
other instrument evidencing any of the Assets or any instrument
or other agreement to which Seller is a party or by which Seller
or any of its assets is
15
bound or affected, except such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications, and accelerations which would not,
individually or in the aggregate, have a material adverse effect on the System,
the Business, or Seller's ability to perform its obligations
under this Agreement or Buyer's ability to conduct the Business
after the Closing in substantially the same manner in which it is
currently conducted by Seller.
5.4. Complete Systems. The Assets represent all
assets, properties, franchises, licenses, permits, consents,
certificates, authorities, operating rights, leases, contracts,
(with the exception of programming contracts and retransmission
consents which Buyer acknowledges may need to be replaced in
order for Buyer to continue to operate the Business), agreements,
commitments and arrangements reasonably necessary for the conduct
of the Business in the ordinary course in the same manner as that
in which such business is currently conducted by Seller. No
property of the type or nature defined in this Agreement as an
"Asset" has been removed, sold, transferred or conveyed since
January 1, 1996, except (i) in the ordinary course of business,
(ii) for property which has been replaced or (iii) for property
which was not necessary for the operation of the Business.
5.5. Title. Except as set forth on Schedule 5.5 and
for the Permitted Encumbrances, Seller has, and on the Closing
Date will have, good and marketable title to the Assets. The
Assets on the Closing Date will be free and clear of all
Encumbrances of any kind or nature, other than Permitted
Encumbrances.
5.6. Real Property. (a) All the Assets consisting of
interests in Real Property that are material to the conduct of
the Business are described on Schedule 1.7. Seller has valid
leasehold interests in Real Property leased by Seller under
written leases or subleases, correct and complete copies of which
have been made available to Buyer.
(b) All easements, rights-of-way and other rights
obtained directly by Seller which are necessary in any material
respect for Seller's current use of any Real Property are valid
and in full force and effect, and, to Seller's knowledge after
due inquiry, Seller has not received any notice with respect to
the termination or breach of any of those rights.
5.7. Environmental Matters. (a) To the Best of
Seller's Knowledge, Seller's use of the Real Property complies in
all material respects with all Environmental Laws. Seller
has not received written or oral notice of any claim or
investigation based on Environmental Laws which relates to any
Real Property or any operations conducted by Seller on such Real
Property.
(b) Seller has provided, or prior to Closing will
provide, Buyer with complete and correct copies of (i) all
studies, reports, surveys or other materials in Seller's
possession relating to the presence or alleged presence of
Hazardous Substances at, on or affecting the Real Property,
(ii) all notices or other materials in Seller's possession that
were received from any Governmental Authority having the power to
administer or enforce any Environmental Laws relating to current
or past ownership, use or operation of the Real Property or
activities at the Real Property and (iii) all materials in
Seller's possession relating to any claim,
16
allegation or action by any private third party under any Environmental Law.
5.8. Compliance with Law; Governmental Permits.
(a) Except as set forth on Schedule 5.8, the ownership, the
leasing and use of the Assets as they are currently owned, leased
and used by Seller and the conduct of the Business as it is
currently conducted by Seller, do not violate any Legal
Requirement, which violation(s), individually or in the
aggregate, reasonably could be expected to have a material
adverse effect on the Business. Seller has not received any
notice claiming a material violation by Seller or the Business of
any Legal Requirement applicable to Seller or the Business as it
is currently conducted and, to the Best of Seller's Knowledge, no
basis exists for any person to claim that such a violation
exists.
(b) Schedule 1.5 lists all Governmental Permits
that are necessary to the conduct of the Business as it
is currently conducted by Seller. Complete and correct copies of
all such Governmental Permits as currently in effect have been,
or prior to the Closing will be, made available to Buyer. All
such Governmental Permits are currently in full force and effect.
There is no action, proceeding or investigation pending or, to
the Seller's knowledge after due inquiry, threatened, relating to
the termination, suspension or modification of any such
Governmental Permit and Seller is in compliance in all material
respects with the terms and conditions of all Governmental
Permits. Seller is not in violation of or default under any
material provision of any Governmental Permit, and to the
knowledge of Seller based on due inquiry, there exists no fact or
circumstance which, with the passage of time or the giving of
notice or both, would constitute a violation of or default under
any Governmental Permit, or permit any issuing Governmental
Authority to cancel or terminate the rights thereunder except
upon the expiration of the full term thereof.
(c) The operation of the System has been, and is,
in compliance in all material respects with the Communications
Act of 1934, as amended (as so amended, the "Communications
Act"), and the rules and regulations of the Federal Communi
cations Commission (the "FCC"), except that, as to any rate
regulation thereunder, the foregoing is limited to the Best of
Seller's Knowledge. Seller has delivered, or prior to Closing
will deliver, to Buyer complete and correct copies of all reports
and filings for the past three years made or filed pursuant to
the Communications Act or FCC rules and regulations with respect
to the Business.
(d) To the Best of Seller's Knowledge, the
operation of the System has been, and is, in compliance in all
material respects with the Cable Television Consumer Protection
and Competition Act of 1992 (the "Cable Act"), and the rules and
regulations of the FCC promulgated thereunder.
(e) To the Best of Seller's Knowledge, the
operation of the System has been, and is, in compliance in all
material respects with the Telecommunications Act of 1996 (the
"Telecom Act"), and the rules and regulations of the FCC
promulgated thereunder.
(f) Except to the extent that the failure to
comply with any of the following does not have a material adverse
effect on the Assets, the System or the Business and
17
except as set forth in Schedule 5.8 hereto, where required, appropriate
authorizations from the FCC have been obtained for the use of all
aeronautical frequencies in use in the System and the System is
presently being operated in compliance with such authorizations
(and all required certificates, permits and clearances from
governmental agencies, including the Federal Aviation
Administration), with respect to all towers, earth stations,
business radios and frequencies utilized and carried by the
System has been obtained. Schedule 5.8(f) sets forth information
identifying aeronautical frequencies, the geographic coordinate
of the approximate center of the System's service area and the
authorized radius of the System.
5.9. Seller Contracts. Schedule 1.8 lists all Seller
Contracts that are material to the conduct of the Business as it
is now conducted. Complete and correct copies of the Seller
Contracts as currently in effect have been, or prior to the
Closing will be, made available to Buyer. Neither Seller nor, to
the Best of Seller's Knowledge, any other party to any Seller
Contract is in any material respect in breach of the performance
of its obligations under any Seller Contract.
5.10. Copyright Compliance. Seller has deposited
with the United States Copyright Office all statements of account
and other documents and instruments, and paid all royalties,
supplemental royalties, fees and other sums to the United States
Copyright Office, required under the Copyright Act with respect
to the Business and operations of the System as are required to
obtain, hold and maintain the compulsory copyright license for
cable television systems prescribed in Section 111 of the
Copyright Act. Seller and the System are in material compliance
with the Copyright Act. Seller and the System are entitled to
hold and do now hold the compulsory copyright license described
in Section 111 of the Copyright Act, which compulsory copyright
license is in full force and effect and has not been revoked,
canceled, encumbered or materially adversely affected in any
manner. Seller has made available to Buyer complete and correct
copies of all reports and filings, and all reports and filings
for the past three years, made or filed pursuant to the Copyright
Act with respect to the Business. Seller has not received any
notice to the effect that the conduct of the Business as
currently conducted infringes on the rights of any Person in any
copyright or other intellectual property right, except as to
potential copyright liability arising from the performance,
exhibition or carriage of any music on the System.
5.11. Financial Statements. (a) Seller has
delivered to Buyer correct and complete copies of certain
financial information for the System for the years ended Decem
ber 31, 1995 and December 31, 1994 and the six-month period ended
June 30, 1996 (collectively, the "Seller Financial Statements").
