PURCHASE AGREEMENT
DATED AS OF APRIL 18, 1999
AMONG
INTERMEDIA CAPITAL MANAGEMENT VI, LLC,
INTERMEDIA MANAGEMENT INC.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
TCI ICM VI, INC.,
INTERMEDIA CAPITAL MANAGEMENT VI, L.P.,
▇▇▇▇▇▇▇▇▇▇ ▇▇ CAPITAL PARTNERS, L.P.,
▇▇▇▇▇▇▇▇▇▇ ▇▇ OFFSHORE CAPITAL PARTNERS, L.P.,
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P.,
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., as Sellers,
TCI IP-VI, LLC (For the Limited Purposes Set Forth in
Sections 6.12 and 8.2(g) and (h)),
AND
INSIGHT COMMUNICATIONS COMPANY, L.P.,
as Buyer
PURCHASE AGREEMENT
DATED AS OF APRIL 18, 1999
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TABLE OF CONTENTS
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ARTICLE 1
CERTAIN DEFINITIONS
1.1 Terms Defined in this Section......................................................................1
1.2 Terms Defined Elsewhere in this Agreement.........................................................12
1.3 Rules of Construction.............................................................................13
ARTICLE 2
SALE AND PURCHASE OF PURCHASED INTERESTS; PURCHASE PRICE
2.1 Sale and Purchase of Purchased Interests..........................................................14
2.2 Purchase Price for Purchased Interests............................................................14
2.3 Adjustments to Purchase Price.....................................................................15
2.4 Payment at Closing................................................................................19
2.5 Post-Closing Purchase Price Adjustments...........................................................19
2.6 Sellers' Representative...........................................................................22
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER
3.1 Organization and Ownership of InterMedia Companies................................................22
3.2 No Conflict; Required Consents....................................................................23
3.3 InterMedia Assets.................................................................................23
3.4 System Franchises, System Licenses, and System Contracts..........................................24
3.5 Real Property.....................................................................................25
3.6 Environmental.....................................................................................26
3.7 Compliance with Legal Requirements................................................................27
3.8 Patents, Trademarks and Copyrights. ..............................................................29
3.9 Financial Statements; Undisclosed Liabilities; Absence of Certain Changes or
Events............................................................................................29
3.10 Litigation........................................................................................30
3.11 Tax Returns.......................................................................................30
3.12 Employment Matters................................................................................30
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3.13 InterMedia Systems Information....................................................................31
3.14 Accounts Receivable...............................................................................32
3.15 Bonds; Letters of Credit; Insurance...............................................................32
3.16 Finders and Brokers...............................................................................32
3.17 Transactions with Affiliates......................................................................32
3.18 Competition.......................................................................................32
3.19 Pending Transactions..............................................................................33
3.20 Pending Swap Schedules............................................................................33
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
4.1 Authority of Sellers; Authorization and Binding Obligation........................................33
4.2 No Conflict; Required Consents....................................................................33
4.3 Title to Purchased Interests......................................................................34
4.4 Litigation........................................................................................34
4.5 Finders and Brokers...............................................................................35
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization; Authority...........................................................................35
5.2 Authorization and Binding Obligation..............................................................35
5.3 No Conflict; Required Consents....................................................................35
5.4 Finders and Brokers...............................................................................36
5.5 Investment Purpose................................................................................36
5.6 Investment Company................................................................................36
5.7 Litigation........................................................................................36
5.8 Balance Sheet.....................................................................................36
ARTICLE 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 Access to Premises and Records. .................................................................36
6.2 Continuity and Maintenance of Operations; Certain Deliveries and
Notices...........................................................................................37
6.3 Required Consents, Franchise Renewal..............................................................38
6.4 Confidentiality; Press Release....................................................................40
6.5 Cooperation; Commercially Reasonable Efforts......................................................41
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6.6 HSR Act...........................................................................................41
6.7 Tax Matters.......................................................................................41
6.8 Cooperation on Financing and SEC Matters..........................................................43
6.9 Schedules.........................................................................................44
6.10 Environmental Reports.............................................................................45
6.11 Year 2000 Matters.................................................................................45
6.12 Consent and Agreements of Sellers, TCI and Buyer..................................................46
6.13 WARN Act..........................................................................................47
6.14 Affiliate Transactions............................................................................47
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
7.1 Conditions to Buyer's Obligations.................................................................47
7.2 Conditions to Sellers' Obligations................................................................49
ARTICLE 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing...........................................................................................50
8.2 Deliveries by Sellers.............................................................................51
8.3 Deliveries by Buyer...............................................................................52
ARTICLE 9
TERMINATION
9.1 Termination by Agreement..........................................................................53
9.2 Termination by Sellers............................................................................53
9.3 Termination by Buyer..............................................................................54
9.4 Effect of Termination.............................................................................56
9.5 Attorneys' Fees...................................................................................56
ARTICLE 10
MISCELLANEOUS
10.1 Fees and Expenses. ..............................................................................56
10.2 Notices ..........................................................................................57
10.3 Benefit and Binding Effect. .....................................................................58
10.4 Further Assurances. .............................................................................58
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10.5 GOVERNING LAW. ..................................................................................59
10.6 Entire Agreement. ...............................................................................59
10.7 Amendments; Waiver of Compliance. ...............................................................59
10.8 Counterparts......................................................................................59
10.9 Rights Cumulative.................................................................................59
10.10 Survival..........................................................................................59
10.11 Commercially Reasonable Efforts...................................................................61
10.12 Effect of Agreement...............................................................................61
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TABLE OF SCHEDULES
Schedule Description
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Schedule 2.3 Purchase Price Calculation
Schedule 3.1 Organization and Ownership of InterMedia Companies
Schedule 3.2 Conflicts; Required Consents
Schedule 3.3 Principal Items of Tangible Personal Property (including all motor
vehicles); Liens
Schedule 3.4 System Franchises, System Licenses and System Contracts
Schedule 3.5 Real Property
Schedule 3.6 Environmental
Schedule 3.7 Compliance with Legal Requirements
Schedule 3.8 Patents, Trademarks and Copyrights
Schedule 3.9 Financial Statements, Undisclosed Liabilities; Absence of Certain
Changes or Events
Schedule 3.10 Litigation
Schedule 3.11 Tax Matters
Schedule 3.12 Employment Matters
Schedule 3.13 InterMedia Systems Information
Schedule 3.15 Bonds; Letters of Credit; Insurance
Schedule 3.17 Transactions with Affiliates
Schedule 3.18 Competition
Schedule 4.2 Sellers Conflicts; Required Consents
Schedule 4.3 Title to Purchased Interests
Schedule 6.2 Post-Signing Operations
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TABLE OF EXHIBITS
Exhibit Description
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Exhibit A Form of Noncompetition Agreement
Exhibit B Form of Seller Release
Exhibit C Form of Post-Closing Escrow Agreement
Exhibit D Form of InterMedia Company Release
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as of April 18, 1999,
by and among InterMedia Capital Management VI, LLC, a Delaware limited liability
company (the "General Partner"), InterMedia Management, Inc., a California
corporation ("IMI"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual ("▇▇▇▇▇"), TCI ICM VI, Inc.,
a Delaware corporation ("TCI Inc."), InterMedia Capital Management VI, L.P., a
California limited partnership ("ICM-VI"), ▇▇▇▇▇▇▇▇▇▇ ▇▇ Capital Partners L.P.,
a Delaware limited partnership, ▇▇▇▇▇▇▇▇▇▇ ▇▇ Offshore Capital Partners L.P., a
Cayman Islands exempted limited partnership, Blackstone Family Investment
Partnership III L.P., a Delaware limited partnership, ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., an
individual ("Hindery"), as Sellers, TCI IP-VI, LLC, a Delaware limited liability
company ("TCI LLC") (for the limited purposes set forth in Sections 6.12 and
8.2(g) and (h)), and Insight Communications Company, L.P., a Delaware limited
partnership ("Buyer").
RECITALS
The General Partner owns all of the general partnership interests in
InterMedia Capital Partners VI, L.P., a Delaware limited partnership (the
"Partnership"). ICM-VI, the Blackstone Partners (as defined below), Hindery and
TCI LLC are each limited partners of the Partnership and own limited partnership
interests in the Partnership. IMI is a limited partner of InterMedia Partners
Group VI, L.P., InterMedia Partners VI, L.P., and InterMedia Partners of
Kentucky, L.P. (the "Subsidiary Partnerships"). Buyer desires to acquire 50% in
the aggregate of the partnership interests in the Partnership and desires to
acquire from IMI all of its partnership interests in the Subsidiary
Partnerships, and the General Partner, ICM VI, IMI, ▇▇▇▇▇, TCI Inc., the
Blackstone Partners, Hindery and TCI LLC (referred to collectively as the
"Sellers" and individually as a "Seller") desire to sell to Buyer such
partnership interests in the Partnership and the Subsidiary Partnerships, in
each case for the consideration and on the terms and conditions set forth in
this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Terms Defined in this Section. The following terms, as used in this
Agreement, have the meanings set forth in this Section:
"1992 Cable Act" means the Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder, all as in effect from time to time.
"Accounts Receivable" means all rights of the InterMedia Companies to
payment for goods or services provided prior to the Adjustment Time, including
but not limited to, rights to payment for cable services to customers of the
InterMedia Systems, rights to payment for telecommunications and other services
to customers of InterMedia's Business, the sale of advertising, the leasing of
channels, launch fees, co-op dollars, and other goods and services and rentals.
"Adjustment Time" means (a) with respect to Adjustment Assets and
Adjustment Liabilities and other items that primarily relate to the InterMedia
Companies as a whole, 11:59 p.m., local San Francisco time, on the day
immediately preceding the Closing Date, and (b) with respect to Adjustment
Assets and Adjustment Liabilities and other items that primarily relate to a
particular InterMedia System, 11:59 p.m. local time for that InterMedia System,
on the day immediately preceding the Closing Date.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with the specified Person,
where "control" means the ownership, directly or indirectly, of voting
securities representing the right generally to elect a majority of the directors
(or similar officials) of a Person or the possession, by contract or otherwise,
of the authority to direct the management and policies of a Person.
"Basic Services" means the lowest tier of cable television service
offered to subscribers of an InterMedia System that includes the retransmission
of local broadcast signals as defined by the Cable Act and the 1992 Cable Act.
"Blackstone Partners" means ▇▇▇▇▇▇▇▇▇▇ ▇▇ Capital Partners L.P.,
▇▇▇▇▇▇▇▇▇▇ ▇▇ Offshore Capital Partners L.P., and Blackstone Family Investment
Partnership III L.P., each of which may be referred to herein individually as a
"Blackstone Partner."
"Business Day" means any day other than a Saturday, Sunday or a day on
which the banking institutions in New York, New York are required or authorized
to be closed.
"Cable Act" means the Cable Communications Policy Act of 1984, as
amended, and the FCC rules and regulations promulgated thereunder, all as in
effect from time to time.
"Capital Stock" means any and all shares, interests, or other
equivalent interests (however designated) in the equity of any Person, including
capital stock, partnership interests, and membership interests, and including
any rights, options or warrants with respect thereto.
"Charter Documents" means the articles or certificate of incorporation,
bylaws, certificate of limited partnership, partnership agreement, certificate
of formation, limited liability company operating agreement, articles of
association, and similar charter documents, as applicable to any Person other
than an individual.
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"Closing" means the consummation of the purchase and sale of the
Purchased Interests pursuant to this Agreement in accordance with the provisions
of Article 8.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder, all as in effect from time to time.
"Communications Act" means the Communications Act of 1934, as amended,
and the FCC rules and regulations promulgated thereunder, all as in effect from
time to time.
"Contract" means any contract, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant, right
or other instrument, document, obligation or agreement, whether written or oral.
"Copyright Act" means the Copyright Act of 1976, as amended and in
effect from time to time.
"Credit Agreement" means the Revolving Credit and Term Loan Agreement
dated April 30, 1998 among InterMedia Partners VI, L.P., as Borrower, Toronto
Dominion (Texas), Inc., as Administrative Agent, and the other Lenders party
thereto, as amended by the First Amendment dated as of March 23, 1999.
"Environmental Law" means any binding applicable Legal Requirement
concerning the protection of the environment and public or employee health (to
the extent relating to the environment), including Legal Requirements relating
to emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment, air (including both ambient and within
buildings and other structures), surface water, ground water or land or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
"Equivalent Basic Subscribers" (or "EBSs") means, as of the Closing
Date or any other date of determination for each InterMedia System, the sum of:
(A) The total number of private residential customer
accounts reflected on Cabledata Report KK or CSG
Report CPRM006, as applicable, that are billed by
individual unit for at least Basic Service regardless
of whether such accounts are in single-family homes
or in individually billed units in apartment
buildings and other multi-unit buildings; plus
(B) The quotient of:
(1) The total monthly ▇▇▇▇▇▇▇▇ for sales of
Basic Service and Expanded Basic Service by
such InterMedia System during the most
recent billing period ended prior to the
Closing Date or any other date of
determination to
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commercial, bulk-billed and other accounts
not billed by individual unit, whether on a
discounted or non-discounted basis ("Bulk
Revenue"), and to private residential
customer accounts that are billed by
individual unit but pay less than the
standard monthly service fees for Basic
Service, but excluding ▇▇▇▇▇▇▇▇ in excess of
a single month's charges for any account,
divided by
(2) The predominant monthly combined rate
(without discounts of any kind) charged by
such InterMedia System to individually
billed subscribers for Basic Service and
Expanded Basic Service offered by such
InterMedia System as of the date of this
Agreement.
The monthly ▇▇▇▇▇▇▇▇ for sales of Basic Service and Expanded Basic Service to
commercial, bulk-billed and other accounts not billed by individual unit that
are subject to binding agreements prior to the Closing Date but not counted as
Bulk Revenue as of the Closing Date because such accounts were not yet active,
will be included in clause (B)(1) above (subject to the proviso below) for
purposes of the EBS calculation for the Final Closing Statement to the extent
such accounts become active during the period beginning on the Closing Date and
ending on the date the Purchase Price is finally determined in accordance with
Article 3 (the "Final Settlement Period"); provided that the additional EBSs
calculated pursuant to this paragraph will be included only to offset accounts
that were excluded pursuant to paragraphs (2) and (5) below.
For purposes of calculating EBSs, there will be excluded:
(1) For purposes of the calculations in clause (A) above,
accounts that are charged less than the standard monthly service fees then in
effect for such InterMedia System for Basic Service (except with respect to
senior citizen discounts generally offered by the InterMedia Companies within
the InterMedia System to senior citizens).
(2) All accounts billed by individual unit that are more than
60 days past due (or 90 days in the case of Louisville System accounts) in the
payment of any amount in excess of $10.00 at the Closing Date or any other date
of determination. All ▇▇▇▇▇▇▇▇ to any commercial, bulk-billed and other accounts
not billed by individual unit that are more than 90 days past due at the Closing
Date or other date of determination. For purposes of this Agreement, payments on
account of monthly ▇▇▇▇▇▇▇▇ will be deemed due on the first day of the period
for which the service to which such ▇▇▇▇▇▇▇▇ relate is provided.
(3) Any accounts billed by individual unit, and all
commercial, bulk-billed and other accounts not billed by individual unit (other
than those subject to binding agreements as specified in the unnumbered
paragraph above) that, as of the Closing Date or other date of determination,
have not paid in full the charges for at least one full month of subscribed
service.
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(4) That portion of ▇▇▇▇▇▇▇▇ included in clause (B) above
representing an installation or other non-recurring charge, a charge for
equipment or a charge for any outlet or connection other than the first outlet
or first connection, a charge for any tiered service other than Expanded Basic
Services (whether or not included within Pay TV), any charge for Pay TV or
pass-through charge for sales taxes, line-itemization, franchise fees, fees
charged by the FCC and the like.
(5) Any individually billed unit and all ▇▇▇▇▇▇▇▇ to any
commercial, bulk-billed and other accounts not billed by individual unit (e.g.,
apartment buildings) which is served pursuant to a dwelling unit, access,
right-of-entry or similar written agreement in respect of which the General
Partner or the InterMedia Companies have received oral or written notice prior
to the Closing Date that such agreement will be terminated prior to the end of
the Final Settlement Period; provided, however, that any such account excluded
pursuant to this paragraph (5) as of the Closing Date that is not terminated
during the Final Settlement Period will be included in the EBS calculation for
purposes of the Final Closing Statement.
(6) Any individually billed unit and all ▇▇▇▇▇▇▇▇ to any
commercial, bulk-billed or other accounts not billed by individual unit that was
solicited within the 60-day period preceding the Closing Date or other date of
determination to purchase such services by promotions or offers of discounts
other than those ordinarily made by the InterMedia Companies or contemplated by
InterMedia's 1999 Budget.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto, all as in effect from time to time.
"ERISA Affiliate" means, with respect to any Person, a trade or
business affiliated within the meaning of Sections 414(b), (c) or (m) of the
Code.
"Escrow Agent" means the Person mutually selected by Buyer and the
General Partner pursuant to Section 2.5(a) to serve as the escrow agent under
the Post-Closing Escrow Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder, all as in
effect from time to time.
"Expanded Basic Services" means any CPST tier of any InterMedia System
designated as such in the rate filings of the InterMedia Companies.
"FCC" means the Federal Communications Commission.
"Franchising Authorities" means all Governmental Authorities that have
issued or granted a System Franchise relating to the operation of an InterMedia
System.
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"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"General Partnership Interest" means the general partnership interest
in the Partnership held by the General Partner.
"Governmental Authority" means the United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing, and including any Franchising Authority.
"Hazardous Substances" means (a) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. ▇▇.▇▇. 6901
et seq.), as amended, and the rules and regulations promulgated thereunder, all
as in effect from time to time; (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (15
U.S.C. ▇▇.▇▇. 9601 et seq.) (CERCLA), as amended, and the rules and regulations
promulgated thereunder, all as in effect from time to time; (c) any substance
regulated by the Toxic Substances Control Act (TSCA) (15 U.S.C. ss.ss.2601 et
seq.), or the Insecticide, Fungicide and Rodenticide Act (IFRA) (7 U.S.C.
ss.ss.136 et seq.), each as amended, and the rules and regulations promulgated
thereunder, all as in effect from time to time; (d) asbestos or
asbestos-containing material of any kind or character; (e) polychlorinated
biphenyls; (f) any substances regulated under the provisions of Subtitle I of
RCRA relating to underground storage tanks; (g) any substance the presence, use,
handling, treatment, storage or disposal of which on real property is prohibited
by any Environmental Law; and (h) any other substance which by any Environmental
Law requires special handling, reporting or notification of any Governmental
Authority in its collection, storage, use, treatment or disposal.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended and the regulations promulgated by the Federal Trade Commission
with respect thereto, all as in effect from time to time.
"InterMedia Assets" means all assets, properties, privileges, rights,
interests and claims, real and personal, tangible and intangible, of every type
and description that are owned, leased, held for use or used in connection with
InterMedia's Business and in which any InterMedia Company has any right, title
or interest or acquires any right, title or interest on or before the Closing,
including Tangible Personal Property, Owned Real Property, Leased Real Property,
Other Real Property Interests, System Franchises, System Licenses, System
Contracts, and Other Intangibles.
"InterMedia Companies" means each of the Partnership and the Subsidiary
Partnerships, each of which may be referred to herein individually as an
"InterMedia Company."
"InterMedia Company Release" means the "Release" substantially in the
form of Exhibit D to be delivered to the Sellers at the Closing by each
InterMedia Company.
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"InterMedia Systems" means the cable television systems owned and
operated by the InterMedia Companies or any combination of any of them, each of
which may be referred to herein individually as an "InterMedia System."
"InterMedia's 1999 Budget" means the budget for InterMedia's Business
for the 1999 calendar year, in the form delivered to Buyer prior to execution of
this Agreement.
"InterMedia's Business" means the cable television business and all
related and ancillary businesses and all other businesses conducted by the
InterMedia Companies, whether conducted through the InterMedia Systems or
otherwise.
"Judgment" means any judgment, writ, order, injunction, award or decree
of any court, judge, justice or magistrate, including any bankruptcy court or
judge or the arbitrator in any binding arbitration, and any order of or by any
Governmental Authority.
"Knowledge" means, with respect to any Person, the actual knowledge of
a particular matter of such Person, or if such Person is an entity, one or more
of the principal corporate personnel of such Person, and, with respect to the
General Partner, includes the actual knowledge of one or more of the general
managers of the InterMedia Systems.
"Leased Real Property" means all leasehold interests in real property
that are held for use or used in connection with InterMedia's Business which any
InterMedia Company has, or acquires prior to Closing, including those described
as Leased Real Property on Schedule 3.5.
"Legal Requirement" means applicable common law and any statute,
ordinance, code or other law, rule, regulation, order, technical or other
written standard, requirement, policy or procedure enacted, adopted,
promulgated, applied or followed by any Governmental Authority, including any
Judgment and all judicial decisions applying common law or interpreting any
other Legal Requirement, in each case, as amended.
"Lien" means any security interest, conditional sale or other title
retention agreement, any lease, consignment or bailment given for purposes of
security, any capitalized lease, mortgage, lien, indenture, pledge, option,
encumbrance, adverse interest, constructive trust or other trust, claim,
attachment, exception to, defect in or other condition affecting title or other
ownership interest (including but not limited to reservations, rights of entry,
possibilities of reverter, encroachments, easements, rights-of-way, restrictive
covenants, leases and licenses) of any kind, which constitutes an interest in or
claim against property, whether arising pursuant to any Legal Requirement,
System License, System Franchise, System Contract or otherwise.
"Limited Partner Seller" means each of ICM-VI, ▇▇▇▇▇, TCI Inc., the
Blackstone Partners, Hindery, and IMI.
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"Limited Partnership Interests" means the limited partnership interests
in the Partnership held by each of ICM-VI (prior to the Distribution) or IMI,
▇▇▇▇▇ and TCI Inc. (after the Distribution), the Blackstone Partners, and
Hindery, respectively, and the limited partnership interests in the Subsidiary
Partnerships held by IMI.
"Litigation" means any written claim, action, suit, proceeding,
arbitration or hearing that could result in a Judgment.
"Loan Documents" means the Credit Agreement, the Term Loan A Agreement,
the Term Loan B Agreement and the other "Credit Documents" (as that term is
defined in each of the Credit Agreement, the Term Loan A Agreement and the Term
Loan B Agreement).
"Loan Document Liens" means Liens created by the Loan Documents in
favor of the Lenders and described in Schedule 3.3.
"Material Adverse Effect" means a material adverse effect on (a) the
condition (financial or otherwise) or results of operations of InterMedia's
Business, (b) the InterMedia Assets, business, operations, conditions (financial
or otherwise) or units of operations of any single Principal System Group, taken
as a whole, (c) the InterMedia Assets, business, operations, condition
(financial or otherwise) or results of operations of the other InterMedia
Systems (i.e., those which are not within any Principal System Group), taken as
a whole, or (d) the ability of any Seller to perform its obligations under this
Agreement.
"Multichannel Video Programming Distributor" or "MVPD" means a
distributor of cable television services, multichannel multipoint distribution
service, direct broadcast satellite service or television receive-only satellite
programming, who makes available for purchase, by subscribers or customers,
multiple channels of video programming, other than Persons distributing such
services only to multiple dwelling unit or other commercial customers (including
hotels, motels, resorts, hospitals, dormitories, prisons, restaurants, bars and
similar establishments).
"Noncompetition Agreement" means the Noncompetition Agreement between
Buyer and each of the Blackstone Partners, substantially in the form of Exhibit
A, which agreement shall be executed and delivered at the Closing.
"Operating Partnership" means InterMedia Partners of Kentucky, L.P.
"Other Intangibles" means all intangible assets other than System
Franchises, System Licenses and System Contracts, including subscriber lists,
Accounts Receivable, claims, patents, and copyrights that are owned, held for
use or used in connection with InterMedia's Business and in which any InterMedia
Company has, or acquires prior to Closing, any right, title or interest.
"Other Real Property Interests" means all easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property that are held for use or used in
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connection with InterMedia's Business and in which any InterMedia Company has,
or acquires prior to Closing, any right, title or interest, including those
interests described as Other Real Property Interests on Schedule 3.5, but not
including Leased Real Property or Owned Real Property.
"Owned Real Property" means all fee interests in real property that are
held for use or used in connection with InterMedia's Business which any
InterMedia Company has, or acquires prior to Closing, including those described
as Owned Real Property on Schedule 3.5 and all improvements thereon.
"Partnership Agreement" means the Agreement of Limited Partnership for
the Partnership dated as of October 30, 1997, as amended by a First Amendment to
Agreement of Limited Partnership dated as of April 30, 1998.
"Pay TV" means a la carte tiers or premium programming services
selected by and sold to subscribers on a per channel or per program basis.
"Permitted Lien" means any (a) Lien securing Taxes, assessments and
governmental charges not yet due and payable, (b) zoning law or ordinance or any
similar Legal Requirement, (c) right reserved to any Governmental Authority to
regulate the affected property, (d) as to Owned Real Property, any Lien not
securing indebtedness or arising out of the obligation to pay money that does
not individually or in the aggregate interfere with the right or ability to own,
use or operate the Owned Real Property as they are being used or operated or
materially diminish the value of such Owned Real Property, (e) in the case of
Owned Real Property and Leased Real Property, any lease or sublease by any
InterMedia Company in favor of a third party that is disclosed in the Schedules
to this Agreement, (f) in the case of Leased Real Property, the rights of any
lessor and any Lien granted by any lessor of Leased Real Property, (g) any
inchoate materialmen's, mechanics', workmen's, repairmen's or other like Liens
arising in the ordinary course of business, (h) the Loan Document Liens, (i)
Liens described on Schedule 3.3 and (j) recorded exceptions included in any
title policy that relates to owned real property that is listed on Schedule 3.5
and was delivered to Buyer prior to execution of this Agreement; provided that
"Permitted Lien" will not include any Lien securing a debt (other than the Loan
Document Liens) or any Lien that could prevent or impair in any way the conduct
of the business of the affected InterMedia System as it is currently being
conducted.
"Person" means any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
"Post-Closing Escrow Agreement" means the Escrow Agreement among the
General Partner, Buyer and the Escrow Agent, substantially in the form of
Exhibit C hereto, which agreement shall be executed and delivered at the
Closing.
"Principal System Group" means any of the Lexington, Louisville,
▇▇▇▇▇▇▇▇▇ or Bowling Greens InterMedia Systems, as more particularly described
in Schedule 3.13(e).
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"Required Consents" means the consents, permits, approvals and
authorizations of Governmental Authorities and other Persons, and filings,
notices, and applications with Governmental Authorities and other Persons,
necessary to transfer lawfully the Purchased Interests to Buyer or otherwise to
consummate lawfully the transactions contemplated by this Agreement.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder, all as in effect from
time to time.
"Seller Release" means the "Release" substantially in the form of
Exhibit B to be delivered to Buyer at the Closing by each Person designated on
Exhibit B hereto.
"Service Area" means any geographic area in which an InterMedia Company
is authorized to provide cable television service pursuant to a System Franchise
or provides cable television service in which a System Franchise is not required
pursuant to applicable Legal Requirements.
"Subsidiary" means, with respect to any Person, any other Person of
which the outstanding voting Capital Stock sufficient to elect at least a
majority of its board of directors or other governing body (or, if there are no
such voting interests, of which 50% or more of the Capital Stock) is owned
(beneficially or otherwise) directly or indirectly by such first Person or any
Subsidiary thereof.
"System Contracts" means all pole line agreements, underground conduit
agreements, crossing agreements, multiple dwelling, bulk billing or commercial
service agreements, leased channel access agreements and other Contracts (other
than System Franchises and System Licenses) held for use or used in connection
with InterMedia's Business and to which any InterMedia Company is, or becomes
prior to Closing, a party or bound, including those described on Schedule 3.4.
"System Franchises" means all franchise agreements, operating permits
or similar governing agreements, instruments, resolutions, statutes, ordinances,
approvals, authorizations and permits obtained from any Franchising Authority in
connection with InterMedia's Business, including those listed on Schedule 3.4,
including all amendments and modifications thereto and all renewals thereof.
"System Licenses" means the intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with InterMedia's Business (other than System Franchises, System Contracts and
Other Real Property Interests), including those described on Schedule 3.4.
"Tangible Personal Property" means all tangible personal property that
is owned, leased, held for use or used in connection with InterMedia's Business
and in which any InterMedia Company has, or acquires prior to Closing, any
right, title or interest, including towers, tower equipment, aboveground and
underground cable, distribution systems, headend amplifiers, line amplifiers,
microwave equipment,
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converters, testing equipment, motor vehicles, office equipment, computers and
billing equipment, furniture, fixtures, supplies, inventory and other physical
assets, the principal items of which, including all motor vehicles, are
described on Schedule 3.3.
"Taxes" means all levies and assessments of any kind or nature imposed
by any Governmental Authority, including all income, sales, use, ad valorem,
value added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies, together with any interest
thereon and any penalties, additions to tax or additional amounts applicable
thereto.
"Tax Returns" means any tax return, declaration of estimated tax, tax
report or other tax statement, or any other similar filing required to be
submitted to any Governmental Authority with respect to any Tax.
"Term Loan A Agreement" means the Term Loan A Agreement dated April 30,
1998 among InterMedia Partners Group VI, L.P., Toronto Dominion (Texas), Inc.,
as Administrative Agent, NationsBank of Texas, N.A., as Documentation Agent, and
the other Lenders party thereto, as amended by the First Amendment dated as of
March 23, 1999 that has been delivered to Buyer.
"Term Loan B Agreement" means the Term Loan B Agreement dated April 30,
1998 among InterMedia Partners Group VI, L.P., Toronto Dominion (Texas), Inc.,
as Administrative Agent, The Bank of New York Company, Inc., as Documentation
Agent, and the other Lenders party thereto, as amended by the First Amendment
dated as of March 23, 1999, and as to be further amended by an amendment
substantially in the form of the draft Second Amendment dated April 12, 1999
that has been delivered to Buyer prior to execution of this Agreement.
"Transferable Service Area" means a Service Area with respect to which:
(a) no franchise or similar authorization is required for the provision of cable
television service in such Service Area, (b) no Required Consent is necessary
for the transfer of control of any System Franchise for such Service Area in
connection with the consummation of the transactions contemplated by this
Agreement, or (c) if a Required Consent is necessary for the transfer of control
of any System Franchise for such Service Area in connection with the
consummation of the transactions contemplated by this Agreement, an effective
consent or approval has been obtained without the imposition of any condition or
any modification that in either case makes, or is reasonably likely to make, the
underlying System Franchise materially more onerous in any respect or materially
reduces in any respect, or is reasonably likely to materially reduce in any
respect, the benefits available under the System Franchise in respect of which
the Required Consent relates.
"Transaction Documents" means this Agreement, the Post-Closing Escrow
Agreement, the Noncompetition Agreement, the Seller Releases, and the other
documents, agreements, certificates and other instruments to be executed,
delivered and performed by the parties in connection with the transactions
contemplated by this Agreement.
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"Upset Date" means February 1, 2000, as such date may be extended
pursuant to the provisions of this Agreement, including Sections 9.2 and 9.3.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
---- -------
Adjustment Assets Section 2.3(b)(1)
Adjustment Liabilities Section 2.3(b)(2)
Amended and Restated Partnership Section 6.12(c)
Agreement
Buyer First Paragraph
Confidential Information Section 6.4(a)
Conversion Section 8.2(c)
Cost of Service Election Section 3.7(d)
Designated Closing Date Section 8.1(a)
Distribution Section 2.1(b)
Final Closing Statement Section 2.5(b)(1)
First Swap Section 2.3(c)(1)
First Swap Adjustment Section 2.3(c)(1)
First Swap Agreement Section 2.3(b)(2)(VI)
FrontierVision Section 2.3(b)(2)(VI)
General Partner First Paragraph
Hindery First Paragraph
IMI First Paragraph
InterMedia Balance Sheet Section 3.9
InterMedia Plans Section 3.12
InterMedia's Financial Statements Section 3.9
▇▇▇▇▇ First Paragraph
Material Environmental Liability Section 3.6
Net Closing Payment Section 8.3(a)
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Partnership First Paragraph
Pending Swap Adjustment Section 2.3(d)
Pending Swaps Section 2.3(c)(2)
Post-Closing Adjustments Escrow Section 2.5(a)
Post-Closing Adjustment Funds Section 2.5(a)
Preliminary Closing Statement Section 2.4
Purchase Price Section 2.2
Purchased Interests Section 2.1(a)
Reimbursable Capital Expenditures Section 2.3(a)
Rollover/Refinancing Section 6.8(d)
Second Swap Section 2.3(c)(2)
Second Swap Adjustment Section 2.3(c)(2)
Second Swap Agreement Section 2.3(b)(2)(VI)
Seller Recitals
Subscriber Adjustment Section 2.3(d)
Subscriber Shortfall Section 2.3(d)
Subscriber Target Section 2.3(d)
Subsidiary Partnerships Recitals
TCI Inc. First Paragraph
TCI LLC First Paragraph
WARN Act Section 6.14
1.3 Rules of Construction. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender and any other number as the context requires. As used
in this Agreement, the word "including" is not limiting, and the word "or" is
not exclusive. Except as specifically otherwise provided in this Agreement in a
particular instance, a reference to a Section is a reference to a Section of
this Agreement, a reference to an Exhibit is a reference to an Exhibit to this
Agreement, a reference to a Schedule is a reference to a Schedule to this
Agreement, and the terms "hereof," "herein," and other like terms refer to this
Agreement as a whole, including the Schedules and the Exhibits to this
Agreement, and not solely to any particular part of this Agreement. The
descriptive headings in this Agreement are inserted for
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convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
ARTICLE 2
SALE AND PURCHASE OF PURCHASED INTERESTS;
PURCHASE PRICE
2.1 Sale and Purchase of Purchased Interests.
(a) Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, each Seller hereby agrees to sell,
transfer, and deliver to Buyer at the Closing, and Buyer hereby agrees to
purchase at the Closing, the partnership interests specified below (the
"Purchased Interests"), free and clear of all Liens (other than the Loan
Document Liens and transfer restrictions created by the Partnership Agreement in
favor of the other partners thereunder):
(1) from the General Partner, the General Partnership
Interest;
(2) from each of IMI, ▇▇▇▇▇, the Blackstone Partners,
and Hindery, the entire Limited Partnership Interest in the Partnership held by
each such Seller after giving effect to the Distribution;
(3) from TCI Inc., a portion of the Limited
Partnership Interest in the Partnership held by such Seller after giving effect
to the Distribution and to the purchases described in Sections 2.1(a)(1) and
(2), such that Buyer will own and hold 50% of the aggregate partnership
interests in the Partnership immediately after the Closing and that TCI Inc. and
TCI LLC together will own and hold 50% of the aggregate partnership interests in
the Partnership immediately after the Closing; and
(4) from IMI, the entire Limited Partnership Interest
in each of the Subsidiary Partnerships held by IMI.
(b) Distribution. Immediately prior to the Closing, ICM-VI
shall distribute to IMI, ▇▇▇▇▇ and TCI Inc. all of ICM-VI's partnership
interests in the Partnership, including all of ICM-VI's rights under the
Partnership Agreement (the "Distribution").
2.2 Purchase Price for Purchased Interests. Buyer shall pay and deliver
to the General Partner for the benefit of the Sellers as consideration for the
sale of the Purchased Interests an amount in cash equal to $327,185,000, subject
to adjustment as provided in Section 2.3 and determined in accordance with this
Article 2, and subject to further adjustment as provided in Section 8.1(a)(4)
(the "Purchase Price").
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2.3 Adjustments to Purchase Price.
(a) Capital Expenditures Adjustment. The Purchase Price shall
be increased by 50% of the aggregate amount of Reimbursable Capital
Expenditures. For purposes of this Agreement, "Reimbursable Capital
Expenditures" means the sum of all capital expenditures actually made by the
InterMedia Companies during the period beginning April 13, 1999 and ending at
the Adjustment Time with respect to any of the InterMedia Systems relating to
(1) upgrades and rebuilds of InterMedia System plant capacity and (2) the
purchase of digital converters, plus (without duplication) the cost of inventory
purchased on or after April 13, 1999 that relates specifically to such upgrades
and rebuilds and converters but which costs have not yet been accounted for as a
capital expenditure.
(b) Debt and Working Capital Adjustment. The Purchase Price
shall be decreased by 50% of the amount, if any, by which the amount of
Adjustment Liabilities as of the Adjustment Time exceeds the amount of
Adjustment Liabilities shown on Schedule 2.3 and shall be increased by 50% of
the amount, if any, by which the amount of Adjustment Liabilities as of the
Adjustment Time is less than the amount of Adjustment Liabilities shown on
Schedule 2.3. The Purchase Price shall be decreased by 50% of the amount, if
any, by which the amount of Adjustment Assets as of the Adjustment Time is less
than the amount of Adjustment Assets shown on Schedule 2.3 and shall be
increased by 50% of the amount, if any, by which the amount of Adjustment Assets
as of the Adjustment Time exceeds the amount of Adjustment Assets shown on
Schedule 2.3.
(1) Subject to the other provisions of this Section
2.3(c), "Adjustment Assets" means the sum of: (A) cash and cash equivalents (but
only to the extent such cash is held by the InterMedia Companies at the
Closing), (B) Eligible Accounts Receivable net of any credit balances owed to
cable television subscribers of the InterMedia Systems, (C) Prepaid Expenses,
(D) Deposits, (E) Programming/Launch Receivables, and (F) Other Current Assets,
in each case of clauses (A) through (F) computed for the InterMedia Companies as
of the Adjustment Time on a consolidated basis and without duplication in
accordance with GAAP applied on a basis consistent with the preparation of the
InterMedia Balance Sheet and Schedule 2.3.
(I) "Eligible Accounts Receivable" means 99%
of the face amount of all Subscriber Accounts Receivable that are 60 or fewer
days past due as of the Adjustment Time and 100% of the face amount of all
Advertising Accounts Receivable that are 120 days or fewer past due as of the
Adjustment Time. No Subscriber Accounts Receivable that are more than 60 days
past due and no Advertising Accounts Receivable that are more than 120 days past
due will be included in Eligible Accounts Receivable.
(II) "Subscriber Accounts Receivable" means
accounts receivable of the InterMedia Companies (excluding Advertising Accounts
Receivable) resulting from the provision of cable television service by the
InterMedia Systems to active subscribers as of the Adjustment Time and that
relate to periods prior to the Adjustment Time. For purposes of making "past
due" calculations to determine whether Subscriber Accounts Receivable are
Eligible Accounts Receivable, the subscriber
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billing statements will be deemed to be due and payable on the first day of the
period during which the service to which such billing statements relate is
provided.
(III) "Advertising Accounts Receivable"
means accounts receivable of the InterMedia Companies resulting from advertising
on an InterMedia System or another cable television system sold either directly
by the InterMedia Companies or by an ad sales representative or an advertising
agency of the InterMedia Companies or through an advertising interconnect
partnership or otherwise. For purposes of making "past due" calculations to
determine whether Advertising Accounts Receivable are Eligible Accounts
Receivable, invoices will be deemed to be due and payable upon date of invoice.
(IV) "Prepaid Expenses" means the book value
of prepaid expenses of the InterMedia Companies (but only to the extent
constituting a current asset and only to the extent that such prepaid expenses
will accrue to the benefit of the InterMedia Companies upon and after the
Adjustment Time).
(V) "Deposits" means all monies which are on
deposit with third parties as of the Adjustment Time for the account of the
InterMedia Companies or as security for the InterMedia Companies' performance of
their obligations, including deposits on real property leases and deposits for
utilities that will accrue to the benefit of the InterMedia Companies upon and
after the Adjustment Time.
(VI) "Programming/Launch Receivables" means
the current and long- term portion of balances due to the InterMedia Companies
from programmers whose networks are carried by the InterMedia Systems.