Except for the absence of footnote disclosures, cash flow
statements and statements of equity and except for estimated,
annualized or projected financial information, the Seller
Financial Statements fairly present, in all material respects,
the results of operations of the System for the respective
periods ended on such dates, all in conformity with GAAP
consistently applied, and with respect to the Seller Financial
Statements for the six-month period ended June 30, 1996, subject
to normal year-end adjustments (none of which are expected to be
material in amount).
(b) Since the latest date of the Seller Financial
Statements (i) the
18
Business has been operated only in the ordinary course and (ii) there has been
no material adverse change in, and no event has occurred which, so far as
reasonably can be foreseen, is likely, individually or in the aggregate, to
result in any material adverse change in the results of
operations of the Business, other than any change arising out of
matters of a general economic nature or matters (including, but
not limited to, competition caused by or arising from direct
broadcast satellite, the Multichannel Multipoint Distribution
Service, legislation, rule making and regulation) affecting the
cable television industry (national or regional) in general.
5.12. Legal Proceedings. Except for any judgments,
orders, actions, suits, proceedings or investigations as may
affect the cable television industry (national or regional)
generally, there is no judgment or order outstanding, or any
action, suit, proceeding or investigation by or before any
Governmental Authority or any arbitrator pending or, to Seller's
knowledge based on due inquiry, threatened, involving or
affecting any of the Assets or the Business which, if adversely
determined, would have a material adverse effect on the Assets or
the Business or would materially impair the ability of Seller to
perform its obligations under this Agreement.
5.13. Employment Matters. (a) Seller does not
employ any individuals in connection with the operation of the
Business and does not, and is not obligated to, maintain or
contribute to any employee benefit plan, as defined in Sec
tion 3(3) of ERISA. All individuals managing the operations of
the Business are employees of TCI or its Affiliates (other than
Seller) (the "Employer"). The Employer is reimbursed for
employee-related expenses relating to the operations of the
Business by Seller under the Management Agreement or the
Partnership Agreement.
(b) To Seller's knowledge after inquiry of
Employer, Employer has complied in all material respects with all
Legal Requirements relating to the employment of labor and those
relating to wages, hours, collective bargaining, unemployment
compensation, worker's compensation, equal employment
opportunity, age and disability discrimination, immigration
control and the payment and withholding of taxes with respect to
employees of Employer who primarily perform services in
connection with the operation of the Business.
(c) Employer is not a party to any contract with
any labor organization, and Employer has not recognized or agreed
to recognize any union or other collective bargaining unit with
respect to employees of Employer who primarily perform services
in connection with the operation of the Business. Except as set
forth on Schedule 5.13(c), no union or other collective
bargaining unit has been certified as representing any of the
employees engaged in the operation of the Business, and, to the
Best of Seller's Knowledge, Employer has not received any request
from any party for recognition as a representative of employees
engaged in the operation of the Business for collective
bargaining purposes. Neither Seller nor Employer is party to any
agreement, oral or written, express or implied, that would
require Buyer to employ any individual after the Closing Date.
(d) Schedule 5.13(d) sets forth a true and
complete list of all individuals employed by Employer who
primarily perform services with respect to the operation
19
of the Business. Except as provided on Schedule 5.13(d), neither Seller
nor Employer is a party to any written employment contract,
agreement, commitment or arrangement with any individual
identified on Schedule 5.13(d).
(e) Except for those plans described on Sched
ule 5.13(e) and in the TCI Employee Handbook dated February, 1995
(the "Employer Plans"), which are sponsored by the Employer, or
to which the Employer contributes or is obligated to contribute,
the employees of Employer who primarily perform services with
respect to the operation of the Business do not receive benefits
under any bonus, deferred compensation, pension, profit-sharing,
retirement, severance pay, insurance, stock purchase, stock
option, or other fringe benefit plan, arrangement or practice, or
any other employee benefit plan, as defined in Section 3(3) of
ERISA.
(f) Seller has not incurred or taken any action,
and to the Best of Seller's Knowledge, no action or event has
occurred, that could cause Seller to incur any material liability
(i) under Section 412 of the Code or Title IV of ERISA with
respect to any Employer Plan that is a single-employer plan,
within the meaning of Section 4001(a)(15) of ERISA, (ii) on
account of a partial or complete withdrawal from any Employer
Plan that is a multiemployer plan, within the meaning of Sec
tion 3(37) of ERISA, or on account of any unpaid contributions to
any such multiemployer plan, or (iii) for any tax or penalty
under Section 4975 of the Code or Section 502(i) of ERISA on
account of any prohibited transaction, within the meaning of Sec
tion 4975 of the Code or Section 406 of ERISA, with respect to
any Employer Plan.
5.14. System Information. (a) (i) The number of
Equivalent Basic Subscribers served by the System, the number of
subscribers served by the System taking Expanded Basic Services
and the bandwidth of the System and (ii) to Seller's knowledge
based on due inquiry, the number of Homes Passed by the System
and the approximate number of miles of plant included in the
Assets, each as of June 30, 1996, are as set forth on
Schedule 5.14.
(b) Seller has filed offset notifications or
obtained appropriate waivers for all aeronautical frequencies
currently in use by the System. Seller's use of such
aeronautical frequencies is in compliance with all applicable FCC
rules, regulations and requirements. The System is presently
carrying channels and is providing reception on all such channels
in compliance with the technical standards set forth in all
applicable FCC rules, regulations and requirements.
(c) To the Best of Seller's Knowledge, the System
is the only cable television system presently servicing the area
included in the Franchise Areas or in any area in which Seller
operates the Business that does not require a franchise.
5.15. Finders and Brokers. Except for its
engagement of Xxxxxxx & Associates, L.P. to assist Seller in the
solicitation of offers to purchase the Assets and except for a
disposition fee payable by Seller to an Affiliate pursuant to its
Partnership Agreement, Seller has not employed any financial
advisor, broker or finder or incurred any liability for any
financial advisory, brokerage, finder's or similar fee or
commission in connection with the transactions contemplated by
this Agreement.
20
5.16. Tax Matters. Except as set forth on Schedule
5.16, (a) all Tax Returns required to be filed by Seller before
the Closing with respect to the Business or the Assets have been
or will be filed on or before the Closing and (b) all Taxes shown
as due or payable before the Closing on such Tax Returns have
been or will be paid when required by law.
5.17. Condition of Equipment. The Equipment
material to the operation of the System is generally in good
repair and operating condition (subject to normal wear and tear).
5.18. Insurance. Seller has maintained insurance
policies in the ordinary course of business which when taken
together provide adequate insurance coverage for the Assets and
the operations of the Business for all risks normally insured
against by a Person carrying on the same business as Seller.
5.19. Franchises. The franchises described on
Schedule 1.5 are the franchises necessary for Seller to operate
the System lawfully and in a manner in which it is presently
being operated. As of the date of this Agreement, no community
serviced by the System has become certified by the FCC for the
purpose of regulating a System's operations and/or rates.
5.20. Capital Project. By the Closing Date, Seller
shall have completed in good and workmanlike manner the capital
project represented to be undertaken and completed by Seller in
the Xxxxxx & Associates, L.P. Information Memorandum dated May
1996 (the "Capital Project") and the description of the Capital
Project set forth in the memorandum shall be deemed to be
incorporated herein by reference
ARTICLE VI
6. Buyer's Representations and Warranties.
Buyer represents and warrants to Seller as follows:
6.1. Organization and Qualification. Buyer is a
corporation or partnership, as the case may be, duly organized,
validly existing and in good standing under the laws of its state
of incorporation or formation and has all requisite corporate or
partnership power and authority to carry on its business as cur
rently conducted and to own, lease, use and operate its assets.
Buyer is duly qualified or licensed to do business and is in
good standing under the laws of each jurisdiction in which the
character of the properties owned, leased or operated by it or
the nature of the activities conducted by it makes such quali
fication necessary, except where the failure to be so qualified
or licensed and in good standing would not have a material
adverse effect on the validity, binding effect or enforceability
of this Agreement or the ability of Buyer to perform its
respective obligations under this Agreement.