(VII) "Other Current Assets" means all other
current assets of the InterMedia Companies; provided, however, notwithstanding
any provision of this Agreement to the contrary, Adjustment Assets shall not
include inventory, accounts receivable that are not Eligible Accounts
Receivable, intercompany and affiliated-party receivables, insurance or
condemnation proceeds, sale proceeds received in connection with a disposition
of cable television system assets (other than in connection with the Pending
Swaps), or deferred tax assets.
(2) Subject to the other provisions of this Section
2.3(c), "Adjustment Liabilities" means the sum of: (A) Debt, (B) Accounts
Payable, (C) Subscriber Prepayments and Deposits, (D) Unearned
Programming/Launch Fees, (E) Deferred Revenue, and (F) Other Current
Liabilities, in each case of clauses (A) through (F) computed for the InterMedia
Companies as of the Adjustment Time on a consolidated basis and without
duplication in accordance with GAAP applied on a basis consistent with the
preparation of the InterMedia Balance Sheet and Schedule 2.3.
(I) "Debt" means the sum of (1) all
obligations of the InterMedia Companies for borrowed money (including all
accrued and unpaid interest) under the Loan Documents and any bonds, debentures,
notes, indentures, mortgages, or similar instruments to which any of the
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InterMedia Companies are a party or by which any of them are bound, and (2) all
capital lease obligations of the InterMedia Companies.
(II) "Accounts Payable" means the book value
of all accounts payable of the InterMedia Companies.
(III) "Subscriber Prepayments and Deposits"
means the sum of (1) all outstanding deposits of subscribers of the InterMedia
Systems for converters, decoders and similar items (and, if required to be paid
to such subscribers, accrued interest thereon), and (2) all payments received by
the InterMedia Companies prior to the Adjustment Time for services to be
rendered to subscribers of the InterMedia Systems after the Adjustment Time.
(IV) "Unearned Programming/Launch Fees"
means the current and long-term portion of programming and launch support funds
received or to be received by the InterMedia Companies from programmers for
which the InterMedia Companies will be obligated to continue the programming
after the Closing, to the extent such funds have not been recognized into income
prior to the Closing Date.
(V) "Deferred Revenue" means liabilities to
subscribers representing advance ▇▇▇▇▇▇▇▇ for services to be performed by the
InterMedia Companies after the Adjustment Time.
(VI) "Other Current Liabilities" means all
other current liabilities of the InterMedia Companies, including accrued
vacation pay of employees of the relevant InterMedia Company (to the extent
permitted to be carried over by the InterMedia Companies policies), provided,
however, notwithstanding any provision of this Agreement to the contrary,
Adjustment Liabilities shall not include (1) Accounts Payable, (2) Subscriber
Prepayments and Deposits, (3) current and deferred income taxes, (4) current
maturities of Debt, (5) deferred tax liabilities, (6) any payables to any of the
InterMedia Companies, (7) any liabilities covered by identifiable insurance
proceeds net of applicable deductibles, (8) liabilities for which the InterMedia
Companies are entitled to indemnification under the following provisions, net of
any applicable deductible, basket, cap or similar limitation: (A) section 10.1
of the Contribution Agreement dated as of October 30, 1997, as amended by the
First Amendment to Contribution Agreement dated as of April 30, 1998, between
InterMedia Capital Management VI, L.P., and TCI TKR of Southern Kentucky, Inc.,
TCI TKR of Northern Kentucky, Inc., TCI TKR of Jefferson County, Inc., TCI
Cablevision of Kentucky, Inc., TCI Cablevision of North Central Kentucky, Inc.,
TCI of North Central Kentucky, Inc., TCI of Lexington, Inc., and TCI of
Radcliff, Inc., (B) section 10.1 of the Asset Exchange Agreement dated as of
October 31, 1998 between the Operating Partnership and Insight Communications of
Indiana, LLC, and (C) section 10 of the Asset Exchange Agreement dated as of
February 17, 1999, as amended by amendments dated March 1, 1999 and March 11,
1999 (the "First Swap Agreement"), and of the Asset Exchange Agreement dated as
of March 11, 1999 (the "Second Swap Agreement"; together with the First Swap
Agreement, the "Swap Agreements"), each between the Operating Partnership and
FrontierVision Operating Partners, L.P. ("FrontierVision"), and (9) any expenses
that the Sellers are obligated to pay as set forth in Section 10.1.
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(3) For purposes of making the adjustments pursuant
to this Section 2.3(b), revenues and expenses shall be treated as prepaid or
accrued so as to reflect the principle that revenues and expenses will be
prorated so that revenues and expenses attributable to the period prior to the
Adjustment Time shall be for the account of Sellers and revenues and expenses
attributable to the period after the Adjustment Time shall be for the account of
Buyer.
(c) Pending Swap Adjustment.
(1) If the transaction contemplated by the First Swap
Agreement (the "First Swap") is consummated prior to the Closing hereunder, then
the Purchase Price shall be decreased by the sum of $265,000 and one-half of the
amount, if any, by which the cash payment to be made by FrontierVision pursuant
to Section 2.1(a)(ii) of the First Swap Agreement is increased by a subscriber
adjustment pursuant to Section 2.1(a)(v) of the First Swap Agreement (such
decrease, the "First Swap Adjustment").
(2) If the transaction contemplated by the Second
Swap Agreement (the "Second Swap"; together with the First Swap, the "Pending
Swaps") is consummated prior to the Closing hereunder, then the Purchase Price
shall be decreased by the sum of $903,850 and one-half of the amount, if any, by
which the cash payment to be made by FrontierVision pursuant to Section
2.1(a)(ii) of the Second Swap Agreement is increased by a subscriber adjustment
pursuant to Section 2.1(a)(v) of the Second Swap Agreement (such decrease, the
"Second Swap Adjustment").
(3) If either Pending Swap is consummated after the
Closing hereunder but prior to the date that is six months after the Closing
Date hereunder, the Buyer will remit to the General Partner, for the account of
the Sellers, within three Business Days of the receipt of such proceeds and
account information from the General Partner, 40% of $2,650,076 (as such System
Difference Amount (as such term is used in the First Swap Agreement) may be
amended other than pursuant to the adjustments contemplated by the First Swap
Agreement), in the case of the First Swap, and 40% of $9,038,500 (as such System
Difference Amount (as such term is used in the Second Swap Agreement) may be
amended other than pursuant to the adjustments contemplated by the Second Swap
Agreement), in the case of the Second Swap (in each case less 50% of any out of
pocket costs incurred or paid by the InterMedia Companies after the Closing
hereunder in connection with consummating such Pending Swap). Buyer will cause
the InterMedia Companies to use reasonable commercial efforts to complete the
Pending Swaps within six months after the Closing Date to the extent not
completed prior to the Closing hereunder. Buyer shall not permit the terms of
either Pending Swap to be amended or otherwise modified in any respect (whether
by amendment or modification of the applicable Swap Agreement, termination of
the applicable Swap Agreement and execution of another agreement providing for
such Pending Swap, or otherwise) that would result in (1) a reduction in the
System Difference Amount under the First Swap Agreement, other than pursuant to
the adjustments contemplated by the First Swap Agreement as in effect as of the
Closing hereunder, in excess of $680,170, or a reduction in the System
Difference Amount under the Second Swap Agreement, other than pursuant to the
adjustments contemplated by the Second Swap Agreement as in effect as of the
Closing hereunder, in excess of $2,319,830, or (2) a reduction in the System
Difference Amounts, other
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than pursuant to the adjustments contemplated by the Swap Agreements as in
effect as of the Closing hereunder, in connection with any increase in the
assets or other consideration to be received or in the liabilities to be
transferred, or any decrease in the assets or other consideration to be conveyed
or in the liabilities to be assumed, by the InterMedia Companies in the Pending
Swaps, in either case of (1) or (2) without the consent of the General Partner
unless the Buyer reimburses the General Partner for the account of the Sellers
the amount by which the Sellers' portion of such payment would be reduced by
such reduction or other modification.
(d) Subscriber Adjustment. The Purchase Price shall be
decreased by 50% of the dollar amount equal to the product of (1) the Subscriber
Shortfall multiplied by (2) $3,295.00 (such decrease, the "Subscriber
Adjustment"). For purposes of this Agreement, the "Subscriber Shortfall" equals
the number, if any, by which the total number of Equivalent Basic Subscribers
for all of the InterMedia Systems as of the Adjustment Time is less than 424,930
(the "Subscriber Target"); provided that if either Pending Swap has been
consummated prior to the Closing hereunder, the Subscriber Target shall be
decreased by the excess of the number of Equivalent Billing Units of the
InterMedia Systems disposed of by the InterMedia Companies in such Pending Swap
over the number of Equivalent Billing Units of the InterMedia Systems acquired
by the InterMedia Companies in such Pending Swap, in each case as "Equivalent
Billing Unit" is defined in and determined as of the closing date of such
Pending Swap pursuant to the applicable Pending Swap Agreement.
2.4 Payment at Closing. No later than ten Business Days prior to the
date scheduled for the Closing, the General Partner shall prepare and deliver to
Buyer a written report in reasonable detail (the "Preliminary Closing
Statement") setting forth the General Partner's estimate of the Purchase Price,
including its estimates of Reimbursable Capital Expenditures, Adjustment Assets,
Adjustment Liabilities, the Subscriber Adjustment, and the First Swap Adjustment
and Second Swap Adjustment if applicable, all as determined in accordance with
this Article 2. The Preliminary Closing Statement shall be prepared by the
General Partner in good faith and shall be certified by the General Partner to
be its good faith estimate of the Purchase Price and the other amounts set forth
therein as of the date thereof. The Preliminary Closing Statement will be
accompanied by appropriate documentation supporting the amounts set forth
therein and such additional information as the Buyer shall reasonably request
relating to the matters set forth in the Preliminary Closing Statement. The
General Partner shall provide to Buyer reasonable access, upon reasonable
notice, to all records in its possession for purposes of verification of the
Preliminary Closing Statement. At the Closing the Purchase Price shall be
determined on the basis of the Preliminary Closing Statement, with any changes
thereto mutually agreed to by the General Partner and Buyer (the "Estimated
Purchase Price").
2.5 Post-Closing Purchase Price Adjustments.
(a) Post-Closing Adjustments Escrow. Buyer and the Sellers
have agreed on a form of Post-Closing Escrow Agreement in the form of Exhibit C
hereto. Following execution of this Agreement, Buyer and the General Partner
will select a mutually satisfactory bank or other Person to serve as the escrow
agent thereunder and will cooperate in good faith with the Escrow Agent to agree
on the final form of Post-Closing Escrow Agreement, including such changes to
the form attached as
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Exhibit C as are requested or recommended by the Escrow Agent and are mutually
acceptable to Buyer and the General Partner (such acceptance not to be
unreasonably withheld by Buyer or the General Partner). Subject to the
foregoing, at the Closing, the General Partner, Buyer and the Escrow Agent shall
execute the Post-Closing Escrow Agreement, in accordance with which, on the
Closing Date, Buyer will deposit $15,000,000 of the Estimated Purchase Price
with the Escrow Agent to hold in escrow on behalf of the Sellers and Buyer to
provide a fund for any payment to which they may be entitled in accordance with
this Section 2.5 (such escrow, the "Post-Closing Adjustments Escrow," and such
$15,000,000, together with any earnings thereon, the "Post-Closing Adjustment
Funds"). The Post-Closing Adjustments Escrow will be administered, and the
Post-Closing Adjustment Funds will be held and disbursed, in accordance with the
provisions of this Section 2.5 and the Post-Closing Escrow Agreement.
(b) Final Closing Statement.
(1) Within 90 days after the Closing Date, the
General Partner shall prepare and deliver to Buyer a written report (the "Final
Closing Statement") setting forth the General Partner's final estimate of the
Purchase Price, including its estimates of Reimbursable Capital Expenditures,
Adjustment Assets, Adjustment Liabilities, the Subscriber Adjustment, and the
First Swap Adjustment and Second Swap Adjustment if applicable, all as
determined in accordance with this Article 2. The Final Closing Statement shall
be prepared by the General Partner in good faith and shall be certified by the
General Partner to be its good faith estimate of the Purchase Price and the
other amounts set forth therein as of the date thereof. The Final Closing
Statement will be accompanied by appropriate documentation supporting the
amounts set forth therein, including an accounts receivable detail with relevant
aging information as of the Adjustment Time, and such additional information as
the Buyer shall reasonably request relating to the matters set forth in the
Final Closing Statement. The General Partner and the Buyer will each provide to
the other reasonable access, upon reasonable notice, to all records in its
possession for purposes of the preparation and verification of the Final Closing
Statement.
(2) Within 30 days after the date that the Final
Closing Statement is delivered by the General Partner to Buyer, Buyer shall
complete its examination thereof and may deliver to the General Partner a
written report setting forth any proposed adjustments to any amounts set forth
in the Final Closing Statement. If Buyer notifies the General Partner of Buyer's
acceptance of the amounts set forth in the Final Closing Statement, the amounts
set forth in the Final Closing Statement shall be conclusive, final, and binding
on the parties as of the date of such notification. If Buyer fails to deliver
its report of any proposed adjustments within the 30-day period specified in the
preceding sentence, the amounts set forth in the Final Closing Statement shall
be conclusive, final, and binding on the parties as of the last day of such
30-day period. Buyer and the General Partner shall use good faith efforts to
resolve any dispute involving the amounts set forth in the Final Closing
Statement. If the General Partner and Buyer fail to agree on any amount set
forth in the Final Closing Statement within 10 days after the General Partner
receives Buyer's report pursuant to this Section 2.5(b), the disputed amounts
will be determined within the following 30-day period by an independent auditor
of any of the "Big Five" accounting firms so long as such firm does not then
serve as the independent auditor of any of
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the InterMedia Companies, the Sellers or Buyer. The selected auditor shall
endeavor to resolve the dispute as promptly as practicable and such auditor's
resolution of the dispute shall be final and binding on the parties, and a
judgment may be entered thereon in any court of competent jurisdiction. All of
the costs and expenses of the selected auditor and its services rendered
pursuant to this Section 2.5 shall be borne by Buyer, on the one hand, and
Sellers, on the other hand, as nearly as possible in the proportion to the
amount by which the determination of all matters related to such costs and
expenses varies from the positions of Buyer and the General Partner,
respectively, on all such matters.
(c) Payment of Purchase Price Adjustments.
(1) Within three Business Days after the Buyer
delivers to the General Partner the report setting forth its proposed
adjustments to the Final Closing Statement, the amounts not in dispute shall be
determined and the Escrow Agent shall release and pay over to Buyer and/or the
General Partner for the benefit of Sellers, as the case may be, the appropriate
amount of the Post-Closing Adjustment Funds not in dispute, plus investment
earnings attributable to such amount. The balance in the Post-Closing
Adjustments Escrow shall be held by the Escrow Agent until the amount of the
Purchase Price is finally determined pursuant to this Section 2.5 (whether by
agreement of the General Partner and Buyer, by the Buyer's failure to deliver
its report of proposed adjustments within the allotted period, or by the
determination of an independent auditor). Upon and within three Business Days
after such final determination, the Escrow Agent shall release and pay over to
Buyer and/or the General Partner for the benefit of Sellers, as the case may be,
the appropriate amount of the Post-Closing Adjustment Funds based upon such
final determination, plus investment earnings attributable to such amount. If
the Purchase Price as finally determined pursuant to this Section 2.5 exceeds
the Estimated Purchase Price, Buyer will pay to the General Partner for the
benefit of Sellers in cash the amount of such excess within three Business Days
of the date of such determination, plus interest through the date of such
payment to the General Partner at a rate per annum equal to the effective
annualized return on the investment of the Post-Closing Adjustment Funds while
such funds were held in escrow. If the Net Closing Payment exceeds the Purchase
Price as finally determined pursuant to this Section 2.5, the General Partner
will immediately demand that each Seller remit to the General Partner for the
account of Buyer its proportionate share (based on the percentage interest in
the Partnership that such Seller transferred to Buyer pursuant to Section
2.1(a)) of such excess, plus interest through the date of payment to Buyer at a
rate per annum equal to the effective annualized return on the investment of the
Post-Closing Adjustment Funds while such funds were held in escrow, and each
Seller agrees to pay such amount to the General Partner within three Business
Days of the General Partner's demand, and the General Partner will pay to Buyer
in cash the amount received from each Seller within one Business Day after the
receipt of each such payment from the Sellers; provided that if Buyer has not
received the full amount payable for its account from any Seller pursuant to
this sentence within four Business Days after the date the Purchase Price is
finally determined, Buyer may proceed directly against such Seller for such
amount.
(2) All payments to be made to the General Partner
pursuant to this Section 2.5(c) shall be paid by wire or accounts transfer of
immediately available funds (or by cashier's check at the Escrow Agent's or
Buyer's option if the amount payable is $100,000 or less) to an account
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designated by the General Partner by written notice to the Escrow Agent or
Buyer, as appropriate. All payments to be made to Buyer pursuant to this Section
2.5(c) shall be paid by wire or accounts transfer of immediately available funds
(or by cashier's check at the Escrow Agent's or the General Partner's option if
the amount payable is $100,000 or less) to one or more accounts designated by
Buyer by written notice to the Escrow Agent or the General Partner, as
appropriate. The amount of any fees payable by the Sellers to an independent
auditor in connection with a final determination of the Purchase Price or the
Escrow Agent shall be paid out of any Post-Closing Adjustment Funds otherwise
due to the Sellers.
2.6 Sellers' Representative. Each Seller hereby appoints the General
Partner as the true and lawful attorney-in-fact and agent of such Seller, to act
for such Seller in such Seller's name, place and stead with respect to the
matters and transactions contemplated by this Agreement, including preparing the
Preliminary Closing Statement and the Final Closing Statement, and each Seller
hereby agrees that all actions taken and determinations made by the General
Partner pursuant to this Agreement shall be final and binding on all of the
Sellers. The General Partner agrees that it will remit all monies received by
the General Partner pursuant to this Agreement that are payable to another
Seller to such Seller within three Business Days of receiving account
information for such Seller and that it shall hold such monies in trust for the
benefit of such Seller pending such disbursement, and each Seller agrees that
Buyer's and the Escrow Agent's respective obligations to remit any payments due
to any Seller under this Agreement shall be fully performed upon delivering such
payment to the General Partner.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE
GENERAL PARTNER
The General Partner represents and warrants to Buyer as follows:
3.1 Organization and Ownership of InterMedia Companies.
(a) Each InterMedia Company is a limited partnership duly
formed, validly existing, and in good standing under the laws of the
jurisdiction of its formation and has the requisite partnership power and
authority to own, lease, and operate its properties and assets and to carry on
its business in the places where such properties and assets are now owned,
leased, or operated. The Operating Partnership is duly qualified and in good
standing as a foreign limited partnership in the Commonwealth of Kentucky, and
each InterMedia Company is duly qualified and in good standing in all other
jurisdictions in which the ownership or leasing of the InterMedia Assets owned
or leased by it or the nature of its activities in connection with InterMedia's
Business makes such qualification necessary and in which failure to so qualify
would, individually or in the aggregate, have a Material Adverse Effect. No
InterMedia Company, directly or indirectly, owns, of record or beneficially, any
Capital Stock or other securities or other interest in any Person or has the
right or obligation to acquire, any Capital Stock or other securities or other
interest in any Person.
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(b) Schedule 3.1 sets forth the authorized, issued and
outstanding Capital Stock of each Subsidiary Partnership, and each record owner
and beneficial owner of the issued and outstanding Capital Stock of each of the
Subsidiary Partnerships. All of such issued and outstanding Capital Stock of the
InterMedia Companies has been duly authorized, validly issued, and has not been
issued in violation of any federal or state securities laws. Except as set forth
in Schedule 3.1, the record owner of the Capital Stock of each Subsidiary
Partnership owns such Capital Stock free and clear of all Liens (other than the
Loan Document Liens and transfer restrictions created by the Partnership
Agreement in favor of the other partners thereunder). Except as disclosed in
Schedule 3.1, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which any InterMedia Company is a party or by which any of them is bound
obligating such InterMedia Company to issue, deliver or sell, or cause to be
issued, delivered or sold, any additional Capital Stock of such InterMedia
Company or obligating such InterMedia Company to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. The General Partner has delivered to Buyer complete
and correct copies of the Charter Documents of each InterMedia Company as in
effect on the date hereof.
3.2 No Conflict; Required Consents. Except as described on Schedule
3.2, the execution and delivery by each Seller, the performance by each Seller
under, and the consummation of the transactions contemplated by, this Agreement
and the Transaction Documents do not and will not: (a) conflict with or violate
any provision of the Charter Documents of any InterMedia Company; (b) violate
any provision of any material Legal Requirement applicable to the InterMedia
Companies; (c) require any material consent, approval or authorization of, or
filing of any material certificate, notice, application, report or other
document with, any Governmental Authority or other Person; or (d) (i) materially
conflict with, violate, result in a material breach of or constitute a material
default under (without regard to requirements of notice, lapse of time or
elections of other Persons or any combination thereof), (ii) permit or result in
the termination, suspension or material modification of, (iii) result in the
material acceleration of (or give any Person the right to materially accelerate)
the performance of any InterMedia Company under, or (iv) result in the creation
or imposition of any material Lien upon any of the InterMedia Assets under, any
System Franchise, material System License or any material System Contract or
other material instrument evidencing any of the InterMedia Assets or by which
any InterMedia Company or any of its assets is bound or affected.
3.3 InterMedia Assets.
(a) The Operating Partnership has good and valid title to (or,
in the case of the InterMedia Assets that are leased, valid leasehold interests
in) the InterMedia Assets (other than Owned Real Property, Leased Real Property
and Other Real Property Interests, as to which representations and warranties in
Section 3.5 apply). The InterMedia Assets are free and clear of all Liens,
except Permitted Liens.
(b) The InterMedia Assets include all of the assets (including
all of the dwelling-unit easements, rights of entry and similar agreements and
authorizations, and all of the real estate easements, rights of way and similar
authorizations) necessary to permit the InterMedia Companies to
- 23 -
conduct InterMedia's Business lawfully and to operate the InterMedia Systems
lawfully and substantially as they are being conducted and operated on the date
of this Agreement and in compliance in all material respects with all applicable
material Legal Requirements, System Contracts, System Licenses and System
Franchises. Schedule 3.3 lists the principal items of Tangible Personal
Property. Except as described on Schedule 3.3, the Tangible Personal Property is
in good operating condition and repair (ordinary wear and tear excepted). The
InterMedia Assets include inventory at not less than normal historical levels
consistent with past practice (as adjusted for historical rebuild activities)
and sufficient to operate the InterMedia Systems in the ordinary course of
business.
3.4 System Franchises, System Licenses, and System Contracts.
(a) Except for the System Franchises, System Licenses and
System Contracts listed on Schedule 3.4 and the Leased Real Property and Other
Real Property Interests listed on Schedule 3.5, to the General Partner's
Knowledge, the InterMedia Companies are not bound or affected by any of the
following that relate to InterMedia's Business: (i) leases of real property;
(ii) leases of personal property for more than one year or requiring payments
exceeding $25,000 in the aggregate; (iii) franchises for the construction or
operation of cable television systems or material Contracts of substantially
equivalent effect; (iv) licenses, authorizations, consents or permits of the
FCC; (v) other material licenses, authorizations, consents or permits of any
other Governmental Authority; (vi) material easements, rights of access,
underground conduit agreements, crossing agreements or other interests in real
property; (vii) material pole line or attachment agreements; (viii) multiple
dwelling unit agreements, including bulk agreements, and commercial service
agreements; (ix) material agreements pursuant to which the InterMedia Systems
receive or provide advertising sales representation services; (x) material
agreements pursuant to which an InterMedia System has constructed or agreed to
construct for third parties an institutional network or otherwise provides to
third parties telecommunications services other than one-way video; (xi)
material construction and development agreements (other than installation
agreements where services are provided in the ordinary course of business on an
as-needed basis); (xii) agreements pursuant to which any of the InterMedia
Companies have incurred or are liable for any Debt or (xiii) Contracts relating
to the operation of InterMedia's Business other than those described in any
other clause of this Section 3.4(a) which contemplate payments by or to one of
the InterMedia Companies in any 12-month period exceeding $25,000 individually
or $150,000 in the aggregate.
(b) Complete and correct copies of the System Franchises and
System Licenses have been delivered by the General Partner to Buyer. Except as
set forth on Schedule 3.4, the System Franchises contain all of the commitments
and obligations of the InterMedia Companies to the applicable Franchising
Authority granting such System Franchises with respect to the construction,
ownership and operation of the InterMedia Systems, except for any commitments or
obligations that will be fulfilled or satisfied prior to the Closing. To the
General Partner's Knowledge, the System Franchises and System Licenses are
currently in full force and effect and are valid and enforceable under all
applicable Legal Requirements according to their terms. Except as disclosed in
Schedule 3.4 or such rights that will have been waived prior to the Closing,
none of the System Franchises grants to any Franchising Authority or any other
Person any right of first refusal or right to purchase the assets
- 24 -
of any InterMedia System that would be triggered by Buyer's offer to acquire the
Purchased Interests, the execution of this Agreement, or the consummation of the
purchase and sale of the Purchased Interests. There is no legal action,
governmental proceeding or investigation pending, or to the General Partner's
Knowledge threatened, to terminate, suspend or materially modify any System
Franchise or any System License and the InterMedia Companies are in material
compliance with the material terms and conditions of all System Franchises and
System Licenses and with other applicable material requirements of all
Governmental Authorities (including the FCC and the Register of Copyrights)
relating to the System Franchises and System Licenses, including all material
requirements for notification, filing, reporting, posting and maintenance of
logs and records. All Service Areas are served pursuant to one of the System
Franchises except as set forth on Schedule 3.4.
(c) Complete and correct copies of all System Contracts
required to be listed on the Sellers' Schedules (including all Contracts
relating to Leased Real Property and Other Real Property Interests described on
Schedule 3.5) have been provided to or made available to Buyer or will be
provided to Buyer within five Business Days following execution of this
Agreement (other than System Contracts designated as "Missing" on Schedule 3.4
or 3.5). To the General Partner's Knowledge, such documents constitute the
entire agreement with the other party. Each such System Contract is in full
force and effect and constitutes the valid, legal, binding and enforceable
obligation of the Operating Partnership, and the Operating Partnership is not,
and to the General Partner's Knowledge, each other party thereto is not, in
breach or in default of any material terms or conditions thereunder.
3.5 Real Property. All InterMedia Assets consisting of Owned Real
Property, Leased Real Property and material Other Real Property Interests are
described on Schedule 3.5, including address and use for each such real property
interest. Except as otherwise disclosed on Schedule 3.5, the Operating
Partnership holds title to the Owned Real Property free and clear of all Liens
(except Permitted Liens) and has the valid and enforceable right to use and
possess such Owned Real Property, subject only to the above-referenced Liens. To
the General Partner's Knowledge, except as otherwise disclosed on Schedules 3.5,
the Operating Partnership has valid and enforceable leasehold interests in all
Leased Real Property and, with respect to Other Real Property Interests, has
valid and enforceable rights to use such Other Real Property Interests, in each
case subject only to the above-referenced Liens. To the General Partner's
Knowledge, except for ordinary wear and tear and routine repairs, all of the
material improvements, leasehold improvements and the premises of the Owned Real
Property and the premises demised under the leases and other documents
evidencing the Leased Real Property are in good condition and repair and are
suitable for the purposes used. To the General Partner's Knowledge, each parcel
of Owned Real Property and each parcel of Leased Real Property and any
improvements thereon and their current use (a) has access to and over public
streets or private streets for which the Operating Partnership has a valid right
of ingress and egress, (b) conforms in its current use and occupancy to all
material zoning requirements without reliance upon a variance issued by a
Governmental Authority or a classification of the parcel in question as a
nonconforming use and (c) conforms in all material respects in its current use
to all restrictive covenants, if any, or other Liens affecting all or part of
such parcel. To the General Partner's Knowledge, all buildings, towers, guy
wires and anchors, headend equipment, earth-receiving dishes and related
facilities used in the operations of the InterMedia Systems and included in the
InterMedia Assets are located entirely on
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Owned Real Property or Leased Real Property or other real property in which the
Operating Partnership has an Other Real Property Interest and are maintained,
placed and located materially in accordance with the provisions of all
applicable material Legal Requirements, deeds, leases, licenses, permits or
other legally enforceable arrangements.
3.6 Environmental. Except as would not reasonably be expected to
result, individually or in the aggregate, in fines or penalties under
Environmental Laws or environmental remediation costs required to be incurred
under Environmental Laws in excess of $5 million ("Material Environmental
Liability"):
(a) Except as disclosed on Schedule 3.6, the Owned Real
Property and Leased Real Property comply in all material respects with and, to
the General Partner's Knowledge, have previously been operated in compliance in
all material respects with all Environmental Laws. Except as disclosed on
Schedule 3.6, none of the InterMedia Companies has (i) generated, stored, used,
treated, handled, discharged, released or disposed of any Hazardous Substances
at, on, under, in or about, to or from or in any other manner affecting, any
Owned Real Property or Leased Real Property, (ii) transported any Hazardous
Substances to or from any Owned Real Property or Leased Real Property or (iii)
undertaken or caused to be undertaken any other activities relating to the Owned
Real Property or Leased Real Property, which could reasonably be expected to
give rise to liability under any Environmental Law and, to the General Partner's
Knowledge, no other present or previous owner, tenant, occupant or user of any
Owned Real Property or Leased Real Property or any other Person has committed or
suffered any of the foregoing. Except as disclosed on Schedule 3.6, to the
General Partner's Knowledge, no release of Hazardous Substances outside the
Owned Real Property or Leased Real Property has entered or threatens to enter
any Owned Real Property or Leased Real Property, nor is there any pending or
threatened Litigation based on Environmental Laws which arises from any
condition of the land adjacent to or immediately surrounding any Owned Real
Property or Leased Real Property. Except as disclosed on Schedule 3.6, no
Litigation based on Environmental Laws which relates to any Owned Real Property
or Leased Real Property or any operations or conditions on it (i) has been
asserted or conducted in the past or is currently pending against or with
respect to any of the InterMedia Companies or, to the General Partner's
Knowledge, any other Person or (ii) to the General Partner's Knowledge, is
threatened or contemplated.
(b) Except as disclosed on Schedule 3.6, (i) to the General
Partner's Knowledge, no aboveground or underground storage tanks regulated under
the Environmental Laws are currently or have been located on any Owned Real
Property or Leased Real Property, (ii) to the General Partner's Knowledge, no
Owned Real Property or Leased Real Property has been used at any time as a
gasoline service station or any other facility for storing, pumping, dispensing
or producing gasoline or any other petroleum products or wastes and (iii) to the
General Partner's Knowledge, no building or other structure on any Owned Real
Property or Leased Real Property contains friable asbestos, or
asbestos-containing material.
(c) The General Partner has provided Buyer with complete and
correct copies of (i) all material studies, reports, surveys or other written
materials, which to the General Partner's
- 26 -
Knowledge, are in the possession of the General Partner or the InterMedia
Companies relating to the presence or alleged presence of Hazardous Substances
at, on, under or affecting the Owned Real Property or Leased Real Property, (ii)
all material written notices (other than general notices made by general
publication) or other material written materials in the possession of the
General Partner or the InterMedia Companies that were received from any
Governmental Authority having the power to administer or enforce any
Environmental Laws relating to potential liability under Environmental Laws
arising out of the current or past ownership, use or operation of the Owned Real
Property or Leased Real Property or activities at the Owned Real Property or
Leased Real Property and (iii) all materials in the possession of the General
Partner or the InterMedia Companies relating to any material Litigation or
material allegation by any private third party concerning any Environmental Law
and relating to InterMedia's Business, excepting, in the case of clauses (i),
(ii) and (iii), any such materials that were prepared by legal counsel to the
InterMedia Companies and constitute privileged attorney work product or
communications.
3.7 Compliance with Legal Requirements.
(a) The use of the InterMedia Assets as they are currently
used and the conduct of InterMedia's Business and the operation of the
InterMedia Systems as they are currently conducted and operated do not, to the
General Partner's Knowledge, except as described on Schedule 3.7, violate or
infringe in any material respect any material Legal Requirements currently in
effect (other than Legal Requirements described in Sections 3.6, 3.7(d) and
3.12, as to which the representations and warranties set forth in those
subsections shall apply), including (i) the Communications Act, (ii) Section 111
of the Copyright Act and (iii) all other applicable material Legal Requirements
relating to the construction, maintenance, ownership and operation of the
InterMedia Assets, the InterMedia Systems and InterMedia's Business. Neither the
General Partner nor any of the InterMedia Companies has received any written
notice of any material violation by the InterMedia Companies or InterMedia's
Business of any material Legal Requirement applicable to the operation of
InterMedia's Business as currently conducted, or the InterMedia Systems as
currently operated, and there is no existing fact, circumstance or condition
that could reasonably form the basis for a finding by any Governmental Authority
of any such material violation.
(b) Except as disclosed on Schedule 3.7, a valid request for
renewal has been duly and timely filed under Section 626 of the Cable Act with
the proper Franchising Authority with respect to all System Franchises that have
expired prior to or will expire within 36 months after the date of this
Agreement.
(c) Except as set forth in Schedule 3.7, (i) neither the
General Partner nor any of the InterMedia Companies has received any written
notice or demand from the FCC, from any television station, or from any other
Person or Governmental Authority (A) challenging the right of the InterMedia
Systems to carry any television broadcast station or deliver the same or (B)
claiming that any InterMedia System has failed to carry a television broadcast
station required to be carried pursuant to the Communications Act or has failed
to carry a television broadcast station on a channel designated by such station
consistent with the requirements of the Communications Act; (ii) to the General
- 27 -
Partner's Knowledge, all material FAA approvals to the extent necessary have
been obtained with respect to the height and location of towers used in
connection with the operation of the InterMedia Systems and are listed in
Schedule 3.7, and such towers are being operated in compliance in all material
respects with applicable FCC and FAA rules; and (iii) neither the General
Partner nor, to the General Partner's Knowledge, any of the InterMedia Companies
has received any written notice from any Governmental Authority with respect to
or has knowledge of an intention to enforce customer service standards pursuant
to the 1992 Cable Act and, except as set forth in the System Franchises, to the
General Partner's Knowledge, the InterMedia Companies have not agreed with any
Governmental Authority to establish customer service standards that exceed the
FCC standards promulgated pursuant to the 1992 Cable Act.
(d) To the General Partner's Knowledge, each InterMedia System
is in compliance in all material respects with the provisions of the 1992 Cable
Act as such Legal Requirements relate to the rates and other fees charged to
subscribers of InterMedia's Business. The InterMedia Companies have used
commercially reasonable efforts to establish rates charged to subscribers,
effective since September 1, 1993, that are or were allowable under the 1992
Cable Act and any authoritative interpretation thereof now or then in effect, to
the extent such rates are or were subject to regulation at such time by any
Governmental Authority, including any Franchising Authority and/or the FCC.
Notwithstanding the foregoing, none of the Sellers makes any representations or
warranties that the rates charged to subscribers of the InterMedia Systems would
be allowable by any rules and regulations of any Governmental Authority that are
promulgated after the Closing Date. The General Partner has delivered to Buyer
complete and correct copies of all material FCC Forms and other information
reasonably requested by Buyer relating to rate regulation generally or specific
rates charged to subscribers with respect to the InterMedia Systems. Except as
set forth on Schedule 3.7, the InterMedia Companies have not made any election
with respect to any cost of service proceeding conducted in accordance with Part
76.922 of Title 47 of the Code of Federal Regulations or any similar proceeding
with respect to any of the InterMedia Systems (a "Cost of Service Election").
Except as set forth in Schedule 3.7, the InterMedia Companies have not entered
into and are not subject to any so-called social contract or proposed resolution
with the FCC or any Franchising Authority with respect to rates charged for
cable television services in the InterMedia Systems and are not currently
negotiating or anticipating entering into or being subject to the same. Except
as otherwise described on Schedule 3.7, to the General Partner's Knowledge, (i)
there are no outstanding or unresolved proceedings or investigations (other than
those affecting the cable industry generally) dealing with or otherwise
affecting the rates that any InterMedia System can charge (whether for
programming, equipment, installation, service or otherwise) including appeals,
(ii) no InterMedia System is subject to any currently effective order issued by
a Governmental Authority that reduced the rates that it may charge (whether for
programming, equipment, installation, service, or otherwise), (iii) no
Franchising Authority has been certified by the FCC as a rate regulating
authority with respect to any of the InterMedia Systems, and (iv) there is no
unresolved material complaint pending with respect to the CPST tier of any
InterMedia System and no rate order with respect to the InterMedia Systems that
is being appealed.
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3.8 Patents, Trademarks and Copyrights. Except as set forth on Schedule
3.8, the InterMedia Companies have deposited with the U.S. Copyright Office all
statements of account and other documents and instruments, and have paid all
royalties, supplemental royalties, fees and other sums to the U.S. Copyright
Office under the Copyright Act with respect to the business and operations of
the InterMedia Systems as are required to obtain, hold and maintain the
compulsory license for cable television systems provided by Section 111 of the
Copyright Act. Neither the General Partner nor any of the InterMedia Companies
has received any notice of any material inquiry, claim, action or demand pending
before the U.S. Copyright Office or from any other Person which questions the
copyright filings or payments made by the InterMedia Companies with respect to
the InterMedia Systems. The General Partner has delivered to Buyer complete and
correct copies of all current reports and filings for the past three years, made
or filed with the U.S. Copyright Office pursuant to copyright rules and
regulations with respect to InterMedia's Business. Except as set forth on
Schedule 3.8, the InterMedia Companies do not own or use any patent, patent
right, trademark or copyright related to and material to the operation of the
InterMedia Systems and are not a party to any license or royalty agreement with
respect to any such patent, patent right, trademark or copyright, except for
licenses respecting program material and obligations under the Copyright Act
applicable to cable television systems generally. To the General Partner's
Knowledge, except as described on Schedule 3.8, the InterMedia Systems and
InterMedia's Business have been operated in such a manner so as not to
materially violate or infringe upon the rights, or give rise to any rightful
material claim of any Person for copyright, trademark, service ▇▇▇▇ or, patent
infringement.
3.9 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events. The General Partner has delivered to Buyer complete and
correct copies of (a) audited consolidated balance sheets of the Partnership and
its consolidated Subsidiaries and related statements of income, stockholders'
equity and cash flows for the eight months ended December 31, 1998, including
all notes and schedules thereto (all of such financial statements and notes
being hereinafter referred to as "InterMedia's Financial Statements").
InterMedia's Financial Statements are in accordance with the books and records
of the InterMedia Companies, were prepared in accordance with GAAP and present
fairly the financial condition and operating results of the InterMedia Companies
as of and for the period indicated. The unaudited consolidated Balance Sheet as
of February 28, 1999 of the Partnership and its consolidated Subsidiaries is
herein called the "InterMedia Balance Sheet." At the date of the InterMedia
Balance Sheet, the InterMedia Companies had no material liabilities with respect
to the InterMedia Systems or InterMedia's Business required by GAAP to be
reflected or reserved against therein that were not fully reflected or reserved
against on the InterMedia Balance Sheet, other than liabilities as set forth on
Schedule 3.9. Except as set forth on Schedule 3.9 or as otherwise disclosed in
this Agreement or any other Schedule attached to this Agreement, since the date
of the InterMedia Balance Sheet: (i) the InterMedia Companies have not incurred
any obligation or liability (contingent or otherwise) with respect to the
InterMedia Systems or InterMedia's Business that would require accrual or
disclosure in accordance with GAAP, except obligations incurred in the ordinary
course of business; (ii) there has been no material adverse change in, nor to
the General Partner's Knowledge, has any event or events (other than any events
affecting the cable television industry in general) occurred that, individually
or in the aggregate, are reasonably likely to result in a material adverse
change in (A) the condition (financial or otherwise) or results of operations of
InterMedia's Business, (B) the
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InterMedia Assets, business, operations, condition (financial or otherwise) or
results of operations of any single Principal System Group, taken as a whole, or
(C) the InterMedia Assets, business operations, condition (financial or
otherwise) or results of operations of the other Systems (i.e., those which are
not within any Principal System Group), taken as a whole; and (iii) InterMedia's
Business has been conducted only in the ordinary course of business consistent
with past practice, except as provided in InterMedia's 1999 Budget.