6.2. Authority and Validity. Buyer has all requisite
corporate or partnership, as the case may be, power and authority
to execute, deliver and perform its obligations under this
21
Agreement. The execution and delivery by Buyer of, the performance by
Buyer of its obligations under, and the consummation by Buyer of the
transactions contemplated by, this Agreement have been duly authorized by all
requisite corporate or partnership action, as the case may be, of Buyer and no
other corporate or partnership proceedings, as the case may be, on the
part of Buyer, are necessary to authorize the execution and
delivery of this Agreement or the performance of Buyer's
obligations hereunder. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes a valid and
binding agreement of Buyer, enforceable in accordance with its
terms.
6.3. No Breach or Violation. (a) Except for (i) any
consents that will be obtained by Buyer or waived on or prior to
the Closing Date and are identified on Schedule 6.3(a),
(ii) filings and consents which, if not made or obtained, would
not have a material adverse effect on Buyer's ability to perform
its obligations under this Agreement and (iii) the Regulatory
Requirements, no consent, waiver, approval or authorization of,
or filing, registration or qualification with, any Governmental
Authority is required to be made or obtained by Buyer in
connection with the execution, delivery and performance of this
Agreement by Buyer.
(b) The execution, delivery and performance of
this Agreement by Buyer do not and will not: (a) violate or
conflict with any provision of Buyer's Certificate of
Incorporation or By-Laws or partnership agreement, as the case
may be, (b) violate any Legal Requirement; or (c) (i) violate,
conflict with or constitute a breach of or default under (without
regard to requirements of notice, passage of time or elections of
any Person), (ii) permit or result in the termination, suspension
or modification of, (iii) result in the acceleration of (or give
any Person the right to accelerate) the performance of Buyer
under, or (iv) result in the creation or imposition of any
Encumbrance under, any material contract, agreement, arrangement,
commitment or plan to which Buyer is a party or by which Buyer or
any of its assets is bound or affected, except such violations,
conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in
the aggregate, have a material adverse effect on Buyer's ability
to perform its obligations under this Agreement.
6.4. Litigation. (a) There are no claims, actions,
suits, proceedings or investigations pending or, to the best of
Buyer's knowledge, threatened, in any court or before any
governmental agency or instrumentality, or before any arbitrator,
by or against or affecting or relating to Buyer, or any of its
Affiliates which, if adversely determined, would restrain or
enjoin the consummation of the transactions contemplated by this
Agreement or declare unlawful the transactions or events
contemplated by this Agreement or cause any of such transactions
to be rescinded.
(b) There are no judgments, injunctions, orders
or other judicial or administrative mandates outstanding against
or affecting Buyer or any of its Affiliates which would
materially hinder or delay the consummation of the transactions
contemplated by this Agreement.
6.5. Financial Statements. Buyer has delivered to
Seller copies of its audited financial statements for its last
fiscal year ("Buyer Financial Statement"). The Buyer Financial
22
Statement and the notes thereto fairly present the assets,
liabilities and financial condition of Buyer as of the date
thereof and the results of operations and cash flows or changes
in financial position, as applicable, of Buyer for the period
ended on such date, all in conformity with GAAP consistently
applied, except as may be noted therein. Buyer has delivered to
Seller copies of its unaudited financial statements for its last
fiscal quarter ("Buyer Interim Financial Statement"). Except as
noted therein, the Buyer Interim Financial Statement was prepared
on a basis consistent with the Buyer Financial Statement and
fairly presents, in conformity with GAAP consistently applied,
the financial position of Buyer as of such date and the results
of operations and cash flows or changes in financial position, as
applicable, for such period, subject to normal year-end
adjustments (none of which are expected to be material in
amount), other adjustments noted therein and the absence of
footnotes.
6.6. Adequate Financing. Buyer currently has, or
has received binding commitments pursuant to which one or more
lenders or investors have agreed to loan or contribute to Buyer,
all funds necessary to satisfy all its obligations under this
Agreement and with respect to the transactions contemplated by
this Agreement, including its obligations to purchase the Assets
and to pay the Purchase Price to Seller.
6.7. Finders and Brokers. Buyer has not employed any
financial advisor, broker or finder or incurred any liability for
any financial advisory, brokerage, finder's or similar fee or
commission in connection with the transactions contemplated by
this Agreement for which Seller will in any way have any
liability.
6.8. Qualification of Buyer. Buyer knows of no reason
why it cannot obtain the licenses and permits necessary for it to
own and operate the Business in the manner in which it is
currently conducted by Seller.
ARTICLE VII
7. Additional Covenants.
7.1. Access to Premises and Records. Between the date
of execution and delivery of this Agreement and the Closing Date,
Seller will give Buyer and its representatives, during normal
business hours and with reasonable prior notice, access to the
books, records and facilities of the Business and to the Assets
and will furnish to Buyer and its representatives such
information regarding the Business and the Assets as Buyer may
from time to time reasonably request.
7.2. Continuity and Maintenance of Operations;
Financial Statements. Except as to actions which Buyer has been
advised and to which it has consented in writing and except as
specifically permitted or required by this Agreement or required
by any Legal Requirement, Seller shall:
(a) Operate the Business in the ordinary course
consistent with past
23
practices and will use commercially reasonable efforts to cause Employer to
keep available the services of the employees of the Employer who are primarily
involved in the operation of the Business and to preserve any
beneficial business relationships with subscribers, customers,
suppliers, Governmental Authorities and others having business
dealings with Seller relating to the Business;
(b) Maintain the Assets in operating condition
consistent with past maintenance practices;
(c) Maintain adequate inventories of spare
Equipment consistent with past practice;
(d) Maintain insurance as in effect on the date
of this Agreement;
(e) Complete the Capital Project and otherwise
conform its operations to its existing capital budget through the
Closing Date;
(f) Keep all of its business books, records and
files in the ordinary course of business in accordance with past
practices;
(g) Continue to implement its procedures for
disconnection and discontinuance of service to subscribers whose
accounts are delinquent in accordance with those in effect on the
date of this Agreement;
(h) Not sell, transfer or assign any Assets other
than in the ordinary course of business;
(i) Use commercially reasonable efforts not to
permit any material amendment to, or cancellation of, any of the
Governmental Permits or Seller Contracts;
(j) Not enter into any contract or commitment for
the acquisition of goods or services relating to the System or
the Business involving an expenditure in excess of $40,000 other
than in the ordinary course of business;
(k) Not modify or change the Basic Subscriber
Rate or any other subscriber rates nor employ any new promotions
to obtain subscribers that provide a discount or other feature
that results in rates lower than those presently in effect other
than in the ordinary course of business in accordance with past
practices or with Buyer's written consent; or
(l) Not take or omit to take any action that
would cause Seller to be in breach of any of its representations
or warranties in this Agreement in any material respect,
provided, however, that the foregoing shall not preclude Seller
from engaging a financial advisor to render an opinion as to the
fairness, from a financial point of view, of the transactions
contemplated by this Agreement.
Seller shall continue to prepare all periodic
statements and reports historically
24
prepared by it regarding the System and shall deliver to Buyer, promptly after
such statements and reports become available to Seller, correct and complete
copies of unaudited monthly and quarterly income statements and
operating reports for the System that are prepared by or for
Seller at any time between the date of this Agreement and the
Closing; provided, that, subject to the following sentence,
Seller shall not be required to make and shall not be deemed to
make any representation or warranty concerning such statements or
the contents of any such information delivered to Buyer. Unless
the Closing occurs on or before April 30, 1997 or Buyer waives
the following requirements, Seller shall deliver to Buyer (i)
promptly when available, a copy of the financial statements for
the System for the year ended December 31, 1996, and (ii) at
Closing, if the Closing occurs after May 15, 1997 but before
August 15, 1997 or after August 15, 1997, internally prepared
financial statements for the System for the three-month or six-
month period ended March 31, 1997 or June 30, 1997, as
applicable; except for the absence of footnote disclosures, cash
flow statements and statements of equity and except for
estimated, annualized or projected financial information, the
financial statements delivered pursuant to this sentence shall
fairly present, in all material respects, the results of
operations of the System for the respective periods ended on such
dates, all in conformity with GAAP consistently applied, and with
respect to the financial statements for the three-month and six-
month periods ended March 31, 1997 and June 30, 1997, subject to
normal year-end adjustments.