3.10 Litigation. Except as set forth in Schedule 3.10: (a) there is no
Litigation pending or, to the General Partner's Knowledge, threatened, and to
the General Partner's Knowledge, there is no investigation pending or
threatened, by or before any Governmental Authority or private arbitration
tribunal against any of the InterMedia Companies which, if adversely determined,
would, individually or in the aggregate, have a Material Adverse Effect, or
would result in the material modification, revocation, termination, suspension
or other limitation of any of the System Franchises, System Licenses, System
Contracts or leases or other documents evidencing the Leased Real Property or
the Other Real Property Interests; and (b) there is not in existence any
Judgment (other than Judgments affecting the cable television industry in
general) requiring any of the InterMedia Companies to take any action of any
kind with respect to the InterMedia Assets or the operation of the InterMedia
Systems, or to which any of the InterMedia Companies, the InterMedia Systems or
the InterMedia Assets are subject or by which they are bound or affected.
3.11 Tax Returns. Except as described on Schedule 3.11, the InterMedia
Companies have duly and timely filed in correct form all federal Tax Returns and
all other material Tax Returns required to be filed by them, and have timely
paid all Taxes which have become due and payable, whether or not so shown on any
such Tax Return, except such amounts as are being contested diligently and in
good faith and are not in the aggregate material. Neither the General Partner
nor any of the InterMedia Companies has received any notice of, nor does the
General Partner have any Knowledge of, any deficiency, assessment or audit, or
proposed deficiency, assessment or audit from any taxing Governmental Authority.
3.12 Employment Matters.
(a) Schedule 3.12 contains a complete and correct list of the
names and positions of all employees engaged principally in InterMedia's
Business as of the date set forth on Schedule 3.12. To the General Partner's
Knowledge, the InterMedia Companies have complied in all material respects with
all applicable Legal Requirements relating to the employment of labor, including
the Worker Adjustment and Retraining Notification Act, as amended (the "WARN
Act"), ERISA, continuation coverage requirements with respect to group health
plans and those relating to wages, hours, collective bargaining, unemployment
insurance, worker's compensation, equal employment opportunity, age and
disability discrimination, immigration control and the payment and withholding
of Taxes.
(b) Each employee benefit plan (as defined in Section 3(3) of
ERISA) or any multi-employer plan (as defined in Section 3(37) of ERISA) with
respect to which any of the InterMedia Companies or any of their ERISA
Affiliates has any liability or in which any employees or agents, or
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any former employees or agents, of any of the InterMedia Companies or any of
their ERISA Affiliates participate is set forth in Schedule 3.12 (the
"InterMedia Plans"). Except as disclosed on Schedule 3.12, none of the
InterMedia Companies, none of their ERISA Affiliates and no InterMedia Plan is
in material violation of any provision of the Code or ERISA. No "reportable
event" (as defined in Section 4043 of ERISA) has occurred and is continuing with
respect to any InterMedia Plan and no "prohibited transaction" (as defined in
Section 406 of ERISA) has occurred with respect to any InterMedia Plan. No
material "accumulated funding deficiency" or "withdrawal liability" (as defined
in Section 302 of ERISA) exists with respect to any of the InterMedia Plans.
After the Closing, none of the InterMedia Companies will be required, under
ERISA, the Code or any collective bargaining agreement, to establish, maintain
or continue any InterMedia Plan currently maintained by them or any of their
ERISA Affiliates.
(c) Except as set forth on Schedule 3.12, there are no union
or collective bargaining agreements applicable to any Person employed by any of
the InterMedia Companies that renders services in connection with the InterMedia
Systems and none of the InterMedia Companies has any duty to bargain with any
labor organization with respect to any such Person. Except as set forth on
Schedule 3.12, there are not pending any unfair labor practice charges against
any of the InterMedia Companies, any demand for recognition or any other effort
of or request or demand from, a labor organization for representative status
with respect to any Person employed by any of the InterMedia Companies that
renders services in connection with the InterMedia Systems or InterMedia's
Business. Except as described on Schedule 3.12, none of the InterMedia Companies
has any written employment Contracts, either written or oral, with any employee
of the InterMedia Systems.
3.13 InterMedia Systems Information. Schedule 3.13 sets forth a true
and accurate list of the following information relating to InterMedia's Business
as of the most recent monthly report generated by the InterMedia Companies in
the ordinary course of business containing the information required to prepare
Schedule 3.13 (which date is specified in Schedule 3.13):
(a) the approximate number of miles (both underground and
aerial) of plant included in the InterMedia Assets;
(b) the approximate number of Equivalent Basic Subscribers
(including the number that are individually billed and the number that are
bulk-billed) served by the InterMedia Systems for each Principal System Group
and for all other InterMedia Systems in the aggregate.
(c) the approximate number of single family homes, residential
dwelling units (including apartment, condominium and cooperative building
units), and commercial establishments (including hotels and motels) passed by
the InterMedia Systems;
(d) a description of all Basic Services, Expanded Basic
Services, Pay TV, digital and other optional or tier services available from the
InterMedia Systems, the rates charged by the InterMedia Companies for each and
the number of customers receiving each such service;
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(e) a list of each InterMedia System, with the stations and
signals carried by each InterMedia System and the channel position of each such
signal and station, and the respective bandwidth capacity and channel capacity
for each InterMedia System.
(f) a list of each Service Area served by each InterMedia
System.
3.14 Accounts Receivable. The Accounts Receivable for InterMedia's
Business are actual and bona fide receivables representing obligations for the
total dollar amount of such receivables, as shown on the books of the InterMedia
Companies, that resulted from the regular course of InterMedia's Business. Such
receivables are subject to no material offset or reduction of any nature, except
for a reserve for uncollectible amounts consistent with the reserve established
by the InterMedia Companies in InterMedia's Financial Statements and those
credits or reductions to such accounts made in the ordinary course of business.
3.15 Bonds; Letters of Credit; Insurance. Except as set forth on
Schedule 3.15, there are no franchise, construction, fidelity, performance, or
other bonds, guaranties in lieu of bonds or letters of credit posted by the
InterMedia Companies in connection with its operation or ownership of any of the
InterMedia Systems or InterMedia Assets. Schedule 3.15 is a true and complete
list of all of the material certificates of insurance with respect to any of the
InterMedia Systems or InterMedia Assets or InterMedia's Business.
3.16 Finders and Brokers. None of the InterMedia Companies nor any
Person acting on behalf of the InterMedia Companies has employed any financial
advisors, 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, except any of the foregoing that
will be paid in full by the Sellers.
3.17 Transactions with Affiliates. Except as disclosed in Schedule
3.17, none of the InterMedia Companies has been involved in any business
arrangement or business relationship with any Affiliate of any of the InterMedia
Companies (other than another InterMedia Company), and no Affiliate of any of
the InterMedia Companies (other than another InterMedia Company) owns any
property or right, tangible or intangible, that is used in InterMedia's Business
or the operation of the InterMedia Systems.
3.18 Competition. Except as set forth in Schedule 3.18, to the General
Partner's Knowledge, as of the date of this Agreement, (a) no cable television
system or other non-satellite MVPD other than an InterMedia System is operating
in any of the Service Areas; (b) no Franchising Authority for a Service Area has
awarded a franchise or similar authorization to any cable operator other than
the InterMedia Companies; and (c) no MVPD has applied for a franchise or similar
authorization to serve any such Service Area.
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3.19 Pending Transactions. Other than the Pending Swaps, the InterMedia
Companies have not entered into any agreement or letter of intent or other
commitment to acquire or dispose of any cable television system that has not
been consummated prior to the execution of this Agreement.
3.20 Pending Swap Schedules. Any information set forth in or disclosed
in the schedules to the Swap Agreements as in effect on the date of this
Agreement shall be deemed by this reference to be included in the Schedules to
this Agreement to the extent such information and disclosures would reasonably
be deemed relevant to the corresponding or analogous representations and
warranties made by the General Partner in this Article 3.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller severally represents and warrants to Buyer as follows:
4.1 Authority of Sellers; Authorization and Binding Obligation. Such
Seller has the requisite legal capacity or requisite partnership or limited
liability company power and authority, as appropriate, to execute, deliver and
perform this Agreement and the other Transaction Documents to which such Seller
is a party according to their respective terms. The execution, delivery, and
performance by such Seller of this Agreement and the other Transaction Documents
to which such Seller is a party have been duly authorized by all necessary
action on the part of such Seller. This Agreement and the other Transaction
Documents to which such Seller is a party have been duly executed and delivered
by such Seller (or, in the case of Transaction Documents to be executed and
delivered at Closing, when executed and delivered will be duly executed and
delivered) and constitute (or, in the case of Transaction Documents to be
executed and delivered at Closing, when executed and delivered will constitute)
the legal, valid, and binding obligation of such Seller, enforceable against
such Seller in accordance with their terms, except as the enforceability of this
Agreement and such other Transaction Documents may be limited by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally or by judicial
discretion in the enforcement of equitable remedies, and as rights to
indemnification may be limited by federal or state securities laws or the public
policies embodied therein.
4.2 No Conflict; Required Consents. Except as described on Schedule
4.2, the execution and delivery by such Seller, the performance by such Seller
under, and the consummation of the transactions contemplated by, this Agreement
and the Transaction Documents to which such Seller is a party do not and will
not: (a) conflict with or violate any provision of the Charter Documents of such
Seller; (b) violate any provision of any Legal Requirement applicable to such
Seller; (c) require any consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with, any
Governmental Authority or other Person; or (d) (i) conflict with, violate,
result in a breach of or constitute a default under (without regard to
requirements of notice, lapse of time or elections of other Persons or any
combination thereof), (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to
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accelerate) the performance of such Seller under, or (iv) result in the creation
or imposition of any Lien upon the Purchased Interest held by such Seller under,
any Contract or other instrument by which such Seller or any of its assets is
bound or affected, except for any of the foregoing that would not materially
adversely affect such Seller's ability to perform its obligations under this
Agreement.
4.3 Title to Purchased Interests.
(a) The General Partner holds of record and owns beneficially,
and as of the Closing will hold of record and own beneficially, the General
Partnership Interest set forth by its name in Schedule 4.3, free and clear of
all Liens (other than the Loan Document Liens and transfer restrictions created
by the Partnership Agreement in favor of the other partners thereunder).
(b) As of the date hereof, each Limited Partner Seller holds
of record and owns beneficially the Limited Partnership Interest set forth by
its name in Schedule 4.3, free and clear of all Liens (other than the Loan
Document Liens and transfer restrictions created by the Partnership Agreement in
favor of the other partners thereunder). At the Closing, each Limited Partner
Seller will hold of record and own beneficially the Limited Partnership Interest
required to be sold by it to Buyer at the Closing, free and clear of all Liens
(other than the Loan Document Liens and transfer restrictions created by the
Partnership Agreement in favor of the other partners thereunder), which
partnership interest will have been adjusted to represent a pro rata percentage
interest in all distributions and allocations to be made by the Partnership
without any carried interests or similar preferential rights to distributions or
allocations.
(c) Except as disclosed in Schedule 4.3 and except for this
Agreement and the Partnership Agreement, such Seller (1) is not party to, and
has not granted to any other Person, any options, warrants, subscription rights,
rights of first refusal or any other rights providing for the acquisition or
disposition of partnership interests or other equity interests in the
Partnership, and (2) is not a party to any voting agreement, voting trust, proxy
or other agreement or understanding with respect to the voting of any of the
Purchased Interests or the Capital Stock of any of the InterMedia Companies.
(d) Schedule 4.3 sets forth the correct address of such
Seller's principal place of business, or if such Seller has no principal place
of business, such Seller's residence, and lists any other jurisdiction in which
such Seller reasonably expects that a Person would file evidence of a lien
against or security interest in the assets of such Seller.
4.4 Litigation. There is no Litigation pending or, to such Seller's
Knowledge, threatened, and to such Seller's Knowledge, there is no investigation
pending or threatened, by or before any Governmental Authority or private
arbitration tribunal against such Seller which, if adversely determined, would
materially adversely affect the ability of such Seller to perform its
obligations under this Agreement.
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4.5 Finders and Brokers. Neither such Seller nor any Person acting on
behalf of such Seller has employed any financial advisors, 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, except any of the foregoing that will be paid in full by such
Seller.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each Seller as follows:
5.1 Organization; Authority. Buyer is a limited partnership duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. Buyer has the requisite partnership power and authority to conduct its
activities as such activities are currently conducted and to execute, deliver
and perform this Agreement and the other Transaction Documents to which Buyer is
a party according to their respective terms. The Buyer is duly qualified to do
business as a foreign limited partnership and is in good standing in all
jurisdictions in which such qualification is necessary, except where such
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the ability of Buyer to perform its obligations under
this Agreement.
5.2 Authorization and Binding Obligation. The execution, delivery, and
performance by Buyer of this Agreement and the other Transaction Documents to
which Buyer is a party have been duly authorized by all necessary action on the
part of Buyer. This Agreement and the other Transaction Documents to which Buyer
is a party have been duly executed and delivered by Buyer (or, in the case of
Transaction Documents to be executed and delivered at Closing, when executed and
delivered will be duly executed and delivered) and constitute (or, in the case
of Transaction Documents to be executed and delivered at Closing, when executed
and delivered will constitute) the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with their terms, except as the
enforceability of this Agreement and such other Transaction Documents may be
limited by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally or by judicial discretion in the enforcement of equitable remedies,
and as rights to indemnification may be limited by federal or state securities
laws or the public policies embodied therein.
5.3 No Conflict; Required Consents. The execution and delivery by
Buyer, the performance by Buyer under, and the consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which Buyer is
a party do not and will not: (a) conflict with or violate any provision of the
Charter Documents of Buyer; (b) violate any provision of any Legal Requirement;
(c) require any consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with, any
Governmental Authority or other Person; or (d) (i) conflict with, violate,
result in a breach of or constitute a default under (without regard to
requirements of notice, lapse of time or elections of other Persons or any
combination thereof), (ii) permit or result in the termination, suspension or
modification of, or (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of Buyer under, any Contract or other
instrument by which Buyer or any
- 35 -
of its assets is bound or affected, except for any of the foregoing that would
not materially adversely affect Buyer's ability to perform its obligations under
this Agreement.
5.4 Finders and Brokers. Neither Buyer nor any Person acting on behalf
of Buyer has employed any financial advisors 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,
except any of the foregoing that will be paid in full by Buyer.
5.5 Investment Purpose. Buyer is acquiring the Purchased Interests for
investment for its own account and not with a view to the sale or distribution
of any part thereof within the meaning of the Securities Act other than pursuant
to an effective registration statement.
5.6 Investment Company. Buyer is not, and upon consummation of the
transactions contemplated by this Agreement will not be, an "Investment Company"
required to register as such under the Investment Company Act of 1940, as
amended.
5.7 Litigation. There is no Litigation pending or, to Buyer's
Knowledge, threatened, and to Buyer's Knowledge, there is no investigation
pending or threatened, by or before any Governmental Authority or private
arbitration tribunal against Buyer which, if adversely determined, would
materially adversely affect the ability of Buyer to perform its obligations
under this Agreement.
5.8 Balance Sheet. Buyer has delivered to the General Partner a true
and complete copy of an audited consolidated balance sheet of Buyer and its
consolidated Subsidiaries as of December 31, 1998. As of the date of this
Agreement, all operations of Buyer and its Affiliates are conducted through
Buyer or one or more of its Subsidiaries or joint ventures or other Persons in
which Buyer holds Capital Stock.
ARTICLE 6
SPECIAL COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
6.1 Access to Premises and Records. Between the execution of this
Agreement and the Closing, upon reasonable notice the General Partner will cause
the InterMedia Companies to give to Buyer and its representatives full access
during normal business hours to all the premises and books and records of
InterMedia's Business and to all of the InterMedia Assets and InterMedia
Systems' personnel and will furnish to Buyer and its representatives all such
documents, financial information and other information regarding InterMedia's
Business, the InterMedia Systems and the InterMedia Assets as Buyer from time to
time reasonably may request; provided that no investigation by Buyer will affect
or limit the scope of any of the representations or warranties of the Sellers in
this Agreement or in any Transaction Document or limit the Sellers' liability
for breach of any of the foregoing.
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6.2 Continuity and Maintenance of Operations; Certain Deliveries and
Notices. Except as described on Schedule 6.2 or as Buyer may otherwise consent
in writing, between the date of this Agreement and the Closing, the General
Partner will cause each of the InterMedia Companies to:
(a) conduct InterMedia's Business and operate the InterMedia
Systems only in the usual, regular and ordinary course and consistent with past
practices, except as provided in InterMedia's 1999 Budget (subject to, and
except as modified by, compliance with the following negative and affirmative
covenants), including continuing to make ordinary marketing, advertising and
promotional expenditures, except as provided in InterMedia's 1999 Budget, and,
to the extent consistent with such conduct and operation, use its commercially
reasonable efforts to (i) preserve its current business intact in all material
respects, including preserving existing relationships with Franchising
Authorities, suppliers, customers and others having business dealings with the
InterMedia Companies, and (ii) keep available the services of its employees and
agents providing services in connection with InterMedia's Business;
(b) maintain the InterMedia Assets in good operating
condition; maintain inventory for the InterMedia Systems at not less than normal
historical levels consistent with past practices (as adjusted for historical
rebuild activities) and sufficient to operate the InterMedia Systems in the
ordinary course of business; maintain in full force and effect policies of
insurance with respect to InterMedia's Business consistent with past practices
(including maintaining the policies of insurance listed on Schedule 3.15 at
their current levels of coverage); promptly notify Buyer of any event that
results in any material loss or damage to the InterMedia Assets or InterMedia
Systems (whether resulting from fire, theft, or any other casualty); maintain
its books, records and accounts with respect to the InterMedia Assets and the
operation of the InterMedia Systems in the usual, regular and ordinary manner on
a basis consistent with past practices; comply in all material respects with all
material Legal Requirements applicable to the InterMedia Companies and the
operation of InterMedia's Business; and continue to make capital expenditures,
including rebuild expenditures, materially consistent with InterMedia's 1999
Budget.
(c) except as described on Schedule 6.2, not (i) modify,
terminate, renew, suspend, abrogate or enter into any System Contract or other
instrument that would be included in the InterMedia Assets, other than in the
ordinary course of business; provided that Buyer's consent, not to be
unreasonably withheld or delayed, will be required to modify, terminate, renew,
suspend, abrogate or enter into any System Franchise (except as required or
expressly permitted by another provision of this Agreement) or any other
agreement that contemplates payments to or by the InterMedia Companies in any
12-month period exceeding $100,000 individually; and provided further that
Buyer's consent, which Buyer may withhold in its sole discretion, will be
required to modify any of the Loan Documents to the extent such modifications
taken as a whole would be materially adverse to the InterMedia Companies or to
the extent any such modifications could reasonably be expected to adversely
affect Buyer's ability to obtain the Rollover/Refinancing; (ii) take any action
that would result in the condition set forth in Section 7.1(a) not being
satisfied at any time prior to the Closing, except as required by applicable
Legal Requirements; (iii) engage in any marketing, subscriber installation,
disconnection or collection practices other than in the ordinary course of
business consistent with past practices, except as otherwise
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budgeted in InterMedia's 1999 Budget; (iv) make any Cost of Service Election;
(v) enter into any agreement with or commitment to any competitive access
providers with respect to any InterMedia System; (vi) sell, transfer or assign
any portion of the InterMedia Assets other than sales in the ordinary course of
business to non-Affiliates and assets sold or disposed of and replaced by other
assets of comparable utility and value or permit the creation of a Lien, other
than a Permitted Lien, on any InterMedia Asset; (vii) engage in any hiring or
employee compensation practices that are inconsistent with past practices except
for changes in such practices implemented by the InterMedia Companies and their
Affiliates on a company-wide basis, except as otherwise budgeted in InterMedia's
1999 Budget; or (viii) decrease or increase the rate charged for any level of
Basic Services, Expanded Basic Services or Pay TV or add, delete, retier or
repackage any programming services, except as specifically described in
InterMedia's 1999 Budget or as required by applicable Legal Requirements;
(d) promptly deliver to Buyer true and complete copies of all
quarterly financial statements and all monthly and quarterly financial and
operating reports with respect to the operation of InterMedia's Business
prepared in the ordinary course of business by or for any of the InterMedia
Companies at any time from the date of this Agreement until the Closing;
(e) give or cause to be given to Buyer and its counsel,
accountants and other representatives, as soon as reasonably possible but in any
event prior to the date of submission to the appropriate Governmental Authority,
copies of all FCC Forms 1200, 1205, 1210, 1215, 1220, 1225, 1235 and 1240 or any
other FCC forms required to be filed with any Governmental Authority under the
1992 Cable Act with respect to rates and prepared with respect to any of the
InterMedia Systems;
(f) duly and timely file a valid notice of renewal under
Section 626 of the Cable Act with the appropriate Franchising Authority with
respect to any System Franchise (other than those disclosed in Schedule 3.7)
that will expire within 36 months after any date between the date of this
Agreement and the Closing Date;
(g) promptly notify Buyer of any fact, circumstance, event or
action by it or otherwise (i) which if known at the date of this Agreement would
have been required to be disclosed by it in or pursuant to this Agreement or
(ii) the existence, occurrence or taking of which would result in the condition
set forth in Section 7.1(a) not being satisfied at any time prior to the
Closing, and, with respect to clause (ii), will use its commercially reasonable
efforts to remedy the same.
6.3 Required Consents, Franchise Renewal.
(a) The General Partner will cause the InterMedia Companies to
use commercially reasonable efforts to obtain in writing as promptly as possible
all of the Required Consents in form and substance reasonably satisfactory to
Buyer, and will deliver to Buyer copies of such Required Consents promptly after
they are obtained; provided, however, that the General Partner will afford Buyer
the opportunity to review, approve and revise the form of Required Consent prior
to delivery to the party whose consent is sought. Buyer will cooperate with the
General Partner and the InterMedia Companies in their efforts to obtain the
Required Consents; provided that Buyer will not be required to accept or
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agree or accede to any modifications or amendments to, or the imposition of any
condition to the transfer of control of, any of the System Franchises, System
Licenses, System Contracts, or leases or documents evidencing Leased Real
Property or Other Real Property Interests, that in either case, would make, or
are reasonably likely to make, the underlying instrument materially more onerous
in any respect or that would materially reduce in any respect, or are reasonably
likely to materially reduce in any respect, the benefits available under the
instrument in respect of which the consent relates. Within 30 days after the
date of this Agreement, the General Partner and Buyer will cooperate with each
other to complete, execute and deliver, or cause to be completed, executed and
delivered to the appropriate Governmental Authority or other Person, an
application on FCC Form 394 (or other appropriate form) and appropriate letters
of transmittal requesting such Governmental Authority's or other Person's
consent to transfer of control of each System Franchise, System License, System
Contract, or lease or document evidencing Leased Real Property or Other Real
Property Interest as to which such consent is required. The parties agree that
without the General Partner's and the Buyer's prior consent, no notice or
application or similar document filed with a Governmental Authority or other
Person for the purpose of requesting a Required Consent (including any FCC Form
394 filed hereunder with respect to a System Franchise) or notifying such party
of the transactions contemplated by this Agreement will state that the purchase
and sale of the Purchased Interests and the Closing hereunder are conditioned on
or will necessarily result in consummation of any transaction other than the
transactions contemplated by this Agreement or will request that any such
Required Consent be conditioned on consummation of any transaction other than
the occurrence of the Closing hereunder, and Sellers and Buyer will not be
required to accept a Required Consent that is so conditioned without the General
Partner's or Buyer's consent, respectively.
(b) The General Partner will cause the InterMedia Companies to
use commercially reasonable efforts to obtain, and Buyer will cooperate with the
InterMedia Companies to obtain, renewals or extensions of any System Franchise
that will expire within 30 months after any date between the date of this
Agreement and the Closing Date for which a valid notice of renewal pursuant to
the formal renewal procedures established by Section 626 of the Cable Act has
not been timely delivered to the appropriate Franchising Authority without the
imposition of any conditions or other modifications that would make, or are
reasonably likely to make, the underlying System Franchise materially more
onerous in any respect or that would materially reduce in any respect, or are
reasonably likely to materially reduce in any respect, the benefits available
under the System Franchise in respect of which the renewal or extension relates.
(c) Each Seller will use commercially reasonable efforts to
obtain in writing as promptly as possible all of the Required Consents required
to be obtained by such Seller, in form and substance reasonably satisfactory to
Buyer, and will deliver to Buyer copies of such Required Consents promptly after
they are obtained. Each Seller will promptly notify Buyer of any fact,
circumstance, event or action by it or otherwise (i) which if known at the date
of this Agreement would have been required to be disclosed by it in or pursuant
to this Agreement or (ii) the existence, occurrence or taking of which would
result in the condition set forth in Section 7.1(a) not being satisfied with
respect to such Seller at any time prior to the Closing, and, with respect to
clause (ii), will use its commercially reasonable efforts to remedy the same. No
Seller will take any action that would result in the condition
- 39 -
set forth in Section 7.1(a) not being satisfied with respect to such Seller at
any time prior to the Closing. No Seller will sell, assign, transfer or
otherwise dispose of all or any portion of the Purchased Interest held or
represented to be held by it on the date of this Agreement, except by ICM-VI in
connection with the Distribution and the adjustments referred to in the second
sentence of Section 4.3(b).
(d) Prior to the Closing, at the request of Buyer, the General
Partner and IMI shall use all commercially reasonable efforts to cause any
programming contracts held in the name of IMI or InterMedia Partners, L.P. or
any other InterMedia entity to be assigned to the Operating Partnership to the
extent that programming has been provided to the InterMedia Systems thereunder
(the "InterMedia Programming Contracts"). To the extent that any such InterMedia
Programming Contracts have not been assigned to the Operating Partnership, and
the Operating Partnership has not secured substantially equivalent replacement
programming on substantially similar terms, by the Closing, then following the
Closing, at the request of Buyer, IMI and the Operating Partnership shall
continue to use commercially reasonably efforts to effect such assignments and
shall, to the extent feasible, enter into such arrangements as result in the
Operating Partnership obtaining the benefits of, and performing the obligations
under, such InterMedia Programming Contracts.
6.4 Confidentiality; Press Release.
(a) Sellers may from time to time in the course of this
transaction disclose to Buyer information and material concerning the Sellers
and the InterMedia Companies, the InterMedia Assets and the InterMedia Systems,
including proprietary information, contracts, marketing information, technical
information, product or service concepts, subscriber information, rates,
financial information, ideas, concepts and research and development (any of the
foregoing and any analysis, compilations, studies or other documents prepared by
or on behalf of Buyer in respect thereof are hereafter collectively referred to
as "Confidential Information"). The term "Confidential Information" does not
include any item of information that (1) is publicly known at the time of its
disclosure, (2) is lawfully received from a third party not bound to keep such
information confidential, (3) is published or otherwise made known to the public
by any source other than a party bound by the provisions hereof, (4) was
generated by Buyer independently, or (5) is made publicly known pursuant to
disclosures required by applicable Legal Requirements (including any legal
obligations imposed on Buyer in connection with any public financing proposed to
be obtained by Buyer or any Affiliate of Buyer). Buyer agrees that Confidential
Information received from the Sellers or from the InterMedia Companies shall be
used solely in connection with the transaction contemplated by this Agreement.
Buyer agrees that it shall treat confidentially and not directly or indirectly,
divulge, reveal, report, publish, transfer or disclose, for any purpose
whatsoever (other than to its investors, financing sources and agents for the
purpose of consummating the transactions contemplated by this Agreement, each of
whom shall maintain the confidentiality of such Confidential Information), all
or any portion of the Confidential Information disclosed to it by the Sellers or
by the InterMedia Companies. In the event of a breach of the covenants contained
in this Section 6.4(a), the Sellers shall be entitled to seek injunctive relief
as well as any and all other remedies at law or equity. If the Closing does not
occur, the Confidential Information, except for that portion which consists of
analysis, compilations, studies or other documents prepared by or on behalf of
Buyer, will be returned to the Sellers immediately upon the Sellers' request
- 40 -
therefor; and that portion of the Confidential Information which consists of
analysis, compilations, studies or other documents prepared by or on behalf of
Buyer will be held by Buyer and kept confidential and subject to the terms of
this Section 6.4(a), or will be destroyed.
(b) No party will, and the General Partner will not permit any
InterMedia Company to, issue any press release or make any other public
announcements concerning this Agreement or the transactions contemplated by this
Agreement without the prior written consent and approval of the Buyer (in the
case of the Sellers or the InterMedia Companies) or the General Partner (in the
case of Buyer) except for disclosures required by applicable Legal Requirements
(including any legal obligations imposed on Buyer in connection with any public
financing proposed to be obtained by Buyer or any Affiliate of Buyer). With
respect to press releases or any other public announcement required by
applicable Legal Requirements, the party intending to make such release or
disclosure shall provide the other parties with an advance copy and a reasonable
opportunity to review.
6.5 Cooperation; Commercially Reasonable Efforts. The parties shall
cooperate, and the General Partner shall cause the InterMedia Companies to
cooperate, with each other and their respective counsel and accountants in all
commercially reasonable respects in connection with any actions required to be
taken as part of their respective obligations under this Agreement, and
otherwise use their commercially reasonable efforts, and the parties shall also,
and the General Partner shall cause the InterMedia Companies to, use their
commercially reasonable efforts to consummate the transactions contemplated
hereby and to fulfill their obligations hereunder as expeditiously as
practicable. For a period of six months after the Closing, upon the Buyer's
reasonable request and at Buyer's expense, the General Partner shall cooperate
with Buyer and the InterMedia Companies in connection with any material
transition matters and disputes as described below. Subject to the terms of this
Agreement, such cooperation shall include providing Buyer with a copy of records
and information possessed by the General Partner and reasonably requested by
Buyer relating to any such matter and reasonably assisting Buyer with any
material matter or dispute that may arise after the Closing but only as it
relates to periods prior to the Closing with any party with which the InterMedia
Companies do business (including programmers).
6.6 HSR Act. The parties acknowledge that, as of the date of this
Agreement, the transactions contemplated by this Agreement are not subject to
notification under the HSR Act. In order to facilitate a prompt closing of the
transactions contemplated by this Agreement, the parties agree that to the
extent any subsequent potential transaction (other than the Pending Swaps)
contemplated by any party which arises out of or relates to the Partnership or
the transactions contemplated hereby is subject to the HSR Act, such subsequent
transaction will neither be notified under the HSR Act nor consummated until
after the Closing.
6.7 Tax Matters.
The following provisions shall govern the allocation of responsibility
between Buyer and Sellers for certain tax matters following the Closing Date:
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(a) Tax Returns to be Filed After the Closing Date. The
General Partner shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of the InterMedia Companies which are required to be filed
after the Closing Date and relate solely to periods prior to the Closing Date.
Such Tax Returns shall be prepared in accordance with (1) each InterMedia
Company's past custom and practice (subject to applicable Legal Requirements and
determined on the basis of the appropriate permanent records of such InterMedia
Company) and (2) if the Partnership's taxable year does not close as to all of
its partners on the Closing Date, the interim closing of the books method as
provided in section 1.706-1(c)(2) of the Income Tax Regulations notwithstanding
section 3.1(f) of the Partnership Agreement to the contrary. The General Partner
shall use reasonable commercial efforts to prepare such Tax Returns in a manner
that is consistent with past practice. The General Partner shall provide Buyer
with drafts of such Tax Returns (together with the relevant back-up
information), and Buyer may submit comments which it deems necessary to the
General Partner in connection with the preparation of such Tax Returns. The
General Partner shall in good faith consider the inclusion of such comments;
provided, however, that the General Partner has the final discretion in
determining the final form of such Tax Returns and may file such Tax Returns
with the proper Governmental Authority without Buyer's consent.
(b) Cooperation on Tax Matters.
(1) Buyer and the General Partner shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this Section 6.7 and any
audit, litigation, or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
Litigation, or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Buyer and the General Partner agree to give the
other party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so requests, Buyer
or the General Partner, as the case may be, shall allow the other party to take
possession of such books and records to the extent they would otherwise be
destroyed or discarded. After the Closing the General Partner and the Buyer
shall promptly notify the other of any audit or other Tax matter relating to any
periods prior to the Closing Date which is brought to its attention by notice
from the Internal Revenue Service and forward to the other copies of any
notices, correspondence, reports or other instruments, communications or
documents received in connection therewith. Neither Buyer nor the General
Partner will settle or compromise any such audit or Tax matter without the
consent of the other, which consent shall not be unreasonably withheld.
(2) Buyer and the General Partner further agree, upon
request, to use commercially reasonable efforts to obtain any certificate or
other document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including Taxes with respect to the transactions contemplated hereby).
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(c) Tax Sharing Agreements. All tax sharing agreements or
similar agreements with respect to or involving the InterMedia Companies shall
be terminated as of the Closing Date and, after the Closing Date, the InterMedia
Companies shall not be bound thereby or have any liability thereunder.
(d) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be borne by Sellers.
Buyer and the General Partner will cooperate in all reasonable respects to
prepare and file all necessary Tax Returns and other documentation with respect
to all such transfer, documentary, sales, use, stamp, registration and other
Taxes and fees.
6.8 Cooperation on Financing and SEC Matters.
(a) The General Partner shall cause the InterMedia Companies
to cooperate in all commercially reasonable respects with Buyer in connection
with any financing proposed to be obtained by Buyer following execution of this
Agreement. Without limiting the generality of the foregoing, the General Partner
shall cause the InterMedia Companies to cooperate in all commercially reasonable
respects with Buyer and its counsel and accountants in connection with any
filing required to be made by Buyer with the SEC (including any filing required
in connection with any public financing proposed to be obtained by Buyer). The
General Partner shall provide to Buyer such information relating to the
InterMedia Companies and InterMedia's Business as Buyer may reasonably request.
All costs, expenses and fees incurred in connection with the preparation and
inclusion by Buyer of such information in any such filing shall be borne by
Buyer.
(b) The Sellers hereby consent, and the General Partner will
cause the InterMedia Companies to consent, to the inclusion by Buyer of
financial statements of the InterMedia Companies, if requested to be so included
by Buyer, in any report required to be filed by Buyer with the SEC or pursuant
to applicable Legal Requirements, including the Securities Act and the Exchange
Act. All costs, expenses and fees incurred in connection with the preparation
and inclusion by Buyer of financial statements of the InterMedia Companies in
any such report shall be borne by Buyer. The General Partner agrees to use, and
will cause the InterMedia Companies to use, commercially reasonable efforts to
obtain the consent of the independent public accountants of the InterMedia
Companies to the inclusion of such financial statements in any report so
required to be filed by Buyer.
(c) Buyer hereby agrees to, and following the Closing to cause
each of the InterMedia Companies to, release the Sellers and their Affiliates
and their respective officers, directors, managers, employees, stockholders,
partners, representatives and other agents (each an "indemnitee") from, and
indemnify and hold harmless all such indemnitees against, any losses, claims,
damages or liabilities, joint or several, to which any of them may become
subject under the Securities Act, the Exchange Act or otherwise, which arise out
of or in any way relate to the filings, financings, reports or other actions
contemplated by Section 6.8(a) or (b), including the furnishing of any financial
statements of and other information relating to the InterMedia Companies or the
Sellers for inclusion in any document in connection therewith, and to reimburse
such indemnitees for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
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damage, liability or action as such expenses are incurred, provided, however,
that Buyer's indemnification obligation shall not apply to the extent any such
losses, claims, damages or liabilities arise out of the gross negligence or
willful misconduct of any such indemnitees.
(d) Prior to the Closing (or the date on which the Closing
would occur but for a breach of this Section 6.8(d)), the Buyer will either (1)
procure from the lenders under the Loan Documents a written waiver, in form and
substance reasonably satisfactory to the General Partner, that (A) will permit
the transactions contemplated by this Agreement to be consummated without an
event of default thereunder being caused thereby, (B) that will permit the
payment by the InterMedia Companies on the Closing Date of the monitoring fees
accrued or prorated to such date to TCI LLC and the Blackstone Partners, and (C)
that will permit the sale and transfer of the Purchased Interests to Buyer as
contemplated by this Agreement and the receipt by the Sellers of the Purchase
Price therefor free and clear of the Loan Document Liens; or (2) obtain
refinancing of all of the InterMedia Companies' existing indebtedness for
borrowed money under the Loan Documents to the extent such indebtedness would
otherwise be subject to acceleration upon consummation of the Closing absent the
consent and waiver described in clause (1) (such consent and waiver or
refinancing being referred to as the "Rollover/Refinancing"). In addition, prior
to the Closing (or the date on which the Closing would occur but for a breach of
this Section 6.8(d)) the Buyer will obtain an unconditional written release, in
form and substance reasonably satisfactory to the Blackstone Partners, of the
Blackstone Partners and their Affiliates, effective as of the Closing, from
their guaranty obligations under the Loan Documents (such release being referred
to as the "Blackstone Release") without any payment being required by the
Blackstone Partners or any other Seller in connection therewith without their
consent.
(e) Buyer will bear, and will indemnify the Sellers and the
InterMedia Companies for and against, all costs, charges and expenses associated
with obtaining and consummating the Rollover/Refinancing and the Blackstone
Release.
6.9 Schedules. Not less than five Business Days prior to Closing, the
General Partner will deliver to Buyer revised copies of Schedule 3.4 to reflect
any Contracts entered into after the date of this Agreement which contemplate
payments by or to one of the InterMedia Companies exceeding $25,000 and any
other Schedule included in this Agreement and relating to Article 3 to the
extent necessary to make the representations and warranties of the General
Partner, if specifically qualified by materiality, true and correct in all
respects, and if not so qualified, true and correct in all material respects, in
each case at and as of the Closing with the same effect as if made at and as of
the Closing, except in the case of any representation or warranty which is made
as of a specified date, in which case so true and correct at and as of such
specified date, and in each case marked to show any such changes thereto;
provided, however, that for purposes of the General Partner's representations
and warranties and covenants in this Agreement, all references to the Schedules
will mean the version of the Schedules attached to this Agreement on the date of
signing unless otherwise expressly agreed by Buyer.
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6.10 Environmental Reports.
(a) Between the date of this Agreement and May 31, 1999, Buyer
may obtain at its expense such environmental assessments and reports with
respect to the real property included in the InterMedia Assets as it may
determine and, to the extent within the authority of the General Partner and the
InterMedia Companies, upon reasonable prior notice, the General Partner shall
cause the InterMedia Companies to afford to Buyer, and all environmental
engineers and consultants acting on Buyer's behalf such access during normal
business hours to the sites and facilities relating to the InterMedia Systems as
is reasonably required and does not unreasonably disrupt normal business
operations to permit such engineers and consultants to conduct the physical
on-site inspections and prepare the environmental surveys and assessments with
respect to such sites and facilities as Buyer shall reasonably request. Buyer
will indemnify the Sellers and the InterMedia Companies for any damages to such
sites and facilities that is caused as a result of such surveys and assessments.
Notwithstanding any of the foregoing, no environmental assessment shall include
invasive or destructive sampling or testing at any of such sites or facilities
without the prior approval of the General Partner. The General Partner shall not
unreasonably withhold such approval if the environmental engineers or
consultants acting on Buyer's behalf (1) reasonably conclude, based on specific
information, that conditions are reasonably likely to exist at any of such sites
or facilities that would reasonably be expected to result in Material
Environmental Liability, and (2) with reasonable specificity and particularity
identify to the General Partner the basis for reasonably concluding that such
conditions exist.