7.3. Employee Matters. (a) Buyer may offer employment
to certain of the employees of Employer who primarily perform
services with respect to the operation of the Business as of the
Closing Date. Not later than February 24, 1997, Buyer shall
deliver to Seller a notice containing the names of employees of
the Business whom Buyer intends to hire on the Closing Date;
provided that if the Termination Date is extended by Seller,
Buyer may deliver to Seller a notice no later than 60 Business
Days prior to the extended Termination Date updating the list of
employees to which Buyer intends to hire on the Closing Date.
Seller shall undertake to provide to all affected employees and
any other necessary persons any notice that may be required under
the WARN Act.
(b) Nothing in this Section 7.3 or elsewhere in
this Agreement is intended to confer upon any employee of
Employer or his or her legal representative or heirs any rights
as a third party beneficiary or otherwise or any remedies of any
nature or kind whatsoever under or by reason of this Agreement,
or the transactions contemplated hereby, including, but not
limited to, any rights of employment or continued employment.
All rights and obligations created by this Agreement are solely
between the parties hereto.
7.4. Franchise Extensions. Seller covenants and agrees
that, as soon as practicable following the execution of this
Agreement, it will apply to the applicable Governmental Authority
for an extension (the "Extensions") of each franchise described
on Schedule 1.5 with an expiration date prior to June 30, 2000.
Each such Extension shall have an expiration date no earlier than
June 30, 2000 and may include modifications customarily imposed
by Governmental Authorities issuing cable television franchises
as a condition to obtaining such Extension but in any event shall
not impose any conditions or obligations which are materially
more burdensome than contained in the current franchise.
25
7.5. Environmental Report. Buyer may cause to be
prepared at its expense a Phase I environmental report for the
Real Property described on Schedule 1.7. Seller shall cooperate
with Buyer and permit access to the Real Property during normal
business hours in order for the Phase I environmental report to
be prepared. Seller shall permit Buyer during normal business
hours to inspect environmental records in the possession of
Seller which are necessary for the preparation of the Phase I
environmental report.
7.6. Required Consents. Seller will use commercially
reasonable efforts to obtain, as soon as practicable and at its
expense, all the Required Consents, in form and substance
reasonably satisfactory to Buyer; provided, that "commercially
reasonable efforts" for this purpose shall not require Seller to
undertake extraordinary or unreasonable measures to obtain such
approvals and consents, including, but not limited to, the
initiation or prosecution of legal proceedings or the payment of
fees in excess of normal and usual filing and processing fees.
Buyer will use commercially reasonable efforts to assist Seller
in its efforts to obtain all the Required Consents and the
Extensions, and in connection therewith will consent to such
modifications to any Governmental Permit that a Governmental
Authority may request as a condition to (i) the transfer of such
permit to Buyer and/or (ii) obtaining extension of the term of
such Governmental Permit, provided, however, that Buyer will not
be required to agree to any modifications to a Governmental
Permit unless they are customarily imposed by Governmental
Authorities issuing cable television franchises as a condition to
obtaining the consent to the transfer of such franchises and do
not impose upon Buyer any conditions or obligations which are
materially more burdensome than are contained in any such
Governmental Permit.
7.7. HSR Notification. As soon as practicable after
the execution of this Agreement and if required by applicable
Legal Requirements, Seller and Buyer will each complete and file,
or cause to be completed and filed, any notification and report
required to be filed under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). Each of
the parties will take any additional action that may be
necessary, proper or advisable, will cooperate to prevent
inconsistencies between their respective filings and will furnish
to each other such necessary information and reasonable
assistance as the other may reasonably request in connection with
its preparation of necessary filings or submissions under the HSR
Act. Buyer and Seller shall use commercially reasonable efforts
(including the filing of a request for early termination) to
obtain the early termination of the waiting period under the HSR
Act.
7.8. Notification of Certain Matters. Each party will
promptly notify the other of any fact, event, circumstance or
action the existence or occurrence of which would cause any of
such party's representations or warranties under this Agreement
not to be true in any material respect.
7.9. Risk of Loss; Condemnation. (a) Seller will bear
the risk of any loss or damage to the Assets resulting from fire,
theft or other casualty (except reasonable wear and tear) at all
times prior to the Closing. If any such loss or damage is so
substantial as to prevent normal operation of any material
portion of the System, Seller shall promptly notify Buyer of that
fact and Buyer, at any time within 10 days after receipt of such
notice, may elect by written notice to
26
Seller either (i) to waive such defect and proceed toward consummation of the
acquisition of the Assets in accordance with this Agreement or (ii) to
terminate this Agreement pursuant to Section 10.1(c)(v). If Buyer elects
to consummate the acquisition of the Assets notwithstanding such
loss or damage and does so, there will be no adjustment in the
Purchase Price on account of such loss or damage but all
insurance proceeds payable as a result of the occurrence of the
event resulting in such loss or damage (to the extent not
previously applied by Seller with respect to such loss or damage)
will be delivered by Seller to Buyer or the rights to such
proceeds will be assigned by Seller to Buyer if not yet paid over
to Seller.
(a) If, prior to the Closing, any part of a
material Asset or an interest in a material Asset is taken or
condemned as a result of the exercise of the power of eminent
domain, or if a Governmental Authority having such power informs
Seller or Buyer that it intends to condemn all or any part of a
material Asset (such event being referred to, in either case, as
a "Taking"), then Buyer may terminate this Agreement pursuant to
Section 10.1(c)(vi). If Buyer does not elect to terminate this
Agreement then (a) if the Closing occurs, Buyer shall have the
sole right, in the name of Seller, if Buyer so elects, to
negotiate for, claim, contest and receive all damages with
respect to the Taking, (b) Seller shall be relieved of its
obligation to convey to Buyer the Asset or interests that are the
subject of the Taking and (c) at the Closing Seller shall assign
to Buyer all of Seller's rights (including the right to receive
payment of damage) with respect to such Taking and shall pay to
Buyer all damages previously paid to Seller with respect to the
Taking.
7.10. Adverse Changes. Seller shall promptly
notify Buyer in writing of any materially adverse developments
affecting the Assets, the System or the Business which become
known to Seller, including, but not limited to, (i) any damage,
destruction or loss (whether or not covered by insurance)
materially and adversely affecting any of the Assets, the System
or the Business, (ii) any material notice of violation,
forfeiture or complaint under any material Governmental Permits,
(iii) anything which, if not corrected prior to the Closing Date,
will prevent Seller from fulfilling any condition to Closing
described in Article VIII or (iv) matters or events which may
have a material adverse effect upon the Business, the System, or
the business activities, finances, conditions or earnings for the
System.
7.11. Action By Limited Partners. (a) If required
by applicable Legal Requirements and the Partnership Agreement to
consummate the transactions contemplated by this Agreement, or if
the Seller otherwise elects to do so, the Seller, acting through
the General Partner, shall in accordance with the applicable
Legal Requirements and the Partnership Agreement: (i) within a
reasonable period of time (as determined by the General Partner)
after the execution and delivery of this Agreement, duly call,
give notice of, convene and hold a special meeting (the "Special
Meeting") of the Limited Partners for the purpose of approving
the transactions contemplated by this Agreement; and (ii) subject
to its fiduciary duties (as determined by the General Partner
after consultation with independent counsel), include in any
proxy statement the determination and recommendation of the
General Partner to the effect that the General Partner, having
determined that this Agreement and the transactions contemplated
hereby are in the best interests of Seller and the Limited
Partners, has approved this Agreement and such transactions and
recommends that the Limited Partners vote in favor of the sale of
the Assets to Buyer pursuant to this Agreement.