(b) In order for the Buyer to assert that the closing
condition in Section 7.1(a) has not been satisfied by reason of any
misrepresentation in Section 3.6 resulting in a Material Environmental
Liability, Buyer shall be required to make such assertion by June 15, 1999 or
otherwise be deemed to have waived its right to so assert. If Buyer makes such
assertion and the General Partner disagrees with such assertion, Buyer and the
General Partner shall promptly jointly retain Environ Corporation to serve as an
independent environmental consultant (the "Independent Consultant"). The
Independent Consultant shall be required to promptly, and in no event later than
30 days following the retention of the Independent Consultant, offer its opinion
as to whether the matters alleged by Buyer to constitute a breach of the
representations contained in Section 3.6 would reasonably be expected to result
in a Material Environmental Liability. In reaching its opinion, the Independent
Consultant shall be required to (1) assume that all reasonable and legally
permissible actions will be taken to avoid, minimize or defer liabilities under
Environmental Laws, and (2) only consider liabilities likely to be incurred
within five years of the date of this Agreement. Buyer and each Seller agrees
that the opinion of the Independent Consultant in this regard shall be final and
binding on the parties. The costs and expenses of the Independent Consultant and
its services rendered pursuant to this Section 6.10 shall be borne by the party
with whom the Independent Consultant disagrees.
6.11 Year 2000 Matters.
(a) Certain Defined Terms. For purposes of this Section 6.11,
the following terms shall have the following meanings:
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(1) "Computer and Other Systems" means hardware and
software, equipment and cable plant, and building and other facilities used in
connection with InterMedia's Business which are date dependent or which process
date data, including any firmware, application programs, user interfaces, files
and databases, and which might be adversely affected by the advent or changeover
to the Year 2000.
(2) "Year 2000 Ready" or "Year 2000 Readiness" means
that the referenced component, system, software, equipment or other item is
designed or has been modified to be used prior to, during and after the calendar
year 2000 A.D., and that such item will operate at all levels, including
microcode, firmware, application programs, user interfaces, files and databases,
during each such time period without material error or interruption relating to,
or the product of, date data which represents or references different centuries
or more than one century.
(3) "Year 2000 Remediation Program" means a
reasonable program that is designed to make Year 2000 Ready all material
components, systems, software, equipment, facilities and other items used in
InterMedia's Business. Such Year 2000 Remediation Program must be conducted by
persons with experience in issues related to Year 2000 Readiness and such
persons must have organized an enterprise-wide program management office which
reports to executive level management and the board of directors or other
governing body of such entity.
(b) Year 2000 Readiness Efforts. The General Partner has
delivered to Buyer a summary in reasonable detail of the InterMedia Companies'
Year 2000 Remediation Program. Prior to the Closing Date, the General Partner
shall cause the InterMedia Companies to maintain their Year 2000 Remediation
Program. Pursuant to such Year 2000 Remediation Program, all material Computer
and Other Systems included in the InterMedia Assets will be evaluated,
remediated and tested on the same general basis, and on the same general work
plan and timetable, as other material computer systems, facilities and equipment
owned and operated by the InterMedia Companies' Affiliates. After the Closing
Date through March 31, 2000, the General Partner will use commercially
reasonable efforts to cooperate with Buyer regarding the InterMedia Companies'
Year 2000 Remediation Program. Such cooperation shall consist of providing Buyer
with any non-confidential information possessed by it and reasonably requested
by Buyer regarding the Year 2000 Readiness of any material component of the
Computer and Other Systems owned by the InterMedia Companies. The parties
acknowledge that nothing contained in this Section 6.11 shall constitute any
representation, guarantee, covenant or warranty that the Computer and Other
Systems included in the InterMedia Assets will be Year 2000 Ready at the Closing
Date or thereafter.
6.12 Consent and Agreements of Sellers, TCI and Buyer.
(a) Each Seller and TCI LLC consents to the execution,
delivery, and performance of this Agreement by each Seller and to the taking by
each Seller and each InterMedia Company of all actions contemplated by this
Agreement to be taken by such Person, including the sale of the Purchased
Interests by each Seller to Buyer.
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(b) At the Closing, each of the Sellers, TCI LLC and Buyer
will enter into an Amended and Restated Agreement of Limited Partnership for the
Partnership that will become effective concurrently with the Closing and after
consummation of the Distribution and the Conversion and that will evidence the
admission of Buyer as the general partner of the Partnership holding a 50% pro
rata percentage interest, that will evidence TCI Inc. and TCI LLC as limited
partners of the Partnership holding in the aggregate a 50% pro rata percentage
interest, and that will evidence the withdrawal of the General Partner, IMI,
▇▇▇▇▇, the Blackstone Partners and Hindery as partners in the Partnership (the
"Amended and Restated Partnership Agreement").
6.13 WARN Act. Buyer will not, on or within 90 days after the Closing
Date, permit the InterMedia Companies to effectuate a "plant closing" or "mass
layoff" resulting in "employment loss" at any of the employment sites of the
InterMedia Companies (as those terms are defined in the WARN Act).
6.14 Affiliate Transactions. All agreements and arrangements between
and among any of the InterMedia Companies, on the one hand, and any of the
Sellers (other than TCI Inc.) or such Sellers' Affiliates or TCI Inc. or TCI
LLC, on the other hand, shall be terminated concurrently with the Closing
without any further action by the parties, and all amounts payable thereunder by
the InterMedia Companies shall be paid by the InterMedia Companies at the
Closing out of pre-closing cash (or such amounts shall be included as Other
Current Liabilities in the computation of Adjustment Liabilities), including but
not limited to the following agreements: (a) Services Agreement dated October
30, 1997 between the Operating Partnership and IMI; (b) Administration Fee
Agreement dated April 30, 1998 between Operating Partnership and ICM-VI; (c)
Monitoring Fee Agreement dated April 30, 1998 between the Operating Partnership
and Blackstone Management Partners III, L.L.C.; and (d) Monitoring Fee Agreement
dated April 30, 1998 between the Operating Partnership and TCI LLC.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
7.1 Conditions to Buyer's Obligations. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or before the Closing of the following conditions, any of which
may be waived by Buyer.
(a) Accuracy of Representations and Warranties. The
representations and warranties of each Seller in this Agreement and in any
Transaction Document, if specifically qualified by materiality, shall be true
and correct in all respects and, if not so qualified, shall be true and correct
in all material respects, in each case at and as of the Closing with the same
effect as if made at and as of the Closing, except for any representation or
warranty which is made as of a specified date, which representation or warranty
shall be so true and correct as of such specified date.
(b) Performance of Agreements. Each Seller shall have
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants in this
- 47 -
Agreement and in any Transaction Document to be performed and complied with by
it at or before the Closing.
(c) Deliveries. Each Seller shall have delivered the items and
documents required to be delivered by it pursuant to this Agreement, including
those required under Section 8.2.
(d) Legal Proceedings. No action, suit or proceeding shall be
pending by or before any Governmental Authority or arbitration tribunal and no
Legal Requirement shall have been enacted, promulgated or issued or become or
deemed applicable to any of the transactions contemplated by this Agreement by
any Governmental Authority or arbitration tribunal, which would prevent or make
illegal the consummation of any transactions contemplated by this Agreement.
(e) Franchise Required Consents. The aggregate number of
Equivalent Basic Subscribers in the Service Areas of all of the InterMedia
Companies as of the Adjustment Time that are Transferable Service Areas shall be
at least 97% of the aggregate number of Equivalent Basic Subscribers in all
Service Areas of all of the InterMedia Companies as of the Adjustment Time.
(f) Other Required Consents. Buyer shall have received
evidence, in form and substance reasonably satisfactory to it, that the Required
Consents marked with an asterisk on Schedule 3.2 and any material Required
Consents that are not disclosed on Schedule 3.2 that are substantially of the
same significance as the Required Consents marked with an asterisk on Schedule
3.2 have been obtained without the imposition of any condition or any
modification that in either case makes, or is reasonably likely to make, the
underlying instrument materially more onerous in any respect or materially
reduces in any respect, or is reasonably likely to materially reduce in any
respect, the benefits available under the instrument in respect of which the
consent relates.
(g) No Material Adverse Change. Since February 28, 1999, there
has not been any material adverse change (other than events affecting the cable
television industry generally) in (1) the condition (financial or otherwise) or
results of operations of InterMedia's Business, (2) the InterMedia Assets,
business, operations, condition (financial or otherwise) or results of
operations of any single Principle System Group, taken as a whole, or (3) the
InterMedia Assets, business, operations, condition (financial or otherwise) or
results of operations of the other Systems (i.e., those which are not within any
Principal System Group), taken as a whole.
(h) Subscriber Adjustment. The Subscriber Adjustment (as
reasonably estimated by the General Partner in the Preliminary Closing
Statement) shall not be greater than $15,000,000.
(i) Franchise Renewals. Any System Franchise that will expire
within 30 months after the Closing Date for which a valid notice of renewal
pursuant to the formal renewal procedures established by Section 626 of the
Cable Act has not been timely delivered to the appropriate Governmental
Authority (other than as set forth on Schedule 3.7) shall have been renewed or
extended for a period expiring no earlier than three years after the Closing
Date, such renewal or extension being on terms that would not make, or are not
reasonably likely to make, the System Franchise that is being
- 48 -
renewed or extended materially more onerous in any respect and that would not
materially reduce, or are not reasonably likely to materially reduce, the
benefits available under the System Franchise that is being renewed or extended.
7.2 Conditions to Sellers' Obligations. The obligations of the Sellers
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or before the Closing of the following conditions, any of which
may be waived by the Sellers.
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer in this Agreement and in any Transaction
Document, if specifically qualified by materiality, shall be true and correct in
all respects and, if not so qualified, shall be true and correct in all material
respects, in each case at and as of the Closing with the same effect as if made
at and as of the Closing, except for any representation or warranty which is
made as of a specified date, which representation or warranty shall be so true
and correct as of such specified date.
(b) Performance of Agreements. Buyer shall have performed in
all material respects all obligations and agreements and complied in all
material respects with all covenants in this Agreement and in any Transaction
Document to be performed and complied with by it at or before the Closing.
(c) Deliveries. Buyer shall have delivered the items and
documents required to be delivered by it pursuant to this Agreement, including
those required under Section 8.3.
(d) Legal Proceedings. No action, suit or proceeding shall be
pending by or before any Governmental Authority or arbitration tribunal and no
Legal Requirement shall have been enacted, promulgated or issued or become or
deemed applicable to any of the transactions contemplated by this Agreement by
any Governmental Authority or arbitration tribunal, which would prevent or make
illegal the consummation of any transactions contemplated by this Agreement.
(e) Release. The Blackstone Partners shall have received the
Blackstone Release.
(f) Subscriber Adjustment. Either (1) the Subscriber
Adjustment (as reasonably estimated by the General Partner in the Preliminary
Closing Statement) shall not be greater than $15,000,000, or (2) Buyer shall
have waived its right to the Subscriber Adjustment in excess of $15,000,000.
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ARTICLE 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date.
(1) Subject to satisfaction or, to the extent
permitted by law, waiver, of the closing conditions described in Article 7, and
subject to Sections 8.1(a)(2), 8.1(a)(3) and 8.1(a)(4), the Closing shall take
place on the first Designated Closing Date to occur at least seven days
following satisfaction or waiver of all of the conditions set forth in Sections
7.1(e) and 7.1(f), or on such other date as shall be mutually agreed by Buyer
and the General Partner. For purposes of this Agreement, "Designated Closing
Date" means any of September 1, 1999; October 1, 1999; November 1, 1999;
December 1, 1999; December 23, 1999; February 1, 2000; March 1, 2000; April 3,
2000; May 1, 2000 and the first Business Day of each calendar month thereafter.
(2) If on any date on which the Closing would
otherwise be required to take place pursuant to this Section 8.1(a), (A) there
shall be in effect any Judgment that would prevent or make unlawful the Closing,
or (B) any other circumstance beyond the reasonable control of Sellers or Buyer
shall exist that would prevent the satisfaction of any of the conditions
precedent to any party set forth in Article 7 and the satisfaction of any of
such conditions precedent is not waived by the party entitled to the benefit of
such condition, then either the General Partner or Buyer may, at its option,
postpone the date on which the Closing is required to take place until the next
Designated Closing Date and on each successive Designated Closing Date may
postpone the date for the Closing until the next Designated Closing Date until
such Judgment ceases to be in effect, or such other circumstance ceases to
exist; provided, however, that a party's postponement of the date on which the
Closing is required to take place shall not restrict the exercise by the Sellers
or Buyer of its rights under Section 9.2 or 9.3, as applicable, subject to
extension of the Upset Date as provided therein.
(3) If on the date on which the Closing would
otherwise be required to take place pursuant to this Section 8.1(a), the
combined audited financial statements of the InterMedia Companies for the
periods comprising the three years ended December 31, 1998 have not been
available to Buyer for at least 80 days, Buyer may, at its option, postpone the
date on which the Closing is required to take place until a Designated Closing
Date designated by Buyer that is not later than 110 days after the delivery of
such financial statements.
(4) If on the date on which the Closing would
otherwise be required to take place pursuant to this Section 8.1(a), Buyer has
been unable to obtain any debt financing necessary to fund the Purchase Price as
a result of the written notice by a financing source of its right to refuse to
provide such financing under the terms of any definitive financing agreement or
commitment letter due to a material adverse change in financial, banking or
capital market conditions which materially impairs such financing source's
ability to syndicate such financing, Buyer may, at its option, extend the date
on
- 50 -
which the Closing is required to take place until a Designated Closing Date
designated by Buyer that is not later than the third Designated Closing Date
occurring after the date on which the Closing would otherwise be required to
take place pursuant to this Section 8.1(a); provided, however, that as a
condition to electing such extension, (A) the Purchase Price shall be increased
by $20,000,000, and the Buyer shall immediately pay to the General Partner for
the benefit of the Sellers a nonrefundable deposit of $20,000,000 to be applied
towards the Purchase Price for all of the Purchased Interests other than the
partnership interests in the Subsidiary Partnerships held by IMI (provided that
such deposit shall be forfeited if the Closing shall not occur for any reason
other than Sellers failure to make the deliveries specified in Section 8.2); (B)
all of the closing conditions contained in Section 7.1 (other than the condition
contained in Section 7.1(c) and subject to the following clause (C)) shall be
required to and deemed to have been satisfied as of the date on which the
Closing would otherwise be required to take place pursuant to this Section
8.1(a) (the "Original Designated Closing Date"); and (C) within five Business
Days of receipt of notification from the Buyer of such extension, the General
Partner shall elect whether to have the Subscriber Adjustment measured and
applied as of the Original Designated Closing Date or as of the actual Closing
Date (and if the General Partner elects the Original Designated Closing Date,
the reference in Section 2.3(d) to the "Adjustment Time" shall be deemed a
reference to the Adjustment Time assuming the Closing had occurred on the
Original Designated Closing Date).
(b) Closing Place. The Closing shall be held at the offices of
Cooperman, Levitt, Winikoff & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or any other place or time as the Sellers and Buyer shall mutually agree.
8.2 Deliveries by Sellers. Prior to or at the Closing, Sellers shall
deliver or cause to be delivered to Buyer the following:
(a) Purchased Interests. Assignment agreements providing for
the assignment of the Purchased Interests to Buyer, in a form reasonably
satisfactory to Buyer, together with any certificates representing the Purchased
Interests, duly endorsed for transfer.
(b) Officer's Certificate. A certificate executed by an
executive officer of each Seller, dated as of the Closing Date (or the Original
Closing Date, in the case of a postponement of the Closing by the Buyer pursuant
to Section 8.1(a)(4)), certifying that the closing conditions specified in
Sections 7.1(a) and (b) have been satisfied.
(c) Secretary's Certificate. A certificate executed by the
corporate secretary of each Seller, dated as of the Closing Date, (1) certifying
that the resolutions, as attached to said certificate, were duly adopted by the
Board of Directors (or corresponding governing body) authorizing and approving
the execution by such Seller of this Agreement and the other Transaction
Documents to which such Seller is a party and the consummation of the
transactions contemplated hereby and thereby and that such resolutions remain in
full force and effect; (2) providing, as attachments thereto, Certificates of
Good Standing for each Seller and, in the case of the certificate of the General
Partner, each of the InterMedia Companies certified by an appropriate state
official of the State of their organization, all certified by such state
officials as of a date not more than 15 days before the Closing
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Date; and (3) in the case of the certificate of the General Partner, certifying
as attachments thereto true and correct copies of the documentation (or
applicable provisions thereof) pursuant to which the Distribution was
effectuated and the documentation (or applicable provisions thereof) pursuant to
which the partnership interests in the Partnership were converted and adjusted
to pro rata interests conforming to the representation and warranty in the
second sentence of Section 4.3(b) (the "Conversion").
(d) Consents. Copies of all Required Consents which have been
obtained by the Sellers prior to the Closing.
(e) Corporate, Financial, and Tax Records. All corporate
records (including minute books and stock books and registers) and financial and
tax records (except financial and tax records will be delivered within 120 days
after the Closing with Buyer having reasonable access to such records prior to
the date of delivery) of each of the InterMedia Companies that are not located
at one of the offices or sites included in the Owned Real Property or Leased
Real Property.
(f) Noncompetition Agreement. The Noncompetition Agreement,
duly executed by each Blackstone Partner.
(g) Seller Releases. A Seller Release, duly executed by each
Person designated on Exhibit B.
(h) Amended and Restated Partnership Agreement. The Amended
and Restated Partnership Agreement, in form and substance consistent with
Section 6.12(b) and reasonably satisfactory to the Sellers and TCI LLC, duly
executed by each Seller and TCI LLC.
(i) Post-Closing Escrow Agreement. The Post-Closing Escrow
Agreement, duly executed by the General Partner and the Escrow Agent.
(j) Lien Releases. The Sellers shall have delivered to Buyer
at or prior to the Closing evidence reasonably satisfactory to Buyer that all
Liens, if any (other than the Loan Document Liens if the Loan Documents are to
remain outstanding after the Closing) affecting or encumbering the Purchased
Interests, and that all Liens (other than Permitted Liens) affecting or
encumbering the InterMedia Assets, have been terminated, released or waived, as
appropriate, or original executed instruments in form reasonably satisfactory to
Buyer effecting such terminations, releases or waivers.
8.3 Deliveries by Buyer. Prior to or at the Closing, Buyer shall
deliver to Sellers the following:
(a) Estimated Purchase Price. The Estimated Purchase Price for
the Purchased Interests shall be delivered as follows: (1) $15,000,000 will be
paid to the Escrow Agent for deposit in the Post-Closing Adjustments Escrow
pursuant to Section 2.5(a); and (2) the balance (the "Net Closing Payment") will
be paid to the General Partner by wire or accounts transfer of immediately
available
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funds to an account designated by the General Partner by written notice to Buyer
not less than two Business Days prior to the Closing.
(b) Officer's Certificate. A certificate executed by an
executive officer of Buyer, dated as of the Closing Date, certifying that the
closing conditions specified in Sections 7.2(a) and (b) have been satisfied.
(c) Secretary's Certificate. A certificate executed by the
corporate secretary of the corporate general partner of the general partner of
Buyer, dated as of the Closing Date, (1) certifying that the resolutions, as
attached to said certificate, were duly adopted by the Board of Directors of the
corporate general partner of the general partner of Buyer, authorizing and
approving the execution by Buyer of this Agreement and the other Transaction
Documents to which Buyer is a party and the consummation of the transactions
contemplated hereby and thereby and that such resolutions remain in full force
and effect; and (2) providing, as attachments thereto, a Certificate of Good
Standing for Buyer certified by an appropriate state official of the State of
Delaware, certified by such state official as of a date not more than 15 days
before the Closing Date.
(d) Post-Closing Escrow Agreement. The Post-Closing Escrow
Agreement, duly executed by Buyer and the Escrow Agent.
(e) Amended and Restated Partnership Agreement. The Amended
and Restated Partnership Agreement, in form and substance consistent with
Section 6.12(b) and reasonably satisfactory to Buyer, duly executed by Buyer.
(f) InterMedia Company Releases. An InterMedia Company
Release, duly executed by each InterMedia Company.