27
(b) As soon as practicable after the execution
and delivery of this Agreement, Seller shall, at its sole cost
and expense, file with the SEC under the Exchange Act, and shall
use commercially reasonable efforts to clear with the SEC and
mail to the Limited Partners no later than February 15, 1997, a
proxy statement with respect to the Special Meeting (the "Proxy
Statement"). Seller and Buyer shall cooperate in the preparation
of any Proxy Statement; without limiting the generality of the
foregoing, Buyer shall furnish to Seller the information relating
to Buyer required by the Exchange Act to be set forth in the
Proxy Statement. Seller agrees that the Proxy Statement shall
comply in all material respects with the Exchange Act and the
rules and regulations thereunder; provided, however, that no
agreement is made by Seller with respect to information supplied
by Buyer expressly for inclusion in the Proxy Statement. Buyer
and its counsel shall be given a reasonable opportunity to review
the Proxy Statement prior to the filing thereof with the SEC.
7.12. No Solicitation. (a) Seller shall not, and
shall cause the General Partner, employees, agents and
representatives (including, but not limited to, any investment
banker, attorney or accountant retained by Seller) not to,
initiate, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal with respect to any
Alternative Transaction, engage in any negotiations concerning,
or provide to any other Person any information or data relating
to, the Business, the System, the Assets or Seller for the
purposes of, or have any discussions with any Person relating to,
or otherwise cooperate in any way with or assist or participate
in, facilitate or encourage, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead
to, any effort or attempt by any other Person to seek or to
effect an Alternative Transaction, or agree to or endorse any
Alternative Transaction; provided, however, that nothing
contained in this Section 7.12 shall prohibit Seller or the
General Partner from making any disclosure to the Limited
Partners that, in the judgment of the General Partner based upon
the advice of independent counsel, is required under applicable
Legal Requirements; and provided, further, that (i) Seller or the
General Partner may, upon the unsolicited request of a third
party, furnish information or data (including, but not limited
to, confidential information or data) relating to the Business,
the System, the Assets or Seller for the purposes of facilitating
an Alternative Transaction and participate in negotiations with a
Person making (or who may reasonably be expected to make) an
unsolicited proposal regarding an Alternative Transaction and
(ii) following receipt of a proposal for an Alternative
Transaction, Seller or the General Partner may terminate this
Agreement pursuant to Section 10.1(b)(ii).
(b) TCI shall not, and shall cause its Affiliates
which it controls not to, make a proposal to Seller regarding an
Alternative Transaction. The restriction set forth in this Sec
tion 7.12(b) shall terminate on the earlier of (i) the Closing or
(ii) termination of this Agreement.
7.13. Sales and Transfer Taxes and Fees. Buyer and
Seller shall each pay 50 percent of any state or local sales,
use, transfer, excise, documentary or license taxes or fees or
any other charge (including filing fees) imposed by any
Governmental Authority as a consequence of the transfer of any
Assets pursuant to this Agreement. Seller shall timely file any
28
sales tax returns required to be filed with any Governmental
Authority as a consequence of the transfer of any Assets pursuant
to this Agreement. Buyer shall cooperate in the preparation and
filing of any submission or application necessary to obtain any
clearance relating to, or, if available, exemption from, any
Taxes or fees described in this Section 7.13.
7.14. Commercially Reasonable Efforts. (a) Seller
shall use commercially reasonable efforts to take all steps
within its power, and will cooperate with Buyer, to cause to be
fulfilled those of the conditions to Buyer's obligations to
consummate the transactions contemplated by this Agreement that
are dependent upon its actions, and to execute and deliver such
instruments and take such other reasonable actions as may be
necessary or appropriate in order to carry out the intent of this
Agreement and consummate the transactions contemplated hereby.
(b) Buyer shall use commercially reasonable
efforts to take all steps within its power, and will cooperate
with Seller, to cause to be fulfilled those of the conditions to
Seller's obligations to consummate the transactions contemplated
by this Agreement that are dependent upon its actions and to
execute and deliver such instruments and take such other
reasonable actions as may be necessary or appropriate in order to
carry out the intent of this Agreement and consummate the
transactions contemplated hereby.
7.15. Title Insurance. Seller shall cooperate with
Buyer if Buyer elects to obtain title insurance policies on any
Real Property owned in fee or leased. Buyer shall have the sole
responsibility for obtaining and paying for such policies. The
parties agree that the obtaining of title insurance on any Real
Property shall not be a condition to the obligation of Buyer to
consummate the transactions contemplated hereby.
7.16. Non-Competition. Each of Seller and the General
Partner hereby covenants and agrees that for the period
commencing on the Closing Date and expiring on the third
anniversary thereof, it shall not, directly or indirectly,
compete with Buyer in the provision of terrestrial cable
television video services by means of cable, microwave, fiber
optics, satellite receivers or broadcasts all of which being
directed to the delivery of terrestrial cable television video
services to businesses, residences, multi-family dwellings,
hotels, motels, trailers and other users, in any portion of the
Franchise Areas in which the Business operates on the Closing
Date. Each of Seller and the General Partner further covenants
that for the period commencing on the Closing Date and expiring
on the third anniversary thereof, it shall not, directly or
indirectly, manage, operate, join, control, participate, or
become interested in, or be connected with (as a consultant,
partner, stockholder or investor) any such terrestrial cable
television video service that would compete with Buyer in the
provision of cable television service within any portion of the
geographical area described above, except as a passive investor
or stockholder holding less than five percent of the outstanding
voting stock or equity interest in any corporation or other
entity.
7.17. Forms 394. At Seller's option, Buyer shall
prepare, in form and substance reasonably satisfactory to Seller,
within 15 Business Days after receipt of Seller's written
request, and Seller shall file, Forms 394 with the applicable
Governmental Authorities.
29
7.18. Fairness Opinion. Seller shall use commercially
reasonable efforts to obtain the Fairness Opinion.
ARTICLE VIII
8. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer under this Agreement are
subject to the satisfaction at or prior to the Closing of each of
the following conditions, any one or more of which may be waived
by Buyer, in its sole discretion.
8.1. HSR Act. If required under applicable Legal
Requirements, all filings required under the HSR Act shall have
been made and the applicable waiting period shall have expired or
been earlier terminated without the receipt of any objection or
the commencement or threat of any litigation by a Governmental
Authority of competent jurisdiction to restrain the consummation
of the transactions contemplated by this Agreement.
8.2. Governmental or Legal Action. No action, suit or
proceeding shall be pending or threatened by or before any
Governmental Authority and no Legal Requirement shall have been
enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental
Authority that would (a) prohibit Buyer's ownership or operation
of all or a material portion of the System, the Business or the
Assets or (b) prevent or make illegal the consummation of the
transactions contemplated by this Agreement.
8.3. Accuracy of Representations and Warranties. The
representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date, with
the same effect as though made on and as of the Closing Date,
except for such changes permitted or contemplated by the terms of
this Agreement and except insofar as any of such representations
and warranties relate solely to a particular date or period, in
which case they shall be true and correct in all material
respects on such Closing Date with respect to such date and
period.
8.4. Performance of Agreements. Seller shall have
performed in all material respects all obligations and agreements
and complied, or caused to be complied with, all covenants and
conditions required by this Agreement to be performed or complied
with by Seller at or prior to the Closing Date.
8.5. No Material Adverse Change. During the period
from the date of this Agreement through and including the Closing
Date, there shall not have occurred any material adverse change
in the business, financial condition or operations of the
Business, taken as a whole, other than any change arising out of
matters of a general economic nature or matters (including, but
not limited to, competition caused by or arising from the
Multichannel Multipoint Distribution Service, direct broadcast
satellite, legislation, rule making and regulation) affecting
30
the cable television industry (national or regional) generally, and
Seller shall not have sustained any material loss or damage to
the Assets or the System, whether or not insured, that materially
affects the ability of Seller to conduct the Business in a manner
consistent with past practice.
8.6. Consents and Extensions. Seller shall have
delivered to Buyer evidence, in form and substance reasonably
satisfactory to Buyer, that all the Required Consents and
Extensions have been obtained or given.
8.7. Transfer Documents. Seller shall have delivered
to Buyer customary bills of sale, deeds, assignments and other
instruments of transfer sufficient to convey good and marketable
title to the Assets in accordance with the terms of this
Agreement.
8.8. Opinions of Seller's Counsel. Buyer shall have
received the opinion or opinions of Xxxx, Scholer, Fierman, Xxxx
& Handler, LLP, counsel for Seller, dated the Closing Date,
substantially in the form of Exhibit D.
8.9. Opinion of Seller's FCC Counsel. Buyer shall
have received the opinion of Xxxx, Raywid & Xxxxxxxxx, FCC
counsel for Seller, dated the Closing Date, substantially in the
form of Exhibit F.
8.10. Discharge of Liens. Seller shall have secured
the termination of all material Encumbrances of any nature on the
Assets, other than Permitted Encumbrances.
8.11. Additional Documents and Acts. Seller shall have
delivered or caused to be delivered to Buyer all other documents
required to be delivered pursuant to this Agreement and done or
caused to be done all other acts or things reasonably requested
by Buyer to evidence compliance with the conditions set forth in
this Article VIII.
8.12. Indemnity Escrow Agreement. Seller shall have
executed and delivered the Indemnity Escrow Agreement.
8.13. Certificates. Seller shall have furnished Buyer
with such other certificates of Seller and others, dated as of
the Closing Date, to evidence compliance with the conditions set
forth in this Article VIII, as may be reasonably requested by
Buyer.
8.14. Minimum Subscribers. The aggregate number of
Equivalent Basic Subscribers served by the System as of the
Closing Date shall not be less than 17,955.
ARTICLE IX
9. Conditions Precedent to Obligations of Seller.
The obligations of Seller under the Agreement are
subject to the satisfaction, at or prior to the Closing Date, of
each of the following conditions, any one or more of which may be
waived by Seller in its sole discretion.
31
9.1. HSR Act. If required under applicable Legal
Requirements, all filings required under the HSR Act shall have
been made and the applicable waiting period shall have expired or
been earlier terminated without the receipt of any objection or
the commencement or threat of any litigation by a Governmental
Authority of competent jurisdiction to restrain the consummation
of the transactions contemplated by this Agreement.
9.2. Governmental or Legal Actions. No action, suit
or proceeding shall be pending or threatened by or before any
Governmental Authority and no Legal Requirement shall have been
enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental
Authority that would (a) prohibit Buyer's ownership or operation
of all or any material portion of the System, the Business or the
Assets or (b) prevent or make illegal the consummation of the
transactions contemplated by this Agreement.
9.3. Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date, with
the same effect as though made on and as of the Closing Date,
except for such changes permitted or contemplated by the terms of
this Agreement and except insofar as any of such representations
and warranties relate solely to a particular date or period, in
which case they shall be true and correct in all material
respects on such Closing Date with respect to such date and
period.
9.4. Performance of Agreements. Buyer shall have
performed in all material respects all obligations and agreements
and complied, or caused to be complied with, all covenants and
conditions required by this Agreement to be performed or complied
with by Buyer at or prior to the Closing Date.
9.5. Consents. All Required Consents shall have been
obtained or given.
9.6. Opinions of Buyer's Counsel. Seller shall have
received the opinion or opinions of Hourigan, Kluger, Xxxxxxx &
Xxxxx, P.C., outside counsel for Buyer, dated the Closing Date,
substantially in the form of Exhibit E.
9.7. Limited Partner Approval. The transactions
contemplated by this Agreement shall have been approved by the
affirmative vote of or consent by the Limited Partners to the
extent required by the Partnership Agreement or if Seller
otherwise elects as permitted by Section 7.11.
9.8. Payment of Purchase Price. Buyer shall have paid
to Seller the Purchase Price as set forth in Section 3.1.
9.9. Assumption of Liabilities. Buyer shall have
delivered to Seller a customary assumption of liabilities
agreement which is sufficient to cover Buyer's obligations for
the Assumed Liabilities as set forth in Section 4.1.
32
9.10. Additional Documents and Acts. Buyer shall have
delivered or caused to be delivered to Seller all other documents
required to be delivered pursuant to this Agreement and done all
other acts or things reasonably requested by Seller to evidence
compliance with the conditions set forth in this Article IX.
9.11. Certificate. Buyer shall have furnished Seller
with such other certificates of Buyer and others, dated as of the
Closing Date, to evidence compliance with the conditions set
forth in this Article IX, as may be reasonably requested by
Seller.
9.12. Fairness Opinion. Seller shall have received an
opinion (the "Fairness Opinion"), in form and substance
reasonably satisfactory to Seller, from its financial advisors as
to the fairness, from a financial point of view, of the
transactions contemplated by this Agreement.
9.13. Indemnity Escrow Agreement. Buyer shall have
executed and delivered the Indemnity Escrow Agreement.
ARTICLE X
10. Termination.
10.1. Events of Termination. This Agreement and the
transactions contemplated by this Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual written consent of Buyer and
Seller;
(b) by Seller:
(i) if the consummation of the transactions
contemplated by this Agreement by Seller would
violate any nonappealable final order, decree or
judgment of any Governmental Authority having
competent jurisdiction;
(ii) following receipt by Seller or the General
Partner of an unsolicited proposal for an
Alternative Transaction to the extent that the
General Partner determines in good faith on the
basis of advice of independent counsel that such
action is necessary or appropriate in order for
the General Partner to act in a manner that is
consistent with its fiduciary obligations under
applicable law;
(iii) if any representation or warranty of Buyer
made herein is untrue in any material respect
(other than a change permitted or contemplated by
this Agreement) and such breach is not cured
within 10 days of Buyer's receipt of a notice
from Seller that such breach exists or
33
has occurred;
if Buyer shall have defaulted in any
material respect in the performance of any
material obligation under this Agreement and such
breach is not cured within 30 days of Buyer's
receipt of a notice from Seller that such default
exists or has occurred; or
(v) if any one or more of the conditions to
Seller's obligations to consummate the Closing as
set forth in Article IX cannot reasonably be
satisfied on or before the Termination Date.
(c) by Buyer:
(i) if the consummation of the transactions
contemplated by this Agreement by Buyer would
violate any nonappealable final order, decree or
judgment of any Governmental Authority having
competent jurisdiction;
(ii) if any representation or warranty of Seller
made herein is untrue in any material respect
(other than due to a change permitted or
contemplated by this Agreement) and such breach
is not cured within 10 days of Seller's receipt
of a notice from Buyer that such breach exists or
has occurred;
(iii) if Seller shall have defaulted in any
material respect in the performance of any
material obligation under this Agreement and such
breach is not cured within 30 days of Seller's
receipt of a notice from Buyer that such default
exists or has occurred;
(iv) if any one or more of the conditions to
Buyer's obligations to consummate the Closing as
set forth in Article VIII cannot reasonably be
satisfied on or before the Termination Date;
(v) within 10 days after receipt by Buyer of a
notice from Seller that the loss or damage to the
Assets resulting from fire, theft or other
casualty is so substantial as to prevent normal
operation of any material portion of the System,
as contemplated by Section 7.9(a);
(vi) following a Taking, as contemplated by the
first sentence of Section 7.9(b);
(d) Unless the Closing shall have theretofore
taken place, by either party after the Termination Date, provided
that the terminating party is not otherwise in default or breach
of this Agreement.
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10.2. Manner of Exercise. In the event of the
termination of this Agreement by either Buyer or Seller, pursuant
to Section 10.1, notice thereof shall forthwith be given to the
other party and this Agreement shall terminate and the
transactions contemplated hereunder shall be abandoned without
further action by Buyer or Seller.