ARTICLE 9
TERMINATION
9.1 Termination by Agreement. This Agreement may be terminated at any
time prior to the Closing by mutual agreement between the General Partner and
Buyer.
9.2 Termination by Sellers. This Agreement may be terminated at any
time prior to the Closing by the Sellers and the purchase and sale of the
Purchased Interests abandoned, upon written notice by the General Partner to
Buyer, upon the occurrence of any of the following:
(a) Uncured Breach. Prior to the Closing (if none of the
Sellers are then in material breach of any of its covenants, agreements or other
obligations contained in this Agreement), if Buyer is in material breach or
default of any of its covenants, agreements or other obligations in this
Agreement, or if any of its representations in this Agreement, if specifically
qualified by materiality, is not true and correct in all respects or, if
qualified by materiality, is not true and correct in all material
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respects when made or when otherwise required by this Agreement to be true and
correct, if Sellers provide Buyer with prompt written notice that provides a
reasonably detailed explanation of the facts and circumstances surrounding such
breach or default; provided that Sellers shall have no right to terminate if (i)
Buyer cures such breach or default within 30 days after its receipt of such
written notice, unless such breach or default cannot be cured within such 30-day
period; or (ii) the breach or default is capable of being cured prior to the
Closing Date and Buyer commences to cure such breach or default within such
30-day period and diligently continues to take all action reasonably necessary
to cure such breach or default prior to the Closing Date and such breach or
default is cured prior to the Closing Date.
(b) Conditions.
(1) If the Closing shall not have occurred on any
date designated therefor pursuant to Section 8.1 (without giving effect to any
postponement of the Closing on such date) solely because of the failure of the
conditions set forth in Section 7.2(f) or 7.1(h) to be satisfied or waived on
such date, provided, however that the Sellers must elect to terminate pursuant
to this Section 9.2(b)(1) within 15 days after any such designated date.
Notwithstanding the foregoing, the Sellers may not rely on the failure of the
condition set forth in Section 7.2(f) to be satisfied if such failure was
principally caused by any Seller's failure to act in good faith or a breach of
or failure to perform any of its representations, warranties, covenants or other
obligations in accordance with the terms of this Agreement.
(2) If the Closing shall not have occurred on any
date designated therefor pursuant to Section 8.1 solely because Buyer has
refused to consummate the Closing and all of the conditions set forth in Section
7.1 had been satisfied as of such date (or would have been satisfied by actions
to be taken at the Closing) and Buyer did not have the right to postpone the
Closing pursuant to Section 8.1.
(c) Upset Date. If the Closing shall not have occurred on or
prior to the Upset Date, unless the failure of the Closing to occur was
principally caused by any Seller's failure to act in good faith or a breach of
or failure to perform any of its representations, warranties, covenants or other
obligations in accordance with the terms of this Agreement; provided that if
Buyer has postponed the date required for the Closing pursuant to Sections
8.1(a)(3) or 8.1(a)(4), the Upset Date shall be extended to the date to which
the Closing was postponed.
9.3 Termination by Buyer. This Agreement may be terminated at any time
prior to the Closing by Buyer and the purchase and sale of the Purchased
Interests abandoned, upon written notice to the Sellers, upon the occurrence of
any of the following:
(a) Uncured Breach. Prior to the Closing (if Buyer itself is
not then in material breach of any of its covenants, agreements or other
obligations contained in this Agreement), if any Seller is in material breach or
default of any of its covenants, agreements or other obligations in this
Agreement, or if any of its representations in this Agreement, if specifically
qualified by materiality, is not true and correct in all respects or, if
qualified by materiality, is not true and correct in all material
- 54 -
respects when made or when otherwise required by this Agreement to be true and
correct, if Buyer provides the breaching Seller with prompt written notice that
provides a reasonably detailed explanation of the facts and circumstances
surrounding such breach or default; provided that Buyer shall have no right to
terminate if (i) the breaching Seller cures such breach or default within 30
days after its receipt of such written notice, unless such breach or default
cannot be cured within such 30-day period; or (ii) the breach or default is
capable of being cured prior to the Closing Date and the breaching Seller
commences to cure such breach or default within such 30-day period and
diligently continues to take all action reasonably necessary to cure such breach
or default prior to the Closing Date and such breach or default is cured prior
to the Closing Date.
(b) Conditions.
(1) If the Closing shall not have occurred on any
date designated therefor pursuant to Section 8.1 (without giving effect to any
postponement of the Closing on such date) solely because of the failure of the
conditions set forth in Section 7.1(h) or 7.2(f) to be satisfied or waived on
such date, provided, however that Buyer must elect to terminate pursuant to this
Section 9.3(b)(1) within 15 days after any such designated date.
(2) If the Closing shall not have occurred on any
date designated therefor pursuant to Section 8.1 solely because any Seller has
refused to consummate the Closing and all of the conditions set forth in Section
7.2 had been satisfied as of such date (or would have been satisfied by actions
to be taken at the Closing) and the Sellers did not have the right to postpone
the Closing pursuant to Section 8.1.
(c) Upset Date. If the Closing shall not have occurred on or
prior to the Upset Date, unless the failure of the Closing to occur was
principally caused by Buyer's failure to act in good faith or a breach of or
failure to perform any of its representations, warranties, covenants or other
obligations in accordance with the terms of this Agreement; provided that if
Buyer has postponed the date required for the Closing pursuant to Sections
8.1(a)(3) or 8.1(a)(4), the Upset Date shall be extended to the date to which
the Closing was postponed.
(d) Contract Review. If (1) the System Contracts delivered to
Buyer on or after April 17, 1999 pursuant to Section 3.4(c) are not reasonably
satisfactory to Buyer or (2) the General Partner fails (A) to deliver any
Systems Contract pursuant to Section 3.4(c) and (B) to provide Buyer with
reasonable assurances that it can obtain written evidence or a replacement of
such undelivered Systems Contract on terms reasonably satisfactory to Buyer
within thirty days, Buyer may terminate this Agreement within five Business Days
of the receipt thereof or such failure, provided that if the General Partner
provides such reasonable assurances, such undertaking by the General Partner to
obtain such written evidence or replacement shall be a covenant of the General
Partner hereunder.
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9.4 Effect of Termination. If this Agreement is terminated as provided
in this Article 9, then this Agreement will forthwith become null and void and
there will be no liability on the part of any party hereto to any other party
hereto or any other Person in respect thereof, provided that:
(a) Surviving Obligations. The obligations of the parties
described in Sections 6.4, 9.4 and 10.1 (and all other provisions of this
Agreement relating to expenses) will survive any such termination.
(b) Withdrawal of Applications. All filings, applications and
other submissions relating to the transfer of the Purchased Interests shall, to
the extent practicable, be withdrawn from the Governmental Authority or other
Person to whom made.
(c) Breach by Buyer. No such termination will relieve Buyer
from liability for its breach of this Agreement, and in such event the Sellers
shall have all rights and remedies available at law or equity, including the
right of specific performance against Buyer.
(d) Breach by the Sellers. No such termination will relieve
any Seller from liability for its breach of this Agreement, and in such event
Buyer shall have all rights and remedies available at law or equity, including
the remedy of specific performance against such breaching Seller. Each Seller
acknowledges that the unique nature of the Purchased Interests and InterMedia's
Business renders money damages an inadequate remedy for the breach by it of its
obligations under this Agreement, and it agrees that in the event of such
breach, Buyer will upon proper action instituted by it, be entitled to a decree
of specific performance of this Agreement.
9.5 Attorneys' Fees. Notwithstanding any provision in this Agreement
that may limit or qualify a party's remedies, in the event of a default by any
party that results in a lawsuit or other proceeding for any remedy available
under this Agreement, the prevailing party shall be entitled to reimbursement
from the defaulting party of its reasonable legal fees and expenses (whether
incurred in arbitration, at trial, or on appeal).
ARTICLE 10
MISCELLANEOUS
10.1 Fees and Expenses. Except as otherwise provided in this Agreement,
each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives. Following the Closing the Sellers will be responsible for
paying all expenses of the InterMedia Companies relating to the consummation of
the transactions contemplated by this Agreement, including fees and expenses of
attorneys, accountants, financial advisors and broker fees, and Sellers will
reimburse the InterMedia Companies for any such expenses paid by the InterMedia
Companies after the Adjustment Time. Buyer shall be entitled to rely on and
enforce this Section 10.1 on behalf of the InterMedia Companies after the
Closing.
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10.2 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be in writing, may be
sent by telecopy (with automatic machine confirmation), delivered by personal
delivery, or sent by commercial delivery service or certified mail, return
receipt requested, shall be deemed to have been given on the date of actual
receipt, which may be conclusively evidenced by the date set forth in the
records of any commercial delivery service or on the return receipt, and shall
be addressed to the recipient at the address specified below, or with respect to
any party, to any other address that such party may from time to time designate
in a writing delivered in accordance with this Section 10.2:
If to Buyer: Insight Communications Company, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
constitute notice) to: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Sellers: InterMedia Capital Management VI, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not Pillsbury, Madison & Sutro LLP
constitute notice) to: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not Blackstone Management Partners III, L.L.C.
constitute notice) to: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy (which shall not ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
constitute notice) to: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not Tele-Communications, Inc.
constitute notice) to: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
constitute notice) to: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
10.3 Benefit and Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns; provided that (a) except in connection with the
Distribution as provided in Section 2.1(b) and the adjustments referred to in
the second sentence of Section 4.3(b), neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any Seller without
the prior written consent of Buyer, and (b) neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by Buyer without
the prior written consent of Sellers. Notwithstanding the provisions of the
immediately preceding sentence, Buyer may assign all or any portion of its
rights and obligations under this Agreement to one or more Subsidiaries or
Affiliates of Buyer, without the prior written consent of the Sellers, and Buyer
may assign its rights and obligations under this Agreement with respect to the
purchase of the partnership interests in the Subsidiary Partnerships held by IMI
to any Person without the prior consent of the Sellers; and Buyer shall cause
any entity to which any material portion of the assets of Buyer or its
Subsidiaries are transferred or assigned (other than unaffiliated Persons to
which assets are transferred or assigned in an arms-length transaction) to
become obligated to perform the obligations to be performed by Buyer under this
Agreement to the same extent as Buyer; provided that in each case Insight
Communications Company, L.P. or its successors or assigns, as applicable,
remains liable to perform the obligations in full to be performed by Buyer
hereunder. This Agreement is not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
10.4 Further Assurances. After the Closing the parties shall take any
actions and execute any other documents that may be necessary or desirable to
the implementation and consummation of this Agreement upon the reasonable
request of the other party, at the expense of the requesting party.
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10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
10.6 Entire Agreement. This Agreement, the Schedules and the Exhibits
hereto, and the other Transaction Documents to be delivered by the parties
pursuant to this Agreement, collectively represent the entire understanding and
agreement between Buyer and Sellers with respect to the subject matter of this
Agreement and supersedes all prior agreements, understandings and negotiations
between the parties.
10.7 Amendments; Waiver of Compliance. This Agreement may be amended
and any provision of this Agreement may be waived; provided that any such
amendment or waiver (a) will be binding upon a Seller only if such amendment or
waiver is set forth in a writing executed by such Seller, and (b) will be
binding upon Buyer only if such amendment or waiver is set forth in a writing
executed by Buyer. No waiver shall operate as a waiver of, or estoppel with
respect to, any subsequent or other matter not expressly waived.
10.8 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
10.9 Rights Cumulative. 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.
10.10 Survival.
(a) Covenants and Agreements. All covenants and agreements
contained in this Agreement which by their terms are to be performed after the
Closing shall survive the Closing and shall survive until performed in full,
including all such covenants and agreements contained in Article 2 and Section
10.1.
(b) Representations and Warranties of the General Partner. The
representations and warranties of the General Partner contained in Article 3 of
this Agreement shall expire as of the Closing Date and shall not survive the
Closing.
(c) Representations and Warranties of the Sellers. The
representations and warranties of the Sellers contained in Article 4 of this
Agreement (other than the representations and warranties contained in Section
4.3, which shall survive the Closing until the expiration of the applicable
statute of limitations) shall expire as of the Closing Date and shall not
survive the Closing.
(d) Representations and Warranties of the Buyer. The
representations and warranties of the Buyer contained in Article 5 of this
Agreement (other than the representations and warranties
- 59 -
contained in Sections 5.5 and 5.6, which shall survive the Closing until the
expiration of the applicable statute of limitations) shall expire as of the
Closing Date and shall not survive the Closing.
(e) Limitation of Recourse against Sellers. Following the
Closing, in the absence of actual fraud, neither the General Partner nor any
other Seller shall have any liability or obligation to indemnify or otherwise
hold harmless the Buyer or the InterMedia Companies (or any of their successors
or permitted assigns) for any claim or any loss or liability arising from or in
any way relating to this Agreement or any of the transactions contemplated
hereby (including any misrepresentation or inaccuracy in, or breach of, any
representations or warranties (other than the representations or warranties
contained in Section 4.3) or any breach or failure in performance prior to the
Closing of any covenants or agreements made by the General Partner or the
Sellers in this Agreement or in any exhibit or the Schedules hereto or any
certificate or instrument delivered hereunder), and neither the Buyer nor the
InterMedia Companies (or any of their successors or permitted assigns) shall be
entitled to bring any claim based on, relating to or arising out of any of the
foregoing against the General Partner or any other Seller (or any of the General
Partner's or any other Seller's employees, directors, agents or
representatives). Without limiting the generality of the foregoing, in the
absence of actual fraud, neither the Buyer nor its respective successors or
permitted assigns shall be entitled to seek any rescission of the transactions
consummated under this Agreement or other remedy at law or in equity. This
Section 10.10 shall not preclude Buyer from making any claim in respect of a
breach of any representation, warranty, covenant or agreement which survives the
Closing or any claim under the Post-Closing Escrow Agreement, the Noncompetition
Agreements, the Seller Releases, or assignments delivered at the Closing, which
shall each be governed by its respective terms. Buyer agrees that,
notwithstanding any other provision of this Agreement or any Transaction
Document, and any rule of law or equity to the contrary, the Sellers'
obligations and liabilities under this Agreement and the other Transaction
Documents shall be nonrecourse to all direct and indirect stockholders, general
and limited partners and members of the Sellers and to their successors and
assigns and to all of their respective officers, directors, shareholders,
employees, and agents, and none of the foregoing (except to the extent it is a
Seller) shall have any obligation or liability to Buyer arising out of or in
connection with the transactions contemplated by this Agreement and the other
Transaction Documents.
(f) Acknowledgment by the Buyer. The Buyer understands that
the representations and warranties of the General Partner and the other Sellers
contained in this Agreement will not survive the Closing (except as expressly
set forth in Section 10.10) and constitute the sole and exclusive
representations and warranties of the General Partner and the other Sellers to
the Buyer in connection with the transactions contemplated hereby, and the Buyer
understands, acknowledges and agrees that all other representations and
warranties of any kind or nature expressed or implied (including any relating to
the future or historical financial condition, results of operations, assets or
liabilities of the InterMedia Companies) are specifically disclaimed by the
General Partner and the other Sellers.
(g) Limitation of Recourse against Buyer. Following the
Closing, in the absence of actual fraud, the Buyer shall not have any liability
or obligation to indemnify or otherwise hold harmless the Sellers or the
InterMedia Companies (or any of their successors or permitted assigns) for any
claim or any loss or liability arising from or in any way relating to this
Agreement or any of the
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transactions contemplated hereby (including any misrepresentation or inaccuracy
in, or breach of, any representations or warranties (other than the
representations or warranties contained in Section 5.5 and 5.6) or any breach or
failure in performance prior to the Closing of any covenants or agreements made
by Buyer in this Agreement or in any exhibit or the Schedules hereto or any
certificate or instrument delivered hereunder), and neither the Sellers nor any
of their successors or permitted assigns shall be entitled to bring any claim
based on, relating to or arising out of any of the foregoing against Buyer or
the InterMedia Companies (or any of Buyer's or the InterMedia Companies'
employees, directors, agents or representatives). Without limiting the
generality of the foregoing, in the absence of actual fraud, neither the Sellers
nor their respective successors or permitted assigns shall be entitled to seek
any rescission of the transactions consummated under this Agreement or other
remedy at law or in equity. This Section 10.10 shall not preclude the Sellers
from making any claim in respect of a breach of any representation, warranty,
covenant or agreement which survives the Closing or any claim under the
Post-Closing Escrow Agreement, which shall be governed by its respective terms.
Each Seller agrees that, notwithstanding any other provision of this Agreement
or any Transaction Document, and any rule of law or equity to the contrary,
Buyer's obligations and liabilities under this Agreement and the other
Transaction Documents shall be nonrecourse to all direct and indirect general
and limited partners of Buyer and to their successors and assigns and to all of
their respective officers, directors, shareholders, employees, and agents, and
none of the foregoing shall have any obligation or liability to any Seller
arising out of or in connection with the transactions contemplated by this
Agreement and the other Transaction Documents.
(h) Acknowledgment by the Sellers. Each Seller understands
that the representations and warranties of Buyer contained in this Agreement
will not survive the Closing (except as expressly set forth in this Section
10.10) and constitute the sole and exclusive representations and warranties of
Buyer to the Sellers in connection with the transactions contemplated hereby,
and each Seller understands, acknowledges and agrees that all other
representations and warranties of any kind or nature expressed or implied are
specifically disclaimed by Buyer.
10.11 Commercially Reasonable Efforts. For purposes of this Agreement,
"commercially reasonable efforts" or "reasonable commercial efforts" will not be
deemed to require a party to undertake extraordinary measures, including the
initiation or prosecution of legal proceedings or the payment of amounts in
excess of normal and usual filing fees and processing fees, if any, or other
payments with respect to any contract that are significant in the context of
such contract (or are significant on an aggregate basis as to all contracts).
10.12 Effect of Agreement. Notwithstanding anything to the contrary in
this Agreement, none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, the public or
other announcement or notification of any thereof, or any event or circumstance
arising directly and solely from any of the foregoing shall be deemed to result
in a Material Adverse Effect or otherwise in a breach of or inability to make
any representation or warranty contained in Sections 3.3 through 3.19 (excluding
the representation and warranty in Section 3.4(b) regarding rights of first
refusal) or a failure of a condition precedent contained in Section 7.1(a)
(solely to the extent relating to such representations and warranties), 7.1(b)
or 7.1(g).
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IN WITNESS WHEREOF, this Agreement has been executed by Buyer, the
General Partner and the other Sellers as of the date first written above.
BUYER:
INSIGHT COMMUNICATIONS COMPANY, L.P.
By: ICC Associates, L.P., its General Partner
By: Insight Communications, Inc., its General
Partner
By: ______________________________________________
Name:
Title:
GENERAL PARTNER:
INTERMEDIA CAPITAL MANAGEMENT VI, LLC,
by InterMedia Management, Inc., its Member
By: ______________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief Executive
Officer
LIMITED PARTNER SELLERS:
INTERMEDIA MANAGEMENT INC.
By: ______________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief Executive
Officer
_______________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
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TCI ICM VI, INC.
By: ______________________________________________
Name:
Title:
INTERMEDIA CAPITAL MANAGEMENT VI, L.P.,
by InterMedia Management, Inc., its general partner
By: ______________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief Executive
Officer
▇▇▇▇▇▇▇▇▇▇ ▇▇ CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III L.L.C.,
its General Partner
By: _____________________________________________
Name:
Title:
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP III L.P.
By: Blackstone Management Associates III L.L.C.,
its General Partner
By: _____________________________________________
Name:
Title
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-2
▇▇▇▇▇▇▇▇▇▇ ▇▇ OFFSHORE CAPITAL
PARTNERS L.P.
By: Blackstone Management Associates III L.L.C.,
its General Partner
By: _____________________________________________
Name:
Title
By: Blackstone Services (Cayman) III, LDC, its
General Partner
By: _____________________________________________
Name:
Title
______________________________________________________
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
TCI IP-VI, LLC (For the limited purposes set forth in
Sections 6.12 and 8.2(g) and (h))
By: _____________________________________________
Name:
Title:
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
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