10.3. Effect of Termination. (a) Subject to paragraph
(b) of this Section 10.3, in the event of the termination of this
Agreement pursuant to Section 10.1 and prior to the Closing, all
obligations of the parties hereunder shall terminate, except for
the respective obligations of the parties under Section 13.12;
provided, however, that no termination of this Agreement shall
(i) except as set forth in Section 10.3(b) and Section 10.4,
relieve a defaulting or breaching party from any liability to the
other party or parties hereto for or in respect of such default
or (ii) result in the rescission of any transaction theretofore
consummated hereunder.
(b) If this Agreement is terminated after
June 30, 1997 (i) by Seller pursuant to Section 10.1(b)(ii) or
(ii) by Buyer pursuant to Section 10.1(c) solely because Seller
is in default or breach of the Agreement and Buyer is not
otherwise in default or breach of this Agreement, Seller shall
promptly (within ten days of termination) pay to Buyer the
Commitment Expense incurred by Buyer, up to $125,000. If this
Agreement is terminated by (i) Seller pursuant to
Section 10.1(b)(ii) or (ii) by Buyer pursuant to 10.1(c)(iii) due
to Seller's non-compliance with Section 7.18, Seller shall
promptly (within ten days of termination) pay to Buyer a
termination fee of $765,923; provided, that if Seller terminates
this Agreement pursuant to Section 10.1(b)(ii) with respect to an
unsolicited proposal for an Alternative Transaction proposed by a
Person who submitted a written proposal prior to the date of this
Agreement to purchase the System pursuant to the competitive
auction conducted by Xxxxxxx & Associates, L.P., then the amount
of such termination fee shall be $1,148,884. Any such
termination fee shall be liquidated damages and not a penalty,
and upon receipt thereof Buyer shall be precluded from exercising
any other right or remedy available under this Agreement or
applicable law.
10.4. Liquidated Damages. Provided Seller is not in
default of this Agreement and in the absence of any right of
Buyer to terminate this Agreement under Section 10.1(c) above, in
the event of (i) the breach or default by Buyer of its
obligations under this Agreement and (ii) the termination of this
Agreement prior to the Closing, Seller shall have the option,
upon notice from Seller to Buyer given as provided in the Escrow
Agreement, to receive as liquidated damages, and not as a
penalty, the Deposit. In the event Seller elects to receive the
Deposit as liquidated damages as set forth in this Section 10.4,
Buyer shall promptly (but in no event more than two Business Days
after receipt of such notice) take all action required under the
Escrow Agreement to cause the Deposit to be released to Seller.
If Seller elects to receive the Deposit as liquidated damages as
set forth in this Section 10.4, Seller shall, upon receipt of the
Deposit, be precluded from exercising any other right or remedy
available under this Agreement or applicable law.
ARTICLE XI
11. Nature and Survival of Representations,
Warranties and Agreements.
35
11.1. Nature of Representations, Warranties and
Agreements. Neither party will be deemed to have made any
representation, warranty, covenant or agreement except as set
forth in this Agreement. Without limiting the generality of the
foregoing, neither party will be liable or bound in any manner by
any express or implied representation, warranty, covenant or
agreement that is made by any employee, agent or other Person
representing or purporting to represent such party.
11.2. Survival of Representations and Warranties. The
representations and warranties of Seller and Buyer in this
Agreement and in the documents and instruments to be delivered by
Seller and Buyer pursuant to this Agreement shall survive the
Closing as and to the extent only set forth in this Article XI.
11.3. Time Limitations. If the Closing occurs, Seller
shall have no liability to Buyer with respect to any
representation or warranty or any covenant, agreement or
obligation to the extent required to be performed or complied
with prior to the Closing Date, unless on or before the first
anniversary of the Closing Date Seller is given written notice by
Buyer asserting a claim with respect thereto and specifying the
factual basis of that claim in reasonable detail to the extent
then known by Buyer. If the Closing occurs, Buyer shall have no
liability to Seller with respect to any representation or
warranty or any covenant, agreement or obligation to the extent
required to be performed or complied with prior to the Closing
Date, unless on or before the first anniversary of the Closing
Date Buyer is given written notice by Seller of a claim with
respect thereto and specifying the factual basis of that claim in
reasonable detail to the extent then known by Seller. A claim
with respect to any covenants to be performed or complied with by
Buyer or Seller after the Closing Date may be asserted at any
time.
11.4. Limitations as to Amount. (a) If the Closing
occurs, Seller shall have no liability (for indemnification or
otherwise) with respect to any failure or breach of any
representation or warranty or any covenant, agreement or
obligation to the extent required to be performed on or prior to
the Closing Date until the total of all damages with respect to
such failure or breach exceeds $50,000, and then only for damages
in excess of $50,000.
(b) If the Closing occurs, Buyer shall have no
liability (for indemnification or otherwise) with respect to any
failure or breach of any representation or warranty or any
covenant, agreement, or obligation to the extent required to be
performed on or before the Closing Date until the total of all
damages with respect to such failure or breach exceeds $50,000,
and then only for damages in excess of $50,000.
(c) If the Closing occurs, Seller's aggregate
liability (for indemnification or otherwise) with respect to any
failure or breach of any representation or warranty or any
covenant, agreement or obligation to the extent required to be
performed on or prior to the Closing Date shall be limited to
Buyer's right to make an indemnification claim against Seller
under Article XII and shall be further limited as set forth in
Section 12.3.
(d) If the Closing occurs, Buyer's aggregate
liability (for
36
indemnification or otherwise) with respect to any failure or breach of any
representation or warranty or any covenant, agreement or obligation to the
extent required to be performed on or prior to the Closing Date shall be
limited to $765,923.
ARTICLE XII
12. Indemnification.
12.1. Rights to Indemnification. Subject to the
limitations set forth in Sections 11.3 and 11.4, Seller agrees to
indemnify and hold harmless Buyer against any loss, liability,
claim, damage or expense (including, but not limited to,
reasonable attorneys' fees and disbursements) arising from (a)
any claim for brokerage or agent's or finder's commissions or
compensation in respect of the transactions contemplated by this
Agreement by any Person purporting to act on behalf of Seller,
(b) any claim that Buyer is liable for the Excluded Liabilities
and (c) Seller's failure or breach of any representation,
warranty, covenant, agreement or obligation made or required to
be performed by Seller under this Agreement. Subject to the
limitations set forth in Sections 11.3 and 11.4, Buyer agrees to
indemnify and hold harmless Seller against any loss, liability,
claim, damage or expense (including, but not limited to,
reasonable attorneys' fees and disbursements) arising from (a)
any claim for brokerage or agent's or finder's commissions or
compensation in respect of the transactions contemplated by this
Agreement by any Person purporting to act on behalf of Buyer or,
(b) the failure to perform the obligations of the Assumed
Liabilities or (c) Buyer's failure or breach of any
representation, warranty, covenant, agreement or obligation made
or required to be performed by Buyer under this Agreement.
12.2. Procedure for Indemnification. Promptly after
receipt by an indemnified party under Section 12.1 of notice of
the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against an indemnifying
party under such section, give notice to the indemnifying party
of the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it
may have to any indemnified party except to the extent the
indemnifying party demonstrates that the defense of such action
is prejudiced thereby. In case any such action shall be brought
against an indemnified party and it shall promptly give notice to
the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and,
to the extent that it shall wish, within ten Business Days of
receipt of such notice, to assume the defense thereof with
counsel satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such section
for any fees of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party in connection
with the defense thereof, other than reasonable costs of
investigation. If an indemnifying party assumes the defense of
such action, (a) no compromise or settlement thereof may be
effected by the indemnifying party without the indemnified
party's consent unless (i) there is no finding or admission of
any violation of law or any violation of the rights of the
indemnified party and no effect on any other claims that may be
made against the indemnified
37
party and (ii) the sole relief provided is monetary damages that are paid
in full by the indemnifying party and (b) the indemnifying party shall have no
liability with respect to any compromise or settlement thereof
effected without its consent (which shall not be unreasonably
withheld). If notice is given within ten Business Days to an
indemnifying party of the commencement of any action and it does
not, within ten days after the indemnified party's notice is
given, give notice to the indemnified party of its election to
assume the defense thereof, the indemnifying party shall be bound
by any determination made in such action or any compromise or
settlement thereof effected by the indemnified party.
Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that an
action may adversely affect it or its Affiliates other than as a
result of monetary damages, such indemnified party may, by notice
to the indemnifying party, assume the exclusive right to defend,
compromise or settle such action, but the indemnifying party
shall not be bound by any determination of an action so defended
or any compromise or settlement thereof effected without its
consent (which shall not be unreasonably withheld).
12.3. Indemnity Escrow. Buyer acknowledges and agrees
that recourse against the Seller's Escrow is its sole and
exclusive remedy in the event of a claim against Seller with
respect to any representation or warranty or any covenant,
agreement or obligation, whether for indemnification pursuant to
Article XI or this Article XII or otherwise; provided, however,
that this limitation shall not apply to claims by Buyer for
breaches of covenants to be performed or complied with by Seller
after the Closing Date.
ARTICLE XIII
13. Miscellaneous.
13.1. Parties Obligated and Benefitted. (a) Subject
to the limitations set forth in clauses (b) and (c) below, this
Agreement will be binding upon the parties and their respective
assigns and successors in interest and will inure solely to the
benefit of the parties and their respective assigns and
successors in interest, and no other Person will be entitled to
any of the benefits conferred by this Agreement.
(b) 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 Buyer may assign this Agreement to any Affiliate
of Buyer without Seller's consent; provided, however, that
notwithstanding such assignment Buyer shall remain obligated to
Seller pursuant to the terms and conditions of this Agreement.
13.2. Press Releases. Except as required by applicable
law based on the advice of independent counsel, neither party
shall make any public announcement, press release or Form 8-K
filing under the Exchange Act with the SEC or any other filing
with any other regulatory agency with respect to the transactions
contemplated by this Agreement, without the prior written
approval of the other party. Prior to the Closing Date (or at
any time if the Closing does not occur), Buyer shall, and shall
cause its officers, directors and representatives to, keep
38
confidential and not disclose to any Person (other than its
officers, employees and representatives) or use (except in
connection with the transactions contemplated hereby, including,
but not limited to, efforts to obtain from Governmental
Authorities and third parties Required Consents and Extensions to
the transactions contemplated hereby and the operation of the
Business) all non-public information obtained by Buyer pursuant
to this Agreement. Except as permitted by Section 7.12 (a)
hereof, prior to and following the closing, Seller shall, and
shall cause its officers, employees and representatives to, keep
confidential and not disclose to any Person or use (except in
connection with preparing Tax Returns, conducting proceedings
relating to Taxes or the Excluded Liabilities and, prior to the
Closing Date, as required in conduct of the Business) any non-
public information relating to the Business, and any information
relating to Buyer. Buyer agrees to the inclusion of a
description of the transactions contemplated by this Agreement in
a letter to the Limited Partners. This Section 13.2 shall not be
violated by disclosure pursuant to court order or as otherwise
required by law, on condition that notice of the requirement for
such disclosure is given to the other party hereto prior to
making any disclosure and the party subject to such requirement
cooperates as the other may reasonably request in resisting it.
13.3. Notices. All notices, consents, approvals,
demands, requests and other communications required or desired to
be given hereunder must be given in writing, shall refer to this
Agreement, and shall be sent by registered or certified mail,
return receipt requested, by hand delivery, by facsimile or by
overnight courier service, addressed to the parties hereto at
their addresses set forth below, or such other addresses as they
may designate by like notice:
To Seller:
American Cable TV Investors 5, Ltd.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile No.: (000) 000-0000
With copies to:
Xxxx, Scholer, Fierman,
Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
To Buyer:
Xxxx Multimedia Partnership
000 X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
39
Attention; Xxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
With a copy to:
Hourigan, Kluger, Xxxxxxx & Xxxxx, P.C.
000 Xxxxxx Xxxx Xxxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Any notice from a party hereto may be given by such
party's respective attorneys. Any notice or other communications
made hereunder shall be deemed to have been given (i) if
delivered personally, by overnight courier service or by
facsimile, on the date received, or (ii) if by registered or
certified mail, return receipt requested, five business days
after mailing.
13.4. Waiver. This Agreement or any of its provisions
may not be waived except in writing. The failure of any party to
enforce any right arising under this Agreement on one or more
occasions will not operate as a waiver of that or any other right
on that or any other occasion.
13.5. Captions. The article and section captions of
this Agreement are for convenience only and do not constitute a
part of this Agreement.
13.6. CHOICE OF LAW. THIS AGREEMENT AND THE LEGAL
RELATIONS BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO THE PERFORMED IN THAT STATE,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
13.7. Nonrecourse. Notwithstanding anything in this
Agreement to the contrary, in any action brought by reason of
this Agreement or the transactions contemplated hereby, no
judgment shall be sought or obtained against any of the general
or limited partners of Seller or enforced against any of such
partners or any of their assets.
13.8. Terms. Terms used with initial capital letters
will have the meanings specified, applicable to both singular and
plural forms, for all purposes of this Agreement. The word
"include" and derivatives of that word are used in this Agreement
in an illustrative sense rather than a limiting sense.
13.9. Rights Cumulative. Except as set forth in Sec
tion 10.4, all rights and remedies of each of the parties under
this Agreement will be cumulative, and the exercise of one or
more rights or remedies will not preclude the exercise of any
other right or remedy available under this Agreement or
applicable law.
13.10. Further Actions. Seller and Buyer will
execute and deliver to the other,
40
from time to time at or after the Closing, for no additional consideration
and at no additional cost to the requesting party, such further assignments,
certificates, instruments, records, or other documents,
assurances or things as may be reasonably necessary to give full
effect to this Agreement and to allow each party fully to enjoy
and exercise the rights accorded and acquired by it under this
Agreement.
13.11. Time. If the last day permitted for the
giving of any notice or the performance of any act required or
permitted under this Agreement falls on a day which is not a
Business Day, the time for the giving of such notice or the
performance of such act will be extended to the next succeeding
Business Day.
13.12. Expenses. 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.
13.13. Specific Performance. The parties agree that
irreparable damages would occur if any of the provisions of this
Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States
or any state having jurisdiction, in addition to any other remedy
to which they are entitled at law or in equity.
13.14. Schedules. Any disclosure made on a Schedule
to this Agreement will be deemed included on any other Schedule
to which such disclosure may be pertinent.
13.15. Counterparts. This Agreement may be executed
in one or more counterparts, each of which will be deemed an
original.
13.16. Entire Agreement. This Agreement (including
the Schedules and Exhibits referred to in this Agreement, which
are incorporated in and constitute a part of this Agreement)
contains the entire agreement of the parties and supersedes all
prior oral or written agreements and understandings with respect
to the subject matter. This Agreement may not be amended or
modified except by a writing signed by the parties.
13.17. Severability. Any term or provision of this
Agreement which is invalid or unenforceable will be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining rights of the
Person intended to be benefitted by such provision or any other
provisions of this Agreement.
41
IN WITNESS WHEREOF the parties hereto have executed
this Agreement as of the day and year first above written.
SELLER: AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI Partners V, L.P.,
its general partner
By: TCI Ventures Five, Inc.,
its general partner
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: President
BUYER: XXXX MULTIMEDIA PARTNERSHIP
By: Cable TV, Inc., Managing General Partner
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: President
With respect to Section 7.12(b) only:
TCI COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President
With respect to Section 7.16 only:
IR-TCI PARTNERS V, L.P.
By: TCI Ventures Five, Inc., its general partner
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: President